[Senate Hearing 105-386]
[From the U.S. Government Printing Office]


[DOCID: f:39855.xxx.done]
                                                        S. Hrg. 105-386


 
        DISTRICT OF COLUMBIA APPROPRIATIONS FOR FISCAL YEAR 1998

=======================================================================

                                HEARINGS

                                before a

                          SUBCOMMITTEE OF THE

            COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                       ONE HUNDRED FIFTH CONGRESS

                             FIRST SESSION

                                   on

                           H.R. 2607/S. 1156

  AN ACT MAKING APPROPRIATIONS FOR THE GOVERNMENT OF THE DISTRICT OF 
 COLUMBIA AND OTHER ACTIVITIES CHARGEABLE IN WHOLE OR IN PART AGAINST 
THE REVENUES OF SAID DISTRICT FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 
                      1998, AND FOR OTHER PURPOSES

                               __________

                  Council of the District of Columbia
                       Department of Corrections
                          Department of Health
                      Department of Human Services
                       Department of Public Works
      Financial Responsibility and Management Assistance Authority
                     Metropolitan Police Department
                          Office of the Mayor

                               __________

         Printed for the use of the Committee on Appropriations


                               


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                                 senate

                     U.S. GOVERNMENT PRINTING OFFICE
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_______________________________________________________________________
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                      COMMITTEE ON APPROPRIATIONS

                     TED STEVENS, Alaska, Chairman
THAD COCHRAN, Mississippi            ROBERT C. BYRD, West Virginia
ARLEN SPECTER, Pennsylvania          DANIEL K. INOUYE, Hawaii
PETE V. DOMENICI, New Mexico         ERNEST F. HOLLINGS, South Carolina
CHRISTOPHER S. BOND, Missouri        PATRICK J. LEAHY, Vermont
SLADE GORTON, Washington             DALE BUMPERS, Arkansas
MITCH McCONNELL, Kentucky            FRANK R. LAUTENBERG, New Jersey
CONRAD BURNS, Montana                TOM HARKIN, Iowa
RICHARD C. SHELBY, Alabama           BARBARA A. MIKULSKI, Maryland
JUDD GREGG, New Hampshire            HARRY REID, Nevada
ROBERT F. BENNETT, Utah              HERB KOHL, Wisconsin
BEN NIGHTHORSE CAMPBELL, Colorado    PATTY MURRAY, Washington
LARRY CRAIG, Idaho                   BYRON DORGAN, North Dakota
LAUCH FAIRCLOTH, North Carolina      BARBARA BOXER, California
KAY BAILEY HUTCHISON, Texas
                   Steven J. Cortese, Staff Director
                 Lisa Sutherland, Deputy Staff Director
               James H. English, Minority Staff Director
                                 ------                                

                Subcommittee on the District of Columbia

               LAUCH FAIRCLOTH, North Carolina, Chairman
KAY BAILEY HUTCHISON, Texas          BARBARA BOXER, California
TED STEVENS, Alaska, (ex officio)    ROBERT C. BYRD, West Virginia (ex 
                                         officio)
                           Professional Staff
                          Mary Beth Nethercutt



                            C O N T E N T S

                              ----------                              

                        Thursday, July 10, 1997

                                                                   Page
Office of the Mayor..............................................     1
Council of the District of Columbia..............................    17
Financial Responsibility and Management Assistance Authority.....    29

                        Wednesday, July 16, 1997

Metropolitan Police Department...................................    91
Department of Corrections........................................   107

                        Wednesday, July 23, 1997

Department of Human Services.....................................   135
Department of Health.............................................   147
Department of Public Works.......................................   155


        DISTRICT OF COLUMBIA APPROPRIATIONS FOR FISCAL YEAR 1998

                              ----------                              


                        THURSDAY, JULY 10, 1997

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:05 a.m., in room SD-192, Dirksen 
Senate Office Building, Hon. Lauch Faircloth (chairman) 
presiding.
    Present: Senators Faircloth, Stevens, and Jeffords.

                          DISTRICT OF COLUMBIA

                          Office of the Mayor

STATEMENT OF HON. MARION S. BARRY, JR., MAYOR

                  OPENING STATEMENT OF LAUCH FAIRCLOTH

    Senator Faircloth. Good morning, ladies and gentlemen. The 
meeting will come to order. I will have a brief opening 
statement, and then we will go to the witnesses. This is the 
first of several hearings that will be held by the Senate 
Appropriations Subcommittee on the District of Columbia to 
consider the proposed 1998 budget and the long-range financial 
plans for the District.
    The committee actually has more than one budget to 
consider, which is a little unusual. I understand the Control 
Board and the City Council were not able to reach consensus on 
the spending plan, and I am sure we will hear more on that this 
morning. It is important to have a consensus strategy as to 
where we are going with the city and to balance the budget for 
the city.
    I think it would be far better to come together with one 
budget, but that did not happen. I want to hear from our 
witnesses this morning on the areas of agreement and 
disagreement so we can identify the common ground that does 
exist for putting the District's budget in order.

          spending for city council and control board budgets

    The total spending for both the City Council's proposed 
budget and the Control Board's proposed budget are the same, 
$5.17 billion, and both budgets are designed to achieve a 
balance. The areas of disagreement are significant: funding for 
public safety, corrections, and schools. It is my intention 
that the subcommittee review both documents before any decision 
is made.

                          why a control board

    It is important to remember why we have a Control Board and 
why the subcommittee is reviewing a budget prepared by the 
Control Board in the first place. The city of Washington is not 
delivering its services in a manner that meets the needs of the 
citizens who live in the Nation's Capital. Two years ago, 
problems became so severe that on April 17, 1995, the District 
of Columbia Financial Responsibility and Management Assistance 
Act was signed into law, creating the Financial Control Board.
    At that time, the city was facing a major financial crisis. 
A report of the General Accounting Office from June 25, 1995, 
says the following: the District of Columbia is insolvent. It 
does not have enough cash to pay its bills. Some contractors 
have provided services without contracts.

                       programs under court order

    Many District programs are under court order to address 
basic fundamental weaknesses, and there is widespread belief 
that the District has too many employees and does not provide 
quality service.

                    number of residents leaving city

    Making the problem worse, over 50,000 residents of the city 
have left in the 1990's alone. Over the last 20 years, 200,000 
residents have left the city. A recent study by Dun & 
Bradstreet found that more than 1,800 businesses had moved out 
of the city since 1990, twice as many as had moved in. 
Certainly the leaving of businesses and people has eroded the 
tax base.

                control board established to rescue city

    In short, the Control Board was established to rescue the 
city from financial chaos and from a legacy of mismanagement, 
from the effects of a crime wave that drove citizens away out 
of fear of personal safety, from crumbling roads, and from 
school buildings that have been neglected for so long that it 
will take hundreds of millions of dollars to repair them.
    So as the subcommittee considers the testimony from our 
witnesses this morning, let us remember what business is before 
us. We are about the business of rescuing the Nation's Capital. 
Not only rescuing it, but we are going to turn it into a city 
we all can be proud of. We simply cannot let the District of 
Columbia fail, and the first step, in my opinion, is to restore 
the confidence of the American people and their representatives 
in Congress in the management of the city.
    I have spent my life in the private sector, and I have some 
knowledge of how to run a business. It has been my experience 
that when a business has been run into the ground, management, 
whoever did it, must be held accountable. Until this city can 
demonstrate that it is managed well, that millions of dollars 
are not being wasted or misused, then no amount of cost-
shifting reforms will be enough to solve the problem.

                           management reform

    None of the plans to rescue the city currently before the 
Congress provides for management reform. The rescue plan 
developed by the President would shift a number of functions 
from the city to the Federal Government, but a management 
crisis would still remain. I continue to believe that any 
legislation which attempts to rescue the city must also rescue 
it from mismanagement.
    I remain strongly opposed to the inclusion of any District 
of Columbia rescue plan in the tax reconciliation bill 
currently being considered by the Congress. I have written to 
Trent Lott urging him that such a plan not be in the tax bill.

                            president's plan

    The President's plan would, in my judgment, greatly reduce 
the congressional oversight of the District of Columbia without 
providing any solution to the management problems that the city 
has. A plan which shifts the responsibility for several billion 
dollars of city services and debts back to the American 
taxpayers should not be buried in an omnibus tax bill. The 
Senate deserves an opportunity to debate the plan.
    Balancing the District budget and restoring long-term 
financial responsibility to the Nation's Capital will not be 
easy. After years of mismanagement and neglect, it will take 
more than 1 year of sound management to restore the city. 
However, I am committed, and I believe the Congress is 
committed, to revitalizing the District. We will not abandon 
the commitment.

                         revitalization of city

    The Congress is not only committed to the revitalization of 
the city, there are no other options. It is the Capital of the 
Nation, and it has to be revitalized, not only for the citizens 
of the city of Washington, but for the 280 million American 
citizens that call it the Capital and many of them that visit 
here.
    I would like to remind all of our witnesses that their 
entire statement will be made a part of the record. We ask that 
you limit your opening statement to 5 minutes. There will be 
some flexibility in case it gets some longer, but not a lot 
longer.
    Without objection, the record will remain open until 5:00 
p.m., July 17, for the submission of any additional testimony 
or responses that anyone might have.
    I want to welcome all of our people here this morning, our 
witnesses. First I would like to say that both of the other two 
members of the subcommittee, Senator Barbara Boxer is, I 
believe, on the floor at a meeting, and we expect her to join 
us before the hearing is over. Senator Hutchison from Texas is 
also on the floor, and we expect her to be joining us.
    Our three witnesses this morning are the Hon. Mayor Barry, 
Ms. Cropp, and Dr. Brimmer, chairman of the Control Board. I 
look forward to hearing the testimony and, as I said at a 
hearing yesterday, I thank the witnesses for coming. You all 
did not have as far to come as those did yesterday, but to come 
and testify before a congressional hearing is not always 
something we look forward to. It is like jury duty. It is 
something we need to do to make the Government work, and I will 
ask Mayor Barry if he would begin his testimony.

                       statement of marion barry

    Mayor Barry. Good morning, Mr. Chairman and members of the 
committee. Allow me to begin this morning by taking some time 
to commend you, in that you have demonstrated as chair of the 
committee, unlike many others, that you have really been a 
quick study, making every effort to understand the complexities 
in which the District finds itself today.

                        commendation of chairman

    Another commendable aspect of your leadership has been your 
demonstrated appreciation of the democratic process and 
structure of the Government. Rather than try to micromanage the 
District government, you have kept your involvement at a macro 
level, leaving the local elected officials to make local 
choices for which they will be held accountable.
    Mr. Chairman, I would like to ask that my entire statement 
be entered into the record. You should have copies of it. I 
think it is about 35 pages.
    Senator Faircloth. We do have a copy of it, and it will be 
entered into the record, the entire statement. Mr. Mayor, we 
want to keep testimony fairly brief, but feel comfortable to 
say what you have got on your mind.
    Mayor Barry. Well, I will try to summarize these 35 pages. 
It is kind of difficult. I am a southerner, too, so we talk 
kind of lengthy.

                          no consensus budget

    As you are aware, Mr. Chairman, the executive and the 
legislative branches of the Government and the Financial 
Management Assistance Authority did not reach consensus on the 
District of Columbia's fiscal year 1998 budget and, as you 
pointed out, you are faced with two budgets, the Mayor-Council 
budget, and the Authority's budget.
    There are several reasons for this. I think the overriding 
reason is the fact that this process, as well-intentioned as it 
was, designed by Congressman Davis and others, and adopted by 
the Congress, signed by the President, does not allow for 
consensus.
    I submit a budget to the Authority. Even if they agreed 
with 99 percent of that budget and disagreed with 1 percent, 
they would have to reject the entire budget, and then it goes 
the same way, back and forth between the Council and the 
Authority.

                        design a budget process

    We believe, and I have talked to Dr. Brimmer and Ms. Cropp, 
we need to sit down and design a better budget process. This 
process is designed to create conflict, confusion, and 
disagreement, as well-intentioned as it was.
    Second, it is a matter of some priorities that there is a 
difference. The Council and the Mayor believed very strongly 
that the Department of Corrections had enough money to operate 
in 1998 and, therefore, we were not supportive of any major 
increases in their budget. On the other hand, the Mayor and the 
Council believe that we ought to have local funding for summer 
jobs. The Control Board reduced and cut out, eliminated these 
summer jobs.

                          summer jobs program

    There are some 13,000 young people who applied this summer. 
The Federal Government will support about 4,000, our local 
money about 5,000, giving us 9,000 jobs. We have gone to the 
private sector and to the Federal agencies to get an additional 
3,500 jobs. We differ there. The Board eliminated the Office of 
Tourism, and Mr. Chairman, you know and I know that tourism is 
the No. 1 industry in Washington, behind Government. Over 
100,000 people are in the tourist business. The Board 
eliminated some home assistance purchase programs, and you can 
see that is where the basic difference is. One of philosophy 
and priorities in those areas.
    On the other hand, the Board and the Council agreed on a 
strong public safety budget, and raises for our police 
officers. There was some slight disagreement about the level.
    So those differences are there, and I would urge that you 
adopt the Council and the Mayor's budget as part of where we 
are going.
    Mr. Chairman, before I continue, let me go back to 
something you were speaking of about the Financial 
Responsibility and Management Assistance Authority. I was here 
on the City Council at the beginning of 1993. I was here in the 
spring and the fall of 1994, when subcommittees in the House 
and the Senate had repeated hearings with Mayor Kelly, and both 
the House and the Senate held these hearings on the financial 
and fiscal conditions of the District government.
    Each time the hearing was held and Mayor Kelly and her 
staff came to testify, numbers and explanations changed, and 
each time the numbers and explanations changed, the 
frustrations of those on the Hill with oversight responsibility 
for the District also rose.
    With the heightened frustration came a real skepticism 
about the credibility of the leadership and management of the 
District government.
    At that time, I was a member of the City Council, and even 
those of us on the Council did not know what numbers and 
explanations to believe.

                        deficit of $335 million

    As it was, in January 1995, when I took office, the 
financial crisis came to a head. Shortly after assuming the 
mayorship of the city, we went into the books and discovered a 
deficit of $335 million left over from the previous 
administration, the largest deficit in the history of our city, 
and a potential deficit of another $322 million.
    The point I am making here is that when we went to the 
Federal Government to get some assistance, it was obvious that 
they were not going to give it without some major controls, and 
thus, the Financial Responsibility and Management Assistance 
Authority (the Control Board). It had more to do with a 
deteriorated personnel system, and a broken procurement system 
that had gotten worse over the last 4 years prior to 1995.
    This law is unlike any other in the country in the sense 
that elected officials were not part of the Board, as they were 
in New York or in Philadelphia. Again, that does not foster a 
cooperative relationship. We have elected officials left 
outside of the process, and nonelected officials, as bright and 
as committed as they are, on the other side.

                elected officials part of control board

    If I had my druthers about it, we would redo that law and 
we would include local elected officials as part of the Control 
Board. I think that would make for a better model than what we 
have here, but I want to make it clear that it was the 
financial crisis created in 1993-94, that brought the Congress 
to the point that we needed this Financial Control Board.
    Also, Mr. Chairman--I will not go through all of this, but 
my administration had a three-prong approach. The first prong 
was to reduce the cost of government. That happened in New 
York, happened in Philadelphia. The second was to transfer 
certain funding responsibilities to the Federal Government, 
which is what the present plan does, and the third was revenue 
growth and economic growth.

                    reduction in size of government

    If you look at the record, what we have been able to do in 
the last 2 years in terms of reducing the size of government, 
this government has been reduced in terms of number of people 
on the payroll and the size of the payroll in less than 2\1/2\ 
years by 27 percent. We have lost over 7,500 full-time 
equivalents for a savings of $165 million.
    Senator Faircloth. Seven thousand, did you say?
    Mayor Barry. Seven thousand five hundred, for a savings of 
$165 million. In fact, there was a deficit of $335 million in 
1994 under the previous administration, and in 1995, when we 
started tightening our belt, we only had a deficit of $54 
million. As a businessperson, you can see a dramatic turnaround 
in 1 year from $335 million to $54 million.

                             privatization

    We have not only reduced the size of government, we have 
used privatization as a way of further becoming more efficient 
and further reducing the cost of government. We have outsourced 
major services provided by hundreds of District personnel. The 
correctional treatment facility at one of our prison 
institutions in southeast, 898-bed correctional facility, was 
privatized, saving the taxpayers of the District almost $2.3 
million in operating costs.
    We also closed one of our nursing homes and placed 256 
residents in private home long-term care facilities. We 
privatized our food services in our correctional facilities.
    The point I am making, Mr. Chairman, is that this 
administration, this Mayor, working with the Council, has 
drastically reduced the size of this government. No other city, 
or State, or county in America has done this much this quickly. 
New York took 4 years to do 20 percent of their reduction, and 
Philadelphia had very few reductions. They just made some 
arrangement with the unions to cut costs.
    So we have done a great deal, and if you do not believe we 
have done that, you ask some of these people whose services 
have been reduced. We have gotten so stringent, Mr. Chairman, 
we have gotten to a point where we reduced money from our 
burial fund for people who are destitute and cannot find 
anybody to pay for their burial. At one point they would get 
their major funding from the city, but we have reduced that 
cost. We have reduced services to some of our severely 
disadvantaged citizens. The Department of Human Services lost 
over 2,000 positions.

                   establishment of health department

    We have also established a Health Department. I am just 
telling you this so you may begin to see that, contrary to what 
you may read in the newspapers, the D.C. government has made 
significant progress in the first leg of reducing the size of 
government, reducing the cost of government, and getting our 
management under control. If you look at the financial part of 
our government, there has been a great deal of progress. We had 
junk bonds in 1995, in the early part of 1996. We can now go to 
the bond market and borrow.

                              bond rating

    Our last borrowing was about $280 million in May. We got a 
rate that was only about 7 basis points below Fairfax County, 
which has AAA rating. Again, the point is that Wall Street has 
regained some confidence in the District government, and it 
demonstrates that through our borrowing.
    If you look at service delivery, this afternoon at 1:00 I 
am having a press conference on revamped motor vehicle 
services. We provide State services, which are driver's 
licenses, license plates, et cetera. We have now moved to 
reform that area. Trash is being picked up much more 
efficiently.
    So I take issue with you in terms of the vastness of the 
mismanagement. Of course, we have problems in terms of 
management, but when you look at every area of government, you 
see continued and sustained progress.
    What happens with people like yourselves, because you have 
to depend mostly on the newspapers and television for your 
information about what we are doing, they only point out the 
negative. They never tell you all the things that are working 
in a very, very positive way.

                      businesses leaving the city

    I take issue again in terms of businesses leaving the city. 
We have had, in the last 2 years, a net increase in businesses 
in the District of Columbia. There was a hemorrhaging prior to 
my administration, but I think we had about a net of 75 
businesses that are now in the District of Columbia. We have 
only lost about 25,000--I mean 40,000--jobs in the last 3 
years, but 90 percent of those jobs have been in the Federal 
and District sector. As the Federal Government downsizes and 
the District government downsizes, you lose jobs.
    We have had, really, a small net increase in jobs in the 
private sector. We have slowed down the hemorrhaging of the 
middle-class in Washington, when you look at the numbers.
    And so my point here is that the District has made 
substantial movement in managing our affairs. Our procurement 
system, which was in total disarray when I came in, in January, 
and stayed that way for another 12 to 14 months, as we began to 
fix it, is now beginning to work. We do not have contracts that 
are expiring. People are getting paid in a timely way. Mrs. 
Patterson and my administration will be working on a personnel 
bill in the fall.

                            president's plan

    What we need, though, is for the President's plan to be 
approved. We think it is a good first step, in terms of 
beginning to shift those State functions to the Federal 
Government. We do not have a State. If I were the mayor of 
Raleigh or Charlotte, I could go to the State of North Carolina 
for AFDC, for welfare payments, for food stamps, for Medicaid, 
for State prisons, for county hospitals. I would not have that 
responsibility. So we support the President's direction.
    What we also need is for this committee to assist us in 
figuring our various models for economic growth. As a business 
person, you cannot just cut costs and not have any economic 
growth, as you very well know. So that is the leg of the 
triangle that we need to push forward.

                            council's budget

    I guess, in conclusion, we urge you to adopt the Council's 
budget. I know it puts you in a very difficult position, but 
that is what leadership is about--making some very difficult 
choices. We have made some difficult choices here locally. I 
have had to preside over the worst budget crisis in our 
history. And I have had to take some unpleasant messages to our 
constituents. And as you probably know, people not only kill 
the message, but kill the messenger. And I have taken my share. 
But that is what leadership is all about--making Washington 
what we want it to be.
    If you look outside now, you begin to see a city that is on 
the grow, on the road to recovery. Our streets are cleaner. Our 
government is working much more efficiently.
    Do we have problems? Yes, we do. And we are making the 
effort to attract leadership. In the next week or so I am going 
to announce some personnel changes in my administration, where 
we have attracted, in my view, some of the best and brightest 
public servants in America to help lead us on this road to 
recovery.

                  additional police officers on street

    And, finally, Mr. Chairman, we all want Washington to be a 
good city. We all want Washington to work well. We all want 
Washington to be safer than it has been in the past. And since 
we are talking about safety, our police department has 
radically changed the way it operates. We now have over 400 
additional police officers that went on the streets 3 months 
ago--on the streets in uniform. The chief has added another 
500, starting at the end of this week and the early part of 
next week, where you are going to see police officers riding 
bicycles and in cars and walking the beat.
    And it is paying off, Mr. Chairman. The homicide rate is 
the lowest it has been in 10 years. I think about 1\1/2\ weeks 
ago, there were 135 people killed. That is 135 too much for me, 
but by that same time last year, it was 186, which means over 
50-some lives have been saved because of our police department. 
In the month of March, crime was down by 30 percent in all 
categories, in robberies and auto thefts, et cetera.

                           prepared statement

    And so we are working as hard as we can to make our city 
safer, to make it cleaner, to make our government work more 
efficiently and effectively. And I think we are on the road to 
recovery. When you check the facts, you will find we have made 
substantial progress. And all this talk about mismanagement 
here or there is just what it is--it is talk. The reality is 
that we still have problems, but Washington is growing. And so 
we want to make it not only proud for North Carolinians, but 
proud for all Americans.
    Thank you.
    Senator Faircloth. Thank you, Mayor Barry.
    [Clerk's note: The Mayor's comparative information on the 
staffing for the District of Columbia is being held in the 
files of the subcommittee.]
    [The statement follows:]
                   Prepared Statement of Marion Barry
    Good morning Mr. Chairman and members of the committee. Mr. 
Chairman, allow me to begin this morning by taking some time to commend 
the leadership that you have demonstrated as the chair of this 
committee. Unlike many before you, you have shown a particularly keen 
interest in the District of Columbia--and if I may say so, have been a 
quick-study, making every effort to understand the complexities in 
which the District finds itself today. Another commendable aspect of 
your leadership has been your demonstrated appreciation of the 
democratic process and structure of Governance in America. Rather than 
to micro manage the District government, you have kept your involvement 
at a macro level--leaving the locally elected officials to make local 
choices for which they will be held accountable.
    In accordance with section 202(c)(6) of the District of Columbia 
Financial Responsibility and Management Assistance Authority Act of 
1995, on June 16, 1997, I submitted to the President of the United 
States, the District of Columbia's official fiscal year 1998 budget.
    As you are all aware, the executive and legislative branches of the 
District of Columbia's government and the financial authority did not 
reach a consensus on the District of Columbia's fiscal year 1998. 
Consequently, as permitted by the District of Columbia Financial 
Responsibility and Management Assistance Authority Act of 1995, two 
separate budgets have been submitted. One of these represents the 
District of Columbia's official budget--for which we are here to 
support and seek your support today, and the other represents the 
actions of the financial authority.
    I must point out at the outset, that the lack of consensus on the 
District's budget has much to do with the budget development process 
that is outlined in the Authority Act of 1995. Not only does the 
process require an inordinate amount of ``to and fro'', but at certain 
points in the process, the role of the Mayor and later, the Council, is 
reduced to one of by-standers. This process does not easily lend to 
consensus building but rather assures confrontation and conflict 
throughout the process. Whereas I appreciate the intentions of 
Congressman Davis and others who drafted the District of Columbia 
Financial Responsibility and Management Assistance Authority Act, this 
process has come to be particularly frustrating and I believe it is 
safe to say that all who touch this process are in agreement with this 
fact. It is thus no wonder that the differences between the District's 
official budget and that of the authority are really minimal. Allow me 
to put these differences into perspective:
  --Government direction and support.--The authority's budget is $1.7 
        million lower than the District's official budget.
  --Economic development and regulation.--The authority's budget is 
        $5.3 million lower than the District's official budget.
  --Public safety and justice.--The authority's budget is $7.4 million 
        more than the District's official budget.
  --Public education system.--The authority's budget is $5.5 million 
        lower than the District's official budget.
  --Human support services.--The authority's budget is $2.2 million 
        more than the District's official budget.
  --Public works.--The authority's budget is $1.2 million more than the 
        District's official budget.
  --Financing and other.--The authority's budget is $3.6 million more 
        than the District's official budget.
    The net difference between the District's official budget and that 
of the authority is $1.978 million!
    Let me take this opportunity to recommend and invite all the 
stakeholders of the District to sit down and craft a new process that 
makes sense--and that does not compromise the intent and the essence of 
the Authority Act of 1995.
    Mr. Chairman, we, in the District of Columbia are living in a 
profoundly skeptical yet exciting time.
    You may recall how the concern about the District's financial 
condition began in 1994 under Mayor Kelly. It was becoming increasingly 
obvious that the Kelly administration had lost complete control of the 
District's finances. In the spring and summer of fiscal year 1994, both 
the House and the Senate held numerous hearings on the fiscal condition 
of the District. Each time a hearing was held and Mayor Kelly came up 
to testify, numbers and explanations changed--and each time the numbers 
and explanations changed, the frustrations of those with oversight 
responsibility for the District on the Hill also rose. With this 
heightened frustration came a real skepticism about the credibility of 
the leadership and management of the District government. At that time 
I was a member of the Council of the District of Columbia, * * * and 
even those of us on the Council did not know what numbers and 
explanations to believe.
    As was inevitable, in January 1995, the fiscal crisis in the 
District of Columbia came to a head. Shortly after assuming the 
mayorship of the District, I publicly revealed that there was a deficit 
from fiscal year 1994 of $322 million. I also made public the fact that 
it was anticipated that compounding the deficit from fiscal year 1994 
of $322 million, if nothing was done immediately, the fiscal year 1995 
deficit would be as high as $722 million.
    As though this were not enough, not only were the District's 
finances in disarray, our personnel and procurement systems--which are 
hybrids of the complex Federal systems--had also deteriorated badly. 
Little or no attention or investment had been made in people nor in 
systems or technology. These three fundamental systems that serve as 
the backbone of any government had been so badly neglected that there 
seemed little hope for recovery.
    Under my bold leadership, we immediately developed and employed a 
three pronged recovery strategy.
    The first step was to immediately reduce the cost and growth of the 
government. There were tough decisions and harsh measures that had to 
be taken immediately. Stringent spending controls and management 
actions to avoid this catastrophe were implemented. We rolled back 
employees' salaries; conducted large scale reductions-in-force; made it 
possible for employees to retire earlier by offering voluntary easy and 
early retirement options. several services were stopped and programs 
eliminated. I also began putting together a team of professional 
managers and leaders for the various government agencies--individuals 
who would facilitate this change while making the government work more 
effectively and efficiently. As a result, the deficit in fiscal year 
1995 was $54 million! This represented the largest turn around of any 
local government in the same situation, and for the District, this 
turnaround represented the first time in the history of home rule, that 
expenditures in one fiscal year were lower than those of the previous 
fiscal year. Mind you, this was all before the creation of the District 
of Columbia's Financial Responsibility and Management Assistance 
Authority.
    After containing the hemorrhaging, my administration embarked on a 
systematic quest to craft a transformation plan. On February 14, 1996, 
approximately one year after my return as the chief executive of the 
District of Columbia, and one year after I exposed the extent of the 
fiscal crisis that the District was in, I presented a bold new 
direction for the government of the District of Columbia and the people 
of the District--``a transformation plan for America's first city.''
    At the time of its presentation, there were those who were 
cynical--said we did not have the will nor the wherewithal to carry it 
out--said it would never happen, that it was political fluff. But we 
knew that there was no way but ``up'' from where we were.
    I am happy to report, one year later, that not only is 
transformation on track and working, but District citizens are seeing 
the positive impact of this transformation. Real change, positive 
outcomes and better services for our citizens.
    The underlaying basis of this transformation was the implementation 
of performance-based principles and programs--both in the budget 
development and execution processes, and in the service delivery 
systems. My administration, in accordance with the vision that was set-
out in the transformation plan, has moved quickly to ensure that we 
achieve the goals that help us to perform better and rebuild trust and 
confidence in our government.
    Allow me to elaborate on some of the initiatives that we have 
initiated and some that we have completed:
  --Reduced the size of government.--In the two and a half years of the 
        Barry Administration, we have reduced the government by 
        approximately 7,500 FTE's, for a savings of $165 million, and, 
        we will meet by the end of September 1997, our targeted fiscal 
        year 1997 FTE level of 26,422 by reducing an additional 2,411 
        FTE's from the District government payroll.
      A 27 percent reduction in the size of the workforce over a period 
        of two and a half years!
  --Outsourced city services.--We have outsourced major services 
        previously provided by hundreds of District personnel, 
        including the 898-bed correctional treatment facility, the 
        Educational Academy at Oak Hill, food services for the 
        correctional population and, the police and fire clinic. We 
        have also closed D.C. Village nursing home, having placed 256 
        residents in privately-owned long-term care facilities. All of 
        this has resulted in more efficient and dependable services 
        while at the same time saving the government tens of millions 
        of dollars.
  --Established comprehensive health services.--The Barry 
        administration has created a Department of Health to better 
        focus and administer services to our public; reduced Medicaid 
        expenses by $80 million in fiscal years 1996/1997; created the 
        Public Benefit Corporation and transferred public health 
        clinics to the Corporation for more coordinated health service 
        delivery.
  --Restructured human development initiatives.--My administration has 
        reduced AFDC benefits to more closely reflect our neighboring 
        jurisdictions; we have privatized personal care aids; reduced 
        unemployment benefits and reduced workers' compensation 
        benefits.
  --Public protection business services.--We are investing more in the 
        community policing model by restructuring police beats to take 
        into account neighborhood boundaries. We are also putting into 
        place community policing teams which have a responsibility for 
        developing linkages between the police teams and the 
        neighborhood they serve. There are more police officers 
        assigned to our neighborhoods now, than in recent history.
      In addition, both the fire and police departments are increasing 
        their use of technological resources to improve the quality of 
        service to our public. For example, the 800 mhz system will 
        become a reality this fiscal year, advancing communications for 
        both the D.C. Fire department and the Metropolitan Police 
        Department. The Metropolitan Police Department has expanded the 
        use of the WACIIS crime data base in three police districts--
        during 1997, it will be expanded city-wide.
      Additionally, investments have been made into equipment needs and 
        you will soon see newer, cleaner and more reliable apparatus in 
        both the police and fire departments.
  --Revamped and focused public works services.--We have ensured better 
        trash pick-up and will be conducting more sanitation 
        inspections. We are testing a ward-based sanitation system that 
        focuses accountability while at the same time ensuring more 
        effective services. Ride around the city and you will see that 
        there are several streets that are being resurfaced as we work 
        to revamp our old and worn infrastructure. I am certain that 
        you are aware of how we have also made the environment our 
        priority and have created a better managed independent 
        structure in the water and sewer authority so that we will have 
        cleaner drinking water and more efficient operations.
    I could go on and on about the phenomenal rate of change and 
transformation that has occurred in the District government in these 
last two and a half years. Lest there is a doubt in anyone's mind, the 
District government is being turned around in an unprecedented manner. 
We are making adjustments in our workforce and the way in which we 
provide services in order to ensure true fiscal solvency. Good things 
are happening in the District government--good things are happening in 
the Barry administration.
    We are taking our fiduciary responsibility seriously and are 
effectively managing change in spite of this dynamic and complex 
political environment. Two years ago, the District's rating on Wall 
Street reached ``junk'' status and the U.S. Treasury was the only 
source available to us to finance our cash needs and other general 
obligations. Two years later, investor's confidence in the District's 
recovery and overall transformation has allowed us considerable access 
to the market. Over the past month, we were able to sell more than $230 
million in general obligation bonds at a very competitive interest rate 
and half of these bonds were insured!
    Again, many good things are happening in the District of Columbia * 
* * many good things are happening in the Barry administration. And 
yes, there is still room for improvement and yes, there is so much 
further for us to go--but no one dare suggest that tough decisions have 
not been made.
    Ask the residents whose last safety net was swiped away with the 
elimination of the Emergency Assistance Program. Ask the 855 elderly 
citizens who depended on the Chore Aid Program for their very basic 
needs. Or the Burial Assistance Program that helped those residents who 
could not afford to bury their loved ones. Or the residents who 
depended on the proximity of over a dozen health care clinics that have 
now been closed. Outpatient programs for substance abuse, and more than 
500 personal care aides have all been eliminated over a two-year 
period. How about the recreational programs that do not only serve as 
leisure opportunities but actually serve to save the lives of our 
children? Yes, tough decisions have been made.
    All this notwithstanding, we understand that there will be more 
pain. We understand that we have not yet gone the full course in this 
transformation. The fiscal year 1998 budget furthers our commitment to 
a restructured government and to a smaller and better trained workforce 
that has the technological tools to serve our residents and is more 
customer and business friendly.
    The second step in our three pronged recovery strategy was to 
restructure the relationship between the District and Federal 
governments.
    The District's financial condition has presented dynamics that had 
never been encountered before. The Congress of the United States 
responded by enacting the Financial Responsibility and Management 
Assistance Authority Act, and creating an implementing authority. The 
act also created an independent chief financial officer and further 
empowered the Inspector General. Although there have been some 
``growing pains'' associated with our respective roles and 
responsibilities, I think that it is fair to say that we all share a 
common commitment and vision of a higher quality of life for the 
residents, businesses, and visitors of the Nation's Capital.
    But the District's recovery involves much more than a financial 
authority with greater oversight responsibility, and a chief financial 
officer with independent and broad powers.
    We have demonstrated the will and ability to reduce personnel costs 
but the cost drivers for the District are mostly those functions that 
are typically performed by a State and that we inherited from the 
Federal Government at Home Rule in 1973.
    These big ticket items include: the court system ($109.4 million); 
corrections ($244.2 million); Medicaid ($409 million); debt service 
($443.6 million); and the pension systems for police, fire fighters, 
judges, and teachers ($306.6 million). In total, these items amount to 
$1.513 billion--45.5 percent of the District's official fiscal year 
1998 budget.
    In 1995, I called on the President and Congress of the United 
States to immediately look at ways to relieve the District of some of 
these burdens. It was thus very encouraging to see the President's 
National Capital Revitalization Plan, and more recently, the Norton-
Davis Plan. The adoption of either of these plans will go a long way 
towards addressing the District's long term structural balance and 
recovery.
    Finally, the last step in the District's overall recovery strategy 
is economic growth.
    Realizing that true economic growth cannot occur in an environment 
that is still structurally fragile, the District's official fiscal year 
1998 budget seeks to lay the foundation for this ultimate goal.
    The centerpiece of the fiscal year 1998 budget is stabilization. It 
is grounded in the belief that, after such severe reductions and 
restructuring in the District government, and the resulting uncertainty 
that has rippled throughout the community, we must find a way to invest 
in core services and programs that make a real difference in the 
quality of life for our residents.
    The budget emphasizes services that put children first; emphasizes 
the public's protection; focuses on the city's infrastructure; as well 
as on a government that seeks to enhance the quality of its smaller 
workforce--through increased training opportunities and technology to 
support new and streamlined systems and processes.
    The fiscal year 1998 budget I have submitted to the President and 
the Congress of the United States, reflects $3.321 billion in 
expenditures, and $3.321 billion in projected revenues--a balanced 
budget a full year earlier than required by the District of Columbia 
Financial Responsibility and Management Assistance Authority Act of 
1995.
    This budget was built on two critical assumptions:
    (1) That the District's fiscal year 1997 budget initiatives will be 
completed and as a result, will reduce fiscal year 1997 expenditures by 
$130 million; and,
    (2) That we will reduce the workforce by 2,411 locally funded FTE's 
by this September, the savings from which will flow into fiscal year 
1998.
    The reality of these assumptions is simple: the Barry 
administration has made tough decisions and has been vigilant in 
accomplishing the budget initiatives we promised for this fiscal year. 
This vigilance and tough mindedness has paid off, because we are now in 
a position today to submit a balanced fiscal year 1998 budget.
                  fiscal year 1998 spending priorities
    Over the past several years, the practice of budget cutting has 
turned into a trend that has now become a part and parcel of the 
culture of the budget development process in the District of Columbia. 
It is my responsibility, as the Mayor to adjust and redirect this 
trend.
    To this end, we have agreed on those critical areas of public 
interest that must be addressed in a sober yet comprehensive and 
realistic manner. These areas are; public safety, public education, and 
public works.
    Focusing on these areas does not mean that we will continue to 
allocate good resources after bad. In partnership with the Council of 
the District of Columbia, and the Financial Authority, we are going to 
foster and require accountability--the allocation of precious scarce 
resources must produce our collectively desired outcomes. Our 
commitment is to re-invest in this community from a comprehensive, non-
piecemeal fashion to improve the whole community.
    I remain committed to the development of a healthy and sound law 
enforcement organization in the District of Columbia. The District's 
official fiscal year 1998 budget funds 3,800 police officers. I also 
intend to return between 200-300 officers from sick leave, disability 
or retirement to increase our crime fighting efforts. This will result 
in a net increase of officers on the streets.
    We are going to approach law enforcement not only from an 
enforcement position, but from a preventive stand point as well. We 
will seek to tie the efforts of the public safety agencies with those 
of the human development agencies which include the Department of 
Employment Services and the Department of Recreation and Parks. Greater 
investment will be made in preventive activities such as job training, 
skill development, and various recreational opportunities.
    It is with great dismay that I report that we have failed to 
adequately fund the Summer Youth Employment Program. This program has 
been the source of much contention so allow me to take this opportunity 
to make some facts known for the record:
    This program was initiated in 1979 with the primary objective of 
instilling in our children, an appreciation and value of their 
abilities and worth. It is a program primarily aimed at disadvantaged 
youth aged between 14 and 21 years of age.
    In fiscal year 1996, 11,815 youth went through this program. The 
age breakout was as follows:
        Years of age                                              Number
14-15............................................................. 5,471
16-17............................................................. 4,068
18-19............................................................. 1,866
20-21.............................................................   410

    57 percent of these youth came from households classified as 
economically disadvantaged by the U.S. Department of Labor. Further, 
114 of these youth were classified as ``head of household''--children 
with children!
    The average cost per participant for this six-week program was 
$610. Wouldn't you agree that $610 per young person is a small 
investment for our future?
    Though the authority's budget completely eliminates this program, I 
will continue to support it because I truly believe that this is not 
the time to abandon our children--and particularly those in dire 
circumstances. I believe that this program makes a significant 
difference in the growth and development of our youth and will continue 
to support it as long as I remain Mayor. This fiscal year, owing to 
reductions that were made earlier in the year to address a projected 
budget gap, the funding for this program was significantly reduced. 
Consequently, over 1,000 youth are without summer employment this 
summer. We remain hopeful that the business community will step up to 
the plate and play a more significant role in these youths lives. I 
have to caution that for the sake of our children, and our community, 
we cannot have a repeat of this situation in fiscal year 1998. This 
program has to be taken seriously.
    As we continue to reduce the size of our workforce by restructuring 
actual operations, streamlining systems and processes, and outsourcing 
services, substantial investment must be made in the smaller workforce 
that remains. To this end, we have proposed $5 million in the fiscal 
year 1998 budget for District government employee training and 
development. This program will include executive leadership training, 
professional and technical competencies training, a skills development 
institute, and the implementation of a high involvement workforce 
system.
                               conclusion
    In conclusion, we urge the Congress of the United States to support 
and adopt the official budget of the District of Columbia. This budget 
reflects the understanding of the locally elected officials of the 
District's real needs. It reflects the only true appreciation of the 
needs and concerns of the residents of the District of Columbia--and 
most importantly, it is a sober allocation of the limited resources 
that the District has. It is, for all intents and purposes, ``the 
people's budget.''
    It is my understanding that the basis for the difference between 
the District's official budget and that of the financial authority is 
the need to fund the pay raise for the police officers and to allocate 
more funds to the Department of Corrections. The Financial Authority 
has insisted that an additional $13 million is needed to run the 
Department of Corrections. Neither myself nor the Council, on the other 
hand, believe that it should take $257 million to run the department. 
Significant strides have been made to close various facilities and 
reduce the operational burden on the department. We will continue to 
make these strides and as they come to fruition, so will the cost of 
operating these facilities decrease. As I mentioned earlier, we have 
successfully privatized a 898-bed correctional treatment facility--
reducing the staffing requirement for the District from 366 FTE's to 5 
FTE's! We were able to secure a $52 million up-front payment for the 
physical facility; reduce annual operating costs by $3.5 million; and 
as part of the same deal, we were able to get a commitment from the 
firm that will manage the facility to conduct $3.8 million of capital 
improvements on the facility. Additionally, we have required that they 
come into compliance with all court orders within 6 months and achieve 
accreditation from the American Correctional Association within 2 
years. We recently outsourced 900 beds from the medium security 
facility. We have contracted out food services. In all these instances, 
we are improving the quality of services, reducing the cost of 
operations, and facilitating compliance with court orders. These 
efforts, in combination, will reduce the operating and cost burden on 
this department. From another perspective, I think several members of 
the Council, and I believe the committee, would agree with me in 
expressing concern about the eagerness with which we fund the 
correctional system at the expense of programs and services that are in 
many ways ``preventive.''
    In order for the authority to fund the Department of Corrections at 
the level that they feel is adequate, they have made reductions in the 
areas that will ultimately stunt the District's efforts to gain 
structural balance and true solvency. Specifically, the authority has 
made great reductions to economic development programs and initiatives 
($6.5 million) that are a down payment for the overall recovery of the 
District.
    It makes no sense, in my opinion, to make reductions to 
neighborhood and commercial lending programs such as the Home Purchase 
Assistance Program ($1 million)--a program that provides interest-free 
and low interest loans to qualified District residents to enable them 
to purchase homes; or the employer-assisted housing program 
($390,000)--a program that provides grants and deferred loans to 
employees of the District government who are first-time home buyers in 
the District. As a matter of fact, this program provides additional 
incentives to police officers who purchase homes in the District. The 
authority's budget even eliminates all funding for the Homestead 
Housing Preservation Program ($450,000) which takes possession of tax 
delinquent single and multi-family properties and sells them to credit-
worthy District residents. These programs are geared toward real 
neighborhood and community stabilization and revitalization. These are 
the programs that turn by-standers into stakeholders. Surely we can all 
understand this.
    The authority made the decision to completely eliminate the Summer 
Youth Employment Program. I have spoken about this program earlier in 
my testimony but would like to reiterate--this program too, is a down 
payment for the ultimate recovery of the District. I urge the committee 
to seriously consider restoring the $2.8 million reduction to this 
program.
    Despite our financial difficulties, Washington, D.C. remains one of 
the Nation's top tourism destinations. We have an Office of Tourism and 
Promotions whose primary focus is to coordinate the activities of the 
tourism industry--which incidentally is the largest employer in the 
District of Columbia after the Federal Government. Funding for the 
Office of Tourism and Promotions, a mere $509,000, has been virtually 
eliminated in the authority's budget. This office allows us to maintain 
whatever competitive edge possible and at very minimum, keeps the 
government of the District an actor and participant in this important 
arena.
    Then the question becomes: ``How do we fund these programs?'' I am 
not here today to ask for additional funding for these programs. I am 
simply recommending that these programs and services are funded by 
reducing the authority's recommended budget for the Department of 
Corrections and reallocating this $13 million to these specific 
initiatives.
    I can guarantee that these economic development initiatives, 
programs and services will pay off--and we will be able to measure the 
benefits and we will be able to discuss and report successes.
    Mr. Chairman, allow me to again thank you for the opportunity to 
testify before the committee and for your continued support of the 
District of Columbia. I would like to thank you for supporting our 
request for supplemental funding to repair our schools and to 
adequately compensate our law enforcement officers.
    I have been impressed by your quick-study of the District's issues, 
your willingness to tour the city late at night with the Metropolitan 
Police Department, and your sensitivity to the decision making 
processes of the locally elected officials. I personally appreciate the 
leadership role that you have assumed and the support that you have 
thus far extended to America's first city. As we continue to work 
together, I am certain that you too will champion the call that 
Washington, D.C. is a good city * * * getting better and one that North 
Carolinians and indeed, all Americans will be proud to call their 
Nation's Capital.
                  Council of the District of Columbia

STATEMENT OF LINDA W. CROPP, ACTING CHAIRPERSON
    Senator Faircloth. Now we will hear from Ms. Linda Cropp. 
Ms. Cropp is the acting chairman of the Council of the District 
of Columbia.
    Ms. Cropp, we welcome your testimony, and thank you for 
being with us.
    Ms. Cropp. Thank you so very much. Let me say good morning 
to you, Senator Faircloth, and to other members of the 
committee.
    Senator Faircloth. Ms. Cropp, if you will pull that 
microphone real close, it will enable us to hear you.
    Ms. Cropp. Let us hope this will be better.
    Senator Faircloth. That will be better, but as close to it 
as you can.
    Ms. Cropp. OK. I welcome the opportunity to appear before 
you today to testify in support of your approval of the fiscal 
year 1998 budget for the government of the District of 
Columbia. I have brought with me copies of the reports 
generated by the Council and its standing committees for your 
use and your review of the budget request, and ask that they be 
made a part of the record.
    The Council joins you, Senator, in a desire to make 
Washington, DC, a shining star. We are on the cusp of change 
for a better District of Columbia, a better city, due to the 
activities of the past several years. As stated earlier, we 
have reduced government costs. We, however, do need to have 
some of the structural flaws of the city taken care of.

                      support of council's budget

    Under normal circumstances, I would ask that you support 
the budget with no changes. I realize that your committee is 
facing an unusual situation this year, because there are two 
budgets before you--one from the city and one from the 
Financial Authority. In light of this situation, I would hope 
that you would support the Council's budget, but I suspect that 
it will probably be a blend of the two.
    Please understand that the Council, the Mayor and the 
Financial Authority, with the assistance of the chief financial 
officer, embarked on a concerted effort to achieve a consensus 
budget, and this was the guiding theme of our deliberation 
since last December. In fact, our first group effort was to 
address an $85 million shortfall in this current fiscal year's 
budget, which was accomplished. We addressed the overspending, 
and controls are now in place to avoid such problems in the 
future. That was a united effort.
    Then as we moved to constructing a fiscal year 1998 budget, 
we agreed to certain consensus guidelines, the first and 
foremost of which was that the fiscal year 1998 budget request 
would be a balanced one. Both of the budgets before you meet 
that goal. This achievement comes 1 year earlier than the 
congressional mandate. That is no small task, and no other city 
in such circumstance achieved this task that we have, in 
balancing our budget 1 year earlier.
    We also agreed that the budget would not be premised upon 
additional Federal aid. And both of these budgets accomplish 
that.
    The Council and the Authority were particularly successful 
in working responsibly with one another. The Council attempted 
to address the Board's concern. And the Board, for its part, 
basically marked up against the Council's recommended budget 
levels when it responded to the Council's action. They built 
their budget based on the budget that the Council had created, 
with an awful lot of hard work and an awful lot of very painful 
decisions that were necessary to bring about a balanced budget.
    On behalf of all parties on this side of the table, I want 
to emphasize that our preference would have been to present a 
single consensus budget request to you. But, as it turns out, 
there are some slight differences. A majority of those 
dissimilarities are small and technical and can easily be 
understood. The remaining handful of true policy-based 
disagreements is relatively small and explainable.
    My staff and I are available to work with the subcommittee 
to work out a solution. I am going to go to those areas, but 
let me once again just suggest that when you look at the total 
budget, this is a budget that, for the most part, is a 
consensus budget. The differences are so slight in the overall 
budget that it does represent a successful conclusion among the 
three entities that developed this process.

            difference between council and authority budgets

    The first difference is with regard to the public schools. 
The Financial Authority provided an additional $6.5 million in 
local funds for program enhancement above the Council level. 
The Council was comfortable with the existing funding level 
that it provided to the schools within the context of the 
decisions we had to make in balancing the budget while 
allocating scarce resources among competing priorities, and 
considering the fact that the D.C. school system was also 
reducing its costs, including the closing of several schools. 
We took that into consideration when the Council enacted its 
budget mark.

                   difference in economic development

    With regard to economic development, the Financial 
Authority reduced economic development from the Council's 
approved level by $1.7 million. The Board has indicated that 
the savings could come from reduced administrative overhead. 
The Council was not convinced that the administrative overhead 
savings of this magnitude are realistic and feared that 
programs which encourage home ownership and economic 
development would be reduced instead.
    And, in fact, what we are trying to do is to maintain a 
stable middle-class base with regard to home ownership, because 
that is always the solid part of any society. We wanted to make 
sure we did everything that would stabilize our middle-class 
base in the District of Columbia. Therefore, the Council did 
not endorse that type of reduction. The home purchase 
assistance loan, for example, is one which lower middle-class 
individuals would be able to use to stay in the District when 
they do not qualify for Federal programs.

     difference between council and authority in police department

    Within the police department, which was another area where 
we had a difference, the Financial Authority reduced the police 
department from the Council's approved budget by $5 million. 
The Council believes the funding is needed to fully fund 3,800 
sworn police officers. The Council established its budget this 
year based on priorities.
    The one thing that was a given throughout the city, no 
matter what ward of the city you travel, no matter what 
economic level, no matter what age group, no matter what, 
public safety was the predominant issue in this city. And while 
we were going through major changes with the police department, 
we felt very strongly that having 3,800 police officers was an 
extreme priority. And that represents the difference between 
the Council and the Financial Authority. It is only a 
difference of 100 police officers.
    We have seen dramatic changes in the past several months 
with all of us working in partnership to try to improve public 
safety. Notwithstanding the tragedy that recently occurred, 
murder was down by 40 percent this year as opposed to the same 
time last year. And crime is down all over, in all categories. 
And we hope to keep that up.
    Because of that, the Council wanted to keep a very high 
level for the number of police officers that would be out on 
the street to protect our neighborhoods and to protect our 
citizens and to protect the visitors who come to this city.

 difference between council and authority in department of corrections

    Within the Department of Corrections, the difference is 
about $10 million lower than the amount that the Financial 
Authority provided. The Council's budget request for the 
Department is $3 million more than what was spent in fiscal 
year 1996. And the Council desires more management efficiencies 
in this agency.
    Additionally, within the Department of Corrections, the 
potential for saving from the outsourcing has not been fully 
realized. And the Council believes that there is great 
potential there. With the correctional treatment facility and 
with other privatization areas within the Department of 
Corrections, it was felt that there could be savings there when 
it was coupled with management efficiencies that we would like 
to see occur in the Department of Corrections.

                       tenant assistance program

    There is a tenant assistance program that is another area 
of difference between the Financial Authority and the Council's 
budget. And it is basically one that the Council agrees with. 
What the decision of the Financial Authority does is to 
accelerate the elimination of the program.
    The Mayor and the Council had already embarked on the path 
of eliminating this program totally. We had great concerns with 
the impact on homelessness for this particular program, 
particularly since there was already a reduction in the 
homelessness budget. The Council, as I said earlier, had 
already committed to phase out that program.
    They are honest areas, Senator, of disagreement. And I ask 
that you look beyond them, to recognize that, for the most 
part, the budget before you is a budget that we all agree on. 
Most importantly, it is a budget balanced without depending 
upon any additional Federal aid, and it reflects the priorities 
of the locally elected leadership of public safety, education, 
public works, and a functional health system. The balanced 
budget does not raise taxes, and it does not rely on funding 
gimmicks which balance the books on paper only. Very hard, true 
decisions were made with regard to this budget.

              hearing on actual fiscal year 1996 spending

    This budget request is the result of a detailed review by 
the Council. The Council's standing committee held three series 
of hearings. The first was set to review the actual fiscal year 
1996 spending because we wanted to see where we were spending 
in 1996 and how this sets up against what we want to do in the 
future. The second group of hearings revolved around a set of 
legislative proposals in support of the budget. These proposals 
were offered by the chief financial officer and the Mayor.

                   hearing on fiscal year 1998 budget

    Last, 2 weeks of hearings were held on the fiscal year 1998 
proposed budget itself. The Council carefully rewrote the 
budget. Some areas were increased slightly, to properly fund 
programs and to avoid the need to rework the budget after the 
start of the fiscal year. Structural changes were enacted to 
save money in fiscal year 1998 and all outyears as well.
    In all, the Council's initial approvement of the budget 
request made changes of $100.7 million to the proposals sent to 
us. Subsequently, when the Financial Authority returned the 
budget to us, an additional $24.8 million in changes were made 
to directly address the Board's concerns, primarily in the area 
of public safety and justice.

             reductions in government direction and support

    The Council made reductions in the government direction and 
support appropriations title, the administrative overhead 
portion of the budget, of $6.7 million. The Council also made 
strategic decisions to eliminate portions of local funding for 
job training programs where it was determined that the funds 
were not being spent effectively. That reduction was $8 
million.

                  increases in fiscal year 1998 budget

    In increases, the Council identified priority areas of 
public safety, increased funding for the police department by 
$18 million, the fire department by $3.2 million, and the 
courts by $2.8 million. For the priority area of the schools, 
the Council increased that budget by $15.5 million. For public 
works, the increase was $2.9 million.
    To allow for various increases and decreases that amounted 
to the combined changes of $125 million, difficult decisions 
were required. Fortunately, we were guided by mutual consensus 
among Council members as to what our priorities were. I ask, 
therefore, that you respect our hard work as you do what you 
feel you must do with this budget. I ask that you keep us at 
the table as you review the options toward that end.

                       budget director available

    I have directed the Council's budget director to make 
himself available to work with you, and to coordinate the 
various Council staff who may be used to help this committee as 
you move forward with the budget.
    Testimony on this budget today would not be complete 
without a discussion of the historic opportunity which is 
before Congress to address the city's financial crisis in a way 
that begins to address the fundamental inequities which have 
long existed in the relationship between the District and the 
Federal Government. I am going to submit that part of my 
testimony for the record; I would rather talk to you about that 
a little bit.

                           management problem

    The Mayor spoke a while ago about management problems that 
we have had in the District, and things that we need to face. 
As I go throughout this city every day, I can probably talk to 
countless citizens who can tell me their own stories with 
regard to management problems. But we have made the first 
Herculean step to address those problems. No. 1, we recognize 
that there have been management problems. Before you can make 
any change, you have to understand that there is a need for 
change, and we have done that.

                         regulatory commission

    Step by step, we are doing different things in this city to 
improve the management, so that we can give better service to 
the citizens who we represent. Whether we are talking about the 
regulatory commission that is to come in and look at some of 
the regulations that we have in the city that have been 
overburdensome to many individuals and businesses, we are 
making changes there. Whether or not we are talking about the 
area of procurement, we recognize that there were serious 
problems there. We are making changes there.

                                training

    And, in fact, we are even sending our work force through 
training programs that are greatly needed. This budget reflects 
dollars that will be utilized to train our work force in the 
area of needs, so that the management of this city can be much 
better.
    Be that as it may, Mr. Faircloth, if we had the best 
managers in the whole wide world, there would still be some 
very serious problems with the District of Columbia, because 
there are some structural flaws. And I have been suggesting 
that ``The Orphan Capital,'' by Carol O'Claricain, from the 
Brookings Institute, is a very good document, that really lays 
out the structural flaws that we have in the District of 
Columbia.

                             medicaid cost

    We are the only city in the whole country that pays a $450 
million Medicaid cost--the total cost is $900 million--unlike 
any other city. We are a city that has a population that is 
older, sicker and poorer. Most other cities in this country are 
just like that. The big difference is that these other cities 
have a more affluent suburban area or rural area that can help 
offset the cost of this sicker, poorer population.
    Baltimore, for example, the same population--Montgomery 
County, Howard County, Anne Arundel County, the rest of 
Baltimore, the rest of Maryland, help pay their Medicaid costs.
    Quite frankly, Mr. Faircloth, we in the District of 
Columbia help to pay the Medicaid costs of Baltimore. Because 
over 50 percent of our work force, people who work for the 
District of Columbia alone, not the Federal Government, not the 
private sector, but the District of Columbia, live outside of 
Washington, DC. The predominant number lives in Maryland. And 
they pay absolutely no money back to the District. So District 
taxpayers are paying for Baltimore's Medicaid costs. That is a 
structural flaw.
    Mr. Faircloth, if we did not have to pay the $450 million 
in Medicaid costs that no other city has to pay, we would not 
have had a serious budget crisis last year--$450 million. 
Conversely, if you right now had every other city in this 
country, if they were immediately faced with the responsibility 
of paying 50 percent of their Medicaid costs, I suspect they 
would go down the tubes much faster than we in the District of 
Columbia.

                       unfunded pension liability

    Likewise, another major flaw, a structural flaw, that must 
be addressed is the unfunded pension liability. When all of our 
workers were under the Federal Government, they were under the 
Federal Government retirement system. As you are aware, when 
they were switched over to the District of Columbia, the 
dollars did not come with them. At this point, two or three 
decades later, they have retired. We pay $281 million into 
retirement costs.
    Using Baltimore again--they have a similar work force, but 
because they did not have this unfunded pension liability, they 
only pay $60 million into their pension costs.
    Mr. Faircloth, if we did not have to pay that unfunded 
pension liability, we would have had 220 million additional 
dollars in last year's budget. And I suggest that we would not 
have had the serious, serious financial crisis that we had in 
the District of Columbia. If any other city had to do the same 
thing, it would not have survived as we.

                          structural problems

    The incarceration of felons--the only city who incarcerates 
felons. Saint Elizabeth's Hospital--no other city runs a State 
mental health institution. No other city at all. Those are 
structural problems.
    And, yes, we have some management flaws, management 
problems. I am the first to admit that. But I am also saying 
that I am willing, as well as this Council, to roll up our 
sleeves and do the hard work necessary, make the tough 
decisions necessary to correct the management problems that we 
have. But it must go hand in hand with an approach, and with 
the help from the Congress of the United States, to help us 
with the structural flaws that were created not of our 
volition, but through other, outside areas.
    And because of that, I would hope that we can also address 
that. I am happy, again, to be before you to testify on behalf 
of the Council of the District of Columbia and the citizens of 
the District of Columbia. You have us on this side of the 
table, ready to do what is necessary to make this city function 
so much better, to make this city become a beacon, a shining 
star in this country that we all know that it can be. We have 
great strengths here. We are in partnership, trying to move 
this city forward. We extend our hand to you, asking for you to 
join us in helping to make the Nation's capital the type of 
city that we would like for it to be.

                           prepared statement

    Thank you so very much for giving us this opportunity to 
come before you.
    [The statement follows:]
                  Prepared Statement of Linda W. Cropp
    Good morning Senator Faircloth and other members of the Senate 
Appropriations Subcommittee on the District of Columbia. I welcome the 
opportunity to appear before you today to testify in support of your 
approval of the fiscal year 1998 Budget for the government of the 
District of Columbia. I have brought with me copies of the reports 
generated by the Council and it's Standing Committees for your use in 
your review of the Budget Request and ask that they be made a part of 
the record.
    Under normal circumstances, I would ask that you support the Budget 
with no changes but I realize that your Committee is facing an unusual 
situation this year because there are two budgets before you: one from 
the City; one from the Financial Authority. In light of this situation, 
I expect that the budget which emerges from the Congress will be a 
blend of the two. Please understand that the Council, Mayor and 
Financial Authority, with the assistance of the Chief Financial 
officer, embarked on a concerted effort to achieve a consensus budget 
and this was the guiding theme of our deliberations since last 
December.
    In fact, our first group effort was to address an $85 million 
shortfall in the current fiscal year budget which was accomplished last 
year. We addressed the overspending and controls are now in place to 
avoid such problems in the future.
    Then, as we moved to constructing a fiscal year 1998 Budget, we 
agreed to certain ``consensus guidelines'' the first and foremost of 
which was that the Fiscal Year 1998 Budget Request would be a balanced 
one. Both of the budgets before you meet that goal. This achievement 
comes a year earlier than the Congressional mandate.
    We also agreed that the budget would not be premised upon 
additional federal aid and both of these budgets accomplish that.
    The Council and the Authority were particularly successful in 
working responsively to one another. The Council attempted to address 
Board concerns and the Board, for it's part, basically marked-up 
against the Council's recommended budget levels when it responded to 
Council actions. They built their budget on the base we created.
    On behalf of all the parties on this side of the table, I want to 
emphasize that our preference would have been to present a single, 
consensus, budget request to you but as it turns out, there are some 
differences. A majority of those dissimilarities are small and 
technical and can be easily understood. The remaining handful of true, 
policy based, disagreements are relatively small and explainable. I and 
my staff are available to work with the Subcommittee to work out 
solutions. Let me quickly recap those areas:
    1. Public Schools.--The Financial Authority provided an additional 
$6.5 million in local funds for program enhancements above the 
Council's level. The Council was comfortable with the funding level it 
provided to the schools within the context of the decisions we had to 
make in balancing the budget while allocating scarce resources among 
competing priorities.
    2. Economic Development.--The Financial Authority reduced Economic 
Development from the Council approved level by $1.7 million. The Board 
has indicated that the savings would come from reduced administrative 
overhead. The Council is not convinced that administrative overhead 
savings of this magnitude are realistic and fears that programs which 
encourage home ownership and economic development will be reduced 
instead. Therefore, the Council did not endorse this reduction.
    3. Police Department.--The Financial Authority reduced the Police 
Department from the Council approved budget by $5 million. The Council 
believes the funding is needed to fully fund 3,800 sworn police 
officers.
    4. Department of Corrections.--The Council's budget for Corrections 
is $10 million lower than the amount the Board provided. The Council's 
budget request for the Department is $3 million more than was spent in 
fiscal year 1996 and the Council desires more management efficiencies 
in this agency. Additionally, the potential for savings from 
outsourcing has not been fully realized such as the already privatized 
Correctional Treatment Facility and moving felons to private systems.
    5. Tenant Assistance Program.--The difference between the Financial 
Authority and the Council can be explained by the Board's decision, 
originally proposed by the Mayor, to accelerate the phase-out of this 
locally funded program which assists tenants in paying their rent. The 
Council has already committed to the phase-out of the program but did 
not choose to agree with the acceleration.
    These are honest areas of disagreement and I ask that you look 
beyond them to recognize that, for the most part, the budget before you 
is a budget we all agree on.
    Most importantly, it is a budget balanced without depending upon 
any additional federal aid and it reflects the priorities of the 
locally elected leadership: Public Safety; Education; Public Works; 
and, a functional Health System. The balanced budget does not raise 
taxes and does not rely on funding gimmicks which balance the books on 
paper only.
    This Budget Request is the result of a detailed review by the 
Council. The Council Standing Committees held three series of hearings. 
The first set was held to review actual fiscal year 1996 spending and 
the status of the Fiscal Year 1997 Budget. The second set of hearings 
revolved around a set of legislative proposals, in support of the 
budget, offered by the Chief Financial Officer. Lastly two weeks of 
hearings were held on the Fiscal Year 1998 Budget proposal itself.
    The Council carefully rewrote the budget. Some areas were increased 
slightly to properly fund programs and to avoid the need to rework the 
budget after the start of the fiscal year. Structural changes were 
enacted to save money in fiscal year 1998 and in the out years as well. 
In all, the Council's initial approval of the Budget Request made 
changes of $100.7 million to the proposal presented to us. 
Subsequently, when the Financial Authority returned the budget to us, 
an additional $24.8 million in changes were made to directly address 
Board concerns primarily in the area of public safety and justice.
    The Council made reductions in the Government Direction and Support 
appropriations title, the administrative or overhead portion of the 
budget, of $6.7 million. The Council also made the strategic decision 
to eliminate portions of the local funding for job training programs 
where it was determined that the funds were not being spent 
effectively. That reduction was $8 million.
    In the way of increases to the Council identified priority area of 
public safety the Council increased funding for the Police Department 
by $18 million, the Fire Department by $3.2 million, and the Courts by 
$2.8 million. For the priority area of Public Schools, the Council 
increased the budget by $15.5 million. For Public Works, the increase 
was $2.9 million.
    To allow for the various increases and decreases that amounted to 
the combined changes of $125 million difficult decisions were required. 
Fortunately, we were guided by the mutual consensus, among 
Councilmembers, as to what our priorities were. I ask therefore, that 
you respect our hard work as you do what you feel you must do with this 
budget. I ask that you keep us at the table as you review options and 
towards that end, I have directed the Council's Budget Director to make 
himself available to work with you and to coordinate the various 
Council staff who may be of use to you.
    Testimony on this budget request would not be complete without a 
discussion of the historic opportunity which is before this Congress to 
address the city's financial crisis in a way that begins to address the 
fundamental inequities which have long existed in the relationship 
between the District and Federal governments. I am speaking of the 
President's proposal that certain state functions, now the 
responsibility of the District, be assumed by the Federal Government. 
Please recall that the Budget Request before you does not assume any 
portion of the President's plan and is, in fact, balanced on the 
assumption that the $660 million authorized federal payment will be 
appropriated. If the President's plan, or an alternative, is enacted 
the Budget Request will have to be refashioned to reflect the changes.
    I urge you to support the portions of the President's Plan and also 
the recently subcommittee approved Davis-Norton Plan, which would cause 
the assumption by the Federal Government of the pension liability, 
court expenses and correctional costs. Both plans would also increase 
the federal share of the District's Medicaid costs and I ask your help 
in securing such aid also.
    We who represent the residents of the District of Columbia embrace 
this effort to address the expenditure side of the Districts structural 
financial problems. We believe that slow but steady progress is being 
made to increase the accountability of the District government for 
improved management of our finances, and much work remains to be done 
in this area. However, we also look forward to the day when the revenue 
side of the structural problem is addressed, because if we don't find a 
way to revitalize the local economy and expand our revenue base, the 
District will never get out from under its ongoing fiscal crisis.
    For that reason, I must say that any proposed elimination of, or 
reduction to, the Federal Payment is wrong because the Federal Payment 
is compensation to the District, both for cost of services rendered by 
the District to the Federal government, and for revenues foregone due 
the Federal presence and Congressionally imposed restrictions on our 
ability to raise revenue. Failure to remedy the revenue side of the 
equation mandates that the Federal Payment remain intact.
    As you know, a strong argument can be made that the existing 
payment is too low. Two studies have concluded that the payment should 
be approximately $1.2 billion: (1) the Brookings policy brief published 
in January of this year by Carol O'Claricain, which is entitled ``The 
Orphaned Capital--Adopting a Revenue Plan for the District of 
Columbia''; and, (2) the DC Appleseed Center's report dated November 2, 
1995, which is entitled ``The Case for a More Fair and Predictable 
Federal Payment for the District''.
    I offer these remarks regarding the legislation before the Congress 
to alter the relationship between our two governments in the context of 
the fiscal year 1998 Budget Request in the hope and expectation that 
you will appreciate the difficulty our city faces in balancing this 
budget without additional Federal assistance.
    Thank you again for asking me to present the Council's views to you 
and your Subcommittee.

                     Additional committee questions

    Senator Faircloth. Thank you, Ms. Cropp, for your 
testimony. It was well thought out and eloquently done.
    [The following questions were not asked at the hearing, but 
were submitted to the Council for response subsequent to the 
hearing:]
                Questions Submitted by Senator Faircloth
    Question. One of the major areas of difference in the City Council 
and Control Board budgets is the Department of Corrections. In your 
testimony you state the Council is reluctant to reward the Department 
more than a $3 million increase while it remains a poorly managed 
operation.
    (a) Please explain what specific changes in management the 
Department would need to make before the Council would agree to a 
larger increase for the Department.
    (b) What does the Council consider a reasonable amount of time to 
achieve those changes?
    The Control Board has expressed concern that the Council's budget 
does not fully fund the medical receiver and contracted prison beds for 
the Department of Corrections.
    Please respond fully to the Control Board's concerns on this budget 
issue.
    Answer. Concern regarding the adequacy of the funding for the 
Department of Corrections is understandable. The Council budget level 
is $3 million greater than was actually spent in fiscal year 1996 but 
$10 million less than the Authority approved level. Council is 
expecting greater savings from out-sourcing efforts and management 
improvements. The Department must begin to immediately address how it 
will live within the budget established for it while providing the 
medical receiver adequate funds.
    The Department's budget will require that structural and 
operational changes be implemented to achieve savings. Medium and 
Occoquan 2 facilities must be closed in order to redeploy FTE's so that 
court ordered correctional officer staffing levels can be met in the 
short term and privatization of three fourths of the correctional 
system over the next four years can be achieved.
    Question. The table provided by the D.C. Office of Budget and 
Planning shows only a $938,000 difference between the Council and 
Control Board budgets for the Public Education System. In your 
statement, you report that the Control Board provides an additional 
$6.5 million in local funds for program enhancements for the District's 
public schools.
    Please explain what the real differences are between the City 
Council and Control Board with respect to the proposed budgets for the 
District's public education system.
    Answer. The difference between the Council approved Public Schools 
budget and the Authority approved level is explained on page 60 of the 
Executive Summary of the Budget. The third bullet at the top of that 
page notes that a difference between the Authority and Council includes 
an Authority increase of $6.5 million in ``additional support for 
program enhancements''.
    The other two items of difference in the list explain Authority net 
decreases which result in the net difference between the Council and 
the Authority of less than a million dollars. However, since the two 
other changes are a result of the shifting of expenditures for 
equipment from the operating budget to a short-term financing 
arrangement, they are technical in nature with no programmatic impact. 
The addition of the $6.5 million, by contrast, is a real programmatic 
difference.
    Question. The City Council's proposed budget recommends $4 million 
in revenue initiatives, while the Control Board recommends $6 million.
    Why does the City Council support the $4 million budget request 
rather than the higher $6 million amount?
    Answer. The Council does not object to the inclusion of the Board 
recommended increase in revenues of $6 million. In fact, the Council 
has, at the request of the Chief Financial Officer, taken legislative 
action in support of one of the items which makes up the $6 million 
when the Council approved changes to the District's unclaimed property 
law.
    At the same time, the Council considers the revenue changes it used 
to balance the budget to be defensible. The Chief Financial Officer 
declined to certify the efforts however.
    Question. The Control Board's proposed budget recommends that the 
District lease, rather than buy, some of the District's equipment. Does 
the Council support the Control Board's recommendation to lease some of 
the District's equipment?
    Please explain on which categories of equipment the Council agrees 
and disagrees with the Control Board on equipment leasing.
    Answer. The Council supports the plan to lease certain equipment 
items rather than fund them through the operating budget. At the time 
that the Council last acted on the budget it included, in it's action, 
the shifting of those applicable equipment lines from operating to 
capital that were identified, at that point in time, by the Chief 
Financial Officer. Following Council action the CFO provided additional 
equipment amounts which might be shifted over-and-above those 
identified at the time of the Council's action. Logically, the Board 
included this additional information in their action on the budget.
    Therefore, to the extent to which the Board's equipment shift is 
merely an extension of the Council's action, it should not be 
considered a deviation from the Council budget.
    Question. The proposed City council budget adds six (6) full-time 
equivalent positions to the Council's staff. Please provide, by 
position: (a) The job title; (b) job responsibilities; and (c) salary 
for each position you are proposing to add to the Council's staff.
    Answer. The budget gives the impression that the Council is 
increasing their FTE level when this is not, in fact, the case. The 
Council absorbed a decrease in their fiscal year 1997 budget through 
savings not directly associated with an FTE reduction. Those savings 
carry through into the fiscal year 1998 Budget although, again, there 
is not an FTE reduction. The approved fiscal year 1998 Budget reflects 
the FTE level that the Council set for itself.
    Question. The Control Board has expressed concern with the 
Council's proposed Six Year Capital Improvement Plan on the basis that 
the Council's plan does not include vital information, such as a list 
of space owned and leased by the District.
    (a) Has the Council prepared a need-based strategic capital plan? 
If so, please provide the Committee with a copy.
    (b) Does the Council have a list of space owned and leased by the 
District? If so, please provide the Committee a copy.
    The City Council's proposed budget for capital projects is $194 
million. The Control Board reports that this amount is $44 million 
above the projected bond issuance of $150 million for fiscal year 1998.
    How does the City Council anticipate funding this additional $44 
million in capital projects?
    Answer. The Council approved the Capital Budget proposed by the 
Mayor and constructed by the Chief Financial Officer with no 
substantive changes. Frankly, the amount of effort required to review 
and modify the operating budget consumed the time which the Council 
would have preferred to apply to examination of the capital budget. 
Detailed questions regarding the capital budget would be more 
appropriately posed to the CFO.
    With regard to a comparison of the capital budget to planned 
borrowings, it is important to keep in mind that capital budget 
authority and borrowings can not be directly compared. New authority, 
more often than not, will be spent over a number of years whereas the 
borrowing is designed to be spent over a shorter period. A $100 million 
of new authorizations to be spent over three years would only require 
$50 million in borrowing in the first year, for example.
    Question. What is the city Council's position with respect to 
continued funding of the University of the District of Columbia Law 
School?
    Answer. The Council has explicitly provided a budget for the DC 
School of Law.
      Financial Responsibility and Management Assistance Authority

STATEMENT OF ANDREW F. BRIMMER, CHAIRMAN
    Senator Faircloth. Our final witness this morning is Dr. 
Andrew Brimmer. Dr. Brimmer is Chairman of the District of 
Columbia Financial Responsibility and Management Assistance 
Authority, better known as the Control Board.
    Dr. Brimmer, we welcome you, and I look forward to your 
testimony.
    Dr. Brimmer. Thank you very much, Senator, members of the 
committee. I am delighted to respond to the request to present 
testimony on the 1998 proposed budget.

                       supplemental appropriation

    Before I do that, though, Senator Faircloth, I would like 
to take an opportunity to update the committee on the results 
of our last business before the committee. You might recall 
that we did ask the committee to support a supplemental 
appropriation for fiscal year 1997. We did so because we 
stressed that we needed funds to provide urgently for repairs 
in the public schools so they could open, and we also needed 
urgently financial support for the public safety crime 
prevention initiative that had gotten underway.
    We greatly appreciated the effort that you made. You were 
successful in getting, not only through your committee but 
through the Senate, at least $31 million of our $52 million 
request. We appreciated that.
    Senator, unfortunately, the matter could not be pursued all 
the way through, and so we did not get the supplemental. But 
the needs are still there. I wanted you to get a feeling for 
the impact of the failure to get that supplemental, so I asked 
my staff to canvas the situation with respect to the schools, 
to the police, to the courts, as to the consequences of our 
failure.

                  public schools supplemental request

    First, I was told that the $36.8 million we requested for 
the schools is still needed. It is needed to fund repairs and 
fire code violations. At the same time, we were told and 
assured by General Becton that the schools will open in the 
fall. However, if these schools had additional funds, they 
would be used mainly to pay for boilers. That is an important 
matter.
    He told us that if cold weather comes early in the school 
year, they may have to close some schools because they will not 
be able to provide heat. They need money to get those boilers.
    Now, as of June 26, all but $5.4 million of the $49.7 
million the school system has received has been committed. The 
remainder will be committed very shortly. The schools are still 
in need, and we will focus on this. I tell you now, Senator, we 
most likely will have to come back to you for some help.
    In the area of public safety, we had asked for 
appropriations under several headings in order to fund the 
additional costs of the crime prevention initiative. Now, funds 
to pay for the police department pay raise were achieved. We 
did obtain those funds, effective July 6. That is the effective 
day, July 6, rather than the April 1 effective date we had 
proposed in the supplemental request.

                       funds for police pay raise

    We were able to find $4.7 million, through reprogramming of 
funds within the police department, and we were able to get $1 
million from the police nonpersonal services budget, and $3.7 
million were reprogrammed from the pay-as-you-go capital funds 
of the fire department. The fire department did not lose any 
equipment--we found the money in some other way--so they were 
made whole, but they were able to free up $3.7 million that 
could be transferred.
    So we got the 10-percent pay increase. It is much less than 
the $8.8 million we asked for. We have taken steps--and you 
will notice--that in the budget for fiscal year 1998, we do 
include the full cost of the pay raise for next year.
    Mr. Chairman, we also looked again at the impact of the 
initiative on the courts. The courts are still in desperate 
need of additional funds to support crime prevention 
initiatives. Their workload has increased immensely. The 
corporation counsel is also in need of the additional funds 
requested.

                 corrections contracted additional beds

    Corrections has contracted for 900 additional beds, and 
space is now available through the end of the fiscal year. But 
they were able to do that because they are counting on the fact 
that--they are assuming that the medium-security facility, 
which was originally scheduled to be closed, will not be closed 
and they will still have the beds available there. If it is 
closed, corrections will be sorely pressed for space in which 
to house the prisoners.
    Pretrial services still needs funds to support increased 
overtime from the initiative. One of the most troublesome 
outcomes for us, Mr. Chairman, is that youth services has 
already had a 20-percent increase in the number of youths 
detained.
    Mr. Chairman, in summary, the crime prevention initiative 
which all of the parts of the city concerned with this issue 
supported, the financial burdens resulting from the initiative 
are substantial and we still need help. So, Mr. Chairman, I 
wanted to share with the committee where we stand on this, to 
say to you that we still need help.
    And I repeat again, these were the results of very careful 
consideration. And I will say again, we did not come to this 
lightly. We thank you for that opportunity, Mr. Chairman.
    With your permission, I would like to put this statement in 
the record.
    Senator Faircloth. It is so ordered. It will be done.
    Dr. Brimmer. Thank you, Mr. Chairman.
    Mr. Chairman, I am delighted to respond to the committee's 
request. I will discuss the fiscal year 1998 financial plan and 
budget recently submitted to the Congress by the authority.

                 development of fiscal year 1998 budget

    Now, let me say at the outset that the development of the 
budget for fiscal year 1998 did involve a great deal of 
cooperation. I share wholeheartedly with the characterization 
given by the Mayor and the chair of the Council. It does 
demonstrate that a more sound and comprehensive budget results 
from a dialog among principals. The budget process was 
characterized throughout by mutual cooperation and an open 
exchange of information and points of view.

                             budget process

    But I would also like to agree with the Mayor's observation 
that the process imposed on the city in the law that 
established the Control Board does create a number of 
obstacles. We have given some thought to what might be done to 
reform that process. I mentioned to the Mayor just yesterday 
that we are thinking about it, and, too, we are looking forward 
to working to see if we can come up with some recommendations 
for the Congress to modify that.
    Now, in the discussion of the 1998 budget, however, after 
extensive examination, the Authority determined that the 
Council's final budget must be disapproved under the terms set 
forth under the statute. Then, having rejected the Council's 
budget, the Authority, on June 15, submitted its own budget to 
the Congress, again, as required by the statute. The Authority 
had determined that its financial plan and budget are in 
conformance with the act, will promote the financial stability 
of the District government and will further the interests of 
the people of the District.
    Now, Mr. Chairman, I would like to highlight a few of the 
differences with the Council's budget. Ms. Cropp has already 
done so, but I would like to--as I always say and you have 
heard it and I lived with it--the devil is in the details. I 
believe we should look briefly at some of the details, because 
these capture some fundamental differences with respect to 
priorities. I have a statement which I would ask be included in 
the record.
    Senator Faircloth. Your statement will be put into the 
record, Dr. Brimmer.
    Dr. Brimmer. Thank you very much, Mr. Chairman.
    Senator Faircloth. And, Dr. Brimmer, if you will, move the 
microphone more directly in front so we can hear you.
    Dr. Brimmer. Thank you very much.
    Mr. Chairman, I have an additional table I would like to 
offer for the record. I will ask my staff if they would share 
this table with the committee and with the Mayor and Ms. Cropp.
    What it does is compare the Council's budget and the 
Authority's budget. It does so in some detail. In other words, 
it goes behind the excellent summary descriptions of the size 
of the differences in the chart in front of us. But this 
provides some detail not only where we had the differences, but 
it also shows this broad area of agreement which Ms. Cropp 
described. In almost all of the Authority's decisions, line by 
line, we accepted the Council's mark. Let me press that.

                 authority's mark compared to council's

    When you get this table and you look down it, you will note 
that in the overwhelming number of cases, the Authority's mark 
is identical to the Council's mark. I want to stress that. We 
thought it important to do what Ms. Cropp said. We deferred to 
the preferences and priorities established by the Council. I 
want to stress that. We did not set out to find great 
differences and defend them. Quite the reverse. We set out to 
find areas where we could agree.
    Only in those areas where we felt strongly that the 
requirements of the priorities that have been agreed to--again, 
I want to stress that the priorities Ms. Cropp described--
public safety, education, public works--were all agreed to by 
all of us back in January. So we set out to make certain that 
funding was available to support the achievement of those 
priorities.
    Another guiding principle we had was that we needed to 
identify those areas where a program might be desirable, might 
be one that should be supported if we had the money. But we 
concluded that in a period of stringency, which we are in, 
there are some programs that, while desirable, simply could not 
be afforded--that the public's money, the city's money should 
not go into those areas. So we decided to cut those or at least 
to reduce the recommended appropriation from where the Council 
had it.
    [The information follows:]

                                  PROPOSED FISCAL YEAR 1998 BUDGET--LOCAL FUNDS                                 
----------------------------------------------------------------------------------------------------------------
                                                                           Fiscal year 1998                     
                                                                   --------------------------------             
               Agency name                          Code               Proposed                       Variance  
                                                                      District's    DCFRA proposed              
                                                                        budget          budget                  
----------------------------------------------------------------------------------------------------------------
GOVERNMENTAL DIRECTION AND SUPPORT:                                                                             
    COUNCIL OF THE DISTRICT OF COLUMBlA.  AB......................           8,573           8,573  ............
    AUDITOR OF THE DISTRICT OF COLUMBIA.  AC......................             919             919  ............
    ADVISORY NEIGHBORHOOD COMMISSION....  DX......................             562             562  ............
    OFFICE OF THE MAYOR.................  AA......................           1,393           1,393  ............
    OFFICE OF EXECUTIVE SECRETARY.......  BA......................           1,512           1,512  ............
    INSPECTOR GENERAL OF THE DISTRICT OF  AD......................           5,731           5,731  ............
     COLUMBlA.                                                                                                  
    OFFICE OF COMMUNICATIONS............  BB......................              90              90  ............
    OFFICE OF INTERGOVERNMENTAL           BP......................             670             670  ............
     RELATIONS.                                                                                                 
    OFFICE OF CITY ADMINISTRATOR........  AE......................           3,722           3,722  ............
    OFFICE OF PERSONNEL.................  BE......................           8,322           8,197         (125)
    DEPARTMENT OF ADMINISTRATIVE          AS......................           7,814           6,284       (1,530)
     SERVICES.                                                                                                  
    HUMAN RESOURCES DEVELOPMENT.........  HD......................  ..............  ..............  ............
    CONTRACT APPEALS BOARD..............  AF......................             634             634  ............
    OFFICE OF THE CHIEF FINANCIAL         AT......................           4,748           4,748  ............
     OFFICER.                                                                                                   
    OFFICE OF BUDGET AND PLANNING.......  BC......................           2,001           2,001  ............
    OFFICE OF FINANCIAL OPERATIONS AND    BF......................          10,727          10,727  ............
     SYSTEMS.                                                                                                   
    OFFICE OF FINANCE AND TREASURY......  TR......................           3,914           3,914  ............
    OFFICE OF TAX AND REVENUE...........  CA......................          19,459          18,459       (1,000)
    TAX REVISION COMMISSION.............  PM......................             500             500  ............
    BOARD OF ELECTlONS AND ETHICS.......  DL......................           2,947           2,947  ............
    OFFICE OF CAMPAIGN FINANCE..........  CJ......................             808             808  ............
    PUBLIC EMPLOYEE RELATIONS BOARD.....  CG......................             413             413  ............
    OFFICE OF EMPLOYEE APPEALS..........  CH......................           1,139           1,139  ............
    WASHINGTON METRO AREA COUNCIL OF      EA......................             374             374  ............
     GOVERNMENTS.                                                                                               
    GRANTS MANAGEMENT AND DEVELOPMENT...  BQ......................  ..............  ..............  ............
                                         -----------------------------------------------------------------------
      GOVERNMENT DIRECTION AND SUPPORT..  ........................          86,971          84,316       (2,655)
                                         =======================================================================
ECONOMIC DEVELOPMENT AND REGULATION:                                                                            
    BUSINESS SERVICES AND ECONOMIC        EB......................          28,605          26,886       (1,719)
     DEVELOPMENT \2\.                                                                                           
    ASSISTANT CITY ADMIN FOR ECONOMIC     ED......................  ..............  ..............  ............
     DEVELOPMENT.                                                                                               
    OFFICE ON BANKING AND FINANCIAL       BI......................  ..............  ..............  ............
     INSTITUTIONS \1\.                                                                                          
    OFFICE OF TOURISM AND PROMOTION.....  TK......................  ..............  ..............  ............
    OFFICE OF PLANNING AND DEVELOPMENT..  BD......................  ..............  ..............  ............
    OFFICE OF ZONING....................  BJ......................             384             384  ............
    DEPT OF HOUSING AND COMMUNITY         DB......................  ..............  ..............  ............
     DEVELOPMENT.                                                                                               
    DEPARTMENT OF PUBLIC AND ASSISTED     PH......................           4,650           2,080       (2,570)
     HOUSING.                                                                                                   
    DEPARTMENT OF EMPLOYMENT SERVICES...  CF......................           6,586           6,314         (272)
    BOARD OF APPEALS AND REVIEW.........  DK......................             153             153  ............
    BOARD OF REAL PROPERTY ASSESS AND     DA......................             286             286  ............
     APPEALS.                                                                                                   
    DEPT OF CONSUMER AND REGULATORY       CR......................           4,980           4,274         (706)
     AFFAIRS.                                                                                                   
    PUBLIC SERVICE COMMISSION \1\.......  DH......................  ..............  ..............  ............
    PEOPLES' COUNSEL \1\................  DJ......................  ..............  ..............  ............
                                         -----------------------------------------------------------------------
      ECONOMIC DEVELOPMENT AND            ........................          45,644          40,377       (5,267)
       REGULATION.                                                                                              
                                         =======================================================================
BSED CONSOLIDATION......................  EB......................          28,605          26,886       (1,719)
                                         =======================================================================
PUBLIC SAFETY AND JUSTICE:                                                                                      
    METROPOLITAN POLICE DEPARTMENT......  FA......................         254,585         249,585       (5,000)
    FIRE AND EMERGENCY MEDICAL SERVICES.  FB......................         101,323          98,197       (3,126)
    POLICE AND FIREFIGHTER RETIREMENT     FD......................         211,000         211,000  ............
     SYSTEM.                                                                                                    
    JUDGES' RETIREMENT SYSTEM...........  FG......................           3,100           3,100  ............
    D.C. COURT OF APPEALS...............  FM......................           6,000           6,000  ............
    SUPERIOR COURT OF THE DISTRICT OF     FC......................          70,407          73,006        2,599 
     COLUMBIA.                                                                                                  
    D.C. COURT SYSTEM...................  FN......................          35,152          35,152  ............
    OFFICE OF THE CORPORATION COUNSEL...  CB......................          12,478          12,478  ............
    PAYMENT OF SETTLEMENTS AND JUDGMENTS  ZH......................          14,800          14,800  ............
    PUBLIC DEFENDER SERVICE.............  FE......................           7,753           7,753  ............
    PRETRIAL SERVICES AGENCY............  FF......................           4,562           4,562  ............
    DEPARTMENT OF CORRECTIONS...........  FL......................         244,161         254,167       10,006 
    BOARD OF PAROLE.....................  DD......................           5,906           5,834          (72)
    DC NATIONAL GUARD...................  FK......................             858             858  ............
    OFFICE OF EMERGENCY PREPAREDNESS....  BN......................           1,338           1,338  ............
    COMMISSION ON JUDICIAL DISABILITIES   DQ......................             125             125  ............
     AND TENURE.                                                                                                
    JUDICIAL NOMINATION COMMISSION......  DV......................              78              78  ............
    CIVILIAN COMPLAINT REVIEW BOARD.....  FH......................  ..............  ..............  ............
                                         -----------------------------------------------------------------------
      PUBLIC SAFETY AND JUSTICE.........  ........................         973,625         978,033        4,407 
                                         =======================================================================
PUBLIC EDUCATION SYSTEM:                                                                                        
    BOARD OF EDUCATION/PUBLIC SCHOOLS...  GA......................         461,188         461,983          795 
    PUBLIC SCHOOL REPAIRS...............  GK......................  ..............  ..............  ............
    PUBLIC CHARTER SCHOOLS..............  GC......................           1,235           1,235  ............
    TEACHER'S RETIREMENT SYSTEM.........  GX......................          92,500          92,500  ............
    UNIVERSITY OF THE DISTRICT OF         GF......................          37,643          37,791          148 
     COLUMBlA.                                                                                                  
    LAW SCHOOL OF THE DISTRICT OF         LS......................  ..............  ..............  ............
     COLUMBlA.                                                                                                  
    EDUCATION LICENSURE COMMiSSION......  GH......................  ..............  ..............  ............
    PUBLIC LIBRARY......................  CE......................          20,429          20,424           (5)
    COMMISSION ON THE ARTS AND            BX......................           1,704           1,704  ............
     HUMANITIES.                                                                                                
                                         -----------------------------------------------------------------------
      PUBLIC EDUCATION SYSTEM...........  ........................         614,699         615,637          938 
                                         =======================================================================
HUMAN SUPPORT SERVICES:                                                                                         
    DEPARTMENTS OF HEALTH AND HUMAN       JA......................         813,080         813,155           75 
     DEVELOPMENT \3\.                                                                                           
    DEPARTMENT OF RECREATION AND PARKS..  HA......................          20,563          20,722          159 
    OFFICE ON AGING.....................  BY......................          12,289          12,289  ............
    D.C. GENERAL HOSPITAL-SUBSIDY/D.C.    JC......................          44,335          44,335  ............
     PUBLIC BENEFIT CORP.\3\.                                                                                   
    UNEMPLOYMENT COMPENSATION...........  BH......................          10,678          10,678  ............
    EMPLOYEE DISABILITY COMPENSATION....  BG......................          21,089          21,089  ............
    HUMAN RIGHTS AND MINORITY BUSINESS    HM......................             821             821  ............
     OPPORTUNITY COMMISSION.                                                                                    
    OFFICE ON LATINO AFFAIRS............  BZ......................             636             636  ............
    D.C. COMMISSION FOR WOMEN...........  DP......................  ..............  ..............  ............
    D.C. ENERGY OFFICE..................  JF......................  ..............  ..............  ............
                                         -----------------------------------------------------------------------
      HUMAN SUPPORT SERVICES............  ........................         923,491         923,725          234 
                                         =======================================================================
DEPT HUMAN SERVICES--MEDICAID...........  ........................         409,136         409,000         (136)
DEPT HUMAN SERVICES--FOSTER CARE FAMILY   ........................          70,545          70,545  ............
 SVCS.                                                                                                          
DEPT HUMAN SERVICES--PUBLIC HEALTH        ........................          15,000  ..............      (15,000)
 CLINICS.                                                                                                       
DEPT HUMAN SERVICES-- REMAINING BALANCE.  ........................         318,399         333,610       15,211 
                                         -----------------------------------------------------------------------
      TOTAL, DEPT HUMAN SERVICES........  ........................         813,080         813,155           75 
                                         =======================================================================
PUBLIC WORKS:                                                                                                   
    DEPARTMENT OF PUBLIC WORKS..........  KA......................          95,675          96,935        1,260 
    D.C. TAXI CAB COMMISSION............  TC......................             277             277  ............
    WASHINGTON METRO AREA TRANSIT         KC......................              91              91  ............
     COMMISSION.                                                                                                
    WASH. METRO AREA TRANSIT AUTHORITY    KE......................         127,230         127,230  ............
     SUBSIDY.                                                                                                   
    SCHOOL TRANSIT SUBSIDlES............  KD......................           3,450           3,450  ............
                                         -----------------------------------------------------------------------
      PUBLIC WORKS......................  ........................         226,723         227,983        1,260 
                                         =======================================================================
FINANCING AND OTHER USES:                                                                                       
    WASHINGTON CONVENTION CENTER PAYMENT  ER......................           5,400           5,400  ............
    REPAYMENT OF LOANS AND INTEREST.....  DS......................         365,548         365,196         (352)
    REPAYMENT OF GENERAL FUND DEFICIT...  ZD......................          39,020          39,020  ............
    REPAYMENT OF INTEREST ON SHORT TERM   ZA......................          15,848          18,157        2,309 
     BORROWING.                                                                                                 
    REPAYMENT OF WATER AND SEWR AUTHRTY   ZW......................  ..............  ..............  ............
     RETAINED EARNINGS.                                                                                         
    CERTIFICATE OF PARTICIPATION........  CP......................           7,923           7,923  ............
    INAUGURAL EXPENSES..................  SB......................  ..............  ..............  ............
    HUMAN RESOURCES DEVELOPMENT.........  HD......................           4,896           6,000        1,104 
    COST REDUCTION INITIATIVES..........  ........................  ..............  ..............              
                                         -----------------------------------------------------------------------
      FINANCE AND OTHER USES............  ........................         438,635         441,696        3,061 
                                         =======================================================================
FINANCIAL AUTHORITY.....................  XB......................           3,220           3,220  ............
                                         =======================================================================
      TOTAL, GENERAL FUND--OPERATING      ........................       3,313,009       3,314,987        1,978 
       EXPENSES.                                                                                                
                                         =======================================================================
ENTERPRISE FUNDS:                                                                                               
    PUBLIC SERVICE COMMISSION \4\.......  DH......................           4,250           4,250  ............
    PEOPLES' COUNSEL \4\................  DJ......................           2,428           2,428  ............
    OFFICE ON BANKING AND FINANCIAL       BI......................             100             100  ............
     INSTITUTIONS \4\.                                                                                          
    DEPARTMENT OF INSURANCE AND           SR......................  ..............  ..............  ............
     SECURITIES REGULATION \4\.                                                                                 
    WATER AND SEWER UTILITY               LA......................  ..............  ..............  ............
     ADMINISTRATION.                                                                                            
    WASHINGTON AQUEDUCT.................  LB......................  ..............  ..............  ............
    LOTTERY AND CHARITABLE GAMES CTL      DC......................  ..............  ..............  ............
     BOARD.                                                                                                     
    OFFICE OF CABLE TELEVISION..........  CT......................           2,135           2,135  ............
    WASHINGTON CONVENTION CENTER          ES......................  ..............  ..............  ............
     AUTHORITY.                                                                                                 
    D.C. GENERAL HOSPITAL-OPERATING.....  JB......................  ..............  ..............  ............
    DEPT. OF CORRECTIONS CORRECTIONAL     FP......................  ..............  ..............  ............
     INDUSTRIES.                                                                                                
    D.C. RETIREMENT BOARD...............  DY......................  ..............  ..............  ............
    INDIRECT COST RECOVERY ACCOUNT......  IC......................  ..............  ..............  ............
    D.C. SPORTS COMMISSION--STARPLEX....  SC......................  ..............  ..............  ............
                                         -----------------------------------------------------------------------
      TOTAL, ENTERPRISE AND OTHER FUNDS.  ........................           8,913           8,913  ............
                                         =======================================================================
FTE ATTRITION FACTOR....................  ........................  ..............  ..............  ............
                                         =======================================================================
      TOTAL, D.C. GOVERNMENT              ........................       3,321,922       3,323,900        1,978 
       EXPENDITURES.                                                                                            
----------------------------------------------------------------------------------------------------------------
\1\ These departments will become self-supporting effective fiscal year 1998.                                   
\2\ BSED CONSOLIDATION CONTAINS AMOUNTS FOR (ED), (DK), (BD), (DB).                                             
\3\ Based upon a memorandum of understanding signed in November 1996 between Health and Human Development (DHS) 
  and DCGH, the Hospital Subsidy (JC) in fiscal year 1997 was reduced by $15.0 million with a corresponding     
  increase in DHS' budget. The Hospital was also reduced by $5.8 million in fiscal years 1997 and 1998 (with a  
  corresponding increase in DHS) to reflect Medicaid changes in disproportionate share.                         
\4\ These departments will become self-supporting effective fiscal year 1998.                                   

                 department of administrative services

    Dr. Brimmer. Now, Mr. Chairman, the first one--and I can do 
this very, very quickly and I will not go through all of them, 
but the Department of Administrative Services, you will notice 
on the first page, is one area where we differ with the Council 
by $1.5 million. We believe greater savings can be found in 
that area and an effort ought to be made to press to get them.

                          economic development

    I will next look at the area of economic development, 
because that was stressed. It is true that economic development 
was broken down into several areas. The first one is business 
services and economic development, $1.7 million. Here we 
believe that greater savings can be achieved, and an effort 
ought to be made to do so.
    Department of Public and Assisted Housing, this is an area 
of principal difference. We provided $2.5 million less than the 
Council. This is an area where we believe that while it is 
desirable--promoting middle-class housing is desirable--that in 
a period of budget stringency, this middle-class benefit should 
not have the highest priority. In addition, there are Federal 
funds available to help with some of these areas. We thought, 
where that was the case, they ought to be relied upon.

                             public safety

    The next area I really want to stress, Mr. Chairman, is 
public safety. For us, public safety is not simply police. I 
want to stress this. Public safety includes police, 
corrections, fire, and the courts. I want to repeat, for us, 
public safety includes police, fire, corrections, and the 
courts. So we looked at the whole panoply of these areas. We 
concluded the following with respect to each of them:
    With respect to police, we agree that 3,800 uniformed 
officers is a good target for the police. We felt, however, 
that with the flow of personnel in and out of the system, that 
it will take a year to do that. So we think the target should 
be 3,800, but we thought, on average, there would need to be 
funding for 3,700. It is true, that is just 100, but the 
reasons are important. We did not want to assign scarce 
dollars--and the difference is $5 million--to assign scarce 
dollars, which could be better used some other place if the 
police could not use it in a timely fashion during the year. So 
that is the only difference.
    With respect to corrections, we provided $10 million more 
than the Council. We did so because this is one of the areas 
where we believe there has been underfunding for years. It has 
gone on so long that a substantial part of the corrections 
department's activities is under court supervision. The courts 
have mandated more funds be spent for corrections officers, for 
medical service and so on.
    So we believe that that part of public safety needed to be 
enhanced and we provided the $10 million. I said earlier that 
corrections has a heavy burden, and it is growing. The 
increased police initiative, this drive, which we all 
supported, to fight crime more vigorously will result in more 
arrests, more convictions, more incarceration. So corrections 
needs more money. That is why we did it as you see here.
    Those are the main items I wanted to stress, Mr. Chairman. 
There are other items, but they are not as critical as those, 
and so I will not dwell on them.

                          revenue initiatives

    One other area where we differed with the Council is with 
respect to revenue. The Council had proposed revenue 
initiatives which would have raised about $4 million. The Chief 
Financial Officer, as required by the statute, reviewed those 
proposals and stated that he could not--and informed us--he 
could not certify that amount of revenue. So we did not count 
those. The Council had wished that we would add those to the 
revenue side, and thus give more flexibility on the expenditure 
side. We said we could not.
    Now, along the way, however, the chief financial officer 
did review the various sources of revenue, and he was able to 
certify, later in the process, an additional $6 million net. He 
identified more potential sources but concluded that the $6 
million was the amount he could certify, and that was added to 
the budget. There was additional revenue added, but it was from 
sources different from what the Council had mentioned. That is 
a difference of $2 million.

                        carefully worked budget

    Mr. Chairman, I will stop at this point. Let me say, in 
summing up, that this is a carefully worked budget. We spent 
long hours not only in consultation with the Council and the 
Mayor, but among ourselves at the Authority. The Board members 
and the staff put many hours into this. I personally put in a 
great deal of time on this budget.

                           prepared statement

    The decisions we all reached were reached carefully after 
careful consideration. We think it is a prudent budget. You 
know about my career over the years. You know that I am not 
known for not being careful. You know that, especially in money 
matters, where I spent all of my time in my career, I tend to 
be particularly careful. We have been careful with the city's 
money and with the appropriations for the city. We urge you to 
take that into account and to support our budget.
    Thank you very much.
    [The statement follows:]
                Prepared Statement of Andrew F. Brimmer
    Mr. Chairman and Members of the Subcommittee: My name is Andrew F. 
Brimmer, and I am Chairman of the District of Columbia Financial 
Responsibility and Management Assistance Authority. On behalf of the 
Authority, thank you for the opportunity to appear before the 
Subcommittee today.
    Mr. Chairman, as requested by the Subcommittee, I will discuss the 
fiscal year 1998 financial plan and budget recently submitted to the 
Congress by the Authority, and the implications of that budget for 
improving the efficiency and effectiveness of the District Government.
                              introduction
    Let me start by saying that the development of the fiscal year 1998 
financial plan and budget by the Council of the District of Columbia 
(``Council''), the Mayor, and the District of Columbia Financial 
Responsibility and Management Assistance Authority (``Authority'') 
demonstrates that a more sound and comprehensive budget results from a 
dialogue among the principals. The budget process was characterized 
throughout by mutual cooperation and an open exchange of information 
and points of views.
    After an extensive examination, the Authority determined that the 
Council's final budget must be disapproved under the terms set forth in 
the District of Columbia Financial Responsibility and Management 
Assistance Act of 1995 (``Act'') (Public Law 104-8). Having rejected 
the Council's budget, the Authority on June 15, 1997, submitted its own 
budget to Congress, in accordance with the Act. The Authority has 
determined that its financial plan and budget is in conformance with 
the Act, will promote the financial stability of the District 
government, and will further the interests of the people of the 
District of Columbia.
    Although the parties had hoped that a consensus budget could be 
agreed upon, in the end, enough differences remained among us to 
preclude the achievement of that goal. The absence of consensus should 
not, however, lead people to conclude that the entire budget process 
failed, or that the parties were unable to agree on any priorities. 
Just the opposite is true--in most areas, the Mayor, the Council, and 
the Authority substantially agreed on funding priorities for the 
District government. Moreover, in structuring its own budget, the 
Authority accepted all but a few of the Council's line item 
recommendations.
                            budget overview
    The fiscal year 1998 financial plan and budget estimates total 
revenues and expenditures of $5.17 billion, so a balanced budget is 
achieved. Projections for fiscal years 1999 through 2001 show 
increasing deficits--unless structural initiatives and reforms are made 
in the District's programs and operations. The capital budget for 
fiscal year 1998 is set at $150 million. I would note further that the 
local expenditures portion of the budget, at $3.32 billion, is 
approximately $59 million less than is estimated in fiscal year 1997.
    In developing the fiscal year 1998 financial plan and budget, the 
Authority continued to emphasize the pressing public service needs of 
the District's citizenry--primarily public safety, public schools, and 
public works. The Authority also specified reductions in agency budgets 
that focused on management and other administrative overhead costs, 
rather than reducing workers who provide critical services. For 
example, detailees from other agencies were charged against their 
respective hiring agency's budget. These positions were eliminated in 
the fiscal year 1998 budget, and the agency budgets were decreased by 
the amount of the salary and benefits attributed to each detailee.
    The Act requires that the District develop a financial plan 
annually that describes how the District will move toward financial 
stability. The Mayor vetoed the Council's initial budget on May 13, 
1997, and the Council overrode the Mayor's veto on May 15, 1997. 
Subsequently, the Council's initial budget was received by the 
Authority on May 16, 1997, in accordance with the Act, and was 
disapproved by the Authority on May 20, 1997. The Council then 
submitted its revised budget on June 3, 1997. The Authority is required 
to approve or disapprove the Council's plan within 15 days of receipt.
    Section 201 of the Act requires that a financial plan and budget 
for the District include standards intended to promote financial 
stability. Specifically, the District is mandated to:
  --make continuous substantial progress toward a balanced budget by 
        fiscal year 1999;
  --provide for the orderly liquidation of the accumulated deficit;
  --restore funds borrowed from other accounts; and
  --assure continuing long-term financial stability, as indicated by 
        several factors, including: access to capital markets, 
        efficient management of the District's workforce, and effective 
        provision of services.
    Section 202(d) of the Act provides that, if the Authority 
determines that the Council's plan fails to meet the requirements of 
the Act, the Authority shall disapprove it, and shall provide the Mayor 
and the Council with a statement containing the reasons for the 
disapproval, the amount of any shortfall in the plan, and any 
recommendations for revisions to the plan the Authority considers 
appropriate to ensure that a revised financial plan and budget meets 
the requirements of the Act.
    In addition, the Act contains specific requirements for the 
District's budget, including how expenditures are presented, the type 
of assumptions used, an analysis of cash flow, and information on 
capital expenditures. The Authority issued ``Fiscal Year 1998 Financial 
Plan and Budget Guidance'' on January 15, 1997. The Authority, the 
Mayor, and the Council agreed to more specific guidelines for the 
fiscal year 1998 financial plan and budget during a series of meetings 
in January, 1997, including the following:
  --the plan should reduce the operating costs of the District;
  --the plan should not include unallocated amounts for the District to 
        distribute to agencies;
  --the plan should not include any financial resources to be obtained 
        from debt restructuring; and
  --the fiscal year 1998 budget will be a balanced budget and will 
        demonstrate that substantial progress has been made in reducing 
        the operating deficit.
    The revised Council budget showed further progress from the initial 
Council budget by reconsidering some of the Mayor's budget estimates 
that were lower than the Council's initial estimates for several 
agencies, and including a multi-year leasing program for equipment.
                             revenue issues
    Section 302 of the Act requires the Chief Financial Officer (CFO) 
to prepare and certify annual estimates of all revenues included in the 
District's general fund. These estimates are then submitted to the 
Authority for approval at a public hearing. Once approved, they remain 
binding on the District for purposes of preparing and submitting the 
applicable financial plan and budget.
    The CFO presented revenue estimates for the fiscal year 1998 
financial plan and budget to the Authority at a public hearing on 
January 22, 1997. The CFO estimated fiscal year 1998 general fund 
revenues to be $3,317.9 million, compared to the fiscal year 1997 
revenue forecast of $3,149.6 million, and the fiscal year 1996 actual 
revenue total of $3,316.1 million. The Authority found the estimate 
reasonable, given the assumptions and expected economic outlook 
presented by the CFO, and passed a resolution approving them.
    After the Authority rejected the Mayor's fiscal year 1998 financial 
plan and budget, the Council submitted to the Authority D.C. Bill 12-
210, ``The Fiscal Year 1998 Budget Request Act of 1998'', which 
included $14.2 million in additional revenue initiatives over the 
certified revenue base. The Council identified the collection of right-
of-way fees from utilities, tipping fees for dumping, additional litter 
enforcement personnel, transfers from the Lottery and the Starplex 
reserve fund, and increased collection of out-of-District tuition fees 
for public school students, as the source of funds for these 
initiatives. At the Authority's request, the CFO analyzed the Council's 
revenue initiatives to determine whether they could be certified. The 
CFO determined that the estimates could not be certified.
    Subsequently, in light of the severe budgetary constraints facing 
the District, the CFO reexamined the revenue forecast for fiscal year 
1998, and identified $27 million in additional revenues not captured in 
the original baseline forecast. The CFO identified unclaimed property 
($5 million), the disposition of surplus property ($10 million), and 
improved indirect cost recovery on grants ($12 million), as the source 
of this revenue. The CFO discounted the estimates, and certified $6 
million of the total projections as additional revenue for fiscal year 
1998. The Authority then reviewed and approved the $6 million in 
additional revenues, thereby increasing the projected fiscal year 1998 
revenue base to $3,323.9 million. The Authority recognizes that the 
Council will need to adopt certain legislative provisions related to 
unclaimed property in order to realize some of the revenue.
                         expenditure decisions
    As previously mentioned, the Mayor, the Council, and the Authority 
agreed on almost all of the funding priorities in the budget. 
Generally, the Authority accepted either the Mayor's or the Council's 
proposals in formulating the Authority's budget. However, the Authority 
ultimately rejected the Council's budget because the Authority 
determined that a few areas that were critical to the District's 
stability and growth were under-funded. Even in this period of fiscal 
stringency, the Authority has worked to fund adequately public safety, 
public education, and public works.
    One of the most essential services a jurisdiction provides is for 
the public safety of its residents and visitors. Recognizing that 
public safety is a prerequisite for a stable, vibrant community, it is 
one of the Authority's foremost priorities. With the recent focus on 
reducing crime and the fear of crime in the District, the Metropolitan 
Police Department (``MPD'') has implemented several policing 
initiatives, which range from focusing police activity on open-air drug 
markets to placing more than 400 additional officers on the street. 
These initiatives, which have resulted in a dramatic increase in 
arrests and incarcerations, are impacting almost every agency in the 
criminal justice system, such as the Courts, the Office of the 
Corporation Counsel, the Pretrial Services Agency, and the Department 
of Corrections. In order to sustain the momentum of the new policing 
initiatives, these agencies must be funded to cover costs associated 
with the crime reduction initiatives.
    For instance, the MPD, which usually is the entry point for the 
criminal justice system, is designing and implementing a new operating 
model for the department. The model will require a major reorganization 
of the department, and will result in more officers on the street 
providing better crime control for District residents.
    The new operating model provides officers with a 10 percent pay 
raise which narrows the gap between their salaries and the average 
salary of officers in the surrounding jurisdictions. The Authority's 
allocation of $249.6 million in local funds includes funding for a 10 
percent pay raise for officers. In addition, this allocation enables 
the MPD to hire toward its authorized sworn officer level of 3,815, 
while factoring in the time frame for recruiting, hiring, and training 
new officers, as well as attrition.
    The Department of Corrections (``DOC''), which is the final stop in 
the criminal justice system, historically has been under-funded. The 
District does not have funding to support fully the operational needs 
of the DOC. The District is the only city in the nation that operates 
and funds a prison system. The City's revenue structure is not designed 
to support a prison system. Typically, cities fund jails, not prisons.
    The DOC is operating under numerous court orders and consent 
decrees, which impact virtually every aspect of its operations, as well 
as a receivership of its medical and mental health services. The DOC 
has not had a budget that supports full compliance with the court 
orders and receivership. The DOC's operating budget has been strained 
further by the new police initiatives, which have resulted in a 
substantial increase in arrests and subsequent incarcerations.
    The Authority's allocation of $254.2 million in local funds 
recognizes the need to provide additional funding for the DOC, but it 
also takes into account the need for DOC to realize some efficiencies 
in operations. This allocation includes, but is not limited to, funding 
for placing as many as 1,700 inmates in contract prison housing, 
payments to D.C. General Hospital for medical care provided to inmates, 
and the DOC's costs associated with the MPD's crime reduction 
initiatives.
    In another area, the Authority continues to be concerned about the 
welfare of the District's children. Through the creation of the 
Emergency Transitional Board of Education Trustees (``Trustees'') in 
November, 1996, it has been clear that education of the youth of the 
District is a priority for the Authority.
    The Authority's concern for public education is reflected in the 
funding levels for the District government. For fiscal year 1998, the 
Authority recommends $462 million in local funds, which assumes cost 
savings from initiatives implemented by the Trustees during fiscal year 
1997, and a $12 million pay raise for teachers. Also, the budget 
provides $8 million in lease purchase authority for additional 
technology and security equipment.
    Approximately $21.7 million in cost savings resulted from the 
Trustees implementing several important initiatives, including: closing 
13 public schools for an estimated savings of $6.7 million, and 
eliminating approximately 370 central administration employees for an 
estimated savings of $15 million. In addition, the District of Columbia 
Public Schools (``DCPS'') has revised and eliminated costly contracts 
due to improved procurement processes.
    Other savings to the local operating budget were realized by 
transferring equipment requests for technology and security upgrades to 
a short-term leasing plan. This short-term leasing plan totals $5.7 
million in estimated savings applied to the local budget. The DCPS will 
also be able to draw on $30 million of funds from market borrowings to 
finance vital capital expenditures. In fiscal year 1997, the schools 
had $20 million from market borrowings. When that amount was added to 
the $472 million of appropriated local funds, the DCPS had $492 million 
of total funds available in fiscal year 1997. Counting the funds from 
all available sources, the DCPS fiscal year 1998 budget will total 
almost $500 million, consisting of $462 million of appropriated local 
funds, $8 million of equipment from lease financing, and $30 million 
from capital borrowings.
    I would also note that the Authority considers public works 
improvements to be crucial to the quality of life and economic 
development opportunities in the District. The Authority has supported 
the restoration and enhancement of basic services such as bulk trash 
collection, tree trimming, and pothole repairs that are included in the 
budgets of the Mayor and Council.
    The Authority also has been supportive of the Department of Public 
Works' (``DOW'') efforts to become a performance-based organization. 
The Authority's fiscal year 1998 budget contains $96.9 million in local 
funding. Additionally, this budget supports the lease purchase of more 
than $5 million in new vehicles and equipment for the DPW, mainly to 
augment the trash collection and snow removal fleet.
    The DPW has been engaged in a number of management initiatives 
designed to streamline operations and increase revenues. These 
initiatives include the DPW's effort to develop performance measures, 
redesign trash collection routes, and conduct a study to develop user 
fees for the public-rights-of-way.
                          savings initiatives
    The fiscal year 1997 financial plan and budget included numerous 
revenue and expenditure initiatives which cut across the full spectrum 
of government operations and included broad-based structural reforms. 
Some of these reforms include work force reductions, benefit level 
reductions in various welfare programs, and agency-specific 
initiatives, including replacing food stamp distribution with 
electronic benefit payments. The implementation of these initiatives 
reduced fiscal year 1997 expenditures and were projected for even 
greater savings in fiscal year 1998 through fiscal year 2000.
    In total, it is estimated that the District could save an 
additional $229.2 million through the successful accomplishment of 
these planned initiatives in the outlying years. However, estimates for 
the initiatives included in the fiscal year 1997 budget were discounted 
down to $141.9 million from the total gross amount. The District 
determined that the discount was necessary because significant 
variances were likely to occur in several of the estimates. According 
to the District, these variances could occur as implementation plans 
were executed.
    The District's current forecast shows that $81.4 million (or 57 
percent) of the $141.9 million in savings initiatives that were 
included in the fiscal year 1997 budget will be achieved. This amount 
includes about $58.6 million from reform and cost-control efforts and 
$22.8 million from additional revenue. In order to achieve these 
projected results, the District allocated a total of $47 million to 
agency budgets. Moreover, in place of the initiatives that failed to 
materialize, agencies also were required to modify spending plans to 
include savings alternatives.
                             privatization
    Mr. Chairman, privatization is an effective approach to reduce 
costs and to increase the responsiveness of services provided by 
government. The Authority has proposed, through the current financial 
plan and budget, various privatization initiatives that should 
translate into improved service delivery and reduced costs.
    The Authority continues to believe that privatization efforts--
outsourcing, public-private partnerships, asset sales, and managed 
competition--are essential ingredients in the District's return to 
financial solvency and improved service delivery. Given the importance 
of privatization efforts designed to improve service delivery systems 
and reduce costs, the Authority will issue a report on the District's 
privatization efforts that updates the privatization initiatives, 
examines the impediments to realizing all privatization opportunities, 
and identifies new opportunities for privatization.
    During fiscal year 1997, some privatization initiatives have 
created substantial cost savings and service improvements. A few 
accomplishments include: the Correctional Treatment Facility, which 
provides custody and other services to 900 inmates, which was converted 
to a private operation and received an up-front payment of $52 million. 
The District also closed the D.C. Village Nursing Home and placed 
residents in private nursing facilities, which saved $5 million; 
contracted the education of 200 detained youth at its Oak Hill Facility 
to an accredited contractor; and contracted the Police and Fire Clinic 
to a private health care provider.
    The proposed fiscal year 1998 budget contains several privatization 
initiatives that are expected to generate estimated savings of more 
than $150 million. These savings are not included in the fiscal year 
1998 budget. The Authority encourages the Mayor and the Council to 
expedite the adoption and implementation of the identified 
privatization initiatives. The Authority will provide guidance in the 
identification and development of privatization initiatives for the 
District, and we will work with the District to implement these 
initiatives. Under the Authority's statutory responsibility to review 
and approve contracts, the Authority will continue to exercise rigorous 
oversight over the approval of privatization initiatives in order to 
reach the fiscal year 1998 budget goals.
                            budget out-years
    The fiscal year 1998 budget represents the first year of a multi-
year plan that must, by law, be in balance by fiscal year 1999, 
according to strict accounting guidelines (commonly known as Generally 
Accepted Accounting Principles or GAAP). I must note at this time, Mr. 
Chairman, that a GAAP balance will not be achieved easily. Expected 
revenues will not meet expected spending in the post-fiscal year 1998 
period of the plan, under current Federal law. Over the financial plan 
period, spending, including debt service, increases about 8.5 percent, 
while local fund revenues only increase about 4 percent. As a result, 
by fiscal year 2001, the difference between spending and revenues is 
projected to be almost $180 million. I would add that this scenario 
does not even contemplate a general wage increase for government 
employees.
    Present law constrains the manner in which the District and the 
Authority can address the structural imbalance between the growth of 
revenues and expenditures. All initiatives to close these out-year 
differences must conform to existing federal law; that is, it cannot be 
assumed that, over a four-year period, District or Federal statutes 
will change to contribute to budget balance. As a result, the financial 
plan that the Authority has approved contains a number of District 
initiatives to decrease costs. These would make significant and 
difficult changes in the way the District government does business, 
affecting management reforms, productivity improvements, cost controls, 
consolidations of functions, elimination of discretionary services, and 
privatization of a number of activities. If these cost-saving 
initiatives are not achieved in a timely manner, or if they fail, there 
is a strong likelihood that service reductions would result. Thus, the 
imperative to realize the financial plan and budget savings is urgent. 
It will require hard work especially on the part of those in 
management, to set realistic goals and timetables, and monitor results. 
Given the complex nature of these actions, as well as the planning and 
lead-time required, the District can not delay in implementing these 
actions.
    In addition, meeting the financial plan targets will require 
improved financial information and budget management. For example, 
there were $141.9 million of revenue and cost-saving initiatives in 
fiscal year 1997, which, at this time last year, were expected to 
produce ongoing savings in the plan's out-years. However, the out-year 
savings generally have not materialized. To the extent that they have, 
the savings are incorporated into the fiscal year 1998 budget. This 
year's inability to deliver ongoing savings must not be repeated. To 
the extent that it has been the result of a lack of distinction between 
one-time and ongoing initiatives, this is troubling. To the extent that 
it has been the result of an inability of the District to document 
fully its existing baseline costs and programs upon which such 
initiatives are based, this indicates a fundamental problem in accurate 
budgeting methods.
    The Authority recognizes that it has an important role to play in 
the achievement of the annually balanced budgets included in this 
financial plan. Through strong oversight and use of a detailed 
quarterly reporting system, the Authority is ensuring closer adherence 
to budget targets throughout the fiscal year. Moreover, the Authority, 
in the future, must incorporate into the District's financial plan a 
distinction between one-time and ongoing revenues. It may also create a 
method to link one-time revenues, such as reimbursements, tax audits or 
asset sales, to one-time spending, including facility repairs or 
equipment upgrades. In addition, the Authority, the Mayor, and Congress 
must all facilitate the development of a prudent budget reserve, as 
utilized in many municipalities throughout the country. Finally, these 
innovative programs should begin to pay off the District's large 
accumulated deficit.
                             changes in law
    In an effort to assess the impact of some recent proposals that may 
change the District's structural balance, the District's Budget Office 
has modeled the effect of a number of recent proposals on long-term 
budget balance. The most prominent of these is the President's Plan, 
one provision of which proposes to eliminate the present Federal 
Payment of $660 million. Under the President's Plan, the federal 
government would assume responsibility for a number of District 
government services traditionally performed by state governments, such 
as the courts and prisons, and increase the federal share of Medicaid 
payments from 50 percent to 70 percent. The President's Plan also 
proposes that the federal government assume responsibility for the 
unfunded pension liability for the police, firefighters, teachers, and 
judges, which was transferred from the federal government to the 
District at the time of Home Rule. According to the District's 
analysis, if the President's Plan were to become law, the District 
would realize net budget benefits ranging from $49 million in fiscal 
year 1998, to $140 million in fiscal year 2001, thereby reducing the 
accumulated deficit by almost $377 million by the end of fiscal year 
2001. The President's Plan also provides for a borrowing in an amount 
up to $500 million through the U.S. Treasury to retire the accumulated 
deficit.
                    water and sewer authority (wasa)
    The WASA's Board of Directors approved the fiscal year 1998 
financial plan and budget and submitted it to the Authority as required 
by Public Law 104-8. The WASA's fiscal year 1998 revenue estimate was 
$285.9 million. The expenditure estimate was $283.4 million and would 
have resulted in an excess of revenues over expenses in the amount of 
$2.5 million. The revenue estimate was $83.8 million above the fiscal 
year 1997 estimate, principally the result of a 42 percent rate 
increase that became effective in April, 1997.
    Public Law 104-8 requires the District's Chief Financial Officer to 
certify all revenue estimates before inclusion in the final budget 
document submitted to Congress. During the certification review, staff 
from the Authority and the Office of the CFO raised several concerns 
about WASA's revenue model. Subsequent discussions, which included the 
staff of WASA, the Office of the CFO, and the Authority, resulted in a 
decision to reduce the WASA estimate as follows:
                                                                Millions

Original Revenue Estimate:.......................................$285.9 
Less:
    Decrease in Retail Charges....................................(10.6)
    Decrease in Federal Revenue...................................(14.8)
Add:
    Aqueduct Interest Payment.....................................  2.2 
    Increase in other revenue items...............................  0.7 
                        -----------------------------------------------------------------
                        ________________________________________________
      Revised Revenue Estimate....................................263.4 

    The change in the revenue estimate for retail customers reflects 
adjustments to the original consumption estimates that were used in 
WASA's revenue model. Federal agency revenues also were adjusted from 
the accrual estimate of $33.9 million to a cash estimate of $19.1 
million because the District must adhere to Public Law 101-168, which 
gives the Federal government three years to adjust its budget for 
changes in rates and usage. At present, WASA does not have sufficient 
cash reserves to fund additional expenditures while carrying these 
receivables on their books. Finally, the revenue estimate was increased 
by $2.2 million to reflect interest payments due from the surrounding 
jurisdictions for the Washington Aqueduct and to add $700,000 to other 
revenue items.
    The WASA Board agreed that the adjustments were necessary and 
approved the changes. The District's CFO certified the revised revenue 
estimate, and the Authority approved the revised revenue estimate for 
inclusion in the District's fiscal year 1998 financial plan and budget. 
The reallocation of expenses to conform to the revised revenue estimate 
is the responsibility of WASA's Board of Directors.
                            capital program
    Mr. Chairman, the fiscal years 1998-2003 Capital Improvement Plan 
and fiscal year 1998 Capital Budget (``CIP''), submitted by the Council 
to the Authority on June 3, 1997, contain many areas of significant 
improvement over previous CIP submissions. The District, as part of the 
fiscal year 1998 CIP formulation, has successfully identified and 
listed recommended projects and sub-projects for authorization, and has 
begun to incorporate some budgetary management and control in the 
process. The CIP also contains a spending plan and financing schedule 
that is project based and identifies sources of funding for each 
project.
    The Authority, however, remains concerned over several areas of the 
CIP formulation process, including the failure of the District to 
incorporate: a needs-based strategic capital plan, with a depreciation 
and replacement schedule; a District-wide facilities condition 
assessment; a fixed asset inventory; and a list of owned and leased 
space.
    In addition, the Authority has raised several issues with the 
District concerning the capital budget formulation process. 
Specifically, the Authority was concerned about the lack of sufficient 
resources within the Capital Division of the Office of Budget to insure 
budgetary control over the CIP, the need to improve the monitoring and 
control over planned spending via the District's Financial Management 
System, the District's failure to hold agencies accountable for 
implementing their capital projects in compliance with projected and 
budgeted spending levels, and the existence of numerous instances where 
budget authority and financing remain outstanding for projects that are 
substantially complete. The District's failure to complete this task 
has resulted in significant amounts of unexpended capital funds, even 
as the City continues to borrow additional funds for new and existing 
projects.
    Another area of concern is that the District's borrowing capacity 
is severely hampered by resources available in the operating budget to 
pay debt service, the debt ceiling cap of 14 percent of anticipated 
revenues, and the District's limited authority to issue alternative 
types of debt instruments. The Authority has recognized and noted in 
its Strategic Plan that the District's annual infrastructure financing 
need, although not quantified as a result of the District's failure to 
complete a comprehensive facilities assessment, is significantly higher 
than the most recent projections of average future borrowings of $150 
million annually.
    The list of fiscal year 1998 capital projects submitted by the 
Council to the Authority for approval totaled $194 million. This list 
exceeded the budgeted fiscal year 1998 bond authorization level by $44 
million. As a result, the Authority requested that the Capital Project 
Review Team (CPRT) re-prioritize and reformulate the capital project 
list to reflect the expected fiscal year 1998 capital borrowing plan. 
The Authority then approved the new CPRT list of capital projects with 
one adjustment--a $10 million increase in public schools financing. The 
Authority notes that there is a great deal of uncertainty as to the 
amount of excess capital funds remaining in prior year capital 
accounts. This uncertainty is due to the failure of the District to 
complete its project close-out process, which must be done in order to 
determine the actual balance of additional funds available to be 
reprogrammed. Under current law, in order to transfer unused and excess 
capital funds from one agency to another, a reprogramming of capital 
funds must occur, which requires the approval of the Mayor, the 
Council, and the Authority. The authorization of any remaining projects 
will be contingent upon the District completing the close-out process 
described above, and the successful reprogramming of remaining excess 
capital funds.
    Finally, the Authority has encouraged the development of approaches 
to capital financing that would more closely match the maturity of 
financings to the expected life of assets. The Budget Office has begun 
to identify short-lived capital projects included in the fiscal year 
1998 CIP which may be eligible for financing on a shorter-term basis 
than the 30-year authorized term currently used by the District on 
capital borrowing. The Authority recommends that the District complete 
this process as soon as possible to receive any further reductions in 
interest cost savings.
                         budget process changes
    Finally, Mr. Chairman, I wish briefly to take note of the budget 
process required under Public Law 104-8. With all respect to those who 
drafted the budgetary provisions of the Act, most parties would agree 
that, despite good intentions, the process by which the District of 
Columbia government must develop and approve an annual financial plan 
and budget is cumbersome and time consuming. Moreover, as the result of 
this year's budget proves, a process that guarantees extensive 
engagement and collaboration of all parties does not, by itself, ensure 
consensus. Thus, I have asked the Authority staff to provide the Board 
with recommendations on streamlining and making more effective the 
budget process. Once reviewed and approved, I will respectfully submit 
proposed law changes to the appropriate Congressional Committees for 
their consideration.
    Mr. Chairman, that concludes my testimony. I would be happy to 
respond to any questions that you or your colleagues have at this time.

             BUDGET OF THE DISTRICT OF COLUMBIA LOCAL FUNDS FOR FISCAL YEAR 1997 AND FISCAL YEAR 1998 AND GROSS BUDGET FOR FISCAL YEAR 1998             
                                                                [In thousands of dollars]                                                               
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Differences                                                             
                                                                                  between                              Proposed                         
                                                                      Fiscal    fiscal year    Fiscal                   fiscal      Grants,      Gross  
                                                                     year 1997    1997 and    year 1998   Authority    year 1998    intra-      fiscal  
                                                                       local      Council     Council's  adjustments     local     District    year 1998
                                                                       funds    fiscal year    budget                    funds     and other    budget  
                                                                                    1998                                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
Council...........................................................       8,656          -83       8,573  ...........       8,573           2       8,575
ANC...............................................................         562  ...........         562  ...........         562         562            
Mayor.............................................................       1,425          -33       1,392  ...........       1,392         632       2,024
Executive Secretary...............................................      1,6111          -99       1,512  ...........       1,512         557       2,069
Communications....................................................         110          -20          90           90         238         328            
Intergovernmental Relations.......................................         671            1         670  ...........         670         555       1,225
Inspector General.................................................       7,070       -1,339       5,731  ...........       5,731  ..........       5,731
City Administrator................................................       3,827         -105       3,722  ...........       3,722         695       4,417
Personnel.........................................................       8,435         -113       8,322         -125       8,197       1,923      10,120
Administrative Services...........................................       8,332         -518       7,814       -1,530       6,284      15,736      22,020
Contract Appeals Board............................................         550           84         634  ...........         634  ..........         634
                                                                   =====================================================================================
CFO...............................................................       4,206          761       4,967  ...........       4,967         200       5,167
Budget............................................................       2,899         -898       2,001  ...........       2,001      16,823      18,824
Financial Ops and Systems.........................................      12,067       -2,040      10,027  ...........      10,027      2,7241      12,751
Finance and Treasury..............................................       6,414  ...........       6,414  ...........       6,414       2,608       9,022
Tax and Revenue...................................................      20,463       -3,023      17,440       -1,000      16,440          73      16,513
                                                                   -------------------------------------------------------------------------------------
      CFO SUBTOTAL (20-24)........................................      46,049       -5,200      40,849       -1,000      39,849      22,428      62,277
                                                                   =====================================================================================
Tax Revision Commission...........................................  ..........          500         500  ...........         500  ..........         500
Bd of Elections and Ethics........................................       2,707          240       2,947  ...........       2,947  ..........       2,947
Campaign Finance..................................................         785           23         808  ...........         808  ..........         808
Public Employee Rel Board.........................................         315           98         413  ...........         413  ..........         413
Employee Appeals..................................................       1,087           52       1,139  ...........       1,139  ..........       1,139
Council of Governments............................................         396          -22         374  ...........         374  ..........         374
Auditor...........................................................         962          -43         919  ...........         919  ..........         919
                                                                   -------------------------------------------------------------------------------------
      GOVT DIRECTION AND SUPPORT..................................      93,550       -6,579      86,971       -2,655      84,316      42,766     127,082
                                                                   =====================================================================================
Asst City Admin for Econ Dev:                                                                                                                           
    Busn Services and Econ Dev....................................      27,930          675      28,605       -1,719      26,886      31,593      58,479
    Zoning........................................................         605         -221         384  ...........         384         543         927
    Dept of Employment Services...................................      14,313      d-7,727       6,586         -272       6,314      51,005      57,319
    Consumer and Reg Affairs......................................       4,509          471       4,980         -706       4,274      10,253      14,527
    Public Assisted Housing.......................................       8,163       -3,513       4,650       -2,570       2,080  ..........       2,080
    Appeals and Review............................................         153  ...........         153  ...........         153  ..........         153
    Bd Real Prop Appeals/Assess...................................         343          -57         286  ...........         286  ..........         286
                                                                   -------------------------------------------------------------------------------------
      ECONOMIC DEVELOPMENT........................................      56,016      -10,372      45,644       -5,267      40,377      93,394     133,771
                                                                   =====================================================================================
Police............................................................     236,339       18,246     254,585       -5,000     249,585      22,798     272,383
Fire..............................................................     103,745       -2,422     101,323       -3,126      98,197         654      98,851
Court of Appeals..................................................       6,023          -23       6,000  ...........       6,000  ..........       6,000
Superior Court....................................................      72,277       -1,870      70,407        2,599      73,006       3,639      76,645
Court System......................................................      35,459         -307      35,152  ...........      35,152  ..........      35,152
Settlements and Judgements........................................      14,800  ...........      14,800  ...........      14,800  ..........      14,800
Pretrial..........................................................       3,737          825       4,562  ...........       4,562         524       5,086
Corrections.......................................................     260,528       16,367     244,161       10,006     254,167       5,319     259,486
Parole............................................................       5,960          -54       5,906          -72       5,834       1,711       7,545
Emergency Preparedness............................................       1,417          -79       1,338  ...........       1,338       1,499       2,837
Police and Fire Retirement........................................     226,700      -15,700     211,000  ...........     211,000  ..........     211,000
Judges Retirement.................................................       5,500       -2,400       3,100  ...........       3,100  ..........       3,100
Corporation Counsel...............................................      12,363          115      12,478  ...........      12,478       4,940      17,418
Public Defender...................................................       7,797          -44       7,753  ...........       7,753  ..........       7,753
National Guard....................................................         876          -18         858  ...........         858  ..........         858
Judicial Disabilities.............................................         125  ...........         125  ...........         125  ..........         125
Judicial Nomination...............................................          78  ...........          78  ...........          78  ..........          78
                                                                   -------------------------------------------------------------------------------------
      PUBLIC SAFETY AND JUSTICE...................................     993,724      -20,098     973,626        4,407     978,033      41,084   1,019,117
                                                                   =====================================================================================
Public Schools....................................................     472,318      -11,130     461,188          795     461,983     105,116     567,099
9Public Charter Schools...........................................       2,835       -1,600       1,235  ...........       1,235  ..........       1,235
University of D.C.................................................      37,797         -154      37,643          148      37,791      43,496      81,287
Public Library....................................................      20,867         -438      20,429           -5      20,424       1,612      22,036
Arts and Humanities...............................................       1,724          -20       1,704  ...........       1,704         353       2,057
Teachers Retirement...............................................      88,100        4,400      92,500  ...........      92,500         800      93,300
                                                                   -------------------------------------------------------------------------------------
      PUBLIC EDUCATION............................................     623,641       -8,942     614,699          938     615,637     151,377     767,014
                                                                   =====================================================================================
Human Servces-Non-Medicaid........................................     341,300       -7,765     333,535           75     333,610    9340,171     673,781
Medicaid..........................................................     401,000        8,000     409,000  ...........     409,000     425,420     834,420
Foster Care.......................................................      70,545  ...........      70,545  ...........      7O,545      18,003      88,548
Public Health Clinics.............................................      14,500      -14 500  ..........  ...........  ..........  ..........  ..........
Total Human Services (78-81)......................................     827,345      -14,265     813,080           75     813,155     783,594   1,596,749
Dept of Recreation and Parks......................................      22,095       -1,532      20,563          159      20,722       5,366      26,088
Office on Aging...................................................      13,312       -1,023      12,289  ...........      12,289       6,103      18,392
Public Benfit Corporation.........................................      37,935        6,400      44,335  ...........      44,335  ..........      44,335
Unemploy. Compensation............................................      10,678  ...........      10,678  ...........      10,678  ..........      10,678
Disability Comp...................................................      24,O89       -3,000      21,089  ...........      21,089  ..........      21,089
Human Rights and Minority Busn....................................         718          103         821  ...........         821         106         927
Energy Office.....................................................  ..........  ...........  ..........  ...........  ..........       5,000       5,000
Latino Affairs....................................................         640           -4         636  ...........         636          30         666
Commission on Women...............................................  ..........  ...........  ..........  ...........  ..........          20          20
                                                                   -------------------------------------------------------------------------------------
      HEALTH AND HUMAN SERVICES...................................     936,812      -13,321     923,491          234     923,725     800,219   1,723,944
                                                                   =====================================================================================
Public Works......................................................      95,746          -71      95,675        1,260      96,935      52,523     149,458
Taxicab Commisssion...............................................         419         -142         277  ...........         277         571         848
WMATA.............................................................     129,008       -1,778     127,230  ...........     127,230  ..........     127,230
Transit Commission................................................          96           -5          91  ...........          91  ..........            
School Transit Subsidy............................................       3,839         -389       3,450  ...........       3,450  ..........       3,450
                                                                   -------------------------------------------------------------------------------------
      PUBLIC WORKS................................................     229,108       -2,385     226,723        1,260     227,983      53,094     281,077
                                                                   =====================================================================================
Debt Service......................................................     333,710       70,858     404,568         -352     404,216  ..........     404,216
Short-Term Borrowing..............................................      34,461      -18,613      15,848        2,309      18,157  ..........      18,157
Convention Center Transfer........................................       5,400  ...........       5,400  ...........       5,400  ..........       5,400
General Fund Recovery Debt........................................      38,314      -38,314  ..........  ...........  ..........  ..........  ..........
Human Resource Development........................................      12,257       -7,361       4,896        1,104       6,000  ..........       6,000
Certificate of Participation......................................       7,926           -3       7,923  ...........       7,923  ..........       7,923
Inaugural.........................................................       5,702       -5,702  ..........  ...........  ..........  ..........  ..........
                                                                   -------------------------------------------------------------------------------------
      FINANCING AND OTHER USES....................................     437,770          865     438,635        3,061     441,696  ..........     441,696
                                                                   =====================================================================================
Financial Authority...............................................       3,220  ...........       3,220  ...........       3,220  ..........       3,220
                                                                   -------------------------------------------------------------------------------------
      TOTAL GENERAL FUND..........................................   3,373,841      -60,832   3,313,009        1,978   3,314,987   1,181,934   4,496,921
                                                                   =====================================================================================
DPW (Utility Administration)......................................  ..........  ...........  ..........  ...........  ..........     263,425     263,425
Aqueduct..........................................................  ..........  ...........  ..........  ...........  ..........      33,885      33,885
                                                                   -------------------------------------------------------------------------------------
      TOTAL WATER AND SEWER ENTERPRISE............................  ..........  ...........  ..........  ...........  ..........     297,310     297,310
                                                                   =====================================================================================
Public Service Commission.........................................       4,250  ...........       4,250  ...........       4,250         297       4,547
Offce of People's Counsel.........................................       2,428  ...........       2,428  ...........       2,428  ..........       2,428
Dept of Insurance and Sec.........................................  ..........  ...........  ..........  ...........  ..........       5,683       5,683
Banking and Financial Institutions................................  ..........          100         100  ...........         100         500         600
Correctional Industries...........................................  ..........  ...........  ..........  ...........  ..........       9,432       9,432
Cable.............................................................       2,135  ...........       2,135  ...........       2,135         332       2,467
Lottery...........................................................  ..........  ...........  ..........  ...........  ..........     213,500     213,500
Retirement Board..................................................  ..........  ...........  ..........  ...........  ..........      16,762      16,762
D.C. General......................................................  ..........  ...........  ..........  ...........  ..........      64,099      64,099
Convention Center.................................................  ..........  ...........  ..........  ...........  ..........      46,400      46,400
Sports Commission/Starplex........................................  ..........  ...........  ..........  ...........  ..........       5,936       5,936
                                                                   -------------------------------------------------------------------------------------
      TOTAL ENTERPRISE FUNDS......................................       8,813          100       8,913  ...........       8,913     660,251     669,164
                                                                   =====================================================================================
Expenditures Pending Revenues.....................................  ..........       10,412      10,412      -10,412  ..........  ..........            
                                                                   -------------------------------------------------------------------------------------
      TOTAL APPROPRIATIONS........................................   3,382,654      -60,732   3,332,334       -8,434   3,323,900   1,842,185   5,166,085
                                                                   =====================================================================================
Appropriation Title:                                                                                                                                    
    Government Direction..........................................      93,550       -6,579      86,971       -2,655      84,316      42,766     127,082
    Economic Development..........................................      56,016      -10,372      45,644       -5,267      40,377      93,394     133,771
    Public Safety and Justice.....................................     993,724      -20,098     973,626        4,407     978,033      41,084   1,019,117
    Public Education..............................................     623,641       -8,942     614,699          938     615,637     151,377     767,014
    Health and Human Services.....................................     936,812      -13,321     923,491          234     923,725     800,219   1,723,944
    Public Works..................................................     229,108       -2,385     226,723        1,260     227,983      53,094     281,077
    Financing and Other Uses......................................     437,770          865     438,635        3,061     441,696  ..........     441,696
    Authority.....................................................       3,220  ...........       3,220  ...........       3,220  ..........       3,220
    Enterprise....................................................       8,813          100       8,913  ...........       8,913     660,251     669,164
    Expenditures Pending Revenue..................................  ..........  ...........      10,412      -10,412  ..........  ..........  ..........
                                                                   -------------------------------------------------------------------------------------
      TOTAL.......................................................   3,382,654      -60,732   3,332,334       -8,434   3,323,900   1,842,185   5,166,085
                                                                   =====================================================================================
Revenue Estimates.................................................   3,251,750       66,150   3,317,900  ...........   3,317,900   1,842,185   5,160,085
Revenue Initiatives...............................................      56,938      -52,938       4,000        2,000       6,000  ..........       6,000
Penidng Revenues..................................................  ..........       10,112      10,412       10,412  ..........  ..........            
                                                                   -------------------------------------------------------------------------------------
      TOTAL REVENUE...............................................   3,308,688       13,212   3,332,312       -8,412   3,323,900   1,842,185   5,166,085
                                                                   =====================================================================================
REVENUE VS. EXPENDITURES..........................................     -73,966       73,944         -22  ...........  ..........  ..........  ..........
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Senator Faircloth. Thank you, Dr. Brimmer.
    I do want to say that I have been impressed by the detailed 
accounting that has gone into the budget.
    I cannot believe that this kind of care has gone into it in 
years past, or the city would not be in the position it is in 
today.

                      detailed and exacting budget

    I want to say to you, Dr. Brimmer, and to you, Ms. Cropp, 
that it is a very detailed and exacting budget, and the 
differences will be worked out, but I would like to recognize 
the head of the Senate Appropriations Committee, the most 
powerful man probably in the Senate, and certainly one of the 
most experienced and knowledgeable.
    Senator Stevens, we would be delighted to hear anything you 
have to say.

                        STATEMENT OF TED STEVENS

    Senator Stevens. Thank you very much, Mr. Chairman. I thank 
you for that promotion. I am delighted to come by.
    I noticed, Mayor Barry, your comment about Senator 
Faircloth's commitment to this subcommittee, and it is really 
very true. I do not know if the world knows it, but I told him 
that with his chore to try and get reelected, this is probably 
a subcommittee he should pass up. But he decided that he wanted 
to do it, and he has taken clearly the bit in his teeth.
    I like what he tried to do in last year's bill. We are 
going to work with him here now in our process to try and see 
to it that he works with you and with Dr. Brimmer and see if we 
cannot find some way to resolve some of these controversies.
    I share what Senator Faircloth has just stated, that there 
is no question that we have more detail now on this budget than 
we have ever had before, and I am hopeful that we can work with 
you and help resolve some of these problems.

               transformation plan for public management

    Mr. Mayor, it is my understanding that you have given the 
committee a copy of the transformation plan for public 
management. Could we ask if that plan in legislative language 
has gone to the City Council so the City Council can consider 
your plan?
    Mayor Barry. Senator, we have sent portions of the plan to 
the City Council. For instance, the procurement function of 
public management has been enacted into law by the City 
Council, and we have sent the personnel function--we have not 
sent the reorganization over to the City Council yet. We have 
it ready to go, but we are in a dialog with Mrs. Patterson, the 
chair of the committee, to make sure that there are some areas 
that she may have concerns about that are addressed. We intend 
to send that over fairly shortly.
    Senator Stevens. I have been working with Senator Jeffords 
on his proposal to help in the financing of particularly the 
education portion of the District's problems.
    In your statement that you filed with us, you indicate that 
you believe that the Control Board under Dr. Brimmer, they are 
$5.5 million lower than your budget, yet the District of 
Columbia's Office of Budget and Planning indicates the 
difference is about $1 million. Is it possible to resolve the 
conflicts in that budget without our involvement?
    Mayor Barry. Are you speaking of the public education 
budget?

                     difference in school's budget

    Senator Stevens. Yes; the D.C. school budget.
    Mayor Barry. That number was an earlier number and, looking 
at Dr. Brimmer's new analysis here, it is closer to about 
$795,000, that is all.
    Senator Stevens. Is this something we should become 
involved with, or are you going to be able to work that number 
out?
    Mayor Barry. I think that is small enough to be worked out.
    Senator Stevens. They tell us we do have a vote on, so let 
me just wind up my request.
    For another member, Mr. Mayor, I have been asked to ask 
that you provide the committee with a list of full-time 
equivalent positions in the Mayor's office for fiscal year 1998 
with a job description and the salary for each position. Could 
we have that from you?
    Mayor Barry. Yes, sir.
    [The information follows:]
                     Letter From Marion Barry, Jr.
                                  The District of Columbia,
                                     Washington, DC, July 17, 1997.
The Honorable Lauch Faircloth,
United States Senate,
Hart Senate Office Building, Washington, DC.
    Dear Senator Faircloth: During my testimony at last week's hearing 
on the fiscal year 1998 Budget for the District of Columbia, I 
indicated that I would forward some comparative information on the 
staffing of the Executive Office of the Mayor (EOM). While I promised 
to submit data back to fiscal year 1994, the middle of the Kelly 
Administration, I thought it might be helpful to present data relevant 
to my previous term as well.
    The following chart reflects authorized staffing ceilings for the 
EOM for the fiscal years 1989 through the present.

        Fiscal year                                            FTE total

1989..............................................................   157
1990..............................................................    98
1991..............................................................    93
1992..............................................................   142
1993..............................................................   128
1994..............................................................   132
1995..............................................................   112
1996..............................................................    86
1997..............................................................    86

    In fiscal year 1989 the maximum authorized staffing level in the 
EOM was 157 Full-Time Equivalent (FTE's) employees. During the 
following two years, I reduced the EOM staffing ceiling to 93 FTE's. 
This action was in direct response to the findings of a commission that 
I created that was headed by Alice Rivlin. The Rivlin Commission 
Report, as it has come to be known, was the first critical self-
analysis of the District Government. There were specific 
recommendations made with respect to the structure of the District 
government, as well as staffing level recommendations. I fully 
supported the Commission's findings then and now. During the first full 
year of operations of the Kelly Administration, the authorized FTE 
level increased from 93 FTE's to 142 FTE's.
    In fiscal year 1994, the third year of the Kelly Administration, 
the EOM had 132 authorized FTE's. During the second year of the Kelly 
Administration, there were 142 authorized FTE's. In comparison, during 
the second year of the present Barry Administration, there were 86 
authorized FTE's or 40 percent less FTE's in the EOM. Both 
administrations have supplemented these authorized staffing levels with 
detailed employees. Currently, the EOM has 26 employees detailed to 
support critical service delivery requirements. At one point, as 
discussed in my enclosure, the Kelly administration maintained at least 
48 employees on detail from other agencies.
    The referenced reduction in authorized staffing levels has occurred 
notwithstanding increased demands and requests for information from the 
Control Board, Congress and the City Council with respect to budget 
development and increased oversight and transformation initiatives. Any 
further reductions in the FTE level for the EOM would leave EOM without 
the capacity to respond to and deliver the services our residents 
expect and deserve.
    Thousands of residents depend on the work of the Office of the 
Ombudsman. This office includes four FTE's and ten persons on detail 
from other agencies. The City Council Budget, while not reflecting all 
the priorities of this Administration, at least recognizes the 
importance and relevance of providing FTE's to provide constituent 
services through the Office of the Ombudsman.
    Every reported independent analysis of District Government 
operations that has been conducted since that time (McKinley Report, 
Appleseed, Brookings, DCAgenda, etc) has reached the same or similar 
conclusions set forth in the Rivlin Report. The structure of the 
District of Columbia government is flawed and unworkable. The City will 
never be able to generate sufficient resources to pay for the services 
for its residents and those who visit the Nation's Capital, given the 
restrictions on its ability to raise revenues, limitations imposed by 
its charter and structure of government. Accordingly, additional 
decreases in staff will not necessarily solve the District's 
operational problems.
    I encourage you and your staff to review the enclosed documentation 
in hope that you will gain a better understanding of the following: the 
structure of the EOM; the decreases in the EOM under the Barry 
Administrations; the number and role of the detailed employees in the 
EOM; and the breath of responsibilities and functions that must be 
staffed to support the Executive Office of this government.
    I am enclosing the following documents: (1) Executive Office of the 
Mayor Full-time Equivalent Position Comparison (fiscal year 1989-fiscal 
year 1997); (2) ``As Is'' Organizational Structure--Executive Office of 
the Mayor--July 1997; (3) Executive Office of the Mayor Staffing--
fiscal year 1997.
    I look forward to working with you on these and other issues of 
concern to the District of Columbia. If you have any questions, please 
contact me.
            Sincerely,
                                         Marion Barry, Jr.,
                                                             Mayor.

EXECUTIVE OFFICE OF THE MAYOR FULL-TIME EQUIVALENT (FTE) POSITION COMPARISON (FISCAL YEAR 1989-FISCAL YEAR 1997)
----------------------------------------------------------------------------------------------------------------
                                                                  Barry             Kelly             Barry     
                                                             administration    administration    administration 
                          Agency                           -----------------------------------------------------
                                                            1989  1990  1991  1992  1993  1994  1995  1996  1997
----------------------------------------------------------------------------------------------------------------
Office of the Mayor (AA)..................................    44    27    27    37    32    32    25    29    29
Office of the Secretary (BA)..............................    44    29    28    41    41    50    50    34    34
Office of Communications (BB).............................    11     9     9     9     9     7     6     6     6
Office of Intergovernmental Relations (BP)................    58    33    29    55    46    43    31    17    17
                                                           -----------------------------------------------------
      EOM Totals..........................................   157    98    93   142   128   132   112    86    86
----------------------------------------------------------------------------------------------------------------


    ``AS IS'' ORGANIZATIONAL STRUCTURE--EXECUTIVE OFFICE OF THE MAYOR   
                               [July 1997]                              
------------------------------------------------------------------------
                                   Grade/                               
          Position title            step    Salary     Source of detail 
------------------------------------------------------------------------
Mayor's Office:                                                         
    Mayor........................   00/00   $85,705  ...................
    General Assistant............   17/01    87,895  ...................
    Executive Assistant..........   13/04    50,888  ...................
    Logistical Assistant (Detail)   11/01    32,577  (CF) Employment    
                                                      Services.         
    Administrative Assistant        11/09    40,921  (BE) Personnel     
     (Detail).                                        Office.           
    Secretary....................   09/03    28,750                     
    Secretary (Detail)...........   06/08    24,619  (CF) Employment    
                                                      Services.         
    Secretary (Detail)...........   06/01    20,181  (JA) Human         
                                                      Services.         
    Clerical Assistant (Detail)..   05/06    21,068  (AS) Administrative
                                                      Services.         
    Clerical Assistant...........   05/01    18,208  ...................
Press Secretary's Unit:                                                 
    Press Secretary..............   16/01    75,599                     
    Staff Assistant..............   12/05    44,045  ...................
Mayor's Scheduling Unit:                                                
    Employee Dev. Spec. (Detail).   13/03    49,399  (BE) Personnel     
                                                      Office.           
    Scheduling Assistant.........   13/01    46,421  ...................
    Scheduling Assistant.........   09/03    28,750  ...................
    Staff Assistant..............   07/10    28,657  ...................
    Scheduling Spec..............   07/03    23,701  ...................
Chief of Staff's Office:                                                
    Chief of Staff...............   17/04    81,885  ...................
    Deputy Chief of Staff........   15/07    76,949  ...................
    Executive Assistant..........   12/04    42,795  ...................
    Administrative Aide..........   11/02    33,620  ...................
Office of Diversity and Special                                         
 Services:                                                              
    Director.....................   15/03    68,665  ...................
    Executive Assistant..........   13/01    46,421  ...................
    Special Assistant............   12/03    41,545  ...................
    Special Assistant............   12/01    39,045  ...................
    Staff Assistant (Detail).....   11/03    34,663  (FL) Corrections.  
    Staff Assistant..............   07/01    22,285  ...................
Office of Religious Affairs                                             
    Special Assistant for           12/01    39,045  ...................
     Religious Affairs.                                                 
    Staff Assistant..............   10/04    32,501  ...................
Board and Commission's Office:                                          
    Special Assistant............   14/04    58,378  ...................
    Staff Assistant..............   12/03    41,545  ...................
    Staff Assistant..............   11/06    37,792  ...................
    Staff Assistant (Detail).....   09/06    31,348  (CF) Employment    
                                                      Services.         
    Staff Assistant (Detail).....   06/04    22,083  (FL) Corrections.  
Office of Ombudsman:                                                    
    Director.....................   15/02    66,594  ...................
    Deputy Ombudsman (Detail)....   13/07    55,355  (JA) Human         
                                                      Services.         
    Community Serv. Rep..........   09/06    31,348  ...................
    Comm. Serv. Rep. (Detail)....   09/01    27,018  (JA) Human         
                                                      Services.         
    Business Services (Detail)...   09/01    27,018  (KA) Public Works. 
    Business Services (Detail)...   07/10    28,657  (FA) Police        
                                                      Department.       
    Comm Serv. Rep. (Detail).....   07/10    28,657  (FA) Police        
                                                      Department.       
    Business Service (Detail)....   07/10    28,657  (FB) Fire          
                                                      Department.       
    Program Assistant (Detail)...   07/01    22,285  (JA) Human         
                                                      Services.         
    Business Services (Detail)...   07/01    22,285  (FA) Police        
                                                      Department.       
    Community Serv. Rep..........   07/01    22,285  ...................
    Computer Assistant (Detail)..   05/01    18,208  (FB) Fire          
                                                      Department.       
    Information Recept...........   04/01    16,400  ...................
    Clerk (Detail)...............   03/01    14,724  (JA) Human         
                                                      Services.         
Office of Communications:                                               
    Director.....................   16/01    75,599  ...................
    Corres. Mgt. Officer.........   13/04    50,888  ...................
    Public Affairs Spec..........   11/02    33,620  ...................
    Writer-Editor................   09/05    30,482  ...................
    Public Affairs Spec..........   09/05    30,482  ...................
    Staff Assistant (Detail).....   07/01    22,285  (CF) Employment    
                                                      Services.         
    Clerical Asst................   05/01    18,208  ...................
Office of Intergovernmental                                             
 Relations:                                                             
    Director.....................   17/01    81,885  ...................
    Legislative Analyst..........   12/01    39,045  ...................
    Staff Assistant..............   12/07    46,545  ...................
    Clerical Assistant...........   07/03    23,701  ...................
Congressional Affairs:                                                  
    Legislative Analyst..........   13/05    52,377  ...................
    Staff Assistant..............   12/02    40,295                     
Council Affairs:                                                        
    Legislative Analyst..........   13/07    53,355  ...................
    Legislative Analyst..........   13/10    59,822  ...................
    Legislative Analyst..........   12/01    39,045                     
Regional Affairs:                                                       
    Regional Affairs Specialist..   14/01    54,858  ...................
    Staff Assistant (Detail).....   11/08    39,878  (JA) Human         
                                                      Services.         
Office of Policy and Evaluation:                                        
    Director.....................   17/01    81,885  ...................
    Executive Assistant (Detail).   15/08    79,020  (CF) Employment    
                                                      Services.         
    Edc. Policy Officer..........   14/06    63,658  ...................
    Special Assistant (Detail)...   14/02    56,618  (DD) Parole Board. 
    Policy Analyst...............   13/06    53,866  ...................
    Oper. Research Analyst.......   13/04    50,888  ...................
    Youth Policy Analyst.........   12/01    39,045  ...................
    Public Health Advisor           11/05    36,749  (JA) Human         
     (Detail).                                        Services.         
    Policy Analyst...............   09/04    29,616  ...................
    Staff Assistant (Typing).....   08/10    31,609  ...................
Office of the Secretary:                                                
    Secretary, D.C...............   15/02    66,594  ...................
    Project Manager Assistant       13/05    52,377  (SC) Sports        
     (Detail).                                        Commission.       
    Special Assistant............   13/03    49,399  ...................
    Visual Info. Spec............   12/10    50,295  ...................
    Paralegal Specialist (Detail)   12/04    42,795  (CF) Employment    
                                                      Services.         
    Special Assistant............   12/01    39,045  ...................
    Staff Assistant..............   11/05    36,749  ...................
    Administrative Assistant.....   09/01    27,018  ...................
    Clerk........................   05/05    20,496  ...................
    Clerk........................   07/01    22,285  ...................
Notary Unit:                                                            
    Notary Auth. Officer.........   14/05    61,898  ...................
    Notary Auth. Specialist......   12/04    42,795  ...................
    Notary Auth. Specialist......   09/05    30,482  ...................
    Clerk........................   05/01    18,208  ...................
Ceremonial Services:                                                    
    Special Assistant............   12/05    44,045  ...................
    Staff Assistant..............   11/05    36,749  ...................
    Staff Assistant..............   07/10    28,657  ...................
Controller's Office:                                                    
    Financial Manager............   14/04    60,138  ...................
    Special Assistant............   14/04    60,138  ...................
    Financial Mgmt...............   13/04    50,888  ...................
    Financial Mgmt. Specialist...   12/06    45,295  ...................
    Human Resource Specialist....   12/04    42,795  ...................
    Budget Assistant.............   05/02    18,780  ...................
Records Management Unit:                                                
    Archivist....................   13/06    53,866  ...................
    Public Records Administrator.   13/01    46,421  ...................
    Archivist Tech...............   07/08    27,241  ...................
Office of Documents/Admin.,                                             
 Issuance:                                                              
    Administrator................   15/03    68,665  ...................
    Legislative and Res.            13/10    59,822  ...................
     Specialist.                                                        
    Editor.......................   12/06    45,295  ...................
    Attorney Advisor.............   12/06    45,295  ...................
    Administrative Ofc...........   12/04    42,795  ...................
    Admin. Issuance Assistant....   11/05    36,749  ...................
    Clerk........................   04/06    18,945  ...................
Correspondence Office:                                                  
    Correspondence Management Ofc   13/04    50,888  ...................
    Correspondence Mgt. Spec.....   07/02    22,993  ...................
    Staff Assistant..............   07/01    22,285  ...................
------------------------------------------------------------------------


                                                       EXECUTIVE OFFICE OF THE MAYOR NINE YEAR FISCAL COMPARISON (FISCAL YEARS 1989-1997)                                                       
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 1989                                1990                                1991                                1992               
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
                     Agency                                                 Agency                              Agency                              Agency                              Agency  
                                                      PS         OTPS        total        PS         OTPS        total        PS         OTPS        total        PS         OTPS        total  
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Office of the Mayor (AA)........................   1,841,000     475,000   2,316,000   1,658,000     475,000   2,133,000   1,240,000     693,000   1,933,000   1,541,000     376,000   1,917,000
Office of the Secretary (BA)....................   1,522,000     927,000   2,449,000   1,526,000     898,000   2,424,000   1,218,000     854,000   2,072,000   1,396,000     693,000   2,089,000
Office of Communications (BB)...................     451,000     207,000     658,000     392,000     141,000     533,000     352,000     110,000     462,000     362,000      64,000     426,000
Office of Intergovernmental Relations (BP)......   2,409,000     848,000   3,257,000   2,124,000     810,000   2,934,000   1,415,000     770,000   2,185,000   2,255,000     498,000   2,753,000
                                                 -----------------------------------------------------------------------------------------------------------------------------------------------
      EOM Totals................................   6,223,000   2,457,000   8,680,000   5,700,000   2,324,000   8,024,000   4,225,000   2,427,000   6,652,000   5,554,000   1,631,000   7,185,000
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------


                                                                      EXECUTIVE OFFICE OF THE MAYOR TEN YEAR FISCAL COMPARISON (FISCAL YEARS 1987-1997)--Continued                                                                      
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   1993                             1994                             1995                             1996                             1997             
                                                                    --------------------------------------------------------------------------------------------------------------------------------------------------------------------
                               Agency                                                        Agency                           Agency                           Agency                           Agency                           Agency 
                                                                         PS        OTPS      total        PS        OTPS      total        PS        OTPS      total        PS        OTPS      total        PS        OTPS      total  
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Office of the Mayor (AA)...........................................  1,420,000    267,000  1,687,000  1,623,000    115,000  1,738,000  1,631,000    116,000  1,747,000  1,268,000    280,000  1,548,000  1,507,000    550,200  2,057,200
Office of the Secretary (BA).......................................  1,888,000    987,000  2,875,000  1,738,000    808,000  2,546,000  1,860,000    476,000  2,336,000  1,887,000    458,000  2,345,000  1,703,000    465,000  2,168,000
Office of Communications (BB)......................................    350,000     36,000    386,000    267,000     79,000    346,000    273,000     88,000    361,000    210,000    103,000    313,000    238,000    110,000    348,000
Office of Intergovernmental Relations (BP).........................  1,843,000  2,040,000  3,883,000  1,672,000    103,000  1,775,000  1,789,000     25,000  1,814,000  1,184,000     75,000  1,259,000  1,044,000    182,000  1,226,000
                                                                    --------------------------------------------------------------------------------------------------------------------------------------------------------------------
      EOM totals...................................................  5,501,000  3,330,000  8,831,000  5,300,000  1,105,000  6,405,000  5,553,000    705,000  6,258,000  4,549,000    916,000  5,465,000  4,492,000  1,307,200  5,799,200
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    Mayor Barry. What I will do, Mr. Chairman, I will go back 
to 1994, 1995, 1996, so you can see the tremendous reductions 
that I have made in my office, so you can see the trend.
    Senator Stevens. I think that would be helpful.
    Mayor Barry. I will do that.
    Senator Stevens. That was not my question. We have but 6 
minutes left. I think we have to go vote, Mr. Chairman.
    Senator Faircloth. Thank you, Senator Stevens, and thank 
you for coming by. We will declare about a 5-minute recess, and 
we will be back and reconvene in about 5 minutes.
    [A brief recess was taken.]
    Senator Faircloth. The hearing will come to order.
    Mayor Barry, No. 1, I want to mention that Senator Stevens' 
visit shows the interest that this Congress has in the problems 
that the District of Columbia has faced, and his appearance 
demonstrates the total agreement in the Congress that they have 
got to be addressed and corrected.
    Now, how it has to be done, that is what we are working on 
now, but it has got to be done, and will be.

                     performance accountability act

    Mayor Barry, I have something that has concerned me right 
much, and that is, in the Federal Payment Reauthorization Act 
of 1994, they put in something called a Performance 
Accountability Act in which the city would report, I believe it 
was on March 1 of each year, and this first report was due in 
1995.
    Then there was one due in 1996, and now another one would 
have been due in 1997. Not one has come forth. In fact, a 
letter was submitted in February 1995 asking for a deferral 
until May 17, 1995. Three years have gone by, nothing has come 
forth, and I would like for you to explain to us why, and what 
is going on.
    Mayor Barry. Mr. Chairman, quite frankly, I really do not 
know all the rationale for this. I have had to deal with so 
many of these things. I might have to ask my city administrator 
where we are with that. I really have not focused on it.
    Senator Faircloth. Then turn right around and ask him, 
because this is something that is going to have to be answered.
    Mayor Barry. Senator, Michael Rogers, my city 
administrator, just informed me that 1995 and 1996 are ready to 
be transmitted.
    Senator Faircloth. That what?
    Mayor Barry. That 1995 and 1996 are ready to be transmitted 
to the Congress. We still have some work to do on 1997.
    Senator Faircloth. Turn around and ask him again, why has 
it taken 3 years to do it? When this letter came out, you 
wanted until May 17 to submit it in 1995. What is going on all 
the 3 years?
    Mayor Barry. I guess the honest answer, Mr. Chairman----
    Senator Faircloth. Well, that is the kind we would like, if 
it is possible.
    Mayor Barry. It just has not been done in a timely fashion. 
We have just dropped the ball on that.
    Senator Faircloth. Pardon?
    Mayor Barry. We just dropped the ball on part of it. That 
is the honest answer.
    Senator Faircloth. Well, ask him what day I can expect it, 
what date I can expect it.
    Mayor Barry. For 1995 and 1996, close of business today.
    Senator Faircloth. Close of business today?
    Mayor Barry. Yes.
    Senator Faircloth. That is the kind of answer I wanted. 
Thank you, sir.

                       services under court order

    Mayor, I have been troubled by the extremely large number 
of city services that are under a court order. Of course, you 
know and I know that they are out there. Several agencies have 
failed to comply, to satisfy the court orders to improve the 
services long enough that they are now running by court-
appointed receivers.
    Public housing and child welfare are being administered by 
receivers, and just recently a Federal judge announced that a 
receiver is being appointed to run mental health services.
    Would you explain to me why we have to run the capital 
under court order, and now we are running three, and what is 
being done to correct it, and when it will be corrected?

                    court orders--child welfare area

    Mayor Barry. Well, Senator, if you look at the child 
welfare area, these court orders, or these suits are not 
unusual. They have been filed in cities, counties, and States 
around the Nation.
    Senator Faircloth. Excuse me? They are not unusual?
    Mayor Barry. They are not unusual. That is, the child 
welfare suits. That is, plaintiffs and their attorneys have 
filed suits against cities, counties, and States around the 
Nation, and in terms of our own child welfare system we were 
not doing the kind of job that the court felt we should be 
doing. We disagreed with that. We filed opposition to the 
receiver, but the Federal judge ruled that we were not meeting 
the demands of the plaintiffs and appointed a receiver.
    The last receiver resigned, and the court has appointed a 
new one. We are working with the receiver. We have about 1\1/2\ 
years, 18 months left in this cycle to get the system to a 
point where the plaintiffs' attorney and the courts feel that 
we are doing what is constitutionally mandated. These are 
constitutionally based lawsuits. The same is true with mental 
health services.

                       mental health court order

    This is an area where, quite frankly, we think the Federal 
Government should have taken over. We inherited a bad system 
and did not fix it quickly enough. We took over in 1987 from 
the Federal Government.
    Senator Faircloth. Took over the----
    Mayor Barry. Mental health. This suit had been filed 
against the District before we took it over. Prior to 1987, the 
mental health system was managed by the Federal Government, and 
the Dixon case, which Mrs. Cropp is very familiar with, was 
filed over 20 years ago, and the order was entered over 20 
years ago in terms of the Dixon class of people.
    In the last 3 or 4 months the plaintiffs' attorney and the 
plaintiffs felt that we were not moving rapidly enough to 
implement the decree.
    Senator Faircloth. What about public housing and child 
welfare?
    Mayor Barry. I just talked about public welfare already. My 
first statement was about the child welfare cases being filed 
all over. The same is true even with mental health. The State 
of Texas just finished a court decree that lasted 10 years, but 
this suit was filed prior to the District taking it over. The 
plaintiffs' attorneys, we disagree with the attorneys and the 
plaintiffs that we were not moving rapidly enough.
    The third one, public housing, again was a matter where the 
District was not performing at a level that was acceptable to 
the plaintiffs and their attorneys. We disagree with that, but 
the court said we were not doing so, and I guess the bottom 
line is these Federal judges who have made these decisions just 
did not believe that we were complying with the constitutional 
mandate.
    Ms. Cropp. Mr. Faircloth, may I add something to the 
problem with regard to the receivers, the court receivers?
    Senator Faircloth. Yes.
    Ms. Cropp. It is a terrible problem that we are facing 
right now, and, in fact, if you look at the human services 
budget, the predominant amount of dollars that are tied up in 
the human services budget are in budget areas that we cannot 
touch. We do not have control.
    Senator Faircloth. Well, who does have control?
    Ms. Cropp. The courts at this point. The courts, because 
what is happening now the courts have been mandating over the 
last several years, when there is this type of receivership, 
how to spend the money, even to the point of equipment, whether 
we are talking about typewriters, whether we are talking about 
clerical positions. So it has been extremely frustrating for 
the District of Columbia to deal with an effective and 
efficient budget when we do not have control over such a large 
segment.
    Now, you asked how we got there.

                  number of segments under court order

    Senator Faircloth. Excuse me, let me ask you, so I 
understand. Now, that is over mental health. How many segments 
of government are now under court order and are run by a court 
administrator?
    Ms. Cropp. There are--I do not know the exact number.
    Mayor Barry. I think Linda--Linda, there are--we will get 
it for the record, Senator, but my count now appears to be 
four. Ray Schansky over the D.C. health system at the District 
jail, the child welfare, mental health, and public housing.
    Senator Faircloth. So there are four major segments of 
Government under court order and court-appointed 
administrators.

                 court order on population cap at jail

    Mayor Barry. Now, there are other areas of the Government 
that are under court order, but they do not have receivers. For 
instance, we were sued 25 years ago around population caps at 
our District Jail. Again, these suits, lawyers were filing them 
all over the country.
    Senator Faircloth. I understand that.
    Mayor Barry. And the judge ruled that we had to keep a cap 
of 1,790 people at our jail because they were overcrowded on 
our staff ratio, but it's not a receivership. We just have to 
make sure we comply with those orders.

              population cap at juvenile detention center

    There is an order out with our juvenile detentions that 
says we cannot exceed 188 young people at any one time at our 
juvenile detention center, but those are the four receivers.
    Senator Faircloth. All right.
    Mayor Barry. Again, Senator, I am sure you have seen this 
before. We just disagree with the courts, but the courts said 
they do not think we have done all we need to do, and all these 
cases are on appeal except public housing.
    Public housing, we worked out a way that once we reach a 
certain score, which we think will be about another 1\1/2\ 
years, the receiver leaves and the government takes over that 
again from the courts.
    Senator Faircloth. Dr. Brimmer.
    Dr. Brimmer. Senator, I would like to call to the 
committee's attention the impact of court orders and consent 
decrees, since there are about 40 court orders but a large 
number of consent decrees as well in combination.
    Senator Faircloth. Forty court orders?

                    impact of court orders on budget

    Dr. Brimmer. About that number, and they have a major 
impact on the budget and administration and allocation of 
resources in this government and, above all, on the management 
of resources. I agree with you, what this means is that people 
appointed by courts are having a big impact on the formulation 
and administration of this city's budget. In combination, 39 of 
these mandates are about $450 million, and they involve a 
number----
    Senator Faircloth. How much money?
    Dr. Brimmer. $455 million.
    Senator Faircloth. Are in the mandates?
    Dr. Brimmer. Yes, sir; court-ordered mandates.
    Senator Faircloth. Dr. Brimmer, let me ask you a question. 
Just to cut right through it, who wrote the budget, the court 
orders or the Control Board or the City Council?
    Dr. Brimmer. Well, the Council and the Control Board wrote 
the budgets, but those are givens. Those are givens. There is 
no discretion there. You have to include the money.

                          cost of court orders

    Senator Faircloth. When you start to move around 35 or 40 
court orders, they were the big dog at the budget writing.
    Dr. Brimmer. Yes, sir.
    Ms. Cropp. Mr. Faircloth, when you look at human services, 
for example, where people feel there are a lot of dollars in 
there that the District has discretion over, quite frankly 
there are very few dollars that the District can determine how 
they are going to spend in the human service arena. It is a 
total misnomer that there are dollars out there for the 
District to spend. That is not the case.
    These court orders and consent decrees are having a major 
impact on running this government in an effective and efficient 
manner. In addition to that, some of these court orders started 
many, many years ago and, to be candid, they started possibly 
because of the services that were rendered.
    At this point, however, it is to the point that sometimes 
we even question the efficiency of running after it goes into a 
court order with accountability of funds.
    Senator Faircloth. What we are going to have to do with the 
problems we have in the Council, the Control Board, and the 
Mayor, and everybody else involved, is to get rid of them and 
get the city back to writing its own budget.
    Mayor Barry. Senator, we would like to welcome any 
discussions from your staff and you legally and legislatively 
on how we can begin to address some of these matters. Not to 
deprecate these or minimize them, but a number of these court 
suits have been filed. There has been a pattern that people 
have filed around the Nation, and maybe we have judges here who 
seem to be more prone to grant the defendant--I mean, the 
plaintiffs--their request.
    Senator Faircloth. Mr. Mayor, that is the weakest 
reasoning, and I am not saying back to you what we hear in 
Washington every day. I am sure that Senator Thompson's 
committee is hearing it upstairs today--well, it is all right 
for us to do it because other people are doing it. It was wrong 
to begin with. It is a mess, but do not look at us. You know, 
they were doing it, too. So if everybody is doing it, it must 
be all right to do it--when breaking the law wide open.
    So that to me is not a reason. Because other people have 
got the problem does not mean that we are supposed to have it. 
Each tub has to stand on its own bottom.
    I am delighted to welcome Senator Jeffords. As I mentioned 
earlier, Senator Stevens stopped by with us a few minutes ago. 
There is no stronger supporter of the District of Columbia, and 
especially the school system, than Senator Jeffords.
    Senator, we would be glad to hear anything you want to say 
to us.

                   court mandates on opening schools

    Senator Jeffords. Certainly. It is good to see you, Dr. 
Brimmer, Mrs. Cropp, and the Mayor. Just following up on the 
testimony you have just heard, I was with the Board of Trustees 
on the schools last night, and their whole evening was spent 
trying to figure out what to do with the court mandates on 
opening schools in the fall. And there is a possibility of some 
30 or 40 schools not opening because the judge is not quite 
happy with the way things are proceeding. It is a tough one.

                     $2 billion in code violations

    On the other hand, we know that there is a GSA report that 
shows that there are about $2 billion in code violation repairs 
necessary. And as I understand it, you can correct me if I am 
wrong, Parents United each year just pick out different groups 
of those violations to bring court suits to then try and get 
them repaired. So every year we find ourselves in the 
appropriation process of having to appropriate emergency 
repairs to open the schools, and then next year you will have 
another suit brought on another group of schools. Dr. Brimmer, 
is that the way it has been proceeding?
    Dr. Brimmer. It is my understanding that that is an 
accurate description, Senator Jeffords.
    Senator Jeffords. And with $2 billion to go, that is going 
to be an annual event. And the only way we can fix that, in my 
mind, is what I am trying to work on, and that is if we can get 
a revenue stream to provide the money to fix them before the 
courts tell you to fix them. Is that basically the better 
scheme than the way we are doing right now?
    Dr. Brimmer. I agree.
    Senator Jeffords. And to do that means we have to develop 
that stream. And the thought that the Appropriations Committee 
is going to appropriate $2 billion to fix the D.C. schools, we 
are all smiling. I mean, that just is not going to happen.

                        resources to fix schools

    But on the other hand, I would point out there are enough 
resources in this area to do that. But the problem we have, and 
I will use the unmentionable word, is that you have got to have 
the commuter tax. But what I am trying to find out is what we 
can do to use those resources for the area, not just for the 
District. And if we were to do that, we would have enough with 
just a 3-percent commuter tax to provide the resources to fix 
all the schools here and also to provide resources to Maryland 
and Virginia to provide the skill training which is necessary. 
They have got about 50,000 jobs available, as I understand it, 
in this area that are not being filled now for lack of skills. 
And so it seems to me that the approach we have to take to get 
you all out of this mess is to find a way we can fund these 
things in a way that does not require them to be appropriated 
emergency-wise, and to be able to do that in a way that 
benefits the whole area.
    This Nation needs right now a demonstration of how a labor 
market area can work together to provide the skills necessary. 
If we were to do that, to fill those jobs would be another $3.5 
billion a year in this area, which would be available for 
resources.
    So I, on the one hand, commend you for these hearings to 
bring these matters out, but you are going to be about as 
frustrated as the Board of Trustees and everybody else is on 
every year facing the same problem of the schools being shut 
down unless you come up with the money to fix them. And we have 
got to find a better answer than that.
    Dr. Brimmer, I would like your comments.
    Dr. Brimmer. Well, I share that wholeheartedly, Senator, 
and, Mr. Chairman, if you would permit me to go back and report 
to Senator Jeffords what I reported to the chair earlier. In 
anticipation of coming here today I went to see what has been 
the consequence of our failure to get the money in the 
supplemental request to pay for the school repairs. It was 
reported to me as of yesterday, the schools still need that 
$36.8 million, they need it to open, to make the repairs of 
prior code violations so the schools will open.

                        repair of school boilers

    General Becton said the schools will open. He has money, 
and he will do that. But he also said that they need additional 
funds because they have to repair the boilers. He said that if 
cold weather comes early in the school year, that may cause 
school closings. So it is a serious matter in the short run. It 
is still a major problem, and I mentioned to the chairman these 
circumstances may, in fact, require us to come back and still 
ask for some help.
    Now, on the longer run question, I agree wholeheartedly 
with your estimate. First, I have no reason to doubt that the 
accumulated deficiencies will require something like the $2 
billion. I have seen that figure in a variety of places. Others 
have looked at it, and from whatever angle they come, they come 
to roughly that figure. I could not imagine that the Congress 
would appropriate that money, so I agree some other scheme 
needs to be found, some other source needs to be found, and so 
I was delighted when I heard about the proposal you had made, 
and I support it wholeheartedly.
    Senator Jeffords. I appreciate that.
    Mr. Chairman, I could go on the rest of the day. Any 
comments?
    Senator Faircloth. We are honored to have you, and we are 
delighted. You talk to anybody you want to.

                              commuter tax

    Senator Jeffords. All right. Thank you.
    Mayor Barry. Senator Jeffords, let me suggest that you are 
right, we need to find a revenue stream that is dedicated to 
this repair problem, because it gets worse every year. And I 
think your idea of a reciprocal income tax, commuter tax, is 
something that I would hope that you and Senator Faircloth and 
others would pursue in the Senate. And you are certainly going 
to run into major opposition, as you know, in the House because 
of Congressman Davis and Congresswoman Morella and all the 
suburbanites who would feel pressured to oppose it because it 
means revenue out of their State treasury, but it is the right 
thing to do, in my view.
    Senator Jeffords. Let me ask you this: I think you have two 
big barriers right now for people moving back in. One is the 
income tax structure, which I think--I know I am right, the 
taxes that the District has to charge to raise it is higher 
than--substantially higher, as far as individual impact, than 
either Virginia or Maryland, is that correct? I mean, you are 
at 9.3, I think the highest is something, 8, but that does not 
come in until higher levels. So when a person thinks about 
moving in here with a job, the first thing they have got to 
think about is how much tax they are going to pay. Is that 
generally correct? And that is a barrier. Dr. Brimmer?
    Dr. Brimmer. Senator, undoubtedly tax differentials have a 
big impact. But some work we did some years ago started when 
Mayor Barry asked us to look at the impact of taxes and other 
factors on businesses leaving and coming into the city. One 
thing we have found with respect to people leaving the city, 
and we pursued a number of them and asked, is that taxes were 
not the highest item.

                          quality of services

    For businesses, the principle item was the quality of the 
services they were getting. Rents were also high. Some work we 
have done more recently suggested that people, especially 
middle class families, who are leaving the cities do not rank 
taxes very high. The first reason is schools. The second one is 
crime. That is summed up as value for the money, sort of 
housing quality versus the prices.
    Taxes are on the list, but it is further down.
    Senator Jeffords. Yes, but schools are No. 1.
    Dr. Brimmer. Schools are No. 1.
    Senator Faircloth. What was No. 2, Dr. Brimmer?
    Dr. Brimmer. Crime, and the fear of crime.
    Senator, that is why we have stressed in all of our work 
that we have to work on the fundamental causes. Fixing the 
schools, and ending the crime. That is why we are working on 
these matters.
    Senator Jeffords. You have answered my second question. 
That is the schools. But also, I would like to check some 
figures with you, because I think it dramatizes the situation 
that the District finds itself in. I think we have had 200,000 
people move out in the last couple of decades, and 50,000, I 
think, this decade, but most of them still work in the 
District, or at least we have a huge number of people in the 
suburbs that work in the District. And it is my understanding 
that about $20 billion leave out of the city to people living 
in the suburbs. Is that fairly accurate?
    Dr. Brimmer. Yes, Senator. This is a question which I----
    Senator Faircloth. Excuse me, Dr. Brimmer. $20 billion?
    Senator Jeffords. Are paid to people.
    Senator Faircloth. OK, the salaries of people that left the 
city.
    Senator Jeffords. That is right.
    Senator Faircloth. OK, I am sorry.

                         income earned in city

    Mayor Barry. These that live in the suburbs that work in 
Washington is about $20 billion of income.
    Senator Faircloth. That those people that work in 
Washington and live outside the city.
    Mayor Barry. It is about 70 percent of all the income.
    Senator Jeffords. And on the other hand, the amount of 
money that comes from D.C. residents that work in the suburbs 
is somewhere around 1 percent of that, or about $200 million, I 
believe.
    Dr. Brimmer. Senator, the work I have done, and we have 
been looking into this at the Control Board, we have looked at 
the trends from 1985 to 1995. What we did was to look at 
personal income. That is wages, salaries, and everything else. 
In 1995, that figure was about $30 billion of income generated 
in the District. Of that $30 billion, just under $20 billion--
two-thirds--was received by people who work in the District who 
live outside. Just over $11 billion was received by people who 
work in the District and live in the District. Roughly, as I 
said, two-thirds.
    A decade ago, that division was quite different. At that 
time, about 55 percent of the personal income earned in the 
city went to the suburbs, 45 percent stayed in the city. Those 
ratios have changed drastically. And everything I have seen 
suggests that the trend is likely to continue.
    One final thing I would mention, Senator, is that personal 
income in the District has grown over that period at a rate 
fairly close to what personal income has grown at in Maryland 
and Virginia. So the District has not been stagnant in terms of 
generated income. What has happened is that the substantial 
share of that growth in income leaves the city. So the city 
does not have that tax base which would generate revenue for 
this city.
    Ms. Cropp. Senator, if I could add to that, the staggering 
figures that Dr. Brimmer just gave, when you look at the people 
who work for the D.C. government alone, 50 percent of the 
people who work for the D.C. government--not the Federal 
Government, not the private sector--live outside of the 
District of Columbia. So they are taking actual city dollars, 
and they are paying for the services in other cities, in other 
States.
    If you live in Philadelphia, for example, or work in 
Philadelphia, you have to pay some type of income to that city. 
The same with New York. The tragedy of the whole thing is if 
someone moves out of Philadelphia or they work outside of the 
city, they are still paying taxes to Pennsylvania. So revenue 
is still going into Philadelphia through the State. The same 
with Chicago. Money is still going into that city through the 
State.
    But once an individual leaves Washington, DC, we get 
absolutely no value, as every other city does. They are in the 
Commonwealth of Virginia or the State of Maryland. We lose 
totally, whereas in every other instance at least the State 
helps to put money back into it when people leave the city, and 
this is a trend that has been going on--leaving cities--since 
after World War II, you saw that trend occurring. And for all 
urban cities, we are having that problem. It has been 
exacerbated over the years as shopping malls have grown up and 
people who shopped in the center city now shop in the suburbs, 
so we do not even get the sales taxes. So our revenue is just 
dropping geometrically.
    Senator Jeffords. Why do you not tax the commuters?
    Ms. Cropp. Why do we not tax the commuters?
    Senator Jeffords. Right.
    Ms. Cropp. Well, there is an august body----
    Mayor Barry. Called the Congress of the United States of 
America.
    Ms. Cropp [continuing]. Which is probably the best body in 
the whole wide world, that would get even better if they would 
see the inequity in that and they would allow a remedy for 
Washington, DC, to be able to fairly, at least, get its 
income--tax its income at its source.
    Mayor Barry. Senator, a charter establishing our local 
government, Mayor, City Council, had a provision in it which 
forbid us from taxing income.
    Senator Faircloth. Now, who did you say prevented it? I 
think I know, but tell me again, Mayor.
    Mayor Barry. In 1973, when the Congress passed legislation 
giving us an elected City Council, elected Mayor, as opposed to 
an appointed Commission and an appointed Council, in that 
legislation there was a provision which forbid the city from 
taxing income of those who worked here but lived elsewhere. It 
was a political move. Congressman Broyhill, who represented the 
Northern Virginia delegation in the House, was one of the key 
people on the committee.
    Senator Faircloth. This was a rider to home rule?
    Mayor Barry. Yes, sir.
    Senator Jeffords. And when was this? What year?
    Mayor Barry. 1973.

                    number of cars coming into city

    Also, Senators, there is another factor. There are 300,000 
cars that come into the District of Columbia. And since we 
cannot tax income of those who earn money here and live 
someplace else, they are beating up our streets and polluting 
our air, and we get no taxes from them, either. That compounds 
our problem.
    Senator Faircloth. We are well aware of the problem, and 
Senator Jeffords and I, I think, agree on some of the obvious 
solutions. I do not know whether he agrees totally. I am not a 
supporter of the 15-percent income tax. I simply do not think 
you can sell that to the 50 States and 280 million people, that 
if you live in Washington you are going to pay 15 percent and 
if you live in your favorite city, Mr. Mayor, Topeka, KS. 
[Laughter.]
    Mayor Barry. Both cities are favorites of mine.
    Senator Faircloth [continuing.] You are going to pay 33\1/
3\. So I do not agree with that at all, and am not going to.
    Senator Jeffords. I am finished.
    Senator Faircloth. Well, I thank you for coming.
    Mayor Barry. Mr. Chairman, on that point about the 15 
percent, it is our view--I am sure that Ms. Cropp and Dr. 
Brimmer probably agree--that if we could tax income at its 
source and get this $750 million in, we could then lower our 
own State income tax. We could also lower our business tax and 
other taxes to make us more competitive, and, therefore, the 
burden on the District residents by lowering the State tax 
would ease their total taxing burden, and that may be an 
alternative to the 15 percent.
    Senator Faircloth. We have got to look at it, but let me go 
on with a question I have for you, Mr. Mayor.
    Senator Jeffords. Thank you, Mr. Chairman.
    Senator Faircloth. Thank you, Senator Jeffords. Thank you 
for coming.

                           procurement system

    Again, you see a demonstration of the support of this 
Congress for the city. The problem is that you are going to 
have to restore confidence in the Congress that the city has 
got management, and that is the thing we are talking about. I 
have heard continuously from city employees that it takes 
months and years to purchase supplies for the city government 
because the procurement system is in such a fiasco. I note that 
the Control Board issued a report on the city's broken 
procurement system. The report found the District is overpaying 
for services because of too many sole-source and emergency 
contracts.
    For example, the report found that in 1995, 59 percent of 
all contracts entered into by the Department of Administrative 
Services and the Department of Human Services, these two major 
departments, were awarded without full and open competition. 
Mayor Barry, why has this management problem been allowed to 
continue over the years? The purchases are emergency, but this 
problem is far from an emergency. It has been going on and on 
and on, and, Dr. Brimmer, I want to ask you the same question. 
So I will start with Mayor Barry, and then I will bring the 
same question to you, Dr. Brimmer.

                          procurement process

    Mayor Barry. Senator, let me say that if you were to do an 
analysis today of our procurement process and our procurement 
system, you would find almost a 180-degree turnaround since 
that January report. We now would maintain and say that 90 
percent of all the DHS procurements are being bid 
competitively; that in the last 2 months we have not had 
contracts, except one contract, to expire without a contract; 
that we have a new procurement law now, have a new interim 
chief procurement officer; we are developing rules and 
regulations that will make sure that there is a certain 
timeframe for doing this.
    To give an example, in the last 1\1/2\ years or so it took 
180 days for the Department of Public Works to process a 
request for bids to the time that you got the award. It is now 
down to about 80 days. And so we are cutting all of those 
procedures.
    There are several reasons, not offering excuses, but 
explanations. One, our law was very cumbersome, which made it 
very difficult to purchase things in a very timely way; and 
second, the biggest one, quite frankly, was that in 1995 and 
1996 we lost a lot of brainpower because of this budget crisis. 
We offered people easy outs and early outs, and so we lost 
experienced personnel.
    What are we doing about it? We just did an analysis of 
every procurement--and we also had a hiring freeze.
    Senator Faircloth. Let me ask you all a question. If you 
lost experienced people in 1995 by offering the easy outs, 
early outs, in fact, if I am picking up, what you are saying is 
that the good ones left and the bad ones stayed?
    Mayor Barry. No; what we had happening was that procurement 
is more than just having a degree and having some ability to 
count. There is a certain experience factor there. We were left 
with less experienced people. We also had a hiring freeze, 
which means we could not replace them. But the good news is 
that we have just finished--had a consultant to assist us in 
doing a personnel evaluation, person-by-person, of everyone who 
touched procurement, doing an analysis of their skills, their 
level of experience and expertise, and we now know where we 
have to move to remove people who do not have what we have a 
need for, and how we can hire people back.
    But notwithstanding all of that, there has been a 180-
degree turnaround in our procurement since January. You will 
not get those horror stories, you will not get those numbers of 
60 and 70 percent sole source. You now will get a situation 
where, as I said, 90 percent of our procurements are in the 
competitive area. We also increased the amount of small 
purchases from $10,000 to $25,000, which means that the people 
in the agencies can do this very rapidly by getting three 
quotes.
    Senator Faircloth. They can buy $25,000 without a 
competitive bid?
    Mayor Barry. No, sir; you have to get three bids.
    Senator Faircloth. What is the limit they can buy without a 
bid?
    Mayor Barry. $250.
    Senator Faircloth. $250.
    Mayor Barry. Right.
    Senator Faircloth. That is the limit they can buy?
    Mayor Barry. That is the limit without a bid.
    Senator Faircloth. All right. Dr. Brimmer, would you like 
to address this?
    Mayor Barry. Also let me say, Mr. Chairman, we have been 
working very closely with Mrs. Newman on the Authority, along 
with the Authority staff, and I think they would, if asked, 
give you an indication that things have vastly improved in the 
procurement area.
    Senator Faircloth. Dr. Brimmer?

                consideration and approval of contracts

    Dr. Brimmer. Thank you, Senator. First let me say that 
consideration and approval of contracts takes more of my time 
at the Control Board than any other single activity. Why is 
that so? Remember under the statute the Board is charged with 
reviewing and approving contracts. The way we have arranged our 
work at the Board, this is done substantially on a delegated 
authority basis. I have that delegated authority. So as these 
contracts come to the Board for review and approval, the staff 
brings them to me.
    So I am at the tail end of this, and what I have seen 
describes a situation that is improved to some degree from the 
profile in that report which you are citing. But not to the 
extent that may be suggested here.
    First, we need to look at the character of the emergency 
contracts coming down the pike.

                      types of emergency contracts

    Senator Faircloth. You say look at the character?
    Dr. Brimmer. The character, the types of emergencies. Some 
of the emergencies which I have seen in the past, in my 
judgment, were subterfuge. There is a limit. For example, I saw 
contract after contract for $99,000. So I asked the staff why 
is that? A random flow of business should not suggest that on 
any given day I am seeing dozens of $99,000 contracts. Answer: 
Because that way you escape certain review and approval limits.
    That is stopping. That has stopped.
    Senator Faircloth. Well, let me ask you now, that was a 
question I just asked, and maybe I did not detail my question 
enough. We just were told that $250 is the limit that can be 
bought without three bids. Now, you are saying $99,000 can be 
bought without review or bids, is that right?
    Dr. Brimmer. Well, I do not know. No; I did not mean 
without bids. What I am saying is without review. There are 
certain----
    Senator Faircloth. Review by whom?
    Dr. Brimmer. Mr. Chairman, it is clear that many of those 
contracts I am saying, and some are bigger than $100,000, but 
someone is breaking them up into pieces in order to escape the 
detailed review. That is my conclusion.
    Senator Faircloth. Well, may I ask you a question? I 
understand the $250 bid--I mean, without a bid. That is 
reasonable and as it should be. But where does the--what kicks 
in at above $100,000 in the reviewing of a contract that say 
would not affect a $90,000 contract? What is the different 
review process?

                  contracts above and below $1 million

    Dr. Brimmer. First, there is a question of contracts of $1 
million and over, the procedures are they go through the 
Council.
    Senator Faircloth. How about contracts below $1 million?
    Dr. Brimmer. They do not. The Council does not have to 
approve those. So if you have a $1 million contract and you 
break it up into smaller pieces, you avoid one step in the 
review. It is not simply avoiding that review. It has some 
serious consequences and implications, and I will come back to 
that. But there is another element here, Mr. Chairman, the 
question of bidding versus sole source.

                       bidding versus sole source

    If it is a true emergency, and the procurement officer or 
program head can demonstrate that there is an emergency and 
that a sole source is justified, it can be put forward. I see a 
number of those where it is a genuine emergency. And that is 
what I am seeing more frequently.
    Senator Faircloth. Dr. Brimmer, let me ask you a question. 
What possibly could you need in Washington, in this area, that 
there is not but one person, one company supplying sole source?
    Dr. Brimmer. Mr. Chairman, many of the contracts I am 
seeing are for services--not goods, services.
    Senator Faircloth. All right, services. There is a sole 
source. Is not anybody else interested in bidding on, nobody 
else is interested in providing the service, but one? If it is, 
I would like to go into that business, because it needs two.
    Dr. Brimmer. Well, you see, Mr. Chairman, the typical 
contract in the District is a renewal, not a de novo original 
contract.

                           rebid of contracts

    Senator Faircloth. They do not rebid it, in other words, 
they just renew it?
    Dr. Brimmer. That is the problem.
    Senator Faircloth. Why not rebid it?
    Dr. Brimmer. The requirements are that when these come up, 
they should rebid it. But if you have slept through the 
requirement date, and the service is about to be interrupted, 
then I have only one choice, and frankly, Mr. Chairman, the two 
or three I have dealt with on an emergency basis most recently 
were of that character. I ended up writing Mrs. Cropp a letter 
on this one because of the way it arose.

                 food service contract at D.C. general

    I will be very specific. A food service contract at D.C. 
General Hospital was about to be terminated because the vendor 
had not been paid for months. So the staff brought it to me and 
said look, this vendor has not been paid. We cannot stand by 
and allow him to walk out and not have food service. So will 
you approve this contract on an emergency basis? So we did. 
Another one, a medical service not being paid.
    I mention this because what I see here is the inability or 
failure of the managers of some of these programs to anticipate 
the need to act on these, and they slip up. That is the 
management problem. There is nothing technical about this. 
People, if they were to see it in advance, make the 
preparation, do the bidding, they could get it done. But they 
are not doing it in a timely fashion.
    Senator Faircloth. All right. And in asking the question, I 
am not in any way--Dr. Brimmer, I want to say I am proud of 
what you are doing and have total confidence. The line of 
questioning was not in----
    Dr. Brimmer. I understand.
    Senator Faircloth. But I just sit here and am amazed. How 
many people work in the administrative services of the city? 
About how many?

               number of employees in procurement process

    Mayor Barry. Senator, before I answer, let me just say that 
I would like to request several things. I do not see contracts 
under $1 million myself. They are done administratively. I sign 
contracts after about six signatures have already been there 
that I send to the City Council and to the Board. But I would 
like to suggest that we ought to get from the Financial 
Responsibility and Management Assistance Authority the last 2 
months of reports. And I would maintain from where I sit and 
what I have been told that those efforts to have contracts at 
$999,000 to get around the $1 million review have not been 
happening. And also----
    Senator Faircloth. Well now, let me ask you a question. Are 
you saying $999,000.
    Mayor Barry. Yes; if it is a $1 million contract----
    Senator Faircloth. Just under $1 million. I thought you 
said $99,000.
    Dr. Brimmer. I did.
    Senator Faircloth. But we are talking about $999,000, or 
just under $1 million to slide it through.
    Mayor Barry. That is the one I am speaking of.
    Dr. Brimmer. We are speaking about different categories of 
contracts. I was talking about those that are much more 
plentiful.
    Senator Faircloth. Well, let me ask you, without all this, 
how many people work in administration in the city?
    Mayor Barry. In terms of the procurement process, the last 
number I saw of persons under my control was about 135 people.
    Senator Faircloth. All right. How can 135 people simply not 
know when a contract is coming up? Who is in charge of figuring 
it out, and why were they not fired day one, the first time it 
happened?
    Mayor Barry. Senator, that sounds very simple.
    Senator Faircloth. It is what, now?
    Mayor Barry. It is not as simple as you would make it.
    Senator Faircloth. It is as simple as that.
    Mayor Barry. No; it is not, either.
    Senator Faircloth. When the contract was not renewed, when 
it did not come up, when nobody paid attention to it, when it 
went flying by, that should have been an ex-employee that let 
it go by.
    Mayor Barry. What happened, Senator--again, I would like to 
try to focus us on how things are working now. I can talk about 
the past, but it does not solve the problem. But I maintain 
that if you look at the number of contracts that have gone over 
to the authority in the last 2 months, none of which I see 
except $1 million, that you will not find the same kind of 
expiration of contracts, sole source kind of contracts.

                            buying from gsa

    Incidentally, let me just point out the authority counts 
buying off of the GSA schedule as sole source. To us, that is 
not sole source. The Federal Government has gone out and gotten 
a number of contractors that are on the GSA schedule. If we buy 
off the GSA schedule, the authority counts it as sole source. 
It is not sole source, in the sense that the Federal Government 
has already done the quality control, done the price controls, 
and so we are just buying off that schedule.
    And second, in the past we have had not enough hands to do 
this work, and, too, had some people who were not performing. 
We have fired in DHS four of the top managers over there, and 
have replaced--well, five, really, with Ms. Morman, who is 
now----
    Senator Faircloth. I am sorry?
    Mayor Barry. We have fired the top managers at DHS.
    Senator Faircloth. You fired the top managers?
    Mayor Barry. That is right.
    Senator Faircloth. Well, let me ask you a question: Why did 
it take so long to do it if this thing has been going on like 
this for that long?
    Mayor Barry. Well, I guess like anything else, when it 
comes to your attention and becomes part of the major 
initiatives you take some action on it.
    Dr. Brimmer. Mr. Chairman?

                     strategic plan for procurement

    Mayor Barry. I was appalled at what I found over there. 
When I started reading some of the reports from the Authority, 
I am not obligated by responsibility, but I had no idea that 
things were as bad as they were. But once we started finding 
out that they were, we took some action. We submitted to the 
Authority a strategic plan for procurement improvement, and I 
think the Authority would have to agree that there has been 
substantial progress, and we are on target with correcting the 
system and making it work for the citizens as well as making it 
work for the employees who have to purchase goods and services.
    Senator Faircloth. I want to ask one question, and we are 
going to wind this hearing up, because we are not going to 
solve the problems of the District of Columbia that have 
accumulated over the last 25 years in one morning, but we are 
going to make a start.
    Mayor Barry. Right.

             staff from agencies working in mayor's office

    Senator Faircloth. Senator Stevens touched on this, but the 
Control Board's proposed budget has identified personnel in 
several agencies who are working in the Mayor's office. How 
many people have you identified from the Control Board as 
working in the Mayor's office that were not on his staff? This 
is a question to you, Dr. Brimmer. How many have you 
identified, the Control Board, that are on the staff that were 
not on his staff, what were the salaries of these people, and 
what agencies were these individuals assigned to, and what were 
they doing for the Mayor, and have they been terminated from 
the respective agencies, and why were they assigned to the 
Mayor's staff? I would like you to give me a complete answer to 
it.
    Dr. Brimmer. Senator, we did look into the question of what 
we call detailees. We do have such a list, except I do not have 
the salaries attached to it.
    Senator Faircloth. How many people on the list?
    Dr. Brimmer. We identified 26 people who were detailed from 
other agencies to the Mayor's office. There were another 21 
persons in the police department, but detailed to the Mayor's 
office.
    Senator Faircloth. Detailed as to what? What are they 
doing?
    Dr. Brimmer. The information I have is that the security 
detail for the Mayor is provided by the police. So these are 
people who are not in the Mayor's own immediate administrative 
office, but in the Mayor's area.
    Now, the 26 people came from, and I will not go into 
detail, the Office of Personnel had one who was an employment 
specialist, another was an administrative assistant. I'll just 
run my eyes over the list; there are six or seven who were from 
Employment Services. They were doing jobs such as logistical 
assistance, secretary, staff assistant, executive assistant, 
paralegal assistant, staff assistant, so on. From Human 
Services I see another six or seven. One was a deputy 
ombudsman--I am just citing titles--deputy ombudsman, a 
community service representative, program analyst, a clerk, 
staff assistant, public health advisor. Corrections had two, 
both of whom were listed as staff assistants. Police, business 
service representative, business service representative, fire 
head, two business service representatives, computer assistant, 
and so on.
    We concluded in our budget review that these persons were 
being paid for by agencies who were not getting the benefit of 
their service. So we decided that those persons should be sent 
back to their agencies or not provided for in the budget, and 
if the agencies wanted to keep providing those services, then 
we thought the Mayor should pay for it. One of the objectives 
of our budget review was to assure that these detailees were 
returned to the agencies who were paying for them, or put in 
the Mayor's budget and either he would have to pay for them in 
competition with some other uses of funds.
    That is what we found out, and that is the policy position 
we took, Mr. Chairman.
    Senator Faircloth. Well, gentlemen----
    Mayor Barry. Mr. Chairman, may I speak on that issue very 
briefly?
    Senator Faircloth. All right. You sure may.
    Mayor Barry. Mr. Chairman, let me say that I will submit to 
you a complete analysis and report of all the things that go on 
in the immediate office of the Mayor and the executive office 
of the Mayor. When you look at this report, with all of the 
functions and all of the work which needs to be done which I 
cannot do personally myself, you would have to conclude that I 
probably have 50 percent of the staff I need to do the work.
    Senator Faircloth. You have what?
    Mayor Barry. I have 50 percent of what we really need to do 
the work.
    Second, if you look at the Federal Government--I mean, he 
is right, if you look at the White House, the Governor's office 
in North Carolina, you will find that it is a common practice 
all over State government, local government, Federal 
Government, for executives to have detailed into their offices 
people from other agencies. It happens in Maryland, it happens 
in Virginia. That does not mean it is right to do, it happens. 
So we were not over here doing something weird.
    Third, we have agreed to return these people back to their 
offices and restructure my office. I am going to have to try to 
figure out a way to do this work with less people. And fourth, 
there was a philosophical difference. I have an Office of 
Ombudsman, which is my constituent service office, where all 
these people were assigned to work in agencies but also work in 
some other place. There were 10 of those. But they will be sent 
back.
    But I wanted to make the point that I will send you a 
report which shows that these were not frivolous kinds of jobs, 
these were not make-work kinds of jobs, they were not trying to 
hide anything. Mayor Kelly did it, I did it, Mayor Washington 
did it, so it has been a tradition in government to detail 
people from other places. But I will send you a report on the 
tremendous amount of work which goes on.

                     Additional committee questions

    I have three jobs. I act as a Governor, account executive, 
and Mayor, and I need people to help me do that work.
    [The following questions were not asked at the hearing, but 
were submitted to the Control Board for response subsequent to 
the hearing:]
                Questions Submitted by Senator Faircloth
    Question. The control board recommends less than half of the 
Council's proposed budget for the Department of Public and Assisted 
Housing. The Council figure is $4.67 million, and the control board 
figure is $2.08 million. Please explain why the control board's 
recommendation is much lower than the Council's?
    Answer. The Authority accepted the Mayor's allowance for the 
Department of Public and Assisted Housing. This amount is the minimum 
funding required to honor outstanding obligations for the Tenant 
Assistance Program, which is being phased out. The Authority supports 
the phase out of this program under the current fiscal circumstances 
facing the District.
    Question. What are the main differences between the control board 
and the Council budgets for public safety?
    Answer. In the Metropolitan Police Department (``MPD''), the 
Authority and the Council provide for an authorized sworn officer 
strength of 3,815. The difference of $5 million arises from the 
Authority's assumption that it will take the MPD longer to achieve that 
on-board strength than does the Council. The Authority bases its 
assumption upon the current on-board strength of 3,612, the current 
attrition rate, the department's capacity to hire and train new 
officers, and the expected increased screening of recruits, to ensure 
the highest quality officers for the MPD. Police Chief Larry Soulsby 
has stated that in order to avoid a repeat of past hiring and training 
problems, the MPD is doing thorough background investigations on all 
potential officers. As such the recruiting and background process, 
according to the Chief, is very lengthy.
    In the Fire and Emergency Medical Services Department the Authority 
eliminated $60,000 for the two full-time equivalent (``FTE'') positions 
that were detailed to the Office of the Mayor, and $3.1 million in pay-
as-you-go capital. Both reductions reflect city-wide policies. The 
former reflects elimination of the amounts and FTE's representing 
detailees, and the later reflects the initiative of the Authority to 
move pay-as-you-go capital into an intermediate term capital program. 
During the current fiscal condition the District must seek alternatives 
to using annual operating funds to acquire assets that have a life 
beyond the fiscal year.
    Question. Please provide the Committee with a list of any 
discretionary programs included in the City Council's proposed budget 
that the control board believes should be eliminated.
    The Authority made reductions in local funding for discretionary 
programs that it believed would be worthy of funding under more 
favorable fiscal conditions for the District. In the area of Business 
Services and Economic Development (``BSED'') the Authority supported 
only mandatory programs, reductions were made in such discretionary 
programs as International Business and Lending and Development Support 
Services.
    In addition to BSED, the Housing Preservation Assistance Program 
(``HPAP'') was reduced by more than half of the Mayor's request. This 
program provides financial assistance in the form of interest-free and 
low interest loans to qualified low and moderate-income residents to 
enable them to purchase homes. The effect of the reduction is the 
elimination of 100 moderate-income loans. The Authority also eliminated 
funding for the Employer-Assisted Housing Program, saving $390,000. 
This program would have funded 34 loans to eligible D.C. government 
employees, mostly police officers, who are first-time home buyers in 
the District.
    Question. The control board recommends $1.26 million more than the 
City Council for the Department of Public Works budget. What is the 
control board proposing to fund in this department that the City 
Council does not support?
    Answer. The Authority added $1.3 million for equipment financing, 
related to leasing of trash collection equipment. In addition, the 
Authority eliminated $30,000 for a detailee assigned to the Office of 
the Mayor, for a net increase of $1.26 million above the Council's 
allowance. Again these actions are consistent with the Authority's 
city-wide policy in each area.
    Question. By how many full-time equivalent positions does the 
control board propose reducing the District's work force?
    How does this number compare with the City Council's figure on 
full-time equivalent positions in fiscal year 1998?
    Answer. The Authority did not include FTE assumptions in its fiscal 
year 1998 budget. In its May, 1997 report, ``Human Resource Management 
Reform: A Strategic Approach'', the Authority concluded that the 
District has not effectively planned or controlled its workforce. The 
lack of workforce planning has also hampered the budget process. 
Because there has been limited systematic attempts to assess personnel 
needs, personnel budgets are based upon the previous year's budgets and 
include arbitrary personnel levels. These full-time equivalent (FTE) 
levels frequently drive unsound decisions to privatize or reduce 
personnel regardless of the cost.
    The Authority intends to allow District government managers to 
allocate their total budget resources in the most effective way 
possible to achieve their goals, and to hold them accountable for 
achieving those goals within the resources provided. The Authority 
intends for managers to manage all resources, not just FTE limits.
    Question. The control board's proposed budget reports that the 
Budget Office circulated a request to the District's agencies and 
departments for certain information, such as:
    (a) A listing of agency programs, ranked by priority, with 
associated funding and full-time equivalent positions based on the 
fiscal year 1997 Congressional approved budget;
    (b) A listing of the agencies program priorities planned for fiscal 
year 1998;
    (c) Revisions to agency narratives and descriptions contained in 
the fiscal year 1997 plan;
    (d) An organizational chart showing all agency control centers; and
    (e) Discussion of program changes planned in fiscal year 1998.
    Please provide a detailed list of which agencies have and have not 
responded to the Budget Office request and copies of any and all 
responses received by these agencies to date.
    Answer. The District of Columbia Office of the Budget has provided 
this information under separate cover.
    Question. The control board's proposed budget reports that the 
control board has identified personnel in several agencies who are 
actually working for the Mayor's Office. Please provide the following 
information with respect to these ``detailees:''
    (a) How many people did the control board identify as working for 
the Mayor's Office who are not on the Mayor's staff?
    (b) What were the salaries of each of these individuals?
    (c) What agencies were these individuals assigned to?
    (d) What tasks were they performing for the Mayor?
    (e) Is the control board recommending that these positions be 
eliminated from their respective agency's staff?
    (f) Is the control board recommending that these individuals be 
reassigned to the Mayor's Office?
    Answer. The Authority has identified the following 25 detailees 
from other executive branch agencies assigned to the Office of the 
Mayor. The fiscal year 1998 budget for the District of Columbia 
government submitted by the Authority eliminates the funds for the 
FTE's shown, the amounts in the last column represents only the salary 
amounts of the individuals, agency budgets were also reduced by the 
estimated cost of associated benefits. The position title is the title 
of the individual on the roles of the detailing agency, not a 
description of their duties in the Office of the Mayor.

          DETAILEES ELIMINATED FROM THE FISCAL YEAR 1998 BUDGET         
------------------------------------------------------------------------
                                                           Authority or 
           Agency              Position title   Salary       Council    
------------------------------------------------------------------------
Office of Personnel.........  Employee Dev      $49,399  Authority.     
                               Spec.                                    
Office of Personnel.........  Admin Assistant    40,921  Authority.     
Employment Services.........  Logistical         32,577  Council.       
                               Assistant.                               
Employment Services.........  Secretary......    24,619  Authority.     
Employment Services.........  Staff Assistant    31,348  Council.       
Employment Services.........  Executive          79,020  Authority.     
                               Assistant.                               
Employment Services.........  Paralegal          42,795  Council.       
                               Specialist.                              
Employment Services.........  Staff Assistant    22,285  Council.       
Administrative Services.....  Clerical           21,068  Authority.     
                               Assistant.                               
Human Services..............  Secretary......    20,181  Council.       
Human Services..............  Deputy             55,355  Council.       
                               Ombudsman.                               
Human Services..............  Community          27,018  Council.       
                               Services Rep.                            
Human Services..............  Program            22,285  Council.       
                               Assistant.                               
Human Services..............  Clerk..........    14,724  Council.       
Human Services..............  Staff Assistant    39,878  Council.       
Human Services..............  Public Health      36,749  Council.       
                               Advisor.                                 
Corrections.................  Staff Assistant    34,663  Council.       
Corrections.................  Staff Assistant    22,083  Council.       
Police......................  Business           22,285  Council.       
                               Services Rep.                            
Police......................  Business           28,657  Council.       
                               Services Rep.                            
Police......................  Community          28,657  Council.       
                               Services Rep.                            
Parole......................  Special            56,618  Authority.     
                               Assistant.                               
Fire........................  Business           28,657  Authority.     
                               Services Rep.                            
Fire........................  Computer           18,208  Authority.     
                               Assistant.                               
Public Works................  Business           22,285  Authority.     
                               Services Rep.                            
------------------------------------------------------------------------

                                 ______
                                 
                  Questions Submitted by Senator Boxer
    Question. The fiscal year 1997 Disaster Supplemental included $22.3 
million in additional funds for emergency capital improvements for the 
physical plant of the D.C. public school system. More specifically, 
these funds were to be directed to addressing fire code and safety 
violations which could prevent the schools from opening in September. 
The Senate Appropriations Committee and the Senate supported the 
Subcommittee's recommendations. Unfortunately, during the conference 
the House conferees were adamant in their opposition to these funds and 
the monies were not appropriated.
    What are the adverse consequences of the failure to appropriate 
these funds?
    How does the District Government propose to successfully cope with 
the situation in view of the fiscal constraints?
    Answer. General Julius Becton, the Chief Executive Officer--
Superintendent of the District of Columbia Pubic Schools (``DCPS''), 
has informed the Authority that he has reordered the priority repairs 
to be performed so that roof replacements and other repairs needed to 
open schools on time will be made. However, DCPS is left with only 
$49.75 million available, from a projected emergency need of $86.6 
million. Work on boilers will be deferred to accomplish as much of the 
other program as possible. If cold weather should occur early in the 
school year some schools will be closed due to a lack of heat.
    Question. The fiscal year 1997 Disaster Supplemental, as passed by 
the Senate, included $8.8 million in additional funds to provide a 10 
percent increase for D.C. police officers to be retroactive to April 1, 
1997. The purpose of the pay increase was to bring the salaries of the 
D.C. police officers closer to the average salary of officers in the 
surrounding jurisdictions, at a time of a major reorganization of the 
department which is intended to put more officers on the streets to 
provide better crime control for District residents and visitors. 
Again, the House conferees were opposed to these funds and they were 
deleted.
    How does the District Government propose to cope with this 
situation?
    Can each of you speak to what if any progress has been made in the 
reorganization of the D.C. Police Department and its impact on crime?
    Has much improvement been detected in terms of diminished crime 
against the residents and visitors to the Nation's Capital?
    Answer. The Council of the District of Columbia has taken action to 
make the 10 percent pay raise for members of the Metropolitan Police 
Department (``MPD'') effective July 6, 1997. This action is possible 
because of the Authority's and Council's approval of a reprogramming 
request of $3.7 million in operating funds from the Fire and Emergency 
Medical Services Department, and $1 million from the MPD operating 
budget for non-personal services. Attached is a copy of a letter that 
the Chairman of the Authority sent to the Acting-Council Chair 
describing this action.
    Also, attached is a copy of MPD Chief Larry Soulsby's second 
Transformation Update which discusses the proposed changes in police 
operations. Finally, attached are two graphs which compare year-to-date 
Part I crimes (serious felonies, such as murder, armed robbery, rape, 
etc.) and homicides between calendar 1996 and 1997. These graphs 
demonstrate that crime is down in all areas of the city, and in all 
crime categories, since the inception of the Memorandum of 
Understanding partners initiative in February, 1997. 
[GRAPHIC] [TIFF OMITTED] T03JY10.000

    Question. Mr. Mayor, I understand that the control board, in its 
action on the budget, added funds to the Department of Corrections and 
reduced funds for other areas, such as summer jobs for youth and 
housing assistance programs.
    Can you tell the Subcommittee about the importance of the city's 
Youth Summer Jobs Program, and give us a little history and background 
on this issue? I'd also like to know more about the Housing Assistance 
Program, which I understand enables poor families to borrow funds in 
order to become homeowners. Has this program been successful, and what 
are the objections to its continuation? At the conclusion of your 
remarks, Mr. Mayor, I would like to hear from the representatives of 
the control board and the City Council on this matter.
    Answer. In the Authority's proposed budget the Housing Preservation 
Assistance Program (``HPAP'') was reduced by more than half of the 
request. This program provides financial assistance in the form of 
interest-free and low interest loans to qualified low and moderate-
income residents to enable them to purchase homes. The effect of the 
reduction is the elimination of 100 moderate-income loans. The 
Authority also eliminated funding for the Employer-Assisted Housing 
Program, saving $390,000. This program would have funded 34 loans to 
eligible D.C. government employees, mostly police officers, who are 
first-time home buyers in the District. The Authority viewed each 
program in the context of the District's current financial condition.
    Question. Could you please give your views on the new authorizing 
legislation which would implement the President's plan for the District 
of Columbia?
    Answer. On May 13, 1997 I wrote to The Honorable Franklin D. 
Raines, Director of the Office of Management and Budget, expressing the 
views of the Authority upon the President's National Capital 
Revitalization and Self-Government Improvement Plan. That 
correspondence is attached.
                     letter from andrew f. brimmer
  District of Columbia Financial Responsibility and
                           Management Assistance Authority,
                                      Washington, DC, July 2, 1997.
Hon. Linda W. Cropp,
Acting Chair, District of Columbia Council,
Washington, DC.
    Dear Chairperson Cropp: Pursuant to Public Law 104-8, the District 
of Columbia Financial Responsibility and Management Assistance 
Authority (``Authority'') has received from the Mayor a request to 
reprogram $3,656,752 of local funds from the fiscal year 1997 equipment 
operating budget of the District of Columbia Fire and Emergency Medical 
Services Department (DCFEMS), to the fiscal year 1997 personal services 
operating budget of the Metropolitan Police Department (MPD), dated 
June 30, 1997. When added to $1,000,000 from the MPD operating budget 
non personal services, this request will support the 10 percent pay 
raise for MPD officers agreed to by the Authority, the Mayor, and the 
Council.
    The certification letter received by the Authority from the Mayor 
and the Chief Financial Officer dated July 2, 1997 demonstrates that 
the District included in its most recent fiscal year 1997 bond 
financing funds totaling $3,968,000 for the DCFEMS's Fire Apparatus 
replacement project. These funds are sufficient to support DCFEMS's 
planned capital equipment purchases. DCFEMS's fiscal year 1997 
operating budget also included $3,968,000 in pay-as-you-go capital 
funds for the purchase of the same equipment. As such, the 
reprogramming of $3,656,752 of operating funds from DCFEMS to the MPD 
operating budget will have no impact on either DCFEMS's operating 
budget, or on their ability to proceed with its planned equipment 
purchases.
    After reviewing this request, the Authority finds it consistent 
with our earlier request that the Mayor reprogram funds within the 
District's budget to pay for the MPD officer's pay raise. The Authority 
therefore supports this request
    Please feel free to contact me should you have any questions on 
this matter.
            Sincerely,
                                         Andrew F. Brimmer,
                                                          Chairman.
                                 ______
                                 

                       letter from andrew brimmer

  District of Columbia Financial Responsibility and
                           Management Assistance Authority,
                                     Washington, DC., May 13, 1997.
Hon. Franklin Raines,
Director, Office of Management and Budget,
Washington, DC.
    Dear Mr. Raines: I am writing with respect to the National Capital 
Revitalization and Self-Government Improvement Plan, which was 
announced by President Clinton on January 14, 1997. As you requested, 
the District of Columbia Financial Responsibility and Management 
Assistance Authority (Authority) is pleased to submit this assessment 
of the President's Plan and its impact on the District of Columbia.
    On March 13, 1997, in testimony before the Subcommittee on the 
District of Columbia of the House of Representatives, the Authority 
communicated to the Congress its overall support for the Plan. This 
letter confirms that earlier support for the Plan and, additionally, 
outlines some recommendations for making even more effective the Plan's 
impact on the Nation's Capital. For your convenience, this letter is 
accompanied by several charts and tables which illustrate the specifics 
of the President's Plan and its potential impact on the District's 
budget.
    Briefly, the Authority's views are as follows:
    The Authority's Strategic Plan, released in December, 1996, 
concluded that one of the most basic reasons for the District's 
continued financial problems is the fact that the Nation's Capital is 
not supported--as is every other city in the United States--by a state. 
Throughout the country, states relieve some of the burdens on their 
cities in numerous ways for which the District has no recourse. The 
Federal Government is logically--and by default--the District's state. 
The burden and costs that other states bear for their cities need to be 
borne for the Nation s Capital by the Federal Government. The Authority 
believes that a more equitable structure to support public services 
must be developed. Our Strategic Plan highlighted for inclusion in such 
a structure the areas of prisons, Medicaid, mental health care, roads 
and bridges maintenance, and several other items.
    Medicaid.--The first area which remains principally a state 
function is Medicaid. The Authority, in its Strategic Plan, concluded 
that Medicaid is treated uniformly throughout the country. To my 
knowledge, in fact, only the City of New York--out of all cities--pays 
any significant share of Medicaid costs. All other cities pay either 
nothing at all, or some small portion. In a report the Authority 
released in April, ``Toward a More Equitable Structure,'' we concluded 
that the District of Columbia, as a city, should be treated no 
differently by the Federal Government than any other city is treated by 
its respective state. The District currently pays 50 percent of 
Medicaid expenses. The President's Plan proposes to increase the 
Federal share of District Medicaid expenses to 70 percent. However, 
this outcome would allow the Federal Government still to treat the 
District worse than the way states treat their cities. In fiscal year 
1997, total Medicaid expenditures are estimated to be $797 million. 
Under the current formula, the District is responsible for $395.6 
million. Under the President's Plan, the District would still be 
required to pay $239.1 million. Therefore, we recommend the Federal 
Government assume responsibility for 100 percent of medicaid costs.
    Courts and Corrections.--The operations and maintenance of major 
prison systems, as the Authority has noted in its Strategic Plan and 
elsewhere, is not the responsibility of cities. Municipalities 
certainly take care of local city jails, but states almost universally 
are responsible for large-scale correctional facilities. The District 
of Columbia currently spends approximately $190 million annually on the 
Lorton Correctional Facility, where 6,000 inmates reside. The sheer 
size and complexity of Lorton dictate that this prison is not 
appropriately the province of the District of Columbia--but of the 
Federal Government. The District will retain responsibility for the 
city jail and the Correctional Treatment Facility. In taking over the 
responsibility for sentenced felons, the Federal Government estimates 
that it will spend $756 million in the next four years. Additionally, 
under the plan, the Federal Government expects to allocate $900 million 
over five years in capital spending on renovation and construction at 
Lorton. Clearly, the assumption of these responsibilities by the 
Federal Government, in the context of state functions, would lift 
considerable budgetary pressure from the District.
    Similarly, although not directly discussed in our Strategic Plan, 
the President's Plan would take over the operations of the court 
system, including the Court of Appeals and the Superior Court. The 
District currently spends some $120 million annually on judicial 
functions, and the costs are rising each year. The operations for pre-
trial services, probation and parole, and the Corporation Counsel's 
juvenile and misdemeanor branches are now expected to be transferred to 
Federal jurisdiction. This is a desirable step. These services are 
frequently provided by states and counties instead of cities. The cost 
of those services provided by the District--but for which the Federal 
Government is the more appropriate party--is estimated at nearly $20 
million annually.
    Pension Liability.--Although the District faces numerous financial 
challenges, none may be greater than the massive unfunded pension 
liability that looms over the District. In 1979, the Federal government 
transferred the pension plans for police officers, firefighters, and 
teachers (later adding local judges), and a $2 billion unfunded 
liability to the District. Under current law, in the year 2004, the 
District will incur the full responsibility and total liabilities for 
these unfunded pension plans, at a time when the unfunded liability is 
estimated to expand from the current $4.8 billion to over $6 billion. 
Additionally, the annual pension costs to the City are projected to 
rise from about $307 million in fiscal 1997 to roughly $470 million in 
2004. A substantial portion of these costs represents excess payments 
made by the District toward the unfunded liability. In fact, total 
excess payments made to date approximate $2 billion. As the Authority 
concluded in its Strategic Plan, without some changes in the law, the 
impact of the liability on the District's operating budget will be 
catastrophic. Furthermore, without any change, the pension liability 
will severely hamper efforts by the District to regain fully financial 
solvency, as Wall Street remains hesitant of providing favorable 
lending conditions to the City so long as the unfunded pension 
liability overhang looms.
    As the unfunded pension liability has always been the 
responsibility of the Federal Government, the Authority is pleased that 
the President's Plan calls for the assumption of a substantial portion 
of the liability, in exchange for most of the plan's assets (which 
currently total about $3.6 billion). In addition to taking over the 
majority of the $4.3 billion of liability, the Federal Government would 
also assume responsibility for payments to current beneficiaries from 
the assets remaining in the funds.
    Transportation and Infrastructure.--The Authority's Strategic Plan 
envisions the Federal Government assuming state-like functions with 
regard to transportation. Under such an arrangement, responsibility for 
the Federal-aid routes, which comprise 40 percent of the District's 
roadways, would be assumed entirely by the Federal Government. 
Justification for this new responsibility is based on the fact that, in 
most states, local transportation needs are financed by motor vehicle 
fees, fuel taxes, and general fund revenues collected on a state-wide 
basis and then distributed to local jurisdictions by the state. These 
revenues are often used by jurisdictions to fund the local matching 
requirements of Federal grants--as well as the capital, operating, and 
maintenance costs for transportation infrastructure. The District's 
only source of funding both the local matching requirements for Federal 
grants and local roads is its diminishing ``state'' motor fuel and 
vehicle taxes. In fiscal 1997, the motor vehicle fuel tax for the 
District will generate $29 million.
    As estimated in the Authority's Strategic Plan, the costs to the 
Federal Government of funding and administering the transportation 
infrastructure needs (including maintenance costs) over four years 
would be $1.4 billion. The first-year costs are $340 million. These 
costs include (1) the District's local match; (2) the cost of 
administration that DPW currently incurs; and (3) annual costs of 
carrying out the Federal-aid construction program. These costs do not 
include the costs of snow removal on the Federal-aid routes. In most 
states, the state pays for snow removal on state roadways. The first-
year costs of the President's Plan to assume transportation functions 
would be $179 million; the four-year cost would be $284 million.
    Mental Health Services.--One major difference between the 
President's Plan and the Authority's Strategic Plan is the 
responsibility for mental health services. Few cities are obligated to 
carry the costs of all mental health programs for their citizens 
without the assistance of the state. The District of Columbia currently 
spends $114 million annually to support mental health facilities, 
including the costs of St. Elizabeth's Hospital, a facility received in 
considerable disrepair from the Federal Government. As with so many 
other health care costs, mental health care is also rising, placing an 
ever-increasing burden of state functions on the District. Thus, the 
cost of these programs is expected to approximate $456.5 million in 
four years.
    Since a review of other major cities indicates that mental health 
hospitals, their operations, and funding are exclusively the function 
of states, the Authority is concerned that the President's Plan makes 
no provision for the assumption or funding of mental health programs. 
Therefore, the Authority recommends that the President consider, in the 
context of the Federal Government assuming state functions, providing 
support to the District for mental health services. The Authority also 
recommends that the District and the Federal Government revisit issues 
associated with the operations and ownership of St. Elizabeth's 
Hospital.
    Economic Development.--The President has also announced, as part of 
his plans for the District, a proposal to create a new Economic 
Development Corporation, along with various tax incentives and credits, 
to assist the City in attracting and retaining businesses. The new 
corporation would be capitalized by the Federal Government with a one-
time investment of $50 million. The Plan also would provide for $250 
million in tax incentives, $79 million in investment tax credits; $2 
million in private activity bonds; job credits worth $133 million 
available to District businesses that hire low or moderate income 
residents; and $20 million in additional expense allowances for certain 
small businesses.
    The Authority welcomes this plan as a much-needed stimulus to the 
District's economic development. Without a state to absorb costs and 
provide various incentives, the District has long been at a 
disadvantage when it comes to creating a meaningful economic 
development program. The President's Plan, therefore, is a very good 
start. I would note, however, that there are many other issues with 
which the District must contend, such as the obstacles inherent in 
excessive regulations, that stymie economic growth. I would also note 
that it will not be sufficient merely to create job growth. Rather, the 
focus of such growth ought primarily to benefit District's residents 
and businesses.
    Accumulated Deficit.--The Authority noted in its Strategic Plan 
that years of improper financial and budgetary management have left the 
District with a massive and ever-increasing accumulated deficit. New 
York, Philadelphia, and other cities with Control Boards quickly 
determined, and effectively implemented, long-term plans to pay down 
similar, often larger, deficits. Future financial solvency of the 
District greatly depends on implementing a long-term financing plan for 
the District's accumulated deficit. The Authority advocated in its 
Strategic Plan that the District undertake a long-term borrowing, and 
we are pleased that the President's Plan also calls for such a 
borrowing and proposes that the U.S. Treasury provide the financing. 
The President has indicated that he will propose legislation providing 
for financing of the District's accumulated deficit, estimated at 
between $400 and $500 million. While the Authority supports the 
President's proposal to address the accumulated deficit, it is 
important to recognize the impact that such a borrowing will have on 
the District's remaining capacity to fund its multi-year capital 
program in light of the current debt limitation. The long-term funding 
of the accumulated deficit will also necessitate relief from the 
District's current debt cap or require an increase in the District's 
debt limitation. The Administration has pledged to work with the 
District Government to accommodate this borrowing, as well as an 
orderly and sustainable capital improvement plan.
    Concluding Observations.--Finally, I would mention that, in the 
context of state functions, there are a number of areas that the 
President's Plan does not address. Our report, ``Toward More Equitable 
Structure,'' concludes that counties typically provide at least some 
level of assistance for services such as Unemployment Compensation, 
Supplemental Security Income Management, Welfare Management, operating 
and capital assistance to local school districts, regulatory and 
inspection functions, as well as certain taxing powers. However, the 
larger share of costs remains with the state. To the extent that the 
President's Plan does not include these services, the Authority urges 
the administration to consider them carefully as part of the state-like 
functions the Federal Government assumes.
    One area in which the Authority continues to have concerns is the 
proposed elimination of the Federal Payment. As we have discussed 
previously, projections of revenues from District sources--composed 
mainly of property, sales, and income taxes--show little or no growth 
through fiscal year 2002. Between fiscal year 1997 and fiscal year 
2002, in fact, these sources are projected to rise by just 2 percent, 
unadjusted for inflation. At the same time, however, District 
expenditures for functions not assumed by the Federal Government under 
the President's Plan are anticipated to rise by 10 percent over the 
same period. It is important to note that, of all of the District's 
current revenue sources, the Federal Payment of $660 million is the 
second largest. Absent the Federal Payment, our projections show that 
the District will experience the return of a small deficit situation in 
the out years, principally due to the structural imbalance exacerbated 
by the absent Federal Payment. Therefore, we recommend that the Federal 
Payment be maintained.
    Furthermore, assuming that the President's Plan is implemented, the 
District, quite frankly, would not be out of the woods. The reason is 
that those state programs which the Federal Government is not assuming 
under the President's Plan--must still be funded. Not only must we 
address the issue of underfunding in essential programs as they relate 
to service provision (such as public secondary education), but we must 
recognize that the demand for some services is growing rapidly. The 
Authority believes that the District cannot fund these programs at the 
local level. Current projections indicate that the needed tax revenue 
will not be available. Without continued structural change, it is 
unreasonable to assume that the District will be able to avoid a period 
of sustained deficits in the near future.
    I would note that one additional element relates to the cash flow 
deficiencies experienced by the District when funding its operations on 
a daily basis. Under the current statute, the amount of the District's 
short-term borrowings is tied to the level of the following fiscal 
year's Federal Payment. If the Federal Payment is ultimately eliminated 
through implementation of the Presidents Plan, some other mechanism for 
supporting borrowing must be devised.
    I hope that these views have been helpful in clarifying the 
Authority's position with respect to the President's Plan. Based on our 
review of the Plan, and our recommendations. the Authority looks 
forward to the implementation of this important legislation, and to the 
positive impact that it promises for the Nation's Capital. We look 
forward to working with you in the coming months to implement an 
effective plan for restructuring the District of Columbia.
            Sincerely yours,
                                         Andrew F. Brimmer,
                                                          Chairman.

                             TABLE 1A.--IMPACT ON CURRENT FINANCIAL PLAN AND BUDGET                             
----------------------------------------------------------------------------------------------------------------
                                                                           Fiscal year                          
                                               -----------------------------------------------------------------
                                                   1996       1997       1998       1999       2000       2001  
----------------------------------------------------------------------------------------------------------------
Estimated Savings To District Due To                                                                            
 President's Plan:                                                                                              
    Medicaid \1\..............................   $153.64    $158.24    $168.56    $172.88    $178.81    $183.05 
    Pension \2\...............................    200.00     196.00     250.00     268.70     290.10     312.20 
    Prison....................................    164.05     211.78     188.00     189.16     190.35     188.68 
Courts:                                                                                                         
    Court of Appeals..........................      5.77       6.02       6.02       6.06       6.09       6.09 
    Superior Court............................     74.88      72.28      70.21      70.70      71.20      71.08 
    DC Court System...........................     33.04      35.46      33.45      34.32      35.22      35.22 
Pretrial Services.............................      4.23       3.74       3.89       3.90       3.92       3.91 
Board of Parole...............................      5.21       5.96       5.72       5.73       5.73       5.69 
Public Defender Service.......................      7.70       7.80       7.80       7.99       8.19       8.19 
National Highways System......................      1.29       1.33       1.37       1.42       1.47       1.51 
                                               -----------------------------------------------------------------
      Sub-Total Savings.......................    649.81     698.61     735.02     760.86     791.08     815.62 
                                               =================================================================
Less:                                                                                                           
    Net Debt Service Cost--Interest Borrowing                                                                   
     \3\......................................  .........  .........    (15.34)    (15.34)    (15.34)    (15.34)
    Federal Payment...........................   (660.00)   (660.00)   (660.00)   (660.00)   (660.00)   (660.00)
    Loss Interest Earnings-Federal Payment....     (2.30)     (2.30)     (2.30)     (2.30)     (2.30)     (2.30)
                                               -----------------------------------------------------------------
      Net Impact On District's Operating                                                                        
       Budget.................................    (12.49)     36.31      57.38      83.22     113.44     137.98 
----------------------------------------------------------------------------------------------------------------
\1\ Assumes adjusted Medicaid estimates provided by the District's Commission on Health Care Finance that were  
  provided to OMB on 2/11/97. The fiscal year 1998-2001 estimated savings using these figures total $703.30     
  million.                                                                                                      
\2\ Assumes sufficient amount of Pension Assets is left behind for the District's benefit to offset cost of new 
  Pension program needed to achieve $60 million savings in fiscal year 1998. Milliman and Robertson, Inc.       
  (District's actuary) estimates required assets to be $1.275 billion.                                          
\3\ Assumes District borrows $500 million in fiscal year 1998. Borrowing amortized over 15 years, no principal  
  amortization until fiscal year 2004, interest rate of 7.0 percent (see Mayor's Proposed Budget, March 18,     
  1997).                                                                                                        
                                                                                                                
Source: Fiscal year 1998 Financial Plan and Budget w/Modifications to Medicaid and Pension Estimates).          


                           REVISED TABLE 1.--FISCAL YEAR 1998 FINANCIAL PLAN AND BUDGET W/MODIFICATIONS TO MEDICAID ESTIMATES                           
                                                    [Data Source: Finanlcial Plan and Budget 3/18/97]                                                   
--------------------------------------------------------------------------------------------------------------------------------------------------------
                   Category                        1996        1997        1998        1999        2000        2001                Data source          
--------------------------------------------------------------------------------------------------------------------------------------------------------
Revenue:                                                                                                                                                
    Non-Tax...................................     178.34      174.74      176.90      178.30      177.90      177.30   ................................
    Transfers in (Lottery)....................      75.25       75.80       74.20       74.60       76.00       76.00   ................................
    Additional Policies Executed..............  ..........  ..........      12.90       13.90       16.20       16.25   ................................
                                               ---------------------------------------------------------------------------------------------------------
      Subtotal................................   2,656.11    2,586.05    2,657.90    2,687.90    2,729.00    2,782.45   ................................
Federal Payment...............................     660.00      665.70      660.00      660.00      660.00      665.90   ................................
Other Revenue.................................   1,036.96    1,144.30    1,146.04    1,122.64    1,112.88    1,096.55   ................................
                                               ---------------------------------------------------------------------------------------------------------
      Total revenue...........................   4,353.07    4,396.05    4,463.94    4,470.54    4,501.88    4,544.90   ................................
Asset Sales...................................  ..........      24.00       21.50       21.50       21.50       21.50   ................................
Treasury Borrowings...........................  ..........     636.87      317.00      317.00      317.00      317.00   ................................
TRANS.........................................  ..........  ..........     200.00      200.00      200.00      200.00   ................................
                                               ---------------------------------------------------------------------------------------------------------
      Total income............................   4,353.07    5,056.93    5,002.44    5,009.04    5,040.38    5,083.40   ................................
                                               =========================================================================================================
Expenditures:                                                                                                                                           
    Medicaid--Federal Share...................     409.53      401.40      430.61      441.48      456.40      467.10   CHCF 2/11/97; provided by the   
                                                                                                                         OCFO on 4/23/97.               
    Medicaid--District Share..................     384.09      395.60      430.61      441.48      456.58      467.10   CHCF 2/11/97; provided by the   
                                                                                                                         OCFO on 4/23/97.               
        Pension Fund..........................     336.50      321.1O      307.40      330.80      357.10      384.40   Milliman Robertson, Inc.        
        Prisons...............................     164.05      211.78      188.00      189.16      190.35      188.68   Page J-76.                      
            DC Jail and CTF...................      77.00       48.75       52.10       53.55       55.05       56.59   ................................
    Courts:                                                                                                                                             
        Court of Appeals......................       5.77        6.02        6.02        6.06        6.09        6.09   Page J-36.                      
        Superior Court........................      74.88       72.28       70.21       70.70       71.20       71.08   Page J-43.                      
        DC Court System.......................      33.04       35.46       33.45       34.32       35.22       35.22   Page J-50.                      
    Pretriai Services.........................       4.23        3.74        3.89        3.90        3.92        3.91   Page J-69.                      
    Board of Parole...........................       5.21        5.96        5.72        5.73        5.73        5.69   Page J-82.                      
    Public Defender Service...................       7.70        7.80        7.80        7.99        8.19        8.19   Page J-65.                      
    Natonal Highway System....................       1.29        1.33        1.37        1.42        1.47        1.51   Based on Agency/Controller Data.
                                               ---------------------------------------------------------------------------------------------------------
      Subtotal................................   1,503.29    1,511.21    1,537.17    1,586.60    1,647.31    1,695.57   ................................
Other Expenditures............................   2,933.94    2,961.34    2,921.61    2,954.26    2,958.58    2,982.71   ................................
                                               ---------------------------------------------------------------------------------------------------------
      Total Expenditures......................   4,437.23    4,472.55    4,458.78    4,540.86    4,605.89    4,678.28   ................................
Less: Other Uses..............................  ..........     658.37      578.28      588.95      599.61      610.26   ................................
(DEFICIT)/SURPLUS (- or +)....................     (84.14)     (74.00)     (34.62)    (120.77)    (165.11)    (205.14)  ................................
Fiscal year 1997 Initiatives..................  ..........  ..........  ..........      53.40       77.27       43.95   ................................
--------------------------------------------------------------------------------------------------------------------------------------------------------


                      REVISED TABLE 2.--PRESIDENT'S PLAN--WITH FISCAL YEAR 1998 FINANCIAL PLAN AND BUDGET WL MODIFICATIONS RESTATED                     
                                                    [Data Source: Financial Plan and Budget 3/18/97]                                                    
--------------------------------------------------------------------------------------------------------------------------------------------------------
                   Category                        1996        1997        1998        1999        2000        2001                Data source          
--------------------------------------------------------------------------------------------------------------------------------------------------------
Revenue:                                                                                                                                                
    Taxes.....................................  $2,402.52   $2,335.51   $2,393.90   $2,421.10   $2,458.90   $2,512.90   Page A-8.                       
    Non-Tax...................................     178.34      174.74      176.90      178.30      177.90      177.30   ................................
    Transfers in (Lottery)....................      75.25       75.80       74.20       74.60       76.00       76.00   ................................
    Additional Policies Executed..............  ..........  ..........      12.90       13.90       16.20       16.25   ................................
                                               ---------------------------------------------------------------------------------------------------------
      Subtotal................................   2,656.11    2,586.05    2,657.90    2,687.90    2,729.00    2,782.45   ................................
Federal Payment...............................     660.00      665.70   ..........  ..........  ..........  ..........  Assumes no federal payment,     
                                                                                                                         fiscal year 1998.              
Other Revenue.................................   1,036.96    1,144.30    1,314.60    1,295.52   1 ,291.69    1,285.50   ................................
Additional Medicaid Revenue...................  ..........  ..........     168.56      172.88      178.81      183.05   Federai reimbursement 50 percent
                                                                                                                         to 70 percent.                 
                                               ---------------------------------------------------------------------------------------------------------
      Total revenue...........................   4,353.07    4,396.05    3,972.50    3,983.42    4,020.69    4,067.95   ................................
Asset Sales...................................  ..........      24.00       21.50       21.50       21.50       21.50   ................................
Treasury Borrowings...........................  ..........     636.87      500.00   ..........  ..........  ..........  Assumes deficit borrowing,      
                                                                                                                         fiscal year 1998.              
                                               ---------------------------------------------------------------------------------------------------------
      Total Income............................   4,353.07    5,056.93    4,494.00    4,004.92    4,042.19    4,089.45   Assumes no short-term           
                                                                                                                         borrowings.                    
                                               =========================================================================================================
Expendtures:                                                                                                                                            
    Medicaid--Federal Share...................     409.53      401.40      599.17      614.36      635.21      650.15   CHCF 2/11/97; provided by the   
                                                                                                                         OCFO on 4/23/97.               
    Medicaid--District Share..................     384.09      395.60      262.04      268.60      277.59      284.05   CHCF 2/11/97; provided by the   
                                                                                                                         OCFO on 4/23/97.               
        Pension Fund..........................     336.50      321.10       57.40       62.10       67.00       72.20   Milliman & Robertson, Inc.      
        Prisons...............................     164.05      211.78   ..........  ..........  ..........  ..........  Page J-76.                      
            DC Jail and CTF...................      77.00       48.75       52.10       53.55       55.05       56.59   ................................
    Courts:                                                                                                                                             
        Court of Appeals......................       5.77        6.02   ..........  ..........  ..........  ..........  Page J-36.                      
        Superior Court........................      74.88       72.28   ..........  ..........  ..........  ..........  Page J-43.                      
        DC Court System.......................      33.04       35.46   ..........  ..........  ..........  ..........  Page J-50.                      
    Pretrial Services.........................       4.23        3.74   ..........  ..........  ..........  ..........  Page J-69.                      
    Board of Parole...........................       5.21        5.96   ..........  ..........  ..........  ..........  Page J-82.                      
    Public Defender Service...................       7.70        7.80   ..........  ..........  ..........  ..........  Page J-65.                      
    National Highway System...................       1.29        1.33   ..........  ..........  ..........  ..........  Based on Agency/Controller Data.
                                               ---------------------------------------------------------------------------------------------------------
      Subtotal................................   1,503.29    1,511.21      970.71      998.61    1,034.85    1,062.99   ................................
Other Expenditures............................   2,933.94    2,961.34    2,921.61    2,954.26    2,958.58    2,982.71   ................................
                                               ---------------------------------------------------------------------------------------------------------
      Total Expendtures.......................   4,437.23    4,472.55    3,892.32    3,952.87    3,993.43    4,045.70   ................................
Less: Other Uses..............................  ..........     658.37       77.09       55.94       55.94       55.94   ................................
(DEFICIT)/SURPLUS (- or +)....................     (84.14)     (74.00)     524.59       (3.90)      (7.18)     (12.19)  ................................
Fiscal year 1997 Initiatives..................  ..........  ..........  ..........      53.40       77.27       43.95   ................................
--------------------------------------------------------------------------------------------------------------------------------------------------------


         CHART A.--PLANS TO REVITALIZE THE NATION'S CAPITAL \1\         
         [Federal Government Assumption of State-like Functions]        
------------------------------------------------------------------------
       Authority's Strategic Plan                President's Plan       
------------------------------------------------------------------------
Unfunded Pension Liability:               Unfunded Pension Liability:   
    Liability $4,800 million                Liability: $4,800 million.  
    First-year cost: $307 million           First-year cost: $250       
                                           million.                     
    Four-year cost: $1,380 million.         Four-year cost: $1,121      
                                           million.                     
Medicaid:                                 Medicaid:                     
    Percent of Cost: 100 percent            Percent of Cost: 70 percent.
    First-year cost: $430 million           First-year cost: $169       
                                           million.                     
    Four-year cost: $1,796 million          Four-year cost: $703        
                                           million.                     
Prisons: Operating Costs:                 Prisons: Operating Costs:     
    First-year cost: $188 million           First-year cost: $188       
                                           million.                     
    Four-year cost: $756 million            Four-year cost: $756        
                                           million.                     
                                            Capital Costs:              
                                            First-year cost: $300       
                                           million.                     
                                            Four-year cost: $900        
                                           million.                     
District of Columbia Court System:        District of Columbia Court    
                                           System:                      
    No specific provision                   First-year cost: $109       
                                           million.                     
                                            Four-year cost: $446        
                                           million.                     
Pretrial Services:                        Pretrial Services:            
    No specific provision                   First-year cost: $4 million.
                                            Four-year cost: $16 million.
Parole:                                   Parole:                       
    No specific provision                   First-year cost: $6 million.
                                            Four-year cost: $23 million.
Public Defender:                          Public Defender:              
    No specific provision                   First-year cost: $8 million.
                                            Four-year cost: $32 million.
Transportation/Infrastructure: General    Transportation/Infrastructure:
 Fund:                                     General Fund:                
    No specific provision.                  First-year cost: $1 million.
                                            Four-year cost: $6 million. 
Capital:                                  Capital:                      
    First-year cost: $340 million           First-year cost: $179       
     (average)                             million.                     
    Four-year cost: $1,360 million          Four-year cost: $284        
                                           million.                     
Mental Health:                            Mental Health:                
    First-year cost: $114 million           No provision.               
     (average)                                                          
    Four-year cost: $456 million          ..............................
Economic Development:                     Economic Development:         
    The Authority will examine the          First-year cost: $50        
     barriers to economic development      million.                     
     and issue a report by 6/30/97          Four-year cost: $300 million
                                           \2\                          
Financing of Accumulated Deficit:         Financing of Accumulated      
                                           Deficit:                     
    Long-term financing of approximately    Long-term financing of      
     $400 to $500 million                  approximately $400 to $500   
                                           million.                     
------------------------------------------------------------------------
\1\ (Revised May, 1997)                                                 
\2\ Includes $250 million in Federal tax incentives and credits.        

                          subcommittee recess

    Senator Faircloth. Thank you, Mr. Mayor; thank you, Ms. 
Cropp; and thank you, Dr. Brimmer. I think the hearing has been 
beneficial. We will have others. We have probably asked more 
questions than we have answered, but we will be back.
    I thank you.
    [Whereupon, at 12:45 p.m., Thursday, July 10, the 
subcommittee was recessed, to reconvene subject to the call of 
the Chair.]


        DISTRICT OF COLUMBIA APPROPRIATIONS FOR FISCAL YEAR 1998

                              ----------                              


                        WEDNESDAY, JULY 16, 1997

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:04 a.m., in room SD-192, Dirksen 
Senate Office Building, Hon. Lauch Faircloth (chairman) 
presiding.
    Present: Senator Faircloth.

                          DISTRICT OF COLUMBIA

                     Metropolitan Police Department

STATEMENT OF POLICE CHIEF LARRY SOULSBY

                  OPENING STATEMENT OF LAUCH FAIRCLOTH

    Senator Faircloth. Good morning, ladies and gentlemen. The 
hearing is called to order.
    This is the second hearing of the Senate Appropriations 
Subcommittee on the District of Columbia, and we are here to 
consider the District's fiscal year 1998 budget proposals.
    Today, we will hear testimony on the budget requests for 
the D.C. Department of Corrections and the Metropolitan Police 
Department. These funds relate to one of the most glaring 
problems confronting our Nation's Capital: Public safety.
    Until residents and visitors alike can walk the streets of 
the Nation's Capital without fear of assault, no tax breaks or 
economic development will save the city. Nothing will work 
until the streets are safe. As long as there are murders like 
the recent tragedy at the coffee shop, as long as police 
officers can be gunned down in cold blood, any other type of 
economic reform is a waste of time.
    The middle class that can leave the city will continue to 
move to the Virginia and Maryland suburbs. Other Americans from 
North Carolina and perhaps Topeka, KS, or wherever, will be 
afraid to visit.
    Crime has become a very profitable business in the city, 
where unemployment as of May was 6.8 percent, a full 2-percent 
higher than the national average of 4.8 percent.

                           drug use in prison

    To make matters worse, our corrections facilities have 
become training grounds for young criminals. Once released, 
they return to the streets better, tougher criminals than when 
they went in. The crime does not stop even while the criminals 
are behind bars. According to a recent report, 9 percent of 
D.C. Corrections inmates have tested positive for drug use 
while in prison.

                              court orders

    I have spoken previously about the problems of 
mismanagement throughout the city. Between May 1995 and June 
1997, four agencies of the D.C. government were placed under 
receivership. The Department of Correction alone is currently 
operating under 13 court orders and mandates--13 court orders. 
We need to find out why.
    As a consequence, the courts are driving the Department 
budget because in order to comply with the court orders, agency 
heads must make mandated changes, and the changes come with a 
price, always.

                       new powers of police chief

    Despite these problems, some important progress is 
occurring. Fighting crime has recently made some progress. In 
the police department, the police chief was given new powers to 
clean up the department as part of a memorandum of 
understanding with the Mayor, Control Board, City Council 
members, Judge Hamilton and others. The chief was given more 
authority to hire and fire senior officers, authority which had 
previously been exercised by the Mayor. The chief placed an 
additional 400 police officers on the street. The result is 
that arrests are up and crime is down.
    The police department is an example of how the city can 
form a partnership, bring in experts to address a problem, and 
then begin to solve it. If this approach were taken in every 
department of the city, we could see some dramatic 
improvements.
    Today, we will hear testimony from the director of the 
Department of Corrections, Margaret Moore, and the chief of the 
Metropolitan Police Department, Larry Soulsby. The committee 
looks forward to your testimony as we continue to review the 
budget proposals for your departments.
    I would like to extend condolences to you, Ms. Moore, on 
the death of your father. Knowing the personal loss you have 
recently experienced, I appreciate your being with us this 
morning.
    We expect Senator Boxer and Senator Hutchison to join us 
later on this morning.
    [The statement follows:]
           Prepared Statement of Senator Kay Bailey Hutchison
    Mr. Chairman, thank you for accepting this statement for the 
record.
    As we discuss appropriations for the District of Columbia for 
fiscal year 1998, and particularly appropriations for law enforcement 
functions, I would like to point out my concern that Congress take 
decisive action to address the crime problem plaguing our capital city.
    In addition to considering funding allocations for law enforcement, 
Congress should be using every means within its constitutional 
authority to curb crime in the District of Columbia. I have introduced 
legislation that would subject the murderers of DC police officers to 
the death penalty. I introduced this legislation after the brutal 
murder of DC Officer Brian Gibson. Brian Gibson was ambushed as he sat 
in his patrol car, serving the citizens of DC and this nation. His 
young wife has been left with the unshakable memory of a senseless 
murder of her husband; her children have been left without a father. 
Since Brian Gibson was murdered, two other DC police officers have been 
mercilessly hunted down and murdered by criminals. I believe that those 
officers should have the same protection that all other law enforcement 
officers in the DC metropolitan area have: the murderer faces the 
possibility of death.
    When I introduced this legislation, I spoke to Mayor Marion Barry 
and many other DC officials, to assure them that my sole intention was 
to extend to DC officers the protection equivalent to that enjoyed by 
US Capitol Police, federal law enforcement officials, and Virginia and 
Maryland police. I have been unequivocal in my message: if the District 
of Columbia would take this step to protect its law enforcement 
officials, then I would step back and not take any further action.
    Mayor Barry did indeed sponsor a bill before the DC Council to make 
the murder of a DC police officer a capital crime. I applaud his 
leadership on this issue and I was encouraged to see that the Mayor was 
actively seeking this level of protection for the officers who risk 
their lives to protect the lives of others. I followed the course of 
the Mayor's bill and spoke to many other DC officers about this matter.
    However, I was very disappointed to learn that the Judiciary 
Committee of the DC Council defeated the bill almost unanimously, and 
the full DC Council adopted a Sense of the Council Resolution opposing 
the death penalty for the murder of police officers. With those votes, 
the DC Council made clear that it had no intention of protecting its 
officers with the same protections we afford to all other officers in 
this city.
    Therefore I am moving forward with my bill. I look forward to 
passage of this legislation, which will send a strong message to those 
who terrorize our citizens and visitors in our nation's capital city: 
if you dare to take the life of a DC police officer, you had better be 
prepared to give your life in return.

    Senator Faircloth. Before we begin, let me remind all of 
our witnesses that your entire statement will be made a part of 
the record, so we ask that you limit your opening statement to 
10 minutes, and we will hear all opening statements followed by 
questions.
    Since we only have two witnesses this morning we will not 
be using the timer, so feel free to say what you have got on 
your mind.
    With that, I would like to call on our first witness, Chief 
Soulsby, for his statement.

                       statement of larry soulsby

    Mr. Soulsby. Good morning, Senator Faircloth, members of 
the Senate Appropriations Subcommittee on the District of 
Columbia, ladies and gentlemen. I thank you for the opportunity 
to appear before this subcommittee and to discuss our fiscal 
year 1998 budget. I am going to deviate from my statement and 
just talk about some points in the statement instead of 
spending the time reading the statement.
    Senator Faircloth. Well, since we have only two witnesses 
we have plenty of time, so say what you have got on your mind.

             fiscal year 1998 budget for police department

    Mr. Soulsby. The department's fiscal year 1998 operating 
budget has been set tentatively at $272,383,000.
    Senator Faircloth. Chief, if you do not mind, pull the 
microphone closer to you.
    Mr. Soulsby. I am a big man with a silent voice. 
[Laughter.]
    The department's fiscal year 1998 operating budget has been 
set at $272,383,000. I believe that the budget set for fiscal 
year 1998 provides adequate funding for personnel services, but 
we may encounter unexpected nonpersonnel services, costs that 
would be associated with the department's reorganization that 
would reach beyond the limits of this budget.
    Nonpersonnel services spending set in the fiscal year 1998 
budget may not provide for those unanticipated costs that may 
be associated with the technology needed to carry out the new 
mandate.
    As you know, Senator, we are currently going through a 
total remake of this department. As issues arise, as we try to 
address the new mandates, we are trying to operate within the 
budget, and I can assure you that we will do everything we can 
to operate within that budget.

                      closing of helicopter branch

    In the past year we have closed the department's helicopter 
branch for two reasons. No. 1, it was a cost-saving measure, 
and No. 2, could we really afford to have that kind of 
operation, considering the other types of services available?
    We have relied heavily on U.S. Park Police in the last year 
to respond when a policeman needs the services of the 
helicopter branch, whether it be to pick up individuals that 
have been hurt, or whether it be to respond to a burglary 
scene. The U.S. Park Police has provided that service, but at 
great expense to them. There is a possibility in the future 
that I may have to provide additional funding to the U.S. Park 
Police for them to assist us, but that still is better than 
having a duplicate unit of the helicopter branch. It is 
something we need to consider that is not currently budgeted.

                 problems confronting police department

    In the past, I have spoken candidly about the problems 
confronting the police department. Over the last decade, the 
department has been crippled by many things, including lack of 
funding; there have been many issues.
    We have had a stagnant organizational culture. We have been 
operating without accountability in many areas.
    Senator Faircloth. Without what?
    Mr. Soulsby. Accountability, personal accountability. Also, 
members of various ranks have not taken ownership in their job 
and have not given back everything they could.
    I am here today to tell you that things have changed, that 
the Metropolitan Police Department is on the road to recovery 
and success. We will once again become one of the best 
departments in the country. We have got a long way to go, but 
we are making improvements as we go forward.

                           reduction in crime

    In the first 6 months of 1997, crime has been reduced by 17 
percent citywide. When compared to the same period of 1996, 
each of the seven police districts have achieved decreases in 
crime. All but one have had double digit decreases in crime. 
Crimes against persons are down 14 percent for the year. Crimes 
against property have reduced by 17 percent.
    As we sit here today, homicides are down 26 percent for the 
year. There are 48 more people alive this year than there were 
last year at this time, 48 less people killed this year to 
date. The homicide total is the lowest number for the first 6 
months of any calendar year since 1987.
    Robbery is down 26 percent. Burglary is down 23 percent. 
Stolen autos are down 28 percent.
    There have been many things occurring in the last 6 months, 
and I will speak to those in 1 minute, not the least of which 
has been the increased activity of police officers, officers 
who are now understanding that they have a role to play, and 
are being held accountable for not doing their role.

                     arrests up for first 6 months

    The total arrests for the first 6 months of this year are 
up 44 percent compared to last year. Issues such as writing 
tickets, moving tickets, parking tickets, and warning tickets 
are up 98 percent this year compared to last year. The first 6 
months we have had 180,961 tickets written in this city, and 
those play big parts, because many things that officers do are 
self-motivated issues. They have to address problems, and while 
we do have too many people killed and robbed in this city, we 
also have over 100 people killed in auto accidents. So we have 
to do things like traffic safety to prevent those deaths.
    If you are dead, I do not care how you died, you are still 
dead, and so those are also issues police departments have to 
act on on a daily basis.

                  police performance up significantly

    Almost every measurable activity with regard to police 
performance is up significantly this year, while complaints 
against police officers have not increased.

                      memorandum of understanding

    In December 1996, the MOU partners memorandum of 
understanding joined together to assist in a major 
transformation of the Metropolitan Police Department. The 
members signing the agreement were the Mayor, the chief of 
police, City Council, chief judge of the D.C. Superior Court, 
the corporation counsel, U.S. Attorney's Office, and the 
Financial Responsibility and Management Assistance Authority.
    We all came together and said that we have to make public 
safety a No. 1 priority. We have taken several actions since 
then to make that occur, not the least of which was the 
empowerment of the chief of police, which was set in February 
1997. The Mayor delegated personnel budget and procurement 
authority to the chief of police. A new leadership team was 
immediately appointed and dedicated to the empowerment of the 
police department as we move forward. I changed the top 
leadership of the department so that we could focus on the 
necessary changes for the future.
    Across the board, the citizenry was not happy with their 
police department, and were not happy on a day-to-day basis of 
what was occurring. Public safety was an issue, so we have to 
make drastic changes if we intend to have different outcomes, 
and we have moved forward in that area.

                         new mission statement

    A new mission statement was developed for the Metropolitan 
Police Department, one focused on reducing crime, preventing 
crime and fear of crime, dealing with public safety issues, and 
building a real bridge with the community.
    Since the release of the baseline report on February 19, 
1997, we have started working toward new operational and 
organizational conditions within the Metropolitan Police 
Department. To test where we needed to go, in March of this 
year we went into seven enhanced enforcement areas throughout 
the city and used tactics used by other major cities such as 
New York to see if we could have reductions in crime the way 
they had.
    To accomplish this, we deployed more than 400 officers into 
these areas. The result after several months was a reduction in 
crime by 24 percent in those areas. A lot of tickets were 
written; various arrests occurred; and all police activities, 
everything from homicides to you name it in those areas went 
down drastically by using plans and strategies of other major 
departments.

                  better services by police department

    What we have tried to do since then, after studying what 
occurred there for 4 months, is to take what we have learned 
and spread that throughout the entire city. Every part of the 
city has to be policed better and has to have better service 
from the police department. People have to be able to live 
without fear of crime on a day-to-day basis.
    We have to have the same level of high visibility, 
community interaction and participation so a reduction in crime 
will become a reality in every neighborhood in the city.

                 implementation of new operating model

    On July 1 of this year we began the implementation of our 
new operating model. The plan that we are carrying out is the 
work of several teams and committees made up of experienced and 
dedicated sworn members and civilians of the department who 
have looked at how we can take what we learned and transcend 
that throughout the entire department.

                establishment of 83 police service areas

    A part of that has been our new operating model that calls 
for us to establish 83 police service areas throughout the 
city. We have tried to equalize the work load throughout each 
of these police service areas, and we have tried to equalize 
the manpower in those areas so we could have adequate manpower 
to police the city.
    We had 623 officers who did uniform prevention work in 
sectors, before this transition. Once it is complete, and it is 
about 95 percent complete now, we will have 1,344 officers that 
will be assigned in those areas--a substantial increase in 
officers out there trying to prevent crime before it occurs, 
before the pain occurs.
    What we had become is a department that tried to make 
apprehensions after the fact, catch the person after the crime 
occurs. We have to stop the pain up front. It is a major 
transition for our department. It is a major rethinking.
    Between approximately one-fourth and one-third of our 
officers in the last 3 weeks have received new jobs, new duties 
working on the street, and we have done that through the last 
several weeks relatively quietly.
    For the most part the members accept the change and the 
challenge, and are looking forward to where we are going. We 
continue on this same path that we have tried to set up.
    Each police service area is serviced by a team of patrol 
officers, detectives, and vice investigators. This is a 
decentralization of personnel and authority away from 
specialized units to the basic street level police patrol 
teams. These teams provide 24-hour, 7-day-a-week coverage to 
the neighborhoods which they serve.

                      decentralizing of authority

    We are trying to decentralize authority, and many of the 
decisions that are now made at the highest levels in the police 
department will be made by the sergeant in charge of those 
teams that are right there in the community. They are able to 
meet with the community, assess the problems, make changes in 
personnel, make changes in scheduling, or make whatever change 
is necessary to attack the problem as it occurs.
    As a part of our new operating model strategy, we also are 
consolidating station operations to eliminate the need to have 
duplicate services, support services. We have decentralized 
many of our specialized units and centralized functions to the 
police service areas. Every district has done away with 
community service officers. They have done away with 
specialized units within those districts and assigned those 
officers to work in the community. Every police officer has to 
be a community services officer. Every police officer has to be 
able to talk to and work with the community.
    We have also consolidated the Narcotics and Special 
Investigations Division, and the Criminal Investigations 
Division into one operational unit, and reduced the size of 
those combined units by about one-fourth, and put those 
personnel back in the field working in the community.

                           improve management

    We are all moving forward on several other fronts to 
improve the management and the operation of the departments. 
These include the development of an informational technology 
strategy to integrate all of the department's informational 
systems such as mobile digital computers, which will be 
installed very soon in almost all of our front line vehicles, 
the records management system, and a computer-assisted 
dispatching system.
    We are also working on the development of an infrastructure 
blueprint for the improvement in such areas as fleet 
management, and there will be a total overhaul of how we handle 
fleet management. There will be a total overhaul of how we 
handle property control, of how we handle prisoner transport, 
of how we handle prisoner housing of the thousands of people 
that we arrest each year, how we handle support services, 
material management, and also a change in the way we handle the 
citizen complaint process to involve the community in that 
process.
    In short, everything we do in the police department is 
being changed. We are going around the country. We are seeing 
what the best practices are from police departments around the 
country, as well as what the best business practices are to 
totally rebuild this department and bring it back to where it 
was years ago, and move well beyond that, so that we have a 
police department in the city that is an example, a shining 
example, throughout the country.

                     improvement in infrastructure

    Improvements in our infrastructure will also free up 
additional sworn police officers, reduce cost, and enhance 
roles for our sworn and civilian members. We expect that there 
will be a savings as we move through the process, probably in 1 
to 2 years down the road.

                         ten percent pay raise

    Sworn members of the department were granted a 10-percent 
pay raise recently. As you know, some of the officers had not 
had a pay raise since 1989, and while the 10-percent pay raise 
is very helpful, the pay for the members of the department is 
still behind that of other jurisdictions in the Metropolitan 
Police Department.
    And Senator Faircloth, I would like to personally thank you 
and the members of this subcommittee for supporting our request 
for the pay raise. It is something that we are making 
tremendous demands on our officers, and we expect them to 
become more professional very quickly, but one of the things we 
needed to address was the pay raise, and I do appreciate your 
support in that area, sir.

                            training program

    We are also implementing a training program to ensure that 
all of our officers and managers have the skills and knowledge 
necessary to carry out their duties and responsibilities under 
the new operating models.
    We will be involved in developing new training over the 
next year to 2 years, in order to get the officers 
knowledgeable, up to speed on where we are going and what our 
basic outline is. To date we have brought in over 1,000 police 
officers to attend a 1-day orientation session to explain to 
them their operating model and what their role will be.
    On August 12 and 13 we will be conducting a 1-day seminar 
for all of the PSA sergeants and managers that will be working 
in those areas. The following week, we will begin a 2-day 
training for all PSA team members. We want to bring them in as 
teams, all 83 teams individually, and teach them such things as 
how to involve the community, how to deal with problem solving, 
how to police in the future.
    Senator Faircloth. Excuse me, chief, what is PSA?
    Mr. Soulsby. Police service areas, geographical areas they 
work in. We tend to use police jargon too much sometimes.

                          random drug testing

    The department's implementation of a random drug-testing 
program will begin on May 15, 1997, whereby on a daily basis 
members are selected at random to undergo drug screening. So 
far, we have had 245 members tested under that drug-testing 
program, including all of the senior managers on the police 
department and myself.
    Senator Faircloth. How many?
    Mr. Soulsby. Two hundred and forty-five to date.
    Senator Faircloth. How many were found positive?
    Mr. Soulsby. So far, zero, but again, it is done randomly. 
They have no idea when they are going to be selected. They are 
notified that morning to come to the clinic that day.

             suspension of 28-day notice to change schedule

    We have also suspended the 28-day rule that was under union 
contract, which we had to give an officer 28-day notice to 
change their schedule. If we changed their schedule in any way 
without giving that 28-day notice, we had to pay the officers 
overtime. We have suspended that 28-day rule, and we are 
working with the union to reduce or eliminate it in the future.

                     entry level standards reviewed

    The entry-level standards for the department have been 
reviewed to ensure that the standards are adequate. To date, 
the entry-level standards used by the department exceed those 
required by the Commission on Accreditation for Law 
Enforcement, but we are looking to raise those standards beyond 
that to require educational requirements in the future. We are 
looking at the standards we need to have to hire new people.
    We are also looking at what standards we should have for 
promotion, educational requirements and those types of things. 
If we are going to professionalize this department, we have to 
look at everything we do, and we are doing that.

                      recruiting unit reorganized

    The department's recruiting unit has been reorganized, and 
the recruiting process and procedures have been revised to 
ensure that every single applicant is checked, and checked 
twice. We do not hire anyone for this police department that 
should not be on the police department, so we do not make 
mistakes that have been made in the past.
    We are reviewing our disciplinary process and we are trying 
to change that entire process to ensure that timely, meaningful 
discipline occurs, and that people that should not be on the 
department, who do things that are egregious, are removed from 
the department.
    With respect to department recertification, we have had 
over 2,800 officers who have been recertified through firearms 
training in the last 6 months.

                     performance management system

    The department has reviewed its performance management 
system for individuals. The system right now meets the minimum 
professional standards for law enforcement, but we have to do 
better than that. We are not going to be happy with minimum.
    The departmentwide performance matrix systems are being 
developed. The Mayor's office notified us in December that to 
say we needed to get involved in this, but also starting in 
December was the MOU partners, where we knew we were going to 
totally remake the department.
    It does not make sense to set the matrix systems based on 
the way we did things in the past. As a part of what we are 
doing with the consultant as we move through the new operating 
model, the matrix systems, the performance standard set, will 
be set on what the new model is, and expect something to occur 
on that very shortly.

                     performance and accountability

    Performance and accountability are high on everything we do 
and will be doing in the future, and we need this system to 
make sure that that occurs, but the system has to be 
meaningful, and we are making changes to things that have been 
this way for 30, 40, 50 years. We are making many changes 
within the police department.
    In closing, I would like to say again, the Metropolitan 
Police Department is on the road to success. We are moving 
forward in the right direction. We have got a long way to go, 
but we have the willpower to make the change, we have the 
commitment from the senior managers to assure that change 
occurs, and we are willing to accept recommendations and input 
from anyone, because we, too, have pride in this department. We 
look forward to having a proud department in the future, and I 
think the citizens and the country will be proud of this 
department as we move forward.

                           prepared statement

    Changes will not occur 4 or 5 years from now. They are 
changing on a day-to-day basis. As every month passes, you will 
see improvements.
    Thank you for the opportunity to be here today, sir.
    [The statement follows:]
                 Prepared Statement of Larry D. Soulsby
    Good morning Senator Faircloth, members of the Senate 
Appropriations Subcommittee on the District of Columbia, ladies and 
gentlemen. Thank you for the opportunity to appear before the 
Subcommittee and discuss the fiscal year 1998 budget for the 
Metropolitan Police Department.
    The department's fiscal year 1998 operating budget has been set at 
$272,383,000. This amount is broken down into two primary categories: 
$231,182,000 for personal services; and $41,201,000 for non-personal 
services. The personal services allocation authorizes 3,815 sworn and 
722 civilian positions.
    I believe that the budget set for fiscal year 1998 provides 
adequate funding for personal services. I am concerned, however, that 
given our ongoing efforts to improve the operations and organization of 
the department, we may encounter unexpected non-personal services 
costs. Costs that would be associated with the department's 
reorganization that would reach beyond the limits of this budget. The 
reorganization of the department is focused directly on dramatically 
increasing the number of officers working on the street in our 
neighborhoods and the non-personal services spending level set in the 
fiscal year 1998 budget may not provide for those unanticipated costs 
that may be associated with the technology needed to carry out this 
effort.
    In the past I have spoken candidly about the problems confronting 
the department, about a department crippled by problems lasting for a 
decade, a department with a stagnant organizational culture, a 
department without accountability, and a department with insufficient 
funding for salaries and resources. Today, I am here to discuss the 
changes that we have made to our operations and organization, the 
accomplishments that we have achieved, and the changes that are still 
to occur. Clearly, we are on the road to success and rightfully 
regaining our position as one of the best police departments in the 
country.
    The Metropolitan Police Department has embarked on a comprehensive 
transformation of its organization and operations. The outcome of which 
is the development and implementation of immediate and long-term 
organizational and strategic changes to meet the goals of eliminating 
crime and disorder and reducing the fear of crime in the District of 
Columbia.
    In March of this year the department initiated an Enhanced 
Enforcement Effort that targeted specific areas of the city to 
demonstrate and to reassure citizens that their personal safety and the 
protection of their property was our foremost objective. Crime in these 
targeted areas has been reduced by 24 percent over the last four 
months. What we have now done is to remake the department so that the 
same level of high visibility, community interaction and participation, 
dramatic reductions in crime, and the elimination of fear are realities 
in every neighborhood in the city, not simply in a handful of target 
areas of the city.
    On July 1, 1997, we began the implementation process for a New 
Operating Model for the Metropolitan Police Department. The plan that 
we are carrying out is the work of several teams and committees made up 
of experienced and dedicated sworn and civilian department employees. 
The members surveyed their colleagues in the field for ideas and met 
and deliberated for weeks to develop the department's New Operating 
Model. Men and women on the front lines of policing in the District 
have been able to contribute, in a systematic way, their knowledge, 
expertise, and common sense to how the department is organized and its 
resources deployed. The plan transforms police patrol in the District, 
lays the groundwork for productive and sustained citizen-police 
cooperation, and establishes accountability to neighborhoods for 
reducing levels of crime, fear of crime, and disorder.
    Our New Operating Model divides the city into 83 of what we are 
calling Police Service Areas (PSA's) that operate within the framework 
of the department's seven patrol districts. Each PSA is served by a 
team comprised of patrol officers, detectives, and vice investigators. 
This is a decentralization of personnel and authority away from 
specialized units to basic street-level police patrol teams. The team 
provides 24-hour, seven days-per-week coverage to a geographically 
manageable, neighborhood-based area.
    Two essential features of the new model are: (1) officers remain 
assigned to individual PSA's for at least 12 months so they can better 
know and serve specific neighborhoods; and (2) team members sign a 
pledge affirming their commitment to the neighborhood they serve. Both 
the long-term assignment and the signed pledge are meant to reinforce 
the team members' sense of ownership and accountability to their PSA 
and community. Another crucial accountability and management factor is 
that each team is led by a single PSA sergeant who has overall 
responsibility for police service within the PSA.
    The PSA sergeant is required to develop a thorough knowledge of the 
area, and will soon be equipped with a beeper whose number will be 
provided to residents and business people in the PSA. Within reason and 
in non-emergency situations, citizens can beep their PSA sergeant to 
seek or provide information, volunteer for neighborhood anti-crime 
projects, or register concerns.
    The PSA structure is designed to serve several purposes: to 
establish and maintain a closer alliance with the community to work 
toward reducing crime and the fear of crime; to provide each 
neighborhood with a clear channel for input into PSA plans and 
operations; and to greatly enhance police ability to obtain the 
community's support, time, and energy in achieving common objectives.
    Accompanying the reorganization of patrol is the application of a 
new strategic problem-solving approach to drugs, guns, gangs, and 
disorder, those factors that lead to cycles of serious crime and 
disruption in communities. The problem-solving approach is responsible 
for many of the crime-fighting success stories in other cities that you 
may have heard about. Problem-solving operates by (1) identifying the 
underlying cause of a cluster of criminal incidents; (2) determining 
the best plan to eliminate or neutralize the cause; (3) putting the 
plan into action; and (4) making certain it is working. It is aimed at 
the sources of chronic crime and disorder, whether they be homicides, 
neighborhood drug markets, street corner prostitution, or garbage 
clogged alleys that suggest no one cares about conditions in a 
neighborhood.
    The new approach means that the MPD no longer will spend all its 
patrol time responding to 911 calls and reacting after the fact to 
criminal incidents. With the significantly increased number of officers 
on the streets, the PSA teams will have the time and training to attack 
neighborhood crime and disorder through planning, analysis, and 
skillful application of the best police practices developed throughout 
the nation.
    Problem-solving encourages officers to use a variety of methods, 
not just arrests, to solve problems. These methods include using civil 
laws to control public nuisances, offensive behavior, and conditions 
contributing to crime; attaching new conditions to parole and 
probation; issuing citations in lieu of arrests; and tracking repeat 
offenders. The message here is: not everyone has to be locked-up every 
time for every offense. For example, civil action permanently closing 
down a nightclub known for persistent drug trafficking can be more 
effective than recurring police raids.
    As a part of our New Operating Model strategy we are also 
consolidating station operations and decentralizing many of our 
specialized units and centralized functions to the PSA's in the seven 
police districts. At the end of the implementation process, 
approximately 50 percent of all patrol district support staff will have 
been redeployed to the PSA's. Also, approximately one-fourth of all 
sworn personnel not currently assigned to the patrol districts will 
have also been redeployed to the PSA's. This will result in the number 
of officers assigned to the patrol districts being significantly 
increased, which, in turn, means greater police presence and more 
patrol officer time available for preventing crime and disorder.
    The department's Narcotics and Special Investigations Division and 
Criminal Investigations Division are being consolidated into one 
operational unit. This consolidation allows for greater utilization of 
our investigative personnel and frees both uniformed and undercover 
detectives for strategic positioning in our new PSA's.
    At the same time that we are undertaking a comprehensive 
reorganization of the patrol districts, we are also moving forward on 
several other fronts to improve the management and operations of the 
department. These include:
    Sworn members of the department were granted a 10 percent pay raise 
effective July 6, 1997. Continued funding for the pay raise is included 
in the fiscal year 1998 budget being presented to you. I want to thank 
you, Senator Faircloth, for your support in securing this pay raise for 
the members of the department. At the same time, I might mention that 
while the 10 percent pay raise is very helpful, the pay for members of 
the department is still behind that of other jurisdictions in the 
Washington Metropolitan Area.
    Implementation of a training program to ensure that our officers 
and managers have the skills and knowledge necessary to carry out their 
duties and responsibilities under the New Operating Model. So far, over 
1,000 patrol officers have attended a one-day orientation session 
concerning the New Operating Model. On August 12 and 13, 1997, we will 
conduct a one-day training program for all PSA sergeants. The following 
week we will begin to conduct two-day training sessions for all PSA 
team members. The specialized training will cover problem solving, 
communications skills, and other issues relevant to the implementation 
of our new operating model. This training will be in addition to the 
other kinds of training that we provide on a routine basis.
    The department implemented a random drug testing program on May 15, 
1997, whereby on a daily basis members are selected at random to 
undergo drug screening. To date, 245 members have been tested.
    Suspension of the 28 day rule continues thereby affording us the 
opportunity to schedule our personnel as needed in a timely manner.
    Entry level standards for the department have been reviewed to 
ensure that the standards are adequate. The entry level standards now 
used by the department exceed those required by the Commission on 
Accreditation for Law Enforcement Agencies.
    The department's Recruiting Unit has been reorganized and the 
recruiting process and procedures revised to ensure that applicants' 
case files are thoroughly reviewed with more documentation being 
required from applicants. A new recruiting campaign will begin next 
week.
    An extensive review was conducted of the department's disciplinary 
procedures to ensure that all disciplinary cases are thoroughly 
investigated and handled in a timely manner.
    The department's recertification efforts continue. In the past six 
months, over 2,800 members have been through the firearms 
recertification process. Starting October 1, 1997, the department's 
Training Division will begin using a computer assisted learning program 
as a part of its recertification efforts.
    The department has reviewed its performance management system for 
individuals and found that it meets minimum professional standards for 
law enforcement. The new performance review year begins October 1, 
1997.
    Department-wide performance metrics are being developed to ensure 
that managers and supervisors are held accountable for the performance 
of their organizational elements. This important part of the 
department's management study and transformation will ensure that the 
New Operating Model is effective in achieving its objectives and that 
infrastructure changes are implemented as required.
    When looking at the crime and arrest statistics for the first six 
months of 1997, you will see that our efforts are having an impact. 
Crime from January 1 through June 30, 1997, is down 16 percent city-
wide compared to the same time period in 1996. Each of the department's 
seven patrol districts have achieved crime decreases, with six of the 
seven districts having double-digit reductions. Looking at individual 
crime categories we find that:
  --Crimes Against Persons are down 14 percent.
  --Crimes Against Property have been reduced 16 percent.
  --Homicide is down 25 percent. The homicide total is the lowest 
        number for the first six months of any calendar year since 
        1988.
  --Robbery, a crime contributing to the sense of fear and 
        victimization in the community, is down 25 percent.
  --Burglary, an invasive crime that makes citizens apprehensive about 
        the safety and security of their homes, is down 22 percent.
  --Stolen Auto, seen at this point last year as a crime that was 
        totally out of control, is down by 28 percent.
    The total number of arrests that have been made by the men and 
women of the department in the first six months of 1997 have increased 
by 44 percent when compared to the same sixth month period in 1996. In 
the past six months the arrest trends have changed from decreases to 
increases and the crime trends from increases to decreases.
    While these crime reduction achievements and increase in arrests 
are significant, I believe that we can and must do even better. As I 
have already stated publicly, I believe that we can achieve even 
greater decreases in crime. The men and women of the department are 
working hard to bring about a lasting sense of safety and security to 
our communities. Our challenge is to continue this progress in the 
coming months.
    The transformation of the department will help to fulfill two 
personal goals that I have set. The first is to provide the dedicated 
men and women of the Metropolitan Police Department with the 
opportunity to intensify their professional skills and focus their 
talents on the essence of policing, which is combating crime and 
disorder and serving citizens at the neighborhood level. The police 
officers that I know joined the force to help people and our New 
Operating Model gives them the opportunity to do so.
    My second goal is that over the next 12 months, every resident of 
the District of Columbia will be on a first name basis with at least 
one member of the department. The police are a part of the community 
and are empowered by the community, it is not a matter of us versus 
them. It is a matter of we--citizens and police--working together to 
prevent crime, eliminate disorder, and improve the quality of life for 
all who live, work, and visit our Nation's Capital. That is the purpose 
of the new Metropolitan Police Department.
    In closing, I again want to say that I believe that the 
Metropolitan Police Department is on the road to success and that the 
transformation which is underway will result in a police department in 
which we all can take great pride. Thank you for affording me this 
opportunity to appear before the Subcommittee today. I will now be 
happy to answer any questions that you might have.

                     Additional committee questions

    Senator Faircloth. Thank you, Chief Soulsby. We certainly 
have heard of improvements, and look forward to more.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]
                Questions Submitted by Senator Faircloth
    Question. The Fiscal Year 1997 Disaster Supplemental, as passed by 
the Senate, included $8.8 million in additional funds to provide a 10 
percent increase for D.C. police officers to be retroactive to April 1, 
1997. The purpose of the pay increase was to bring the salaries of D.C. 
police officers closer to the average salary of officers in the 
surrounding jurisdictions, at a time of a major reorganization of the 
department which is intended to put more officers on the streets to 
provide better crime control for District residents and visitors. 
Again, the House conferees were opposed to these funds and they were 
deleted.
    Chief Soulsby, how does the District Government propose to cope 
with this situation?
    Can you speak to what if any progress has been made in the 
reorganization of the DC Police Department and its impact on crime?
    Has much improvement been detected in terms of diminished crime 
against the residents and visitors to the Nation's Capital?
    Answer. The Council of the District of Columbia approved 
resolutions authorizing a redirection of D.C. monies to provide funding 
for the pay raise. The redirection was supported by the Financial 
Responsibility and Management Assistance Authority (``Control Board''). 
The salary gap has been reduced to an average of 14 percent below the 
average of surrounding jurisdictions and will be received by sworn 
members of the department in pay checks received on Friday, August 1, 
1997.
    The reorganization of the Metropolitan Police Department began with 
implementation of the departments New Operating Model on July 1, 1997. 
All seven of the department's patrol districts have converted from the 
existing scout car beat configuration to the new police service area 
system. The decentralization of investigative functions began at 
approximately the same date with 100 criminal investigators reassigned 
from specialized headquarters units to the patrol districts. The 
implementation is continuing at this time.
    It is not possible to draw specific conclusions concerning the New 
Operating Model's impact on crime based on three weeks experience. 
However, preliminary crime statistics for the month of July indicate 
that crime is down 28 percent compared to July 1996; total Part I 
offenses for the year 1997 to date are down 17 percent compared to the 
same period in 1996.
    Question. One of the key recommendations of the recent top-to-
bottom review of the District's law enforcement efforts, and one of the 
provisions of the Memorandum of Understanding entered into by yourself 
and other top District officials, was to increase code enforcement and 
nuisance abatement actions against the more than 1,000 abandoned 
nuisance properties in the city.
    These properties are not only eyesores, but they also serve to 
facilitate drug use and other criminal activity, they drive down 
property values and discourage home ownership in the District, and they 
contribute to an atmosphere in the District that discourages hope. Some 
have advocated in part for a Commercial Revitalization Tax Credit to 
encourage the improvement of rundown properties in the District and 
throughout the country.
    Unfortunately, and despite the MOU, action has been taken against 
only a fraction of the abandoned properties in the District. Would you 
please explain why this is the case, and what exactly needs to be done 
to turn this situation around?
    Answer. In the year to date through July 15, 1997, 216 nuisance 
properties identified by the Metropolitan Police Department have been 
cleaned, repaired or barricaded. These properties are those identified 
by the department as sites conducive to drug sales and/or use, 
congregating vagrants, and other criminal and/or order maintenance 
problems. These properties do not include those classified as nuisance 
properties for non-law enforcement reasons.
    The MOU Partners are working to provide more support to the 
department from other city agencies in order to accelerate the 
abatement program.
    Question. Senator Hutchison recently introduced legislation in the 
Senate that would allow for the imposition of capital punishment for 
the murder of a D.C. police officer.
    Would you please explain how you anticipate the allowance of 
capital punishment for the murder of a D.C. police officer would 
benefit and protect the District of Columbia, its police officers, and 
its citizens?
    Answer. Police officers today face a criminal element that has 
little, if any, regard for the life or property of anyone but 
themselves. These criminals will not hesitate to take the life of 
another individual for the most petty of reasons. We as a civilized 
society cannot and must not tolerate such violence in our community.
    Criminals who kill law enforcement officers exercise an absolute 
disregard for society and the rule of law. Any attack upon a police 
officer is an attack upon society itself. When criminals know that a 
police officer can be killed with impunity, how can citizens expect to 
be safe? The criminal element should know that anyone who kills a law 
enforcement officer will themselves be subject to the ultimate penalty.
    The sanction of the death penalty would help to deter the killing 
of police officers and may act as a deterrent to assaults on officers 
during the performance of their duties. It would reassure the community 
that the death penalty will be applied to the most egregious murders, 
which may in turn deter murders in the city at large.
    Question. In mid-May the Police Department began to implement 
performance standards and work rule changes. For example, officers are 
now subject to random drug testing and background checks.
    Please give the Committee a progress report on the Department's 
enforcement of these new performance standards and work rule changes.
    The District's sworn police officers were recently given a 10 
percent pay raise. Is this pay raise tied to an officer meeting the new 
performance standards? How many police officers are on the force and 
how many will qualify for this pay raise?
    Answer. The department implemented a random drug testing program on 
May 1, 1997, whereby on a daily basis members are selected at random to 
undergo drug screening. To date, 245 members have been tested, all with 
negative results.
    During the past six months, approximately 2,800 members have been 
through firearms recertification training. Beginning October 1, 1997, a 
computer-assisted learning system will supplement the department's 
recertification and in-service training programs
    Suspension of the 28-day scheduling rule continues in effect 
affording the department the opportunity to schedule its personnel as 
needed in a timely manner.
    Sworn officers shall not be employed by any licensed ABC 
establishment.
    Beginning in October 1997, the department's Office of Professional 
Standards will begin implementation of a five-year background 
recertification process for all active department employees.
    A physical fitness and wellness program will be implemented at the 
Police and Fire Clinic on September 2, 1997.
    The Recruiting Branch will implement voice stress analyzer testing 
as part of the pre-employment testing process on or before December 13, 
1997. Branch personnel are currently participating in an extensive 
training program to operate the equipment.
    The department instituted a Performance Management System for sworn 
members the ranks of officer, detective, sergeant, and lieutenant at 
the beginning of fiscal year 1997 on October 1, 1997. This performance 
evaluation system also includes agents assigned to the Office of 
Professional Standards. An extension of the system to the ranks of 
captain through chief of police is under development.
    The ten percent pay raise is not connected to performance 
standards. All sworn members will receive the pay raise.
    Question. In March your department redeployed 400 police officers 
to patrol units as part of a new crime fighting effort called the Zero 
Tolerance for Crime Initiative.
    In April you reported to this Committee that this redeployment 
increased arrests by 72 percent over March of 1996.
    Can you tell us what the number of arrests were by month for March, 
April, May and June 1997?
    How do these numbers compare with the numbers for March, April, May 
and June of 1996?
    Answer. The number of arrests made for March, April, May, and June 
1997 increased by 49 percent when compared to 1996. The monthly arrest 
statistics are as follows:

------------------------------------------------------------------------
                                                            Fiscal year 
                          Month                          ---------------
                                                           1996    1997 
------------------------------------------------------------------------
March...................................................   5,315   8,597
April...................................................   3,919   6,388
May.....................................................   3,176   5,336
June....................................................   3,726   3,791
------------------------------------------------------------------------

    Question. The Mayor is required to send to Congress by March 1 of 
each year detailed performance accountability plans for each of the 
city's departments.
    The Committee recently received some of those plans for 1997, but 
one for the police department was not included. Have you prepared a 
plan for fiscal year 1997? If so, has the Mayor's Office been provided 
a copy? If not, when will you provide a copy to the Mayor's Office? 
Please provide a copy to the Committee.
    Answer. The Metropolitan Police Department has not prepared a 
performance plan for fiscal year 1997. The reasons for this are as 
follows:
  --A Mayor's Order initiating the development process was not issued 
        until December 1996.
  --In January 1997, the Crime Control Partners (MOU Partners) for the 
        District of Columbia were established to support the Control 
        Board's selection of Booz-Allen and Hamilton, Inc. to conduct a 
        comprehensive management study of the department
  --It did not seem logical to develop a performance accountability 
        plan for an agency about to undergo a substantial 
        reorganization; performance metrics for the existing department 
        structure and operations would not be useful to evaluate the 
        performance of a substantially new operating model.
  --Booz-Allen is developing performance metrics for the department's 
        New Operating Model. The Booz-Allen project team met with the 
        consultant retained by the city to advise on the development of 
        performance accountability plans. The consultant was advised of 
        (1) the comprehensive nature of the Booz-Allen study, (2) plans 
        to develop performance metrics, and (3) the general format used 
        by the consultant would be used, to the extent possible, for 
        the department's accountability plan.
  --The City Administrator was advised of this decision by letter of 
        the Chief of Police on March 27, 1997.
    The department has formed a project team to develop a Performance 
Focused Management System that will be in place for the start of the 
new fiscal year on October 1, 1997. Prototypes will be tested for both 
monthly and quarterly reports during the final quarter of fiscal year 
1997. The committee will be provided with copies of the fiscal year 
1998 plan and subsequent management reports.
                       Department of Corrections

STATEMENT OF DIRECTOR MARGARET MOORE
ACCOMPANIED BY STEPHANIE MITCHELL, CHIEF FINANCIAL OFFICER

    Senator Faircloth. Now, Ms. Moore, we will be delighted to 
hear your statement.
    Ms. Moore. Good morning, Senator Faircloth. First, allow me 
to thank you for your expressions of condolences on the death 
of my father.
    Good morning, Senator and members of the Senate 
Appropriations Committee for the District of Columbia. I 
appreciate the opportunity to appear before you today to 
discuss the fiscal year 1998 budget for the Department of 
Corrections.
    Senator Faircloth, any review of the proposed budget for 
the Department of Corrections must be done with a clear 
understanding of the state of the District's prison system. I 
have provided public testimony on numerous occasions about the 
life-threatening conditions in the District of Columbia's 
prison facilities.

             study by the national institute of corrections

    In January 1996, the National Institute of Corrections 
released the results of a congressionally mandated study of the 
Department of Corrections that was done by the National Council 
on Crime and Delinquency that confirmed the concerns I have 
raised since my appointment in 1994 about the District's prison 
system.
    Essentially, the study concluded that the system is 
critically understaffed, dangerously overcrowded, and seriously 
underfunded. The NCCD study supports my contention that the 
operational problems of the District's prison system are 
largely attributable to historic underfunding, understaffing, 
overcrowding, prison facilities that are antiquated, poorly 
designed, and inadequate to house our current inmate 
population.
    The study concluded that the D.C. Department of Corrections 
needs to hire an additional 425 correctional officers, build 
2,000 new prison beds, and replace approximately 75 percent of 
the inmate housing at our correctional complex in Lorton, VA.

                         incidences of violence

    Since 1994, when I was first appointed, I publicly 
discussed the problems of the system, and since the release of 
the NCCD report in January 1996, unfortunately there have been 
no major infusions of resources to improve the system. Indeed, 
the incidence of violence in our system reached epidemic 
proportion during calendar year 1996, when there were 286 
inmate-on-inmate assaults, serious assaults, 111 inmate-on-
staff assaults, and 6 inmate homicides.
    The atmosphere of violence in the facilities in our system, 
particularly at Occoquan, where we are forced to house medium 
and high medium security prisoners in open dormitories, has 
been the subject of reports from the special officer of the 
court, the Washington Post articles, as well as the 
aforementioned congressionally mandated study.
    Now, it is only as a result, Senator, of the hardworking 
and dedicated correctional staff that we have that we have 
managed to avoid a major catastrophic event in our system. The 
fact that no substantial investment has been made to implement 
the recommendations of the NCCD report in an effort to cure 
longstanding conditions that threaten the safety of 
correctional staff, inmates, and the general public is, in my 
mind, unconscionable.
    As always, Senator Faircloth, I am committed to living 
within the budget allocation for the Department of Corrections. 
As we have done in the past, we will work within our fiscal 
year 1998 budget. However, to do so will further result in a 
reduction of services and previously unbudgeted costs will not 
be funded at the expense of safety and security and our 
obligations to comply with court orders.

           fiscal year 1998 department of corrections budget

    Senator, it is my understanding that this committee has 
before it for consideration two fiscal year 1998 budgets for 
the Department of Corrections, one from the Council of the 
District of Columbia and another from the Financial Authority. 
The Council of the District of Columbia has proposed a gross 
budget of $249,161,000, and 3,141 FTE's, of which $244,161,000 
represents local funding.
    On the other hand, the Financial Authority has proposed a 
gross budget of $259,286,000 and 3,141 FTE's, of which local 
funding represents $257,167,000.

                       council's proposed budget

    The Council's proposed budget is approximately $10 million 
less in local funding than that of the Financial Authority. 
Additionally, it is important to note that the Council's 
proposed budget for the Department of Corrections is $16 
million less than the agency's adjusted fiscal year 1997 budget 
of $260 million.

                            medical services

    The most significant variance, Senator, between the 
proposed budgets of the Council and the Financial Authority is 
in the area of medical services. The Council's proposed budget 
for medical services is $21 million, compared to $30 million 
proposed by the Financial Authority. Both of these budget 
numbers compare to projected expenditures in medical services 
of $37 million systemwide.

                            medical receiver

    As I am sure you know, Senator, medical and mental health 
services at the D.C. jail were placed in receivership in 1995. 
It is my understanding that the receiver is projecting a budget 
of $15 million for fiscal year 1998, yet the Council's proposed 
fiscal year 1998 budget for the medical receiver is $6.5 
million. That is $8.5 million less than the receiver's 
projected expenditures. Underfunding of medical services in 
general, and the medical receiver in particular, exposes the 
District to criminal and civil contempt motions, fines, 
sanctions, and other onerous court orders.
    The overall executive direction that the fiscal year 1998 
budget is intended to support includes the operation of the 
D.C. jail, five Lorton facilities, and the management of 
contracts for the correctional treatment facility and halfway 
houses. Prior to the end of 1997, we plan to close two 
Department of Corrections-operated halfway houses, and we will 
privatize the one remaining facility before the end of fiscal 
year 1998.

                      contract halfway house beds

    The Council's budget is funded at $3.7 million, which will 
fund 235 contract halfway house beds at a per diem rate of $43 
per day. This is compared with the Financial Authority's budget 
of $4.7 million, which will fund 300 contract beds.
    Our current average daily population in our halfway houses 
is 325, and it is expected that that population will increase 
in fiscal year 1998 with the implementation of our new 
objective inmate classification system.
    Consistent, Senator, with our overall plan to close Lorton 
in fiscal year 1998, the medium security facility and zone 2 of 
the Occoquan facility are scheduled for closure. To accomplish 
this initiative, we will need to outsource approximately 1,900 
prison beds. However, the fiscal year 1998 budget provides 
funding for only 1,725 beds at a per diem rate of $55.
    Closure of these facilities is critical to our fiscal and 
operating strategy for fiscal year 1998. Closure of these 
facilities will also enable us to redeploy approximately 123 
correctional officers to address some longstanding staffing 
deficiencies in our Lorton facilities.
    A contract for 1,438 prison beds with the possibility of 
increasing those numbers by 20 percent hopefully will be 
awarded within the next 90 days. Managing within the fiscal 
year 1998 budget will be tenuous at best. A lot of hard choices 
will have to be made.
    Specifically, as I indicated, there is underfunding in the 
area of medical services in both the Council and the Financial 
Authority budgets. There is no funding available to support any 
population growth that we anticipate is likely to occur as a 
result of the Metropolitan Police Department's crime 
interdiction initiative, and I would submit to you, Senator, 
that any successful crime reduction initiative depends largely 
on the capacity of the correctional system to contain, to house 
repeat dangerous and violent offenders for long periods of 
time. Our capacity to do that is threatened by the lack of 
secure bed capacity in our system.

               services rendered by d.c. general hospital

    Alternative funding sources must be identified for services 
rendered by D.C. General Hospital for inmate hospital care in 
the amount of $3.6 million if the Council's budget is adopted 
and $1.6 million if the Financial Authority's budget is 
adopted.

                  payment to federal bureau of prisons

    Additionally, funding for payment to the Federal Bureau of 
Prisons for the housing of 517 of our prisoners at a cost of 
$13.7 million is not available in either of the budgets, and 
finally, essential educational and vocational development 
programs will have to be eliminated in order to avoid unfunded 
expenditures of nearly $2 million.
    Senator Faircloth, over the next 5 years the Department of 
Corrections will undergo major multiple and simultaneous change 
either as a result of major privatization or as a result of 
federalization, as proposed in the President's revitalization 
plan. But as we look to either privatization or federalization, 
we cannot afford to turn our attention away from our obligation 
to adequately fund the correctional system to date so that we 
can continue in our efforts to manage our prisons in a safe, 
secure, and humane manner.
    To do so requires resources. Without such financial 
assistance, we will face greater problems as the department's 
resources continue to diminish. We will face a diminution of 
the conditions of confinement and the conditions of employment 
within the city's prison and jail facilities and, thus, a 
continued threat to public safety and public health.

                    accomplishments of past 3 years

    Senator, in spite of the relatively bleak picture that I 
just painted, I must add for the record that we have made 
significant progress over the past 3 years in our efforts to 
improve the conditions in our prison system. I would like to 
submit for the record a copy of our major accomplishments 
document that shows the accomplishments of the agency over the 
past 3 years. It includes the implementation of one of the most 
comprehensive mandatory drug and alcohol testing programs for 
correctional systems in the country, the implementation of 
criminal background checks for all incumbent correctional 
employees, the implementation of comprehensive preemployment 
screening for correctional employees, as well as significant 
advancements in the use of automated technology to increase 
operational efficiencies throughout our agency.
    Senator, again, I thank you for the opportunity to testify, 
and I am available to respond to questions as best I can.

                           prepared statement

    I might mention for the record also that sitting with me is 
Stephanie Mitchell, the chief financial officer for the 
Department of Corrections.
    [The statement follows:]
                Prepared Statement of Margaret A. Moore
    Good morning Senator Faircloth and members of the Senate 
Appropriations Committee for the District of Columbia. I appreciate the 
opportunity to appear before you today to discuss the fiscal year 1998 
budget.
    Senator Faircloth, a review of the proposed budget for the 
Department of Corrections must be done with a clear understanding of 
the state of the District's prison system. I have provided public 
testimony on numerous occasions about the life threatening conditions 
in the District of Columbia's prison facilities. In January of 1996 the 
National Institute of Corrections released the results of a 
congressionally mandated study of the Department by the National 
Council on Crime and Delinquency (NCCD) that confirmed concerns I have 
raised since my appointment in 1994. Essentially, the study concludes 
that the system is critically understaffed, dangerously overcrowded and 
seriously underfunded. The NCCD study supports my contention that the 
operational problems of the District's prison system are largely 
attributable to historic under-funding, under-staffing, overcrowding 
and prison facilities that are antiquated, poorly designed and 
inadequate to safely house our current inmate population. The study 
concluded that the D.C. Department of Corrections needs to hire an 
additional 425 correctional officers, build 2,000 new prison beds, and 
replace approximately 70 percent of the inmate housing at Lorton. Since 
1994 when I first publicly discussed the problems of the system and 
since the release of the NCCD report in January of 1996 there has been 
no major infusion of resources to improve the system. Indeed, the 
incidence of violence in our system reached epidemic proportions in 
calendar year 1996 when there were 268 inmate on inmate assaults, 111 
inmate on staff assaults and 6 inmate homicides. The atmosphere of 
violence in many of the facilities in our system, particularly Occoquan 
where we are forced to house medium and high medium security prisoners 
in open dormitories has been the subject of reports from the Special 
Officer of the Court, Washington Post articles, as well as a 
congressionally commissioned study by the National Council on Crime and 
Delinquency (NCCD). It is only a result of hard working and dedicated 
correctional staff that we have managed to avoid a major catastrophic 
event. The fact that no substantial investment has been made to 
implement the recommendations of the NCCD report in an effort to cure 
long standing conditions that threaten the safety of correctional 
staff, inmates and the general public is unconscionable.
    As always Senator Faircloth, I am committed to living within the 
budget allocation for the Department of Corrections. As we have in the 
past we will work within our fiscal year 1998 budget; however, to do so 
will result in further reduction of services and previously unbudgeted 
costs will not be funded at the expense of safety, security and our 
obligations to the courts.
    It is my understanding that this committee has before it for 
consideration two fiscal year 1998 budgets for the Department of 
Corrections--one from the Council of the District of Columbia and 
another from the Financial Authority. The Council of the District of 
Columbia has proposed a gross budget of $249,161 million and 3,141 
FTE's, of which local funding is $244,161 million and 3,105 FTE's. On 
the other hand the Financial Authority has proposed a gross budget of 
$259,286 million and 3,141 FTE's, of which local funding is $257,167 
and 3,105 FTE's. The Council's proposed budget is approximately $10 
million less in local funding than that of the Financial Authority. 
Additionally, it's important to note that the Council's proposed budget 
for the Department of Corrections is $16 million below the agency's 
adjusted fiscal year 1997 budget of $260 million.
    The most significant variance between the proposed budgets of the 
Council and the Financial Authority is in the area of medical services. 
The Council's proposed budget for medical services is $21 million 
compared to $30 million proposed by the Financial Authority. Projected 
expenditures for the medical services system wide for fiscal year 1997 
is $37 million. As I'm sure you know Senator Faircloth, medical and 
mental health services at the D.C. Jail were placed in receivership in 
1995. It is my understanding that the Receiver is projecting a budget 
of $15 million for fiscal year 1998. The Council's proposed fiscal year 
1998 budget for the medical receiver is $6.5 million--$8.5 million less 
than the Receiver's projected expenditures. Underfunding of medical 
services in general, and the medical receiver in particular exposes the 
District to criminal and civil contempt motions, fines and further 
onerous court orders.
    The overall executive direction that the fiscal year 1998 budget is 
intended to support includes the operation of the D.C. Jail, five 
Lorton facilities and management of the contracts for the Correctional 
Treatment Facility and halfway houses. Prior to the end of fiscal year 
1997 we plan to close two DOC operated halfway houses and we will 
privatize the one remaining facility before the end of fiscal year 
1998. The Council's budget is funded at $3.7 million which will fund 
235 contract beds at $43.00 per day; this is compared with the 
Financial Authority budget of $4.7 million which will fund 300 beds. 
Our current average daily halfway house population is 325 and is 
expected to increase in fiscal year 1998 with the implementation of our 
new objective inmate classification system.
    Consistent with our overall plan to close Lorton, in fiscal year 
1998 the Medium Security Facility and zone 2 of the Occoquan Facility 
are scheduled for closure. To accomplish this initiative we will need 
to out source approximately 1,900 prison beds. However, the fiscal year 
1998 budget provides funding for only 1,725 beds at a per diem rate of 
$55.00. Closure of these facilities is critical to our fiscal and 
operating strategy for fiscal year 1998. Closure of these facilities 
will enable us to re-deploy 123 correctional officers to address 
critical understaffing at the Lorton facilities. A contract to house 
1,438 inmates, with the possibility of a 20 percent increase in beds, 
should be awarded within the next 90 days.
    Managing within the fiscal year 1998 budget will be tenuous at 
best. A lot of hard choices had to be made. Specifically, there is 
underfunding in the area of medical services in both the Council and 
the Financial Authority budgets. There is no funding available to 
support any population growth as a result of the MPD crime interdiction 
initiative.
    Alternative funding sources must be identified for services 
rendered by D.C. General Hospital/Public Benefit Corporation for inmate 
hospital care in the amount of $3.6 million, if the Council's budget is 
adopted, and $1.6 million if the Financial Authority's budget is 
adopted. Additionally, funding for payment to the Federal Bureau of 
Prison for housing 517 prisoners at a cost of $13.7 million is not 
available in either the Council or Financial Authority budgets. 
Finally, essential educational and vocational development programs will 
be eliminated in order to avoid unfunded expenditures of nearly $2.0 
million.
    Senator Faircloth, over the next five years the Department of 
Corrections will undergo major, multiple and simultaneous changes, 
either as a result of privatization or federalization. But, as we turn 
our attention to the future, we cannot lose sight of our day to day 
responsibility to manage our prisons in a safe, secure and humane 
manner; to do so requires resources. Without such assistance, we will 
face greater problems as the Department's resources are diminished, and 
the conditions in this city's prisons and the jail will continue to 
threaten public safety and public health.
    I am available to respond to any questions you may have at this 
time.
                                 ______
                                 
                   The New Department of Corrections
      correctional excellence--today's vision, tomorrow's reality
                       privatization initiatives
    A major concentration in the Department of Corrections' 
transformation plan centers on privatizing three-quarters of the 
system, resulting in cost containment and improved correctional 
services to inmates.
    In January 1997, transactions were finalized regarding the sale of 
the District's Correctional Treatment Facility (CTF) to a private 
company. The 898-bed medium security prison was sold to Corrections 
Corporation of America (CCA) for $52 million, representing the most 
ambitious and progressive transformation initiative to date.
  --Under the District/CCA agreement, the Department of Corrections 
        will continue to use the prison as a treatment facility for 
        District inmates.
  --The District will pay CCA an operating fee of $70.40 a day per 
        inmate during the first year and a $2.79 million annual lease 
        fee.
  --The city will realize a savings of approximately $112 million over 
        the term of the contract.
  --CCA will invest $3.85 million for capital improvements.
  --CCA will comply with all applicable court orders within six months 
        and have the facility accredited by the American Correctional 
        Association by March 1999.
  --CTF will be returned to the District at the end of the contract.
    Privatization of the Department's food services operations was 
successfully completed in early fiscal year 1997 with a $13 million 
contract awarded to ARAMARK Correctional Services. Privatization of 
food services will generate savings of $2 million annually, increase 
overall operational efficiency and improve the quality of food services 
at all the District's correctional facilities.
                        administrative services
    Transformation efforts by the Department of Corrections have 
included the implementation and maintenance of state-of-the-art 
technologies to maximize work performance and productivity.
    Installation of a powerful state-of-the-art computer network at the 
Department of Corrections headquarters represents a significant 
milestone for the agency.
  --The computer network system includes specialized applications such 
        as automation of administrative processes including 
        procurement, digital images, automated booking at the jail, 
        supply management and skills training for staff in Windows 95 
        environment/Microsoft software.
    Installation of a Department-wide automated time and attendance 
system will enable more accurate accounting of the payroll and will 
also reduce overtime fraud.
  --The system maximizes employee accountability, information accuracy 
        and reliability. It also enables correctional timekeepers to be 
        returned to corrections duties thereby saving between $500,000 
        and $1 million each year in overtime avoidance.
  --Cost of the automated time and attendance system is $250,000; 
        however, the system will pay for itself within 6 months and 
        support the move to a ``paperless office''.
  --Installed a high tech telephone system with voice mail, system 
        paging and telephone conferencing capabilities.
    Created the Offices of the General Counsel and Court Compliance to 
provide legal counsel and guidance to the Office of the Director; 
provide litigation support to Corporation Counsel in suits against the 
Department of Corrections and to develop and implement strategic 
measures to monitor, modify and vacate existing court orders.
    Hired a corrections health care coordinator who has the 
responsibility for the development and implementation of inmate medical 
policies, procedures and protocol, the development of a consolidated 
consent order regarding inmate medical and mental health services. 
Developed ``Statement of Work'' guidelines which will serve to 
privatize inmate medical and mental health services.
    Implemented a ``zero tolerance'' campaign against sexual harassment 
in the workplace and sexual misconduct against inmates. We also had 
input in the drafting of legislation which makes it a crime, punishable 
up to 10 years, for correctional employees to have sex with an inmate. 
The Department's campaign, which included policy development mandating 
annual training, a ``zero tolerance for sexual harassment'' poster, 
bumper stickers and other decals, led the District government's efforts 
to educate the workforce and the community about this violation of the 
law.
  --In May 1994, the Department received a grant from the National 
        Institute of Corrections to objectively study the incidence of 
        sexual harassment throughout the agency.
  --With the assistance of independent consultants, the Department 
        developed and implemented an enhanced sexual harassment 
        prevention policy that clearly defines sexual harassment and 
        retaliation; makes the process for filing complaints easier; 
        delineates the role of employees, managers and supervisors in 
        preventing sexual harassment; mandates annual training for all 
        employees and provides emergency complaint and investigation 
        procedures.
    Closed a 688 bed medium security prison, enabling the redeployment 
of approximately 200 employees, thus avoiding correctional officer 
overtime and increasing institutional efficiency.
    Hired a financial officer to restore fiscal integrity to the 
agency's budgeting and expenditure procedures. The agency has not 
overspent its budget since the appointment of the Director and the new 
Chief Financial Officer for the Department.
    Enhanced halfway house policies and reduced the number of violent 
offender placements within the community.
    Strengthened population management controls through the Emergency 
Powers Act (EPA). EPA provides for the release of non-violent offenders 
up to 90 days prior to their scheduled release date. EPA ensures that 
the prison population will never rise above the court ordered capacity. 
The Department of Corrections has not used EPA since September 1996.
    Enhanced security procedures governing Religious and Volunteer 
Services. Volunteers are required to submit to criminal background 
checks and undergo annual training. Individuals with criminal histories 
may be barred from the correctional facilities depending on the nature 
of the offense. Approved volunteers are issued photo identification 
cards with expiration dates.
    Between 1995 and 1997, more than 100 inmates graduated from the UDC 
Lorton Prison College Program. Inmates have received associate and 
bachelor's degrees in the areas of urban studies, business and public 
management and computer technology. The program offered by the 
University of the District of Columbia, has been at the prison for 19 
years and boasts an under 7 percent recidivism rate among its 
graduates.
    Established a Violence Reduction Program to look at ways of 
reducing violence among inmates in the prison and upon their release to 
the community.
                         workforce enhancements
    Developed and implemented a comprehensive employee drug and alcohol 
testing policy which enables random, reasonable suspicion and post 
accident/extraordinary occurrence testing for all employee's having 
direct contact with inmates. This is the most comprehensive program of 
its kind in the government aimed at creating a drug-free workplace.
    Developed and implemented a policy to conduct criminal background 
checks on all incumbent employees. Random checks will be conducted 
every two years and more frequently for reasonable suspicion.
    Developed and implemented a comprehensive preemployment screening 
program which includes psychological evaluation, drug testing, physical 
fitness, criminal background checks, employment and personal reference 
checks.
    Developed and implemented a standardized written examination for 
all correctional officer recruit applicants.
    Enhanced employee training. Correctional officer recruits must 
successfully complete a six-week intensive training program that 
includes weapons qualifications, sexual harassment awareness and 
prevention, stress management and other specialized training. The 40-
hour In-Service Training Program was reestablished to include basic 
correctional safety and security measures, cardiopulmonary 
resuscitation (CPR), sexual harassment awareness and prevention and 
substance abuse awareness and prevention.
    Established an Employee Assistance Program. The program assists 
employees and their families with counseling measures during crises 
situations that occur at home and on the job.
    Ten (10) employees completed the seven-week Emergency Medical 
Technician (EMT) certification training held at Howard University.
                           community outreach
    The Director served as the 1996 D.C. One Fund Chairperson. 
Corrections employees contributed over $70 thousand of the total 
$731,304 government-wide contribution toward the District's only 
official charitable fundraiser.
    The Director served as the keynote speaker at numerous public 
events, including but not limited to the Annual Conference of the 
Correctional Peace Officer Foundation, Inc., Coalition of Prison 
Ministries, District of Columbia School-Age Care Conference-Alliance 
and Office of Early Childhood Development, Management Development for 
Women and Minorities, Department of Recreation and Parks Youth Summit, 
Fifteenth Street Presbyterian Church Women's Day Program and University 
of the District of Columbia Senior Night.
    Enhanced Department of Corrections Prison Tours Program to provide 
greater public awareness about prison operations and programs.
    Expanded the Maximum Security ``Take It From Me'' youth awareness 
and crime prevention program which has received national recognition. 
The program is designed to educate the public about prison life and 
steer youth from delinquency while motivating them towards a law-
abiding lifestyle.
    Fourteen inmates and community corrections staff from Center # 1 
assisted in the successful search and rescue efforts of an 11-year old 
Southeast, Washington youth who was reported missing for 48 hours.
    Corporal Don L. Wiseman assigned to the Medium Security Facility 
was cited for his heroic life saving deeds that included CPR performed 
on an inmate and saving the life of a Baltimore Gas and Electric 
Company employee being attacked by stray dogs.
    Ten (10) corrections employees have received the Mayor's 
meritorious medal of valor for demonstrating acts of heroism on the job 
or in the community.
    Minimum Security inmates were honored for restoring blighted 
properties on Hanover Place, NW, a community once considered among the 
city's most dangerous and plagued with drug trafficking and drive-by 
shootings.
    Hope Village halfway house inmates assisted community leaders and 
volunteers to clean up an illegal dump site at Savannah Terrace, SE, a 
Ward 8 community.
    D.C. Corrections provides numerous gifts for low income families to 
enjoy special occasion activities. The Department's outreach efforts 
are not restricted to a specific community or need, however, most 
charitable expressions have been extended to the children living at the 
Spring Road Family Shelter managed by the Coalition for the Homeless 
and adopted by the Department of Corrections.

    Senator Faircloth. Thank you. Thank you, Ms. Moore, and Ms. 
Mitchell, thank you for coming.

                        mayor's security detail

    I have some questions, and Chief Soulsby, I will start with 
you. We are very much aware of the improvements you have made 
in the police department, and we are glad to hear you have been 
able to make some headway, Ms. Moore, under the conditions you 
are working under. Chief Soulsby, you reduced the Mayor's 
security detail from 31 to 20, I believe. That is correct, is 
it not?
    Mr. Soulsby. Correct.
    Senator Faircloth. Twenty would still seem extremely high 
to me compared to any other Mayor, comparable around the 
country. Can I just ask you, do you know of any Mayor around 
the country that has 20?
    Mr. Soulsby. No, sir; I am not aware of any Mayor that has 
a complement that heavy. We have reviewed, and that was the 
first step in making that cut, that we have 18 officers and two 
supervisors involved. That includes coverage of his house at 
all times. It is really two components. One is the uniformed 
component, and one is the component of people that travel with 
him on his daily functions. There are two different sites in 
regard to his security.
    We have a person who was shot while he was a city 
councilman, an individual who is known, actually, nationwide, 
worldwide, who does receive mail and phone threats that we do 
look at and investigate. Both he and even more than he, his 
family, constantly voice concern over his safety.
    I have had numerous discussions with him in regards to 
where we need to go, and additional cuts we may need to make 
while trying to accomplish both things, but that is something 
we are still looking at.
    We are also looking at how we may privatize some aspects of 
this, and what other changes could occur.
    Senator Faircloth. That was my next question. Would it not 
be better to completely privatize the security force of the 
Mayor, completely move it from the police department. This 
would remove any possibility of the Mayor or any of his staff 
becoming involved in criminal investigations--totally sever the 
relationship. Would that not be a better way to go at it?
    Mr. Soulsby. That is certainly something we are looking at, 
and we are also dealing with it to see what cost figures would 
be to do that, but it is certainly something we are reviewing.

                     georgetown coffee shop murders

    Senator Faircloth. I am not asking you for anything that 
would damage your investigation, but certainly the killing of 
the people at the coffee shop has aroused a lot of attention 
around the country and in the Congress. Can you tell us what 
steps we are taking to improve security in the Georgetown area, 
because this goes to two very practical things, and you can 
address them.

                                tourism

    Washington survives pretty much on tourism. It is the 
greatest source of income here, and Georgetown is a major area 
of it. You well know, with the rapid spread of news today, that 
if there were an incident involving harm to tourists, the 
impact on the city could be pretty dramatic, so tell us what we 
are doing to make sure that does not happen.
    Mr. Soulsby. Well, first of all I would say that we are 
concerned about those killings, as we are killings all over the 
city. It is something we have to deal with. It is an 
unfortunate type of situation. We are spending a lot of 
resources investigating it, and I feel that we will have a 
positive outcome in that investigation. We will close those 
cases.
    We have made several changes because we not only had that 
murder, but a few days later we had a robbery, a very similar 
robbery occurred. Later on today sometime we will release a 
composite of one of the individuals that we are looking for in 
that robbery to get the media and public help, to help identify 
the people.
    We have taken several steps, and I certainly would love to 
share them with you, but I do not know that I should share in a 
public forum exactly what we are doing to address that, to try 
to preclude another one from occurring. We are doing several 
operational things differently along Wisconsin Avenue and along 
a couple of other roads right there to address that issue. We 
feel that there are certain investigative things we can do in 
both of those cases that will eventually solve those cases, and 
we feel very good about it, but it is something we have to work 
our way through.
    Unfortunately, when these occur it does receive--did 
receive--national spotlight, and no one is more interested in 
trying to resolve it than I am, but we have to go through 
investigative techniques.
    One thing that always concerns you is when they report 
instances like this, that the media is so hungry to report 
things that they reported things that we were doing that we 
were not even doing, and there was a national alert to that. 
When we had the Atlanta bombing, they went out and named a 
suspect that turned out was not even a suspect.
    With respect to the national and media response to the 
triple homicide, they were so interested in being the first to 
put something new out there that they were, I think, talking to 
elevator operators and anyone else, asking, ``What are the 
police doing?'' So we are reading and hearing on the news media 
on a moment-to-moment basis things that were occurring in the 
case, and oftentimes they were not occurring.
    But we are moving forward, and I think we will solve those 
cases. We are very concerned with that case and other 
homicides. But as even the residents of Georgetown and the 
businesspeople in Georgetown will tell you, they have seen a 
tremendous improvement and increase in manpower prior to that, 
as a part of our new operating model and our redeployment of 
several hundreds of officers to the street.
    They will also tell you that we have had tremendous 
reductions in robbery in the Georgetown area as well as 
throughout the city. Prior to the triple homicide and that 
robbery, there had only been two business robberies in 
Georgetown since February 1.
    So the media will have you believe sometimes that it is 
crime-ridden, and, in fact, it is not. So we are really moving 
forward in a lot of areas there, but the actual fact of what is 
going on in the city is not being portrayed across the country.
    Senator Faircloth. Thank you, chief. We are going to take 
just a brief 2- or 3-minute recess. I need to make a call--just 
a brief recess.
    [A brief recess was taken.]
    Senator Faircloth. The meeting will reconvene.

                       utilization of park police

    Chief Soulsby, I had a question. You mentioned the 
utilization of Park Police, and better, closer cooperation with 
Park Police. I do not know whether you mentioned Capitol Police 
or not, but do you see a possibility there? Is there something 
that we need to do, that the Congress needs to be doing to 
encourage or make this work better to facilitate it? Could 
there be more efficient use of the three policing systems of 
the District of Columbia? Tell me what you think.

                 twenty-three different police agencies

    Mr. Soulsby. Well, first of all there are actually more 
than three. There are actually 23 different police agencies in 
the city, everything from the FBI to the zoo police to you name 
it. But the major, uniformed service that we use is the U.S. 
Park Police, and the relationship actually could not be better 
with the U.S. Park Police. They patrol not only the park areas 
but they respond and assist our officers on a day-to-day basis 
on just about everything. We have a tremendous working 
relationship.
    Senator Faircloth. Are these all tied by the same 
communications system?

                          communication system

    Mr. Soulsby. No; they are not. They have a different 
communication system. For instance, in the Capitol Police 
officers assigned to the First District, our police cars also 
have a Capitol Police radio zone, so we can communicate, but it 
is a different zone on our radio. For instance, my radio will 
not talk to the Capitol Police. We have to go through 
communications to do that.
    The Capitol Police officers in their vehicles have got the 
1-D, which is the area that surrounds the building. Their zone 
is in the Capitol Police, and so the local police officer, the 
beat officer, cannot communicate off the radios that are in the 
cars because they are different systems.
    Again, with the Capitol Police we have good communications, 
but their boundaries are real restricted. They have done some 
community policing, as they have been expanded by Congress a 
couple of years ago to an area surrounding the building where 
they do some work in the community.
    Could there be more work that they could do in that area? I 
think there is a potential there.

                       park police provides help

    But the point I was making with the Park Police is they do 
a lot for us. Since we shut down our helicopter branch, they 
are literally responding to hundreds of calls with their 
helicopter now, providing assistance to us, and it has taken 
them from their primary mission.
    I think either the U.S. Park Police are going to have to 
receive some additional funding from Congress to support those 
missions or I am going to have to do some sort of memorandum of 
understanding with the Park Police to provide them moneys to do 
that. It went from their trying to assist us to such a major 
event that it is costing them operational funds.
    As far as day-to-day operations, the U.S. Park Police could 
not be better.

                   report ``a crisis in management''

    Senator Faircloth. Chief, I do not want to belabor this 
point, but the Control Board issued a report in March called 
``A Crisis in Management,'' and they focused on many 
mismanagement problems. I just thought that we had attempted to 
isolate the police department and the Control Board, from 
interference by the Mayor. The Control Board said that the 
Mayor had attempted to use the police department for an 
emergency purchase order of five four-wheel drive vehicles for 
himself, the city administrator, his security detail, and each 
cost $3,000 more than the market price.
    I know you would probably prefer not, but what went on 
there, do you know?
    Mr. Soulsby. They had requested four vehicles to be used by 
the security detail to be able to move the Mayor and any 
executive staff around during snowstorms. The fifth vehicle 
came into play when the city administrator said, if you 
purchase a fifth one I will transfer funds from his accounts to 
the police department to pay for the fifth vehicle.
    We had certain purchase authority that the city 
administrator did not have. He said if you are going to buy 
four I will transfer funds to the department to pay for the 
fifth vehicle. But the four vehicles were going to be paid for 
out of the police department's funds that came to the police 
department. They wanted those vehicles to be able to move the 
Mayor and the executive staff around in snowstorms.
    Senator Faircloth. But the taxpayers were paying for it?
    Mr. Soulsby. Absolutely.

                         additional $15 million

    Senator Faircloth. The memorandum of understanding gave you 
authority to bypass the normal procurement process governing 
other city departments. I understand, for example, that after 
Congress gave $15 million to buy new police cars much of the 
money was not spent. Fifteen million dollars will buy a lot of 
police cars. What was wrong with the city's procurement system 
that you needed permission to bypass it, and has your 
procurement authority improved your ability to purchase? Tell 
us what is going on.
    Mr. Soulsby. The $15 million was to purchase many things, 
from technology to you name it. I think about $1 million of it 
was for cars. For the record I will give you a complete listing 
of how every single bit of that money was to be spent--
everything from AFIS, which is $1.2 million for a computerized 
fingerprinting system update to automate different reports; 
OASIS, which is our criminal intelligence computer; to just 
purchasing additional computers; to purchasing mobile digital 
computers for cars. It is a whole list of things.
    Senator Faircloth. It was not just cars?
    Mr. Soulsby. Oh, no; that is just one little aspect of it. 
There was about $1 million, I think, something like that for 
cars. That was only one part of the $15 million, but it was all 
used for equipment.
    Now, in 1994 the police department had $30 million that 
they spent on goods and services in 1995. Because of the budget 
crisis the police department was reduced, and we only had $16 
million to spend on goods and services. It was cut one-half. 
That was when we first came to Congress and asked for money. 
That is where the $15 million came up to try to make up for 
some of those differences, because of the tremendous cuts.

                       procurement system process

    The D.C. procurement system is a very lengthy, archaic 
process, a very difficult process to get things through the 
system. Coupled on top of that is, we had employees within the 
police department----
    Senator Faircloth. Why is that?
    Mr. Soulsby. I am not an expert on it, but it requires 
numerous reviews by numerous people in various agencies to 
spend any moneys. It is a very lengthy process, which is 
currently going through total reengineering in and of itself.
    Senator Faircloth. Chief, we sat here last week and 
Chairman Brimmer said that it was--he was almost telling us the 
exact opposite on the purchasing in the city, that up to $1 
million could be purchased without approval of any major agency 
head. I do not remember the exact words he said, but he said 
that he had seen many, many purchase orders come through at 
$999,000, just below $1 million.
    Mr. Soulsby. I think we are talking about two things, what 
he has done now versus what used to be. I think this may be the 
difference. You asked what occurred, why did we need this 
transition. The old way was very archaic, and what they did 
was, two things: they allowed us to bypass a lot of the review 
process through other agencies and we are able to go now right 
to the Control Board and the CFO.

                      gsa doing purchasing request

    On top of that, I have contracted with GSA to do a lot of 
my purchasing requests now. In addition to that, they will be 
training a new procurement staff for the police department, so 
that we have people who are well trained in that area, so that 
we do not have this problem. It is absolutely absurd to have 
money to spend--with the $15 million, we worked with Congress, 
and they had a detailed plan of exactly where every penny was 
going, and everybody knew up front.
    That plan I submitted had to go through four committees of 
the hill as well as the Council, and the Mayor, before it was 
decided I could spend the money. Everyone knew exactly what we 
were going to spend it for, but then it had to go back through 
this archaic system before we could spend it after Congress had 
already approved the line item spending.
    Senator Faircloth. The problem was not with the Congress?
    Mr. Soulsby. It was the procurement system itself, as well 
as the quality of people working the system.
    Senator Faircloth. Have you ever gotten it spent?
    Mr. Soulsby. Yes; right now, 67 percent of it has been laid 
out. By the end of the year, all of it will be put in line to 
be spent. The one problem we are running into involves about 
$2.3 million, I think it is, to rework the cell blocks within 
the police districts. We have to work with GSA to get people to 
contract.
    Only certain types of people will come in and rebuild cell 
blocks, so we are trying to work that contract out. That is 
really the only sticky area we are having right now, but I will 
give you a plan in a few minutes that will show you exactly 
where we are, what has been spent, and what has been laid out.

               overtime pay in department of corrections

    Senator Faircloth. Ms. Moore, I heard your statement 
clearly, and I am troubled by the mismanagement throughout the 
Department of Corrections and the problems you are having. I 
understand that a number of employees have been improperly 
receiving thousands of dollars of overtime pay. Would you 
respond to that? Has there been a lot of misuse of overtime 
pay?
    Ms. Moore. Senator, you are referring to a recent incident 
involving employees in our inmate work program. This matter had 
been brought to our attention. I referred the matter to the 
inspector general for investigation. The allegation was that a 
number of employees----
    Senator Faircloth. This is the inspector general for the 
city of Washington?
    Ms. Moore. Yes, sir; the allegation was that these 
employees had claimed thousands of dollars in overtime for 
which they were not entitled. The inspector general's 
investigation was completed. We have looked at the report. We 
are still looking at the report, but it would appear that there 
certainly were some improprieties, that there was clearly some 
management lapse in terms of our supervising or monitoring that 
program, and we will be taking appropriate action to deal with 
those employees on that particular issue.

                          drug testing program

    Senator Faircloth. I note you said you had a drug testing 
program for inmates. Did I understand that?
    Ms. Moore. I testified, sir, we had implemented a 
comprehensive mandatory drug and alcohol testing program for 
employees.
    Senator Faircloth. For the employees only?
    Ms. Moore. We also test and have had in place for some time 
drug-testing for inmates as well.

                   number testing positive for drugs

    Senator Faircloth. I notice that some report came to us 
that you found 72 that tested positive for drugs at the Lorton 
Youth Center and many more in the D.C. facilities. Is 72 a 
correct figure for the Lorton Youth Center that tested positive 
for drugs?
    Ms. Moore. I cannot testify to the accuracy of the numbers 
that were reported in the Washington Post, but I think it is 
important that we all understand that first of all there is no 
such thing as a drug-free prison or jail. Despite the best 
efforts of correctional professionals, inmates, staff, 
visitors, anyone coming in contact with the prison will find a 
way, if they are intent on doing so, to introduce contraband 
into these facilities. Our objective is to minimize it.
    Senator Faircloth. Are visitors not checked when they come 
in?
    Ms. Moore. Absolutely. Visitors are subject to pat 
searches, and we do that, but neither visitors nor staff nor 
other people having business in prison facilities are subject 
to intrusive body cavity searches, which is one of the means by 
which many of the drugs and other contraband enter our system.

              number of inmates testing positive for drugs

    Getting back to the Washington Post report, while it is 
certainly true that a number of prisoners in our system tested 
positive for drug use, the numbers that were reported in the 
Post story were somewhat skewed in that they tend to compare 
the D.C. correctional system, which includes the jail and 
halfway houses as well as the Lorton facilities, with State 
systems in Maryland that do not include the jail and halfway 
houses.
    Individuals who are arrested by the Metropolitan Police, 
who come into our jails, more often than not are under the 
influence of drugs and alcohol, so you are going to have a high 
incidence of positives for those individuals in jails.
    Likewise, those individuals who are in our halfway houses 
are in and out of those facilities daily for the purpose of 
working, attending some sort of program, so their access to 
drugs in the community obviously is going to result in a higher 
incidence of positives than elsewhere in the system.
    So if you isolate out the D.C. jail, the halfway houses, 
and compare the sentenced felon in the D.C. correctional 
system, I think you will find that we track closely to other 
State systems in terms of drug use in prison.
    Any incidence of drug use in a prison is too high, but I 
believe that it is important that everyone understand that 
there is no such thing as a drug-free jail or prison, and 
anyone who tells you otherwise is misrepresenting the facts and 
is misleading you, Senator.

                           escapes at lorton

    Senator Faircloth. Ms. Moore, Lorton has become, I would 
use the word notorious for the number of inmates who have 
escaped, jumping over the fences--this is what we hear--
terrorizing the neighborhood. It has been called a factory for 
criminals.
    Now, none of us are unaware of the problems of Lorton and 
the facility, but why is security such a problem at Lorton?

                           security at lorton

    Ms. Moore. Security is a problem at Lorton for a number of 
reasons. First, as I indicated in my testimony, and as I have 
indicated in public testimony on any number of occasions, there 
are more than 200 correctional officer vacancies in the D.C. 
correctional system. When you have that number of vacancies in 
any prison system you are going to have diminished security, a 
breakdown of security.
    Additionally----
    Senator Faircloth. A question, if I may interrupt, these 
are vacancies because you do not have the money to hire them? 
Is that the reason, or is it because you just cannot hire 
people who want the job?
    Ms. Moore. It is a combination of both, sir. We do not have 
the FTE authority to add 200-plus additional correctional 
officers to our complement, nor has there been funding in the 
personnel services budget to hire 200 additional officers.
    In addition to that, attracting people to come to work for 
the D.C. Department of Corrections, because we do not earn or 
make competitive salaries, in fact, we are the lowest paid in 
the region.

              correctional employees in need of pay raise

    I would submit to you that correctional employees are in 
much need of a pay raise as well, if we are to be competitive 
over the coming years in recruiting quality people to work in 
our system, and also because of the uncertainty because of the 
future of the agency. Uncertainty about whether we are going to 
be privatized or federalized, is resulting in fewer and fewer 
people applying for work with the D.C. Department of 
Corrections, so it is a combination of those three factors.
    But in terms of security, correctional officer vacancies, 
as I have indicated, and an inadequate physical plant are key 
factors. Approximately 67 percent of the housing in our entire 
correctional complex at Lorton is open dormitories. Eighty-
seven percent of the inmate population is classified medium and 
maximum security. They need to be locked up in secure prison 
cells, long-term prison cells. They are here because we do not 
have secure prison cells available.
    These repeat, dangerous, violence-prone prisoners are 
living in open dormitories, approximately 100 to 150, 
supervised by no more than two correctional officers. That is 
unconscionable, and under those types of conditions security is 
difficult at best.
    Senator Faircloth. Did I understand you to say that two 
people are guarding, if that is the word, 150 prisoners?
    Ms. Moore. In many instances, sir, that is absolutely 
correct. Not only are there two unarmed correctional officers--
--
    Senator Faircloth. To supervise 150 medium to maximum 
security prisoners?
    Ms. Moore. Medium to high-medium security prisoners in many 
instances, that is correct.
    Senator Faircloth. Two, unarmed?
    Ms. Moore. That is correct.

                       number of repeat offenders

    Senator Faircloth. I would think that is a prescription for 
disaster. How many of Lorton's current inmates are repeat 
offenders, and, if you know, repeat from one, two, three, four, 
five times?
    Ms. Moore. I do not know how many of them have reentered 
the system three, four, or five times as you ask.
    Senator Faircloth. How many just one time, and then I was 
asking more than one.
    Ms. Moore. Sure. Based upon the data I have available to me 
right now, it appears that about 11 percent of the sentenced 
felons in our system are repeat offenders. If you look at the 
total population where a significant number of them are 
sentenced misdemeanants, that number increases. The overall 
recidivism rate is well over 50 percent.
    Senator Faircloth. Well over 50 percent of the prisoners at 
Lorton have been there before?
    Ms. Moore. Yes, sir.

         privatization or federalization of correctional system

    Senator Faircloth. As you have mentioned, there is much 
discussion of what to do with the prison system of Washington, 
of the District. We have heard from a lot of people that were 
not connected with the system. I would very frankly like to 
hear your thoughts on privatizing the system, or changing to a 
Federal system. Should it be removed, would it be better to 
move it a considerable distance from the District of Columbia, 
and I am just picking western Maryland, Pennsylvania, West 
Virginia, southern Virginia, northern North Carolina, if it is 
federalized as a separate entity from the normal Federal prison 
system?
    I am thinking that most of the prisoners that you have here 
are being sentenced for a different reason than most Federal 
prisoners, so would it need to be a totally separate type, or 
separate facility?
    Give me your thoughts. You have been looking at it for 3 or 
4 years out, but tell me.
    Ms. Moore. Well, let me respond to what I heard as a number 
of questions that you have raised. First of all, very candidly 
I do not believe that there is anything magical about 
privatization or federalization.
    The problems that have plagued the D.C. correctional system 
for many, many years are attributable to the inadequacy of our 
resources more so than any other single factor. The inadequacy 
of the physical plant, the inadequacy of the staffing, the 
inadequacy of the classification system, are all factors that 
drive the current state of corrections in the District of 
Columbia.

                       inadequacies of facilities

    Senator Faircloth. These are inadequacies of facilities?
    Ms. Moore. Facilities and resources, yes, sir.
    I would submit to you that if we had the capital dollars 
necessary to renovate, to retrofit, and to build prison 
facilities at the existing Lorton complex, if we had operating 
dollars necessary to fill all staffing vacancies and to equip 
our staff and our facilities in a way that is consistent with 
national standards, in a way that is consistent with the 
recommendations contained in the report that was done by the 
National Council on Crime and Delinquency, that we would see in 
relatively short order significant improvement--significant 
improvement in the operation of that complex. Those resources 
have not been available.
    Senator Faircloth. Let me ask you a question. Of course, 
you know there is enormous opposition to rebuilding Lorton 
where it is. I have not been to Lorton, so I do not know, but 
from what I have heard you would almost have to strip it to the 
ground and start again. Is that a fair analysis of it? How much 
is there that you can salvage into a new, modern prison system? 
There is very little there to salvage, is that right?
    Ms. Moore. Approximately 70 percent of the housing at 
Lorton has no long-term viability and needs to be replaced, so 
yes, a significant portion of the complex would need to be 
rebuilt, and I understand that there is very strong opposition 
to rebuilding at Lorton. I am simply trying to point out that, 
given the availability of capital dollars and adequate 
operating dollars, that we could fix the system.
    There is simply nothing magical about federalization. There 
is nothing magical about privatization. What the private sector 
brings to the table that we do not have right now are 
resources. They have the dollars to invest in capital 
improvement. They have the dollars to invest in staffing.
    Senator Faircloth. Who is they?

                 private sector/management flexibility

    Ms. Moore. They, meaning the private sector, sir, and they 
also have management flexibility to do things that we simply 
cannot do, and to do them quickly--building facilities, hiring 
staff, renovating facilities, equipping staff. They have 
management flexibility.
    Likewise, the Federal Government, if it were to take over 
the system, it would have to make the same kinds of investment 
that I have argued for the past 3 years--additional capital 
dollars to rebuild the facilities either at the existing Lorton 
complex or somewhere else in the country, and additional 
operating dollars to absorb 7,000-plus additional felons into 
their system. So it all boils down to resources.

                       number of felons in system

    Senator Faircloth. How many additional?
    Ms. Moore. Approximately 7,000 felons, sir.
    Senator Faircloth. Is that what you have at Lorton?
    Ms. Moore. We have approximately 7,000 sentenced felons 
systemwide, both in Lorton and currently housed in our contract 
facility in Ohio.
    Senator Faircloth. Has that tended to increase over the 
years? Is it increasing, and at what rate?
    Ms. Moore. The population has actually stabilized over the 
past 5 years. We saw a tremendous population surge in 1989 with 
the introduction of crack cocaine into the community, and an 
aggressive policing effort. We have since seen a significant 
reduction in our inmate population. Since 1993, I believe, we 
have seen a leveling off of that population.

                  employees detailed to mayor's office

    Senator Faircloth. Talking about money, and we always get 
back to the mismanagement, but I notice that two employees have 
been identified as detailed to the Mayor's office at a cost of 
over $56,000 a year. Why were the positions detailed to the 
Mayor's office, and what two positions were detailed?
    Ms. Moore. The positions were detailed, sir, at the request 
of the executive.
    Senator Faircloth. The executive meaning the Mayor?
    Ms. Moore. That is correct, sir, to provide specific 
support services to the Mayor's office.
    Senator Faircloth. What were the specific support services? 
What does that mean?
    Ms. Moore. Sir, I would have to get back to you on that, to 
let you know exactly what these employees are doing.
    Senator Faircloth. But you pay them and they go to the 
Mayor's office every day to supposedly work?
    Ms. Moore. That is correct.
    Senator Faircloth. But you do not have any idea what they 
do?
    Ms. Moore. I do not specifically know what they do. I will 
find out and get back to you, sir.
    [The information follows:]
department of corrections employees detailed to the office of the mayor
Jeannette Wood--Assistant Training Administrator DS-301-13/5 (Protected 
        Class Employee).
    Presently detailed to the Mayor's Office of Policy to facilitate 
and train staff on the Mayor's Transformation Plan.
James Tufa--Staff Assistant DS-301-11.
    Serves as a staff assistant in the Mayor's Office of Diversity and 
Special Services performing the following duties:
    Establishes and maintains controls on incoming correspondence, 
responds to visitors and callers making contact with the office, 
ensuring appropriate responses are provided. Assists the supervisor in 
getting and assimilating data for special projects, budget submissions. 
Schedules conferences and meetings for the supervisor. Prepares 
personnel actions, maintains control log and filing system for 
personnel documents, budget and records all relevant information.
Phyllis Jackson--Management Assistant/typing DS-344-06/4.
    Serves as a Staff Assistant in the Mayor's Office of Boards and 
Commissions performing the following duties:
    Makes arrangements for the members of Boards and Commissions. Makes 
arrangements for a photographer, prepares certificates, letters, oaths, 
affidavits, and Mayor's Orders. Makes telephone contacts with City 
Council members, private citizens, community and professional groups in 
order to invite their participation at ceremonies. Arranges and attends 
meetings, plans and coordinates projects for the Special Assistant to 
the mayor; has telephone and personal contacts with the members of the 
Boards and Commissions, private citizens, City Council and 
representatives of various District and Federal offices as required. 
Serves as a liaison between the Office of Boards and Commissions and 
the Mayor's Press Secretary and the Office of Communications. Composes 
and edits public information materials.
Georgia M. Green--Paralegal Specialist DS-950-12/7 (Protected Class 
        Employee).
    Currently detailed to the Mayor's Office of Policy to review and 
provide technical assistance on a critical project in the criminal 
justice component of the District's public safety policy i.e., Task 
Force on the Parole Board's Transformation.

    Senator Faircloth. But it has nothing to do with the 
prisons?
    Ms. Moore. No, sir.

               recommendation on fiscal year 1998 budget

    Senator Faircloth. The Control Board has recommended $10 
million more than the City Council. The Council says that it is 
reluctant to award the department more than a $3 million 
increase while it remains a poorly managed operation. In other 
words, they are saying that--this is the City Council's 
approach--that it is poorly managed, so consequently they are 
not going to put any more money into it. Would you respond to 
that, and give me the rationale?

               mismanagement in department of corrections

    Ms. Moore. Well, I will respond to it, sir, and I will be 
very candid with you. I believe that the argument that the 
Department of Corrections is mismanaged is not an accurate 
argument. The problems that we face in our agency are 
attributable more to the inadequacy of our resources than any 
other single factor.
    Senator Faircloth. They say because you have a management 
problem they are not going to give you the money--that they do 
not want to, rather. Is the management problem because of a 
lack of money?
    Ms. Moore. Sir, I would submit to you that in any 
organization the size of the D.C. Department of Corrections, 
where you have more than 3,500 employees, approximately 10,000 
prisoners, there is certainly an opportunity for increased 
management efficiencies, improvement in management. But the 
fact of the matter is that the problems that we face in our 
agency, and that we have faced for a sustained period of time, 
are more attributable to the inadequacy of the resources than 
to any other single factor.

                            medical services

    Senator Faircloth. Now, if I heard you correctly earlier, 
you were saying that the difference is roughly $10 million 
between the Control Board and the D.C. Council. I did want you 
to elaborate on it. Did I understand medical, or medical 
services? That would sound like an enormous amount of money for 
medical services. Could you explain what medical services are, 
and where the money is going?
    Ms. Moore. The $10 million variance between the Council and 
the financial authority budget is a difference in the total 
budget. It is not just the budget in medical services. Well, 
actually, it is about $10 million in medical services. I am 
sorry. The authority's budget for medical services is $30 
million, the Council's budget is $21 million overall.
    We are responsible for providing for the care and treatment 
of nearly 10,000 prisoners. We have a very, very sick inmate 
population.
    Senator Faircloth. What was that?

                         sick inmate population

    Ms. Moore. For the care and treatment of nearly 10,000 
prisoners. We have a very, very sick inmate population. The 
disease incidence in our prison system mirrors the disease 
incidence in the wider community of Washington, DC. There is a 
high incidence of HIV/AIDS, tuberculosis, and other 
communicable diseases. Prisoners are staying in our system for 
longer periods of time. They are aging, and so all of the 
maladies associated with a sick and aging prison population we 
are responsible for attending to.
    We are projecting overall that medical services for the 
entire system will cost $37 million in this fiscal year. Now, I 
would submit to you that those costs are driven in part by 
court orders and consent decrees. Any time the courts are 
involved in prison operations, the cost of those operations, 
regardless of whether it is in medical services or security, 
are going to be higher.

                         receiver at d.c. jail

    We have a receiver at the D.C. jail that has been in place 
since 1995. The receiver spends a large portion of the budget. 
For fiscal year 1998 he has budgeted $15 million for medical 
and mental health services at the jail alone.
    Senator Faircloth. How much?

                          d.c. jail population

    Ms. Moore. Fifteen million dollars for the jail population 
alone, which averages 1,600 inmates a day, recognizing that 
that is a transient population. It is a throughput population 
on the average. Anywhere from 50,000 to 70,000 prisoners come 
into the jail on an annual basis, but the receiver's budget is 
what is driving the cost of health care systemwide.
    And again, I might add that if in 1994, when the courts 
ordered that we implement a remedial plan----

                         number of court orders

    Senator Faircloth. Excuse me. How many court orders is the 
prison system under?
    Ms. Moore. Seventeen court orders and consent decrees.
    Senator Faircloth. You are operating the prison system 
under 17 separate court orders?
    Ms. Moore. Yes, sir.
    Senator Faircloth. And it is a court order at the jail to 
supervise the medical treatment of prisoners coming and going?
    Ms. Moore. Yes; but let me finish stating, sir, that in 
1994 the courts ordered that the District implement a remedial 
plan to cure longstanding problems in the area of medical and 
mental health services at the D.C. jail. An investment of a 
little under $1 million to hire and train staff, to equip 
staff, and to do some physical plant renovations would have 
avoided the system being placed in receivership.
    In spite of numerous appeals we did not get the resources 
necessary to implement the remedial plan to cure those 
problems, and consequently we are in receivership. That is an 
example of what some might call mismanagement. I call it a lack 
of commitment to appropriate adequate resources to run a very 
troubled prison system.

                      number of guards to inmates

    Senator Faircloth. Well, one thing, a question on certainly 
an impressive problem, as you said. Two employees, two guards 
supervising 150 inmates. Now, that would to me be a formula for 
disaster, but by the same token you say you have 3,500 
employees in the system, and 10,000 inmates. Where are the 
other roughly 3,000 employees, if you are down to two employees 
for 150 inmates? Arithmetic gives you about 3,000 doing 
something else.
    Ms. Moore. I am not sure that I understand how you arrive 
at that calculation, sir. We have any number of housing posts 
throughout the complex.
    Senator Faircloth. Well, I arrived at it by 150--two 
employees for 150. You do the arithmetic. But you have got a 
lot. Tell me what the others are doing.
    Ms. Moore. Sure. You have officers who are doing--officers 
are responsible for not only supervising inmates in the 
dormitories, in the living areas. They are also responsible for 
supervising movement throughout the prison, supervising other 
operational areas, such as the dining hall, the infirmary unit, 
the rec area, the transportation of prisoners. The towers are 
staffed 24 hours a day.
    There are any number of posts, and when you add up all of 
the posts and the required coverage for those posts either 5 
days a week, 7 days a week, 24 hours a day, it factors out to 
more than 3,500 officers needed.
    Senator Faircloth. Well, I am not confused that you have 
many, many other duties, and you are talking about two at the 
time, and you are there for a shift, and you have got three 
shifts and 7 days a week, and that would consume the people 
pretty quickly.

                      should system be privatized

    A quick question. Would you say that the prison system 
should be privatized? If you had the authority, if you were the 
dictator to make the decision, would you say to privatize the 
system? I think we all agree it has got to be gotten out from 
under the District of Columbia. Would you say to privatize it, 
or would you say that the Federal Government should take it 
over and make it a part of the Federal prison system?
    Ms. Moore. Let me answer your question this way. If I had 
the authority, if I had the resources necessary, I would prefer 
quite candidly that we continue to operate the system, if for 
no other reason than to demonstrate to you, Senator Faircloth, 
and to others, that we have the capacity to do it. I am just as 
capable, and the staff of the D.C. Department of Corrections 
are just as capable of running a stellar prison system as 
anybody else in the country, but we need resources to do it.
    If we do not have a commitment to fund the D.C. Department 
of Corrections in such a way that the prison system can be run 
in a safe, secure, and humane way, I would suggest that 
privatization may well be a better option. Why? Because based 
on the information available to me the private sector can do it 
just as well, but in a less costly manner than the Federal 
Bureau of Prisons.
    Senator Faircloth. I thank you, Ms. Moore. I am not unaware 
of the problems you face trying to keep that together.

                    number of sworn police officers

    Chief Soulsby, I had one last question, if I may, for you. 
One of the differences between the City Council budget and the 
Control Board budget is the timeframe for hiring additional 
police officers. The Control Board supports the hiring of up to 
3,800 sworn officers but allows time for the recruiting and 
hiring and training. As of today, how many sworn police 
officers do you have, and how long will it take to recruit and 
train the additional officers to bring it up to the 3,800?

                           recruiting process

    Mr. Soulsby. We have 3,612 people on board right now. The 
recruiting process, the background check, and especially since 
we are trying to ensure that we only hire the best, is a very 
lengthy process. If I could, I am going to have Assistant Chief 
Proctor, who is in charge of my recruiting and human resources, 
come and talk about that for just a second, if that is OK.
    Ms. Proctor. Good morning, Senator. Currently we are at 
3,612 officers. By the beginning of the new fiscal year, 
October 1, we can reach 3,800 qualified.
    Senator Faircloth. By October 1?
    Ms. Proctor. Yes, sir; we have done many things to change 
the recruiting process. We are spending much more time on 
background so that the individuals that we invest this time in 
will remain with us and will be qualified to continue their 
career with the Metropolitan Police Department.

                           pool of applicants

    Senator Faircloth. One last question. Do you have a pretty 
good pool of applicants that are qualified?
    Ms. Proctor. Sir, we have a very large pool.
    Senator Faircloth. I mean, that potentially can be 
qualified and trained.
    Ms. Proctor. We are hiring at this point approximately 1 
out of every 15 people that respond to take the written exam, 
so that gives you an idea of the numbers that we have to 
process through the system.
    We have in the last 60 days initiated a number of 
procedures that will allow us to broaden the pool. We are 
reaching outside of the area. We are tapping into the military 
outprocessing centers and into the local colleges, 
universities, and higher learning centers. We are making 
greater reaches into the community, into all parts of our 
community to broaden the pool.
    Senator Faircloth. I thank you. I thank you, Ms. Moore, and 
I thank you, Chief Soulsby.
    Ms. Moore. Senator, I would like to just make one final 
comment for the record. You have indicated that the council has 
expressed an unwillingness to add additional funding to the 
Department of Corrections because of mismanagement.

            comprehensive study of department of corrections

    I want to point to the fact that in January 1996 a very 
comprehensive study of the D.C. Department of Corrections was 
done at the request or the mandate of Congress by the National 
Council on Crime and Delinquency. Hundreds of recommendations 
were contained in that report, many of them addressing 
management issues in the Department of Corrections. I would 
submit to you that if the same commitment, or the same level of 
commitment to correct longstanding problems, management or 
otherwise, in the D.C. Department of Corrections had been 
invested toward implementing the recommendations of that study, 
that we would be well on the way to dealing with systems 
problems throughout our agency.
    That investment was not made, unlike the investment that 
was made following the release of the Booz-Allen report on the 
Metropolitan Police Department.
    It does little good for us to study problems of systems if 
those studies do nothing more than sit on a shelf, take up 
space, and collect dust.
    Senator Faircloth. I could not agree with you more. We have 
probably done more studies and had more motion than we have had 
action.

                     Additional committee questions

    I thank you both for coming. One quick thing. Without 
objection, I will keep the record open, and it will remain open 
until 5 p.m., Thursday, July 24, for anyone that would like to 
submit any additional testimony.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]
                Questions Submitted by Senator Faircloth
    Question. According to information from the Bureau of Prisons, 
nearly \3/4\ of incarcerated D.C. felons are classified as medium--or 
high-security prisoners, and private corrections entities have not 
established a track record in operating the types of facilities that 
are appropriate for confining offenders who need this level of 
security. The private sector's primary experience lies in managing 
minimum security inmates and pretrial offenders, and the escape rate 
for privately-run low-security institutions is more than 25 times the 
escape rate for similar inmates housed in Bureau of Prisons facilities. 
The Bureau of Prisons has raised concerns that private sector 
management of the D.C. felon populations will give rise to serious 
public safety issues.
    Could you please comment on this, and describe what potential 
problems, if any that you foresee if medium- and high-security 
prisoners from the D.C. systems are moved to privately-run facilities.
    Answer. I am unaware of the data source which establishes that the 
escape rate in privately run minimum security facilities is more than 
25 times the rate of escape for similarly classified prisoners in 
Federal Bureau of Prison facilities.
    Between 1992 and 1994 more than 300 of the District's medium 
security prisoners were housed in a Corrections Corporation of America 
managed facility in Mason, Tennessee without significant incident. 
Additionally, CCA has housed more than 800 D.C. prisoners at their 
recently acquired Correctional Treatment Facility in Washington, D.C. 
and 900 at their Northeast Correctional Center in Youngstown, Ohio for 
the last 120 days. Medium and high security prisoners are housed at 
these facilities. There have been no escapes from CTF or the Northeast 
Correctional Center. I anticipate that CCA's management of D.C.'s 
medium and high security prisoners at these facilities will improve as 
their staff gains more experience and training.
    Question. Earlier this year the President outlined a reform plan 
related to the District of Columbia, including reforms of the 
Department of Corrections. Under this plan, from 8 to 10 thousand 
prisoners now in the District's system would be moved into the Federal 
Bureau of Prisons. Other proposals would move large numbers of D.C. 
prisoners into privately run facilities.
    Could you please give us an update on the status of the authorizing 
legislation as it pertains to the Department of Corrections, and in 
doing so, please highlight the most significant differences between the 
priorities of the Department of Corrections and[ the legislation as it 
currently stands.
    Answer. The President's plan and the enabling legislation will 
result in the Federal Bureau of Prisons assuming financial and 
custodial control over the D.C.'s sentenced felon population. The 
District agrees in principle with the proposal to federalize the 
system; however, there is objection to the abolition of parole and the 
imposition of federal sentencing guidelines on D.C. offenders. There is 
ongoing discussion of these issues between the Mayor and Congresswoman 
Norton and other key congressional leaders in an effort to reach a 
compromise.
    Question. Currently a Medical Receiver has been set up in your 
department to run the mental health services at the D.C. Jail. The 
fiscal year 1997 court-ordered budget for the receivership was $16.2 
million, and the fiscal year 1998 proposed budget is $16 million.
    Do you see any signs that conditions are improving under this 
receivership so that the Department may one day be out from under the 
court's control of this program?
    Answer. The delivery of medical and mental health services have 
improved at the D.C. Jail. In addition to the fact that the Receiver is 
an experienced correctional health care professional, he has resources 
and the management flexibility necessary to fix the system. He has the 
ability to procure goods and services without having to rely on the 
District's cumbersome procurement system. Additionally, he can recruit 
and hire well qualified personnel by offering salaries that far exceed 
the District's wage scales. Conversely, he can terminate employees who 
fail to perform without having to go through the District's protracted 
personnel system for adverse and corrective action.
    It is anticipated that the receivership will be in place for at 
least another three years. It is also anticipated that the receiver's 
spending will begin to decrease as he brings the jail's health care 
delivery system into compliance with the court's order.
    Had the Department of Corrections had the resources and management 
flexibility to implement the court's remedial plan for medical and 
mental health services at the jail the receivership would not have been 
ordered.
    Question. Within the Corrections facilities under your control, do 
you know how corrections employees are related to the inmates they 
oversee?
    Answer. We do not keep this data. However, in a city the size of 
the District of Columbia and with a work force that has been hired 
predominately from this city we can only surmise that a significant 
number of employees are related biologically or socially to inmates in 
our system.
    Employees and applicants are required to disclose if they have 
relatives incarcerated in the system. The Department does have in place 
mechanisms which make it mandatory for all staff to report to the 
Warden of their working institutions if they have a relative in this 
system. We also ask all inmates about employees relationships during 
the intake interview when they enter the D.C. Jail and the Lorton 
facilities.
    Management of the D.C. correctional system is complicated by the 
fact that we operate within such a small geographical area. It is 
difficult to effectively separate staff from inmates and inmates from 
other inmates for security reasons within such a small prison complex.
    Question. Can you describe the status of the REP that you have 
contracted to build a new corrections facility in the District of 
Columbia, particularly in light of your stated desire to see 
corrections facilities and their attendant jobs located in or near DC?
    Answer. Prison construction is a tremendous economic development 
opportunity. A 1,000 cell medium security facility results in 
approximately 500 temporary jobs during the construction phase and 300 
to 400 permanent jobs after the facility is fully activated. Given the 
District's current financial state, the District of Columbia should be 
the preferred site for any new prison construction.
    The Department is in the process of developing a RFP to finance, 
design, site, build, and operate up to three 1,000 beds correctional 
facilities within the District of Columbia. One of the facilities would 
be a multi-custody level women's prison and the other(s) would house 
medium custody male offenders.
    It is the intention of the Department of Corrections to transmit 
this document to the Office of Contract Procurement by August 1, 1997.
    Question. In the court case of Neal v. Moore, a class of plaintiffs 
sued the Department for sexual harassment. As a result, in 1996 the 
Department was forced to spend over $800,000 to set up and staff a 
sexual harassment investigatory unit. An additional million are 
anticipated each year because of this law suit. This is millions of 
dollars that could be used to improve prison conditions.
    What is the status of Neal v. Moore, and when do you expect this 
case to be closed?
    Answer. Neal v. Director, D.C. Department of Corrections is a class 
action lawsuit that was filed prior to my becoming Director of this 
agency in 1994. Since assuming this position, I have enforced a ``zero 
tolerance'' policy against sexual harassment. Annual training is 
provided to all staff and violators of the policy are disciplined and/
or fired based on the gravity of the offense.
    I cannot discuss details, but I am happy to report that the 
District of Columbia and plaintiffs counsel has reached a settlement of 
this case which is expected to be approved by the U.S. District Court 
within the next three to six weeks.
    Question. The Metropolitan Police Department entered into its 
Memorandum of Understanding with the Mayor, Police Chief, City Council 
Chair and others to carry out badly needed reforms. The results were 
immediate--crime has dropped 20 percent in recent months.
    Do you think putting in place a model like the Police Department's 
MOU would benefit your Department?
    Answer. A partnership and memorandum of understanding was entered 
into with the Metropolitan Police Department and the Mayor, D.C. City 
Council, Financial Authority, U.S. Attorney, Chief Judge of the D.C. 
Superior Court, Corporation Council and the Department of Corrections 
to operationalize the recommendations made by the Booz-Allen 
consultants to reform the management of the police department. The 
M.O.U partnership has been effective because it brings key decision 
makers to the table to discuss and resolve issues and it has empowered 
the Chief of Police to procure goods and services and to hire and fire 
personnel without going through the District's procurement and 
personnel systems.
    The MOU model would be extremely beneficial to the Department of 
Corrections.
    Question. In May, the Control Board announced that it had awarded a 
contract for the transfer of 900 medium and high security inmates from 
the Lorton facility to Youngstown, Ohio.
    What is the status of this contract? How many inmates have been 
moved out of Lorton to Youngstown? The contract amount was not to 
exceed $6,831,000. If it cost $6.8 million to transfer 900 inmates, 
will the contract result in a savings to your Department?
    Answer. Between May 13, 1997 and June 1, 1997 we moved 900 
prisoners to Youngstown, Ohio without incident.
    It's estimated that the cost associated with the transfer of these 
900 inmates will be approximately $6.4 million based on a per diem rate 
of $55--$400,000 less than the amount budgeted.
    Question. The large number of court orders and consent decrees 
contribute to the District's high fixed expenses. The Department of 
Corrections currently has 13 mandates, and the Control Board estimates 
that these mandates cost the City $108.5 million.
    These court mandates represent 2 crises facing the District: one is 
the financial burden they impose; the second is the management problem 
that underlines these court orders.
    In your opinion, what changes in the management of your Department 
and the District's government are needed to get out from under these 
burdensome and expensive court orders?
    Answer. The court orders and consent decrees the department is 
currently under are largely attributable to inadequate resources. As 
confirmed by a congressionally mandated study by the National Council 
on Crime and Delinquency the department is overcrowded, under staffed 
and under funded. The study confirms that the Department needs to hire 
at least 200 additional correctional officers, build 2,000 new prison 
beds and replace more than 70 percent of the current inmate housing in 
the system.
    Most of the court orders impose staffing levels for correctional 
officers and medical personnel. They also impose population caps at 
four of the seven facilities in the system. Therefore, in order for the 
District to comply with court orders and eventually vacate them 
resources must be invested to address staffing deficiencies and 
overcrowding.
    Our current strategy for addressing these long standing problems is 
to out source prison beds, close facilities and re-deploy existing 
staff to fill critical vacancies at facilities with court ordered 
staffing levels.
    The Department needs to be able to procure goods and services 
expeditiously. We need to be able pay correctional workers at rate 
comparable to the surrounding jurisdictions in order to attract and 
retain qualified employees (It should be noted that D.C. Department of 
Corrections correctional officers are the lowest paid in the region). 
Additionally, we need to be able to expeditiously terminate incompetent 
employees and replace them with highly qualified and motivated workers.
    In essence, to get out from under costly court orders the 
Department needs and investment of resources to address long standing 
staffing and physical plant deficiencies, and it needs management 
flexibility in the areas of procurement and personnel.

                          subcommittee recess

    Senator Faircloth. Thank you.
    [Whereupon at 11:50 a.m., Wednesday, July 16, the 
subcommittee was recessed, to reconvene subject to the call of 
the Chair.]


        DISTRICT OF COLUMBIA APPROPRIATIONS FOR FISCAL YEAR 1998

                              ----------                              


                        WEDNESDAY, JULY 23, 1997

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:10 a.m., in room SD-192, Dirksen 
Senate Office Building, Hon. Lauch Faircloth (chairman) 
presiding.
    Present: Senator Faircloth.

                          DISTRICT OF COLUMBIA

                      Department of Human Services

STATEMENT OF WAYNE D. CASEY, INTERIM DIRECTOR

                  OPENING STATEMENT OF LAUCH FAIRCLOTH

    Senator Faircloth. Good morning, ladies and gentlemen. The 
hearing has come to order.
    This is the third hearing of the Senate Appropriations 
Subcommittee on the District of Columbia, and we are to 
consider the District's fiscal year 1998 budget requests.
    This morning we are going to hear testimony on the budget 
requests for the Departments of Human Services, Health, and 
Public Works. In last year's budget, these three departments 
alone accounted for almost $2 billion out of the $5 billion 
District of Columbia budget.
    These three departments provide essential public services: 
health care for the sick and disabled, clean water and 
sanitation services, road maintenance and repair, among others.

                            road maintenance

    We can start with the latter. The road maintenance in the 
city is a dismal disgrace to the Capital of the United States. 
There are roads within minutes actually going by the Capitol 
that are in scandalous condition.
    A recent survey confirms that a majority of District 
residents believe that the quality of public services is either 
poor or very poor. That is no way to run the Capital of the 
United States.
    Because of the poor management at the top level of local 
government, the overall quality of life in the Capital of this 
Nation is inferior to other major cities that operate on leaner 
budgets and fewer employees.

                            state functions

    I am in no way persuaded by the argument that the District 
of Columbia is burdened with State functions that other cities 
are not responsible for.
    Factoring in a level playing field, the District of 
Columbia spends $8,286 per person to run its government. That 
is more spending per capita than New York at $7,673; San 
Francisco, $5,982; Boston, $5,455; Philadelphia, $4,804; 
Baltimore--Baltimore, next door--$4,649; and Indianapolis, 
$4,086.

                             mismanagement

    Clearly the problem is not the amount of money the District 
has to spend. The problem is that the District mismanages--and 
it has for years and years mismanaged--the money.
    Today the Mayor is in Africa. I think he should be focusing 
on the problems of Washington and not Africa.
    The residents continue to drive down streets with potholes 
in them of unbelievable depth and size.
    Until recently, 15 percent of the fire department's ladder 
trucks were broken, wouldn't work.
    It takes one person to collect time cards for every eight 
employees. This is according to the Washington Post.
    The Mayor's office employs--we know this--twice as many 
people as New York and four times as many as Boston. Twice as 
many, and we really do not know how many he has because they 
come in from so many different ways.
    This morning we will hear from three department heads. One 
has been an acting head for 1 week. The other two have been 
interim directors for 1 year or less.
    I understand that because all three of you are temporary 
department heads, you are accompanied by others who may be able 
to help you.
    Our witnesses represent over 7,700 full-time employees and 
budget requests totaling $2 billion, and many question whether 
the services being provided match the dollars being spent.

                     performance-based organization

    Mr. Bernardino, I have read your statement and am impressed 
with your department's efforts to become a performance-based 
organization. I want to encourage you to continue to shift the 
focus toward setting goals and measuring your success in 
reaching the goals.
    Mr. Casey, you point out in your opening statement that 
your department is responsible for implementing the welfare 
reform legislation passed by Congress last year. While 
certainly I support and the committee supports your efforts, I 
hope we can be assured that the welfare-to-work requirements 
will involve real jobs and not just more government handouts 
for make-believe jobs.
    Senator Boxer and Senator Hutchison have not joined us, and 
we hope they will before we conclude the hearing.
    But before we begin, let me remind all of the witnesses 
that your entire statement will be made part of the record, so 
we ask that you limit your opening statement to 10 minutes, and 
we will hear opening statements followed by questions from the 
witnesses.
    Now, without objection, the record will remain open until 5 
p.m. on Thursday, July 31, 1997, for anyone that wishes to 
submit any additional testimony or to respond to questions 
members have of the witnesses.
    Our first witness today is Mr. Wayne Casey, Interim 
Director for the Department of Human Services. The committee 
looks forward to your testimony, Mr. Casey, as we review the 
budget proposals for your department. You may proceed.

                        statement of wayne casey

    Mr. Casey. Good morning, Chairperson Faircloth and members 
of the Appropriations Subcommittee on the District of Columbia.
    Senator Faircloth. Mr. Casey, if you will move that 
microphone real close. It's difficult to hear.
    Mr. Casey. I thought I had a booming voice, but I guess 
that's not the case. Let me begin again.
    Senator Faircloth. Well, let it boom. [Laughter.]
    Mr. Casey. Good morning, Chairperson Faircloth and members 
of the Appropriations Subcommittee on the District of Columbia. 
I am Wayne Casey, Interim Director of the Department of Human 
Services. I will present a brief statement of the department's 
budget reduction initiatives and the status of welfare reform 
implementation. A more comprehensive statement regarding the 
status of welfare and the status of active class action 
lawsuits are submitted for the record.

                  department of human services budget

    The Department of Human Services' budget includes the 
Commission on Social Services, the Commission on Mental Health 
Services, and the LaShawn Child Welfare Receivership. The 
fiscal year 1998 budget request for the department is $637 
million and 4,891 FTE's. Three hundred and fifty-seven million 
dollars is locally appropriated funding supported by 2,953 
FTE's, and $279 million is Federal nonappropriated funding 
supporting 1,938 FTE's. The fiscal year 1998 budget has 264 
FTE's less than fiscal year 1997.
    The department has instituted numerous spending reductions, 
revenue enhancement initiatives, and staff reductions to 
address the fiscal crisis.

                           homemaker services

    To better utilize limited resources, the Commission on 
Social Services delegated responsibilities for the homemakers 
services program to the Office of Aging Services. This office 
traditionally operated a homemaker services program. Thus, the 
administrative expenses were reduced without compromising the 
quality of services, resulting in an effective and efficient 
use of funds.
    The Mental Retardation/Developmental Disabilities 
Administration, better known as MRDDA, has moved to stabilize 
the payment system and reduce costs by: one, finalizing rules 
to ensure that clients and their families who have the 
resources are charged for the cost of care; and two, developing 
a uniform rate structure for the different levels of service 
provided to clients.

                         welfare reform program

    The Department of Human Services is the lead agency 
responsible for implementing the Personal Responsibility and 
Work Opportunity Reconciliation Act of 1996, commonly referred 
to as welfare reform.
    The department, in conjunction with the Financial 
Authority, has retained consultants to assist in preparing the 
District's Comprehensive Welfare Reform Program and 
implementing required changes in the administration and 
management of social welfare programs currently managed by the 
District.

                         mental health services

    Virtually all of the services provided by the Commission on 
Mental Health Services are mandated by the Federal or District 
statute or are provided under the auspices of the Dixon v. 
Barry court order. The fiscal year 1998 budget request of $98.9 
million reflects an increase of $2.3 million over the 1997 
budget.
    In keeping with the court mandate, the commission will 
close 70 beds at St. Elizabeths Hospital and consolidate 
outpatient therapeutic and outreach programs for child and 
youth services.
    I thank you for the opportunity to testify on the fiscal 
year 1998 budget. I am available for any questions.
    Let me just add for the record that I am pleased to say 
that I have been for the last 18 months the interim director of 
the Department of Human Services. I have led the department 
through its most difficult time. We have lost almost 4,000 
employees over the last 3 years, budget reductions over $221 
million over the last 3 years, and we are stable and we are 
doing fine.

                           prepared statement

    Welfare reform is in good hands. As we talk with other 
States around the country, in our region, Delaware, Maryland, 
Virginia, and Pennsylvania, we feel confident that we are in 
good shape at this point. We meet weekly with those States and 
share observations and comments about the oncoming impact of 
law changes on a daily basis.
    [The statement follows:]
                  Prepared Statement of Wayne D. Casey
    Good morning Chairperson Faircloth and members of the 
Appropriations Subcommittee on the District of Columbia. I am Wayne 
Casey, Interim Director of the Department of Human Services (DHS). I am 
joined by Deloras Shepherd, Chief Financial Officer of Human 
Development and Comprehensive Health; A. Sue Brown, Acting Deputy 
Director; Eileen Elias, Acting Commissioner of Mental Health Services; 
and Annie Goodson, Acting Commissioner of Social Services. I will 
present a brief statement of the department's budget reduction 
initiatives and the status of welfare reform implementation. A more 
comprehensive statement regarding the status of welfare and the status 
of active class action lawsuits are submitted for the record.
    The Department of Human Services budget includes: the commission on 
social services, the commission on mental health services, and the 
Lashawn child welfare receivership. The fiscal year 1998 budget request 
for the department is $637 million and 4,891 FTE's. $357 million is 
local/appropriated funding supporting 2,953 FTE's and $279 million is 
Federal/non-appropriated funding supporting 1,938 FTE's. The fiscal 
year 1998 budget has 264 FTE's less than fiscal year 1997.
    The department has instituted numerous spending reductions, revenue 
enhancement initiatives and staff reductions to address the fiscal 
crisis.
    To better utilize limited resources the Commission on Social 
Services delegated responsibilities for the Homemakers Services Program 
to the Office on Aging Services. This office traditionally operated a 
Homemaker Services Program thus the administrative expenses were 
reduced without compromising the quality of services resulting in an 
effective and efficient use of funds.
    The Mental Retardation/Developmental Disabilities Administration 
(MRDDA) has moved to stabilize the payment system and reduce costs by 
(1) finalizing rules to ensure that clients and their families who have 
the resources are charged for the cost of care, and (2) developing a 
uniform rate structure for the different levels of service provided to 
clients.
    The Department of Human Services is the lead agency responsible for 
implementing the ``Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996'', commonly referred to as ``welfare 
reform''.
    The department, in conjunction with the financial authority, has 
retained consultants to assist in preparing the District's 
Comprehensive Welfare Reform Program and implementing required changes 
in the administration and management of social welfare programs 
currently managed by the District.
    Virtually all of the services provided by the Commission on Mental 
Health Services are mandated by Federal or District statute, or are 
provided under the auspices of the Dixon v. Barry court order. The 
fiscal year 1998 budget request of $98.9 million reflects an increase 
of $2.3 million over fiscal year 1997.
    In keeping with the court mandate the commission will close 70 beds 
at St. Elizabeths Hospital and consolidate outpatient therapeutic and 
outreach programs for child and youth services.
    We thank you for the opportunity to testify on the fiscal year 1998 
budget plan for the District of Columbia Department of Human Services.
                 status of active class action lawsuits
1. Lashawn v. District of Columbia (Child Welfare System)
    1989--Case filed in federal court.
    1995--The court names Jerome Miller as General Receiver.
    1997--The Department of Health and Human Services informed Dr. 
Miller that federal funding is threatened.
    1997--The Court-approved Monitor reported that on virtually every 
measure, the District was more successful at compliance in 1995 than 
the Receivership is 1997.
    1997--Jerome Miller is replaced by Acting Receiver, pending 
recruitment of a final replacement.
2. Dixon v. District of Columbia (Mental Health Services)
    1974--Case filed against the United States government.
    Interim--extensive deinstitutionalization occurs and service 
delivery privatized.
    1997--After a variety of compliance-related problems, Court orders 
commission into receivership. The receiver has not yet been identified.
3. Evans v. District of Columbia (Mental Retardation Services)
    1976--Case filed in federal court.
    1991--After extensive deinstitutionalization and the privatization 
of service delivery, Forest Haven closes.
    1996--Court appoints a special master to ensure vendors are paid 
timely.
4. Jerry M. v. District of Columbia (Youth Services)
    1985--Case filed in Superior Court.
    1993--Cedar Knoll is closed.
    1995--Receiving Home is closed.
    1996--Oak Hill School is privatized.
    1997--Court appoints Special Master to develop plan for 
administration of the education program.
5. Salazar v. District of Columbia (Medicaid)
    1993--Case filed in federal court.
    1997--Remedial Order issued and Court names a Monitor.

                     Additional committee questions

    Senator Faircloth. Thank you, Mr. Casey.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]
                Questions Submitted by Senator Faircloth
    Question. The Metropolitan Police Department entered into its 
memorandum of understanding (MOU) with the Mayor, Police Chief, City 
Council Chair and others to carry out badly needed reforms. The results 
were immediate--arrests are up and crime is down.
    Do you think putting in place a model like the Police Department's 
MOU would benefit your Department?
    Answer. While the MOU on the surface may appear to work for the 
Metropolitan Police Department, it would not be a prudent 
administrative approach for the Department of Human Services. It caters 
to an independent agency structure resulting in turfism and 
divisiveness. History has demonstrated that this has not worked in 
other areas throughout the government.
    Coordination and linkages to other governmental entities undergrid 
the smooth operation of a human service agency. The absence of 
coordination would overtime seriously undermine the agency's service 
delivery effectiveness. Moreover, it sets in motion a fragmented 
governance. An MOU would only put in place a short term solution 
destined to collapse over the long term. This would be counter 
productive.
    Question. The budget documents report that one of the department's 
initiatives is to return to the District 10 percent of the youth who 
are in out-of-state facilities. One option for the placement of these 
young people is to convert the D.C. Village facility.
    What is the status of this initiative? Are you still looking at the 
D.C. Village site?
    Answer. The Youth Services Administration (YSA) has exceeded the 10 
percent return goal. Before this initiative, approximately 102 youth 
were in out-of-state residential placements. The number of youth in 
these facilities is now 78.
    Given the reduction in out-of-state placements, D.C. Village is no 
longer being considered for the placement of young people. Rather, the 
city will use the facility for economic development purposes.
    Further, YSA's planned participation in the Managed Care Initiative 
for the Child Prototype, which will build local capacity, should reduce 
the number of youth being placed in out-of-state residential 
facilities.
    Question. One of the department's cost-cutting initiatives calls 
for contracting out services at Oak Hill Youth Center. Budget documents 
provided to the Committee report that the Youth Services Administration 
had planned to conclude the RFP process by December and seek Control 
Board approval for the contract award in January 1997. It appears that 
the contract is not yet in place.
    What is the cause of the delay in contracting at Oak Hill?
    Answer. There is no delay in contracting Oak Hill Youth Center. 
This was proposed as a fiscal year 1998 initiative by YSA. YSA is 
moving toward this fiscal year 1998 goal.
    One difficulty is the physical condition of the Oak Hill facility. 
YSA received notice that capital funds were available in July 1997, to 
repair the Oak Hill boiler. In fiscal year 1998, other life and safety 
repairs are scheduled, which will enhance the likelihood of an 
increased pool of bidders for this initiative.
    Question. It was recently reported in one office in the D.C. 
Department of Human Resources, 51 people were being paid from an office 
that only had 39 employees assigned to it.
    If you want to hire or fire someone, what is the process you must 
follow?
    What changes would you make in the process if you could make 
changes?
    Answer. Hiring of employees is done on the basis of merit, pursuant 
to the District of Columbia Government Comprehensive Merit Personnel 
Act of 1978 (CMPA) (D.C. Code Sec. 1-101.1 et. seq.). Applicants for 
employment are evaluated either on a written examination (as is the 
case for police officers, firefighters and correctional officers) or 
established qualification requirements. Additionally, candidates are 
awarded veterans preference and residency preference, as applicable. 
New employees are subject to a one year probationary period (except for 
police officers, who are subject to an 18 month probationary period), 
during which time they may be separated at will.
    Removal of employees is based on cause, as defined in title XVI of 
the CMPA (Subchapter XVII). The CMPA provides that an action to remove 
an employee must be proposed no more than 45 days from the date that 
the agency knew or should have known of the act or event which 
constitutes cause. Further, the employee is entitled to make a written 
response and to receive a written decision within 45 days of the date 
that charges are preferred. The employee may appeal a removal to the 
District's Office of Employee Appeals (OEA), established by Title VI of 
the CMPA. Also, the employee may appeal under an alternative process 
(generally, grievance arbitration) if covered by a collective 
bargaining agreement that so provides.
    On January 30, 1997, the Executive submitted proposed personnel 
reform legislation to the Council for consideration. The Executive's 
bill (Bill 12-44) proposes to transform the existing adverse and 
corrective action system, as well as the grievance system by first 
simplifying the statutory framework of these systems.
    Under the CMPA, corrective and adverse actions must be proposed 
within 45 days of the act which constitutes cause. Surveys have been 
conducted on the efficiency of the ``45-day rule'' since its inception. 
The results of one survey indicated that, in as many as 245 cases, 
there was probable cause to take action, however, these actions could 
not be initiated because of the agency's inability to propose the 
action within the 45-day limit.
    Such inflexibility is being addressed in the Executive's bill. We 
propose to remove this arbitrary limitation; further, we propose to 
consolidate the number of causes for which action may be taken from 22 
to 5. This modification would eliminate the necessity of making arcane 
distinctions as is currently needed to determine the appropriate cause 
to be cited in a proposed action.
    Another revision to the adverse and corrective action system which 
Bill 12-44 proposes is the removal of yet another arbitrary time frame 
in the internal agency process. Currently, the CMPA directs that within 
a 45-day period from the date the proposed notice is issued, the 
employee is entitled to receive a written decision, except when there 
is an on-going criminal prosecution against the employee for the same 
act or offense. (This 45-day period is commonly referred to as the 
``2nd 45-day period''). The 2nd 45-day period has been an issue in 
countless appeals before the OEA, notwithstanding the fact that case 
law has defined the ``2nd 45-day'' requirement as directory, whereas 
the ``1st 45-day period'' was determined to be a mandatory. 
Accordingly, we propose to remove this unnecessary hurdle in light of 
the fact that the revised disciplinary system will reduce the amount of 
time that it takes to process a disciplinary action. These measures 
will provide our managers with greater flexibility while eliminating 
artificial limitations and distinctions which complicate these 
processes.
    The Executive's bill will also address the limitations in our 
current adverse and corrective action systems which permit employees 
who have been involved in criminal activity to remain on the payroll 
while agencies or law enforcement entities conduct required 
investigations. The bill proposes to reduce the period during which an 
employee must be carried in an administrative leave status from ten to 
five work days in instance where the employee has falsified official 
records, fraudulently secured appointment, or has been indicated on, 
arrested for, or convicted of a felony charge or of any crime that 
bears a relationship to the employee's position, and to permit 
personnel authorities to place such employees on enforced annual or 
personal leave or leave without pay at the conclusion of the 
administrative leave period. In any instance where a determination is 
made that no further administrative action is to be taken against the 
employee, leave or pay which was lost to the employee during the period 
of enforced leave would be retroactively restored.
    Further, proposed reductions in the time needed to process a 
disciplinary action included revisions to the appeal process Bill 12-44 
provides that appeals to the OEA will be limited to terminations for 
cause, thus guaranteeing a smaller caseload for OEA. An employee whose 
termination is proposed for cause will have a right, upon request, to 
an adversary hearing prior to a final decision by the agency. 
Accordingly, the proposed legislation strikes an appropriate balance by 
preserving the essential requirements of due process for employees and 
by providing management with the tools to act promptly when it needs to 
discipline an employee.
    We also propose to integrate into the disciplinary and grievance 
process alternative dispute resolution (ADR) methods to more 
economically and efficiently resolve disputes and to provide an 
expedited, responsive, less formal means of redress for employees.
    Question. What aspects of the city's contracting system would you 
change?
    Answer. The District of Columbia's contracting system is similar to 
the federal government's contracting system. What is needed in the 
District of Columbia government is training for procurement and program 
personnel and performance standards. An aggressive training program has 
been implemented to train program and procurement personnel in our 
efforts to reform the contracting process. Program/technical staff 
greatly affect the procurement process, which makes program and 
procurement personnel stakeholders in the contracting process. A 
collective approach from procurement/program staff is needed in order 
to reform the contracting process
    Question. In a recent Control Board report on the status of all 
grants in the District of Columbia: 57 grants were listed for your 
department, totaling over $90 million. Of these grants: the department 
has not obligated any funds on 12 of the grants; the department has 
over obligated funds on 5 of the grants; and the department has 
obligated less than 25 percent of the funds on 20 of the grants.
    Question. What is the department doing to address this problem?
    What role does the District's Office of Grants Management and 
Development play in overseeing your department's grants?
    Answer. Report on the status of all grants in the Department:
    As the Financial Authority report referenced in this question has 
not been identified and it is not clear that the report was shared with 
the Department, we cannot specifically comment on the referenced grant 
report. Further, number of grants mentioned (57) appears to include 
grants from the Department of Health (formerly a component of DHS).
    Nonetheless, the Department loads budgets based on the approved 
grant authority received from the granting Agency. The process to load 
and obligate funds is as follows:
  --The agency receives a grant award and forwards the request for 
        approval to the Office of Grants Management and Development;
  --The budget is loaded into the Financial Management System (FMS) in 
        accordance with the approved budget;
  --The program requests the obligation of funds through a requisition 
        to the office of the Chief Financial Officer for the Department 
        for approval and transmission to the Office of Contracts, 
        Grants and Procurement.
  --The Office of Contracts, Grants and Procurement processes the 
        request and sends it to the District of Columbia Financial 
        Responsibility and Management Assistance Authority for review 
        and approval.
  --The Office of Contracts, Grants and Procurement forwards a copy of 
        the approved executed agreement to the Chief Financial 
        Officer's office.
  --The Chief Financial Officer's payables unit enters the request for 
        obligation into FMS and forwards it to the District's 
        centralized obligation unit for final review and obligation.
    The Department has not obligated any funds on 12 of the grants: The 
approval process and untimely procurement actions are generally 
responsible for delays in grant obligations. However, most of our 
grants have more than one year spending authority.
    The Department has over obligated funds on five of the grants: The 
FMS system will not allow obligations which exceed the approved budget 
authority level. An assessment of the grants in question must be made 
in order to respond to this comment.
    The Department has obligated less than 25 percent of the funds on 
20 of the grants. As stated earlier this number probably is inclusive 
of the Department of Health's grants and therefore, would need to be 
reviewed on a grant by grant basis. The obligation process is based on 
the timing and approval of grant authority and approved executed 
agreements which often cause delays in obligation of grant funds.
    Question. In 1996, the president signed into law the Personal 
Responsibility Act. This Act requires the District to monitor support 
payments from non-custodial parents. Failure to do so could result in a 
reduction of Federal grant money to the District. For example, under 
the Act, the department is required to provide paternity information to 
a national database by October 1, 1998.
    Question. Would you please give the Committee a progress report on 
the department's compliance with this legislation?
    Answer. The federal New Hire legislation will be introduced to the 
Council of the District of Columbia during the September 1997 session. 
The development and maintenance of the database will be the 
responsibility of a private contractor who will be selected by October 
1997.
    The Office of Paternity and Child Support Enforcement (OPCSE) has 
entered into a cooperative agreement with the State Center for Health 
Statistics to enhance the voluntary acknowledgment process with all 
D.C. birthing hospitals. As well as implementing an incentive agreement 
for increasing the number of paternities established. This will be 
accomplished with utilization of an automated database available to the 
State Center for Health Statistic and the local hospitals. The 
privatization of OPCSE operations is to be completed by the end of 
1997. The REP issuance is scheduled for August 1997, with selection and 
award of a prospective contractor by November 1997.
    Administrative process legislation, mandated under PRWORA to 
streamline the District's current judicial process of child support 
cases, will be submitted to the Council of the District of Columbia by 
September 1997.
    Question. It was recently reported that your department has spent 
more money from a federal victims assistance program on staff salaries 
than on helping victims of violent crime. None of the $.47 million was 
passed to community groups to provide crime victims with counseling, 
legal assistance and other aid. In 1996 the same thing happened in the 
department with a federal program designed to help abused children. 
This is a serious management program.
    Have you put in place a plan to make sure federal grant money 
reaches the people it is intended to help?
    Answer. Reports regarding the Crime Victims Assistance Program were 
inaccurate. In fact, through the program's social work staff, victims 
of violent crime received a variety of support services. The services 
included crisis intervention, counseling, bereavement support, 
emergency transportation and peer support groups. In fiscal year 1995, 
the crime victims assistance program served 4,740 citizens. While the 
District is treated as a ``state'' for funding purposes, it remains, 
characteristically, an inner city with an extraordinary homicide rate 
drive by street violence.
    The crime victims assistance program and its staff have been 
commended by federal agencies, community-based programs and local 
universities for their efforts on behalf of victims of violent crime. 
In April 1995, the U.S. Attorney's Office for the District of Columbia 
presented the crime victims assistance program with the Justice for 
Victims of Crime Award for outstanding service to crime victims and 
their families. The Department of Justice (DOJ) also recognized the 
expertise of the District's staff in the area of support to survivors 
of homicide. The staff routinely served as consultants and facilitators 
in DOJ sponsored discussions about services for survivors of homicide.
    The federal grant permitted the use of funds to provide direct 
services to victims by agency social workers. The Department of Justice 
guidelines cite the following for use of funds: E. Allocation of Funds 
within the States--``VOCA (Victims of Crime) funds granted to the 
states are to be used by eligible public and private nonprofit 
organizations to provide direct services to crime victims. States have 
sole discretion for determining which organization will receive funds 
and in what amounts as long as the recipients meet the requirements of 
VOCA and the program guidelines''.
    The VOCA guidelines further allow states to ``pay salaries and 
benefits for staff and consultant fees to administer and manage the 
financial and programmatic aspects of VOCA''. Therefore, it was 
appropriate that DHS social workers and social service aides assigned 
to the program be paid from the grant. The single exception was the 
case of a GS-3 clerk typist who had intake duties. Because a portion of 
her time was spent on administrative functions unrelated to direct 
client services delivery, both the District and the Justice Department 
agreed that the District should pay 50 percent of the clerk's salary.
    However, following an April 1996 program review, Justice Department 
officials who monitor the assistance grant recommended in September 
1996 that the District provide crime victims assistance through 
community-based service providers rather than government staff. The 
District was in agreement with this recommendation. Contrary to the 
published reports, the District had previously awarded subgrants in 
fiscal year 1994 to the House of Ruth, the D.C. Rape Crisis Center, 
Deaf Pride, Inc., the Whitman-Walker Clinic and Survivors of Homicide. 
In fiscal year 1996, an award was made to the D.C. Rape Crisis Center.
    Mayor Marion Barry, Jr. wrote to the Department of Justice on 
February 12, 1997 to inform the agency of his decision to designate the 
Office of Grants Management and Development as the official state 
agency to receive the funds and manage subgrants. The District phased-
out the operation of the DHS crime victims assistance program and 
transferred the funds to the Office of Grants Management and 
Development on April 30, 1997.
    The District has begun the process of reform through the following 
actions:
  --development of a competency-based procurement training program in 
        which procurement specialists and program staff have been 
        trained;
  --trained program staff in the development of statements of work for 
        contracts;
  --reduced the level of bureaucracy in the contracting and grants 
        process by delegating contracting and small purchase authority 
        to agency heads;
  --established a Memorandum of Understanding between the Department of 
        Human Services and United States Department of Health and Human 
        Services, Program Support Center for the acquisition of goods 
        and services;
  --worked with the Office of Grants Management and Development to 
        ensure quarterly reporting of the status of expenditures of 
        grant funds and reporting of programmatic actions to achieve 
        the goals of the grants.
    Question. The Control Board had identified over 2 dozen city 
employees who have been detailed from different departments to the 
Mayor's Office. The Control Board determined that 7 employees in your 
department were detailed to the Mayor's Office. What 7 positions were 
detailed to the Mayor's Office? Why were they detailed? What were their 
duties in the Mayor's Office? What is the current status of these 7 
employees? Are they still on detail to the Mayor's Office? Have their 
positions been terminated or are they still employed by your 
department?
    Answer. Employees are currently detailed to following positions in 
the Mayor's Office: Deputy Ombudsman--DS-13--Office of the Ombudsman; 
Program Assistant--DS-07--Office of the Ombudsman; Clerk--DS-03--Office 
of the Ombudsman; Staff Assistant--DS-11--Office of Intergovernmental 
Relations; and Public Health Advisor--DS-11--Office of Policy and 
Evaluation.
    The employees were detailed in order to carry out certain duties 
and responsibilities required to ensue undue interruption to the 
operation of the organization.
    The duties assigned to these positions are as follows:
    Deputy Ombudsman--Responsible for assisting in the development and 
implementation of a District-wide community outreach program. Oversees 
the day-to-day operation of the office as well as in the communities 
and business areas.
    Program Assistant--Prepares, coordinates and controls various 
documents dealing with program/project assignments, policy development/
modification proposals, and organization implementation issues. Assist 
in the coordination of the work plans with the professional staff, 
monitors and evaluates the status of long and short range objectives or 
initiatives of the office.
    Clerk--Provides Clerical and administrative support to the 
operation of the office.
    Staff Assistant--Serves as Legislative Analyst, performing a 
variety of legislative project assignments relating to congressional 
legislative matters affecting the District of Columbia.
    Public Health Advisor--Provides advise and conducts research on 
policies and legislation relating to HIV/AIDS.
    Five of the seven employees are still on detail to the Executive 
Office of the Mayor. We are reviewing the duties and responsibilities 
of these employees as it relates to the mission of the Department of 
Human Services. It is anticipated that this issue will be resolved in 
the near future.
    Question. Since August 1995 the department's child welfare program 
has been run by a receiver. This program runs the city's foster care 
agency. It is the Committee's understanding the foster care program 
costs $103 million, has 400 employees and care for 2,700 foster 
children in the District.
    The city expects to spend $88.5 million during the next fiscal year 
to comply with this court-ordered receivership.
    What is the status of this case?
    Answer. In early 1997 the Court-approved Monitor found that on 
virtually every measure, the District was more successful at compliance 
with the governing Court Orders in 1995 than the Receivership. In June 
1997 the Court-appointed Receiver, Dr. Miller, resigned and the 
Receivership is managed currently by an Acting Receiver. It is 
anticipated that the Court will appoint a new Receiver in September 
1997.
                        letter from wilfred hamm
                         Child and Family Services,
                              LaShawn General Receivership,
                                     Washington, DC, July 30, 1997.
Hon. Lauch Faircloth,
Chairman, Subcommittee of the District of Columbia,
Committee on Appropriations, Washington, DC.
    Dear Senator Faircloth: This letter is in response to your letter 
of July 24th to Mr. Wayne Casey, Interim Director, D.C. Department of 
Human Services, asking several follow-up questions to a recent 
testimony he presented to the Committee. Due to timing, I am responding 
directly to you, with regard to your question number nine, involving 
the District's Child and Family Services Agency (CFSA), which is 
presently under the authority of the LaShawn General Receivership, per 
LaShawn A. v. Barry et al, civil no. 89-1754, U.S. District Court for 
the District of Columbia.
    First, you asked about CFSA's budget. CFSA's fiscal year 1997 
budget is broken down as follows:

                          [Dollars in millions]

Local Appropriation...............................................  70.5
Title IV-E Funding................................................  19.9
Capped Federal Grants.............................................   4.1
                        -----------------------------------------------------------------
                        ________________________________________________
      Total.......................................................  94.5

    It is our view that the Agency's Title IV-E budget authority should 
reflect $22.8 million, and therefore we are currently in discussions 
with the District's CFO to reconcile the difference ($2.9 million). It 
is also the view of the Receivership that the Agency's current budget 
level does not allow it to maintain existing services to children and 
families, while also making the necessary up-front investments that 
will allow the Receivership to reform the District's child welfare 
system. Many improvements and resources are needed to provide a more 
efficient and effective capacity to better serve and protect the 
District's children.
    The Agency provides services to approximately 9,000 children and 
their families. The District is legally responsible for 2,800 children 
who are currently in the foster care system. In an effort to prevent 
children from entering the foster care system and preserving the 
family, the Agency also provides services to 6,200 children who are 
currently with their parents or relatives. In addition, the Agency 
provides services to 415 adoptive parents.
    The Agency provides services to these various client groups through 
its 647 employees (448 District employees and 206 contract employees), 
and various provider organizations.
    Finally, you asked for a status of the case creating the 
Receivership. In that the court order creating the Receivership is not 
time limited, the Receivership intends to continue to proceed with 
instituting the necessary child welfare reforms. Perhaps the greatest 
impediment to reforming the system is that there exists a lack of 
sufficient resources to invest in reform measures. This clearly has and 
will continue to slow up our reform efforts, thereby prolonging the 
life of the Receivership.
    I thank you for your interest, and if there are any further 
questions, please feel free to write and/or call me at (202) 546-9343.
            Sincerely,
                                              Wilfred Hamm,
                                          Interim General Receiver.
    Question. St. Elizabeths Hospital was put under a court order that 
went into effect in 1975, and in June 1997 the court appointed a 
receiver. The Control Board and City Council report that the fixed 
costs of operating St. Elizabeths cannot be meaningfully reduced unless 
entire units are closed. The city spends $40 million a year on St. 
Elizabeths and the facility is reportedly half-empty.
    In your opinion, what are the city's options for St. Elizabeths?
    Answer. St. Elizabeths Hospital must be aggressively down-sized/
consolidated. The hospital occupies two campuses (West and East 
campuses) that rely on antiquated centralized utility infrastructures. 
These infrastructures require on-going and expensive maintenance to 
ensure that the hospital's patient safety and security meet accrediting 
and certifying agency standards.
    For the hospital consolidation to be successful, the Commission 
must take a number of steps to change how service is delivered and the 
appropriate facilities that should be allocated to this service. These 
include:
  --Close the psychiatric child and adult acute inpatient beds (150) by 
        contracting out this care to local hospitals.
  --Down-size the hospital's long-term/continuing care adult beds from 
        392 to between 50 and 125 beds. These beds should remain on the 
        East Campus.
  --Move all administrative and community services to the East Campus 
        and establish appropriate utility support for the remaining 
        patient care and support sites (all on the East Campus), making 
        each building utility self-sufficient.
  --Maintain the John Howard Pavilion/inpatient forensic building 
        (located on the East Campus).
    Question. Should the facility be closed?
    Answer. No.
    Question. The department has an ongoing problem of executing 
contracts and this has resulted in late payments to vendors. To address 
this problem, the department has been working to make sure that vendors 
have been paid on time and has put in place an automated payment 
system.
    Is the automated payment system helping the department make its 
payment deadlines?
    Answer. The automated payment system applies to the ``Child and 
Youth'' educational program in the Commission on Mental Health. The 
system requires that on a quarterly basis, estimate of payments for 
three months be made and checks generated on the 25th day of each 
month. The system is working and payments are made on time.
    Question. Is the department late in its payment to any vendors? If 
so, how many? What percentage of the late payments are more than 30 
days late?--more than 60 days late?--more than 120 days late?
    Answer. The District's prompt payment act requires that payment to 
vendors be made within forty days of submission of a valid invoice. 
Some payments are made beyond the stipulated period, however, because 
of the volume of transactions, approximately 2,500 per month, and the 
fact that checks are generated centrally through the D.C. Treasurer's 
Office, it is difficult to age the late payments.
    Question. In your capacity as Acting Director of the Department of 
Human Services: What kinds of successes have you realized and what 
obstacles have you encountered in implementing welfare reform in the 
District of Columbia? Have you been able to move people from welfare to 
work? Have you been able to save money in the budget?
    Answer. Office of Early Childhood Development (OECD).--The District 
is implementing a campaign to increase the supply of licensed child 
development homes which was begun with an initiative involving IBM and 
AT&T, the Child Care Resource and Referral Service and the Office of 
Early Childhood Development. Twenty new providers will be added to the 
available pool of care in the District as a result of this initiative.
    We will award school age care grants to 20 organizations to 
increase the supply of before and after school care before the end of 
this fiscal year.
                 rehabilitation services administration
Successes
    The DDD has closed 259 cases as allowances or continuances of the 
``under age 18'' cases.
Obstacles
    Many parents did not give full cooperation to the redetermination 
process.
    The Social Security Administration (SSA) should have identified and 
transferred cases of the 854 SSI recipients previously allowed as a 
child ages 18 or under in a more timely manner.
    DDD has experienced a tremendous increase in workload of 854 
redetermination of children under age 18 and children 18 
redetermination for adjudication under the SSA adult listings.
    Question. Have you been able to move people from welfare to work?
    Answer. Income Maintenance Administration (IMA)
Successes
    The District of Columbia has successfully implemented the required 
portions of the Temporary Assistance to Needy Families (TANF) program. 
We implemented TANF on March 1, 1997, enabling the District to receive 
enhanced funding retroactive to the date of submission of the state 
plan, December 3, 1996.
    The second phase of implementation will focus on moving a far 
larger portion of recipients to work. We plan to achieve this by 
continuing our Work first effort, which requires applicants and 
recipients at recertification to engage in a job search as a condition 
of assistance, and offering a set of disregards from earnings that will 
ensure that work is always more profitable than welfare. One of our 
greatest frustrations with welfare reform is the relative scarcity of 
jobs in the District of Columbia. We are exploring the availability of 
jobs in the suburbs and ways to reduce transportation barriers. The 
District, as you know, has lost over 50,000 jobs this decade and our 
projected employment growth rate until the year 2000 is less than one 
percent. This bleak employment picture makes it very difficult to 
successfully implement a work-based welfare system. However, as of June 
30, 1997, welfare-to-work programs have placed 246 individuals (TANF 
applicants and recipients) in full-time unsubsidized employment.
Obstacles
    We have not saved money in the budget due to the implementation of 
welfare reform as, unlike other jurisdictions, our TANF caseload, while 
reduced, has not dropped dramatically. The absence of a steep reduction 
in the caseload no doubt reflects, in part, the general low employment 
growth rate, as previously discussed.
                          Department of Health

STATEMENT OF MARLENE KELLEY, M.D., INTERIM DIRECTOR
ACCOMPANIED BY DR. PAUL OFFNER, COMMISSIONER, COMMISSION ON HEALTH CARE 
            FINANCE

    Senator Faircloth. We are going now to Dr. Kelley.
    Dr. Kelley. Good morning, Chairman Faircloth and members of 
the Appropriations Subcommittee on the District of Columbia. I 
am Marlene Kelley, the interim director of the Department of 
Health. Thank you for this opportunity to testify on the fiscal 
year 1998 budget for the Department of Health.

            fiscal year 1998 budget for department of health

    The total fiscal year 1998 local budget request for the 
Department of Health is $455.8 million and 255 FTE's, which 
includes $409.1 million and no FTE's for the Medicaid Program 
and $46.7 million and 255 FTE's for programs formerly within 
the abolished Commission of Public Health. A summary of the 
department's budget is attached for your convenience.
    Spending reduction initiatives for fiscal year 1998 affect 
every major component of the Department of Health and the 
services that we deliver. Highlights of our initiatives are as 
follows.
    One, the Long Term Care Administration was eliminated.
    There have been reductions taken in the budgets for 
ambulatory health; the Office of the Director, including 
funding for staff development and improvements in technology; 
the school health program; the Preventive Health Services 
Administration; the Agency for HIV/AIDS; and the Addiction 
Prevention and Recovery Administration.
    There have been budget reductions proposed for the medical 
charities program and the Office of Nutrition Planning.

                            medicaid program

    Savings and cost containment proposals for the Medicaid 
Program include enrolling Medicaid-eligible persons in managed 
care organizations that are compensated at a capitated rate for 
a savings of approximately $1 million per month; reducing 
reimbursement rates for nursing homes, hospitals, and group 
homes for persons with mental retardation; implementing a 
prospective reimbursement system for group homes that builds in 
efficiency incentives and revises allowable cost standards; 
tightening nursing home payments and ensuring that Medicare is 
billed before Medicaid; obtaining a home and community-based 
waiver for persons with developmental disabilities and the 
preparation of a similar waiver for the elderly population; and 
embracing the President's proposal to increase the Federal 
Medicaid match for the District from 50 to 70 percent and the 
cost containment measures and initiatives for increasing 
program efficiency.

             assumption of professional licensing functions

    In fiscal year 1998, this new Health Department will assume 
the environmental regulation and professional licensing and 
service facilities regulation functions formerly provided by 
the Department of Consumer and Regulatory Affairs [DCRA]. 
Because the fiscal crisis is governmentwide, responsibility for 
the professional licensing function comes to us from DCRA with 
meager resources. A possible funding solution is to support the 
functions from a dedicated account comprised of fees generated 
by the transferred functions.

                           prepared statement

    The Department of Health is the first new department under 
the Mayor's transformation plan and much is expected of us. We 
are committed to continued implementation of the Mayor's 
comprehensive vision and plan for a new D.C. government that is 
dedicated to planned, orderly, prudent management of our 
affairs. We will do our best to promote and protect the public 
health of the District for its residents and visitors.
    Thank you.
    [The statement follows:]
                  Prepared Statement of Marlene Kelley
    Good morning, Chairman Faircloth and members of the Appropriations 
Subcommittee on the District of Columbia. I am Marlene Kelley, M.D., 
Interim Director, Department of Health (``DOH''). I am joined by Melvin 
Roberts, Chief Operating Officer, DOH; Paul Offner, Deputy Director for 
Health Care Finance; and Deloras Shepherd, Chief Financial Officer for 
Human Development and Comprehensive Health. We thank you for the 
opportunity to testify on the fiscal year 1998 budget for the 
Department of Health.
    The mission of the Department of Health is to establish District-
wide standards for safe and quality service delivery; ensure the 
provision of high quality health services; foster health promotion and 
disease prevention; structure an efficient and cost effective health 
care financing system; and implement, monitor and evaluate the 
department's strategic health plan and the District's State Health 
Plan.
    Our goals are to ensure full implementation of the reorganization 
plan transition work plan; centralize the State Health Agency functions 
to improve the coordination of policy development across agencies; 
promote healthier behavior through emphasis on preventive health 
services; enhance efficiency through automation and technology 
enhancement initiatives; and improve management efficiency by 
streamlining administrative functions.
    Our priorities for fiscal year 1998 are to reduce death and 
disability resulting from chronic and communicable diseases; perform 
essential state health functions; maximize utilization of Federal 
revenue; provide a quality and effective substance abuse prevention and 
treatment program within available resources; establish an effective 
and efficient contracts and procurement system; and improve the 
operations and physical plant of the medical examiner's office.
    The total fiscal year 1998 local budget request for DOH is $455.8 
million and 255 FTE's, which includes $409.1 and no FTE's for the 
Medicaid Program and $46.7 million and 255 FTE's for programs formerly 
within the abolished Commission of Public Health. A summary of the 
department's budget is attached for your convenience.
    Spending reduction initiatives for fiscal year 1998 affect every 
major component of DOH and the services that we deliver. Highlights of 
our initiatives follow.
    The Long Term Care Administration (``LTCA'') was eliminated.
    Reductions have been taken in the budgets for ambulatory health; 
the Office of the Director, including funding for staff development and 
improvements in technology; the School Health Services Program; 
Preventive Health Administration; the Agency for HIV/AIDS (``AHA''); 
and the Addiction Prevention and Recovery Administration (``APRA'').
    Budget reductions are proposed for the medical charities program 
and the office of nutrition planning.
    Savings and cost containment proposals for the Medicaid program 
include:
  --Enrolling Medicaid eligible persons in managed care organizations 
        that are compensated at a capitated rate for a savings of 
        approximately $1 million a month;
  --Reducing reimbursement rates for nursing homes, hospitals and group 
        homes for persons with mental retardation;
  --Implementing a prospective reimbursement system for group homes 
        that builds in efficiency incentives and revises allowable cost 
        standards;
  --Tightening nursing home payments and ensuring that Medicare is 
        billed before Medicaid;
  --Obtaining a home and community-based waiver for persons with 
        developmental disabilities and the preparation of a similar 
        waiver for the elderly population; and
  --Embracing the President's proposal to increase the Federal Medicaid 
        match for the District from 50 to 70 percent and the cost 
        containment measures and initiatives for increasing program 
        efficiency.
    In fiscal year 1998, the new department will assume the 
environmental regulation, professional licensing, and service 
facilities regulation functions formerly provided by the Department of 
Consumer and Regulatory Affairs (``DCRA'').
    Because the fiscal crisis is government-wide, responsibility for 
the professional licensing function comes to us from DCRA with meager 
resources. A possible funding solution is to support the functions from 
a dedicated account comprised of fees generated by the transferred 
functions.
    Despite budget difficulties and reductions, we have made some 
headway. Our major achievements include the closure of the D.C. Village 
nursing facility; the establishment of the community health workers 
program; the receipt of a three year grant from CDC to improve 
pediatric nutrition surveillance system; implementation of substance 
abuse ``MATES'' intensive day program to provide counseling services to 
women who are substance abusers; restructuring the AIDS drug assistance 
program delivery system; and the achievement of a partnership with the 
U. S. Department of Health and Human Services to provide contracts and 
procurement processing support.
                               conclusion
    DOH is the first new department under the Mayor's transformation 
plan and much is expected of us. We are committed to continued 
implementation of the Mayor's comprehensive vision and plan for a new 
District of Columbia government that is dedicated to planned, orderly, 
prudent management of our affairs. We will do our best to promote and 
protect the public health of the District for its residents and 
visitors. Thank you.

                            PROPOSED FISCAL YEAR 1998 GROSS BUDGET BY TYPE OF FUNDING                           
----------------------------------------------------------------------------------------------------------------
                                                      Local     Local    Nonlocal   Nonlocal   Gross     Gross  
                     Department                        FTE     amount       FTE      amount     FTE     amount  
----------------------------------------------------------------------------------------------------------------
Health..............................................    255     $46,712      454      $78,493    709    $125,205
Medicaid............................................  .....     409,136       71      417,460     71     826,596
                                                     -----------------------------------------------------------
      Total.........................................    255     455,848      525      495,953    780     951,801
----------------------------------------------------------------------------------------------------------------

                     Additional committee questions

    Senator Faircloth. Thank you, Dr. Kelley.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]
                Questions Submitted by Senator Faircloth
    Question. The Department of Health's 1998 budget states that its 
number one program priority is to reduce the mortality rate resulting 
from violence and communicable and chronic disease.
    What was the District's mortality rate for 1996?
    Over the past three years did the District's mortality rate rise or 
decline? Please provide specific annual rates.
    How does this trend compare with the rates of other cities of 
comparable size?
    Has the Department established a specific mortality rate reduction 
for 1998? If so, what is it? How does the department plan to achieve 
this reduction?
    Answer. The District's mortality rates for the leading causes of 
death for 1990 through 1995 are listed on the charts contained at 
Attachment 1. The mortality statistics for fiscal year 1996 will be 
available within 90 days.
    [Clerk's note.--Attachment 1 is being held in the files of the 
subcommittee.]
    Mortality rates vary according to the condition being considered. 
However, the average life expectancy of African-American males in the 
District is ten years less than white males in the United States; and 
that of African-American females is some five years less than the white 
females in the United States. Moreover, the District's mortality rates 
vary according to the condition being considered. For example, 
mortality due to stroke and heart disease have declined; whereas 
mortality due to most forms of cancers has not significantly changed. 
In fact, the mortality rate for heart disease in 1990 was 289.5, and 
declined in 1994 to a rate of 281.6, reflecting a 2.7 percent reduction 
rate.
    Mortality rates for major health conditions such as cancer, heart 
disease, stroke, and chronic obstructive pulmonary disease were 
consistently higher in the District than in the rest of the United 
States during 1991-96. [See also Attachment 2 and 3.]
    [Clerk's note.--Attachments 2 and 3 are being held in the files of 
the subcommittee.]
    In general, the District's mortality rates are comparable to those 
found in other U.S. cities with over 500,000 population. It ranks in 
the upper quarter for conditions such as cancer and heart disease.
    The Department has not established a specific mortality rate 
reduction for 1998. It has adopted the mortality and morbidity 
reduction goals for the Healthy People 2000 plan as established by the 
U.S. Department of Health and Human Services. To reach these goals, the 
Department expects to initiate such programs with regard to a number of 
conditions such as heart disease, cancers of the breast, cervix and 
prostate, stroke, diabetes mellitus, and prevention of violence and of 
disability. Reductions are a long term consequence of health promotion 
and disease reduction programs, and generally cannot be expected to 
show any significant effect in less than five years. Thus, we 
anticipate that the proposed programs will begin to influence mortality 
and morbidity rates around the year 2001.
    Question. The Metropolitan Police Department entered into its 
Memorandum of Understanding (MOU) with the mayor, police chief, city 
council chair and others to carry out badly needed reforms. The results 
were immediate--arrests are up and crime is down.
    Do you think putting in place a model like the Police Department's 
MOU would benefit your department?
    Answer. The Department does not believe that the same relationship 
undertaken by the Police Department would assist the Department of 
Health to a great degree. An MOU may not permit the development of a 
clear departmental infrastructure that would result in the effective 
coordination of appropriate and necessary collaborative efforts. 
Moreover, it may cause great confusion in blurring the line of 
authority and responsibility within the Department if a team of 
consultants were on-site directing management and second-guessing 
managerial decisions.
    When the Department of Health Reorganization Plan was considered 
and reviewed by the Council of the District of Columbia and the D.C. 
Financial Responsibility and Management Assistance Authority (Financial 
Authority), the Department was required to develop an Implementation 
Plan that defined the direction that the new department must take, as 
well as specific management efficiencies and management accountability 
goals. Included in the plan is the completion of the Department's 
Strategic Plan and the development of Program Measures for all 
departmental programs and activities.
    The Department has set upon a course to develop and implement 
clearly defined goals, accountability standards, core competencies, and 
program measures. It is these tools that will permit the Department's 
management team, the City Administrator, the Council of the District of 
Columbia, the Financial Authority, the Mayor, the Congress, and the 
District's residents to measure the effectiveness and efficiency of the 
Department.
    The Department also would like to share its Reorganization 
Implementation Plan [Attachment 4] and its most recent report of its 
Program Measures [Attachment 5]. As a part of its Reorganization 
Implementation Plan, the Department developed program measures, which 
it began collating and reporting monthly to the City Administrator, the 
Financial Authority, and the Mayor in April 1997. In addition, the 
Department has entered into a Memorandum of Understanding with the 
Program Support Center of the U.S. Department of Health and Human 
Services to provide contracts and procurement support for two years 
while planning and reform occurs in the procurement and contracts 
system. As a result, contracts and procurement actions are being 
processed in a more rapid manner.
    [Clerk's note.--Attachments 4 and 5 are being held in the files of 
the subcommittee.]
    Question. According to the budget proposals for the department, 
approximately half of the department's budget and two-thirds of the 
department's employees are funded by the federal government.
    How many federal grants are under the department's jurisdiction?
    Is the department responsible for administering the HIV grants 
which were recently highlighted for poor implementation?
    Of the 515 federally funded staff positions in the department, how 
many are working on federal grant programs?
    Answer. There are approximately 50 grants under the jurisdiction of 
the Department of Health. However, given that several federal grants 
that have been awarded to the Department of Health span fiscal/calendar 
years and may be continuation grants, the number increases to 70 
grants. Examples of grants that span several years include: Healthy 
Start, Housing Opportunities for People with AIDS (HOPWA), several Ryan 
White grants, WIC Infrastructure, Refugee Assistance, TB and STD.
    Each of the 515 federally funded staff positions actually work on 
federal grant programs. If employees worked in areas other than those 
that the grant programs fund, the District potentially would be liable 
for any disallowed costs, which would result in a default to the 
appropriation.
    We are unsure as to the reference with respect to poor performance 
in an HIV grant. The Department administers most of the grants through 
which funding for HIV/AIDS services and programs come. All the programs 
that the Department of Health's Agency for HIV/AIDS (AHA) administers 
grant funds for, to include the Ryan White Program (Titles I, II and 
IV), STD, HODRA, and HOPWA, are operating and being utilized to the 
maximum extent possible. Both service delivery and spending targets are 
being met. Moreover, the Ryan White Planning Council, an official 
entity that was established and is mandated by the Ryan White Care Act 
and includes representatives from the entire Washington, D.C. 
metropolitan region, monitors all HIV/AIDS funding programs.
    Question. The City Council and Control Board are recommending 
roughly the same amount of funding for fiscal year 1998 for the 
department. However, the Control Board is recommending an additional 55 
full-time employees, whereas the Control Board is recommending 15 
additional full-time employees.
    What do you believe is the reason for the difference in the two 
budget proposals?
    Answer. The difference in the bottom line FTE recommendation occurs 
only on the local funded FTE's. In the fiscal year 1998 budget 
proposal, the Council approved budget included a local funding 
authorized FTE ceiling level of 215 for fiscal year 1998 and the 
Financial Authority recommended a local funding authorized FTE ceiling 
level of 255 for the Department of Health. The difference reflects a 
need to include in the budget position authority that was removed from 
the authorized ceiling level in fiscal year 1997. The positions 
included those associated with the Office of Medical Services for 
Social Services (OMASS), which provides medical services to detained 
youth at the Oak Hill Youth Center in accordance with the Jerry M. 
Court Order and those associated with retention of the Sexually 
Transmitted Disease (STD) Program by the Department.
    Initially, the Department sought to privatize the OMASS medical 
services. However, final implementation to transfer these medical 
services to an employee-owned ESOP Plan is near completion.
    Further, the positions associated with the STD Program were to be 
transferred to the Public Benefit Corporation. Following additional 
consultations and discussions internally and with the Centers for 
Disease Control (CDC), the department decided to retain responsibility 
for this program as an essential state function of the health 
department.
    These positions number approximately 26 FTE's. Although the 
positions were removed from the budget, the circumstances that led to 
their removal have changed and it is essential to reflect these 
positions in the authorized ceiling level in the budget for the 
department.
    The remaining positions that reflect the difference includes those 
positions that are associated with the establishment of the new 
department. The positions are infra-structure support positions and are 
essential for the effective and efficient management of the new 
Department of Health--contracts and procurement specialist positions, 
attorney positions in the Office of the General Counsel, information 
systems support, grants management positions, human resources 
positions, chief operating officer. These are essential positions that 
were not transferred from the Department of Human Services to the new 
Department of Health.
    Thus, the difference of the 40 FTE's in the Financial Authority's 
and the Council Approved budgets for the local funded authorized FTE 
ceiling reflects these essential positions.
    Question. A recent article in the Washington Post noted that the 
District of Columbia now has the highest rates of tuberculosis, new 
AIDS infection, and infant mortality in the nation. The article cites a 
situation where the District failed to spend money that was available 
through federal grants to provide housing for victims of AIDS. In fact 
the article points to several examples of the District's failure to 
monitor or spend federal grants that might have significantly improved 
the health situation in the city.
    Where does the District stand on this situation now? How has the 
District attempted to remedy this problem?
    Is the District government taking advantage of all federal health 
grants to which it is entitled? When do you see the District being able 
to show that it is fully using all available federal health resources 
to which it is entitled to improve the health of District residents?
    Answer. The recent article in The Washington Post contained 
factually incorrect information. The District does not have the highest 
rates of tuberculosis, new AIDS infection, and infant mortality in the 
nation. The response that follows will hopefully, correct some of the 
misleading information contained in the article.
    First, the District's tuberculosis rates have been declining over 
the past decade, and in 1995 the number of reported tuberculosis cases 
in the District was the lowest in history. Again, the mortality data 
that is included in Attachment 1 provides some insight with respect to 
mortality rates associated with tuberculosis. Moreover, we are awaiting 
confirmation of the 1996 rates. In addition, it should be noted that 
the number of tuberculosis cases reported in the District to date in 
1997 is 25 percent lower than at the same time in 1996. This fact 
strongly suggests that what may have been an increase in 1996 was a 
temporary exception to the downward trend for this disease in the 
District.
    The federal grants dealing with tuberculosis control may not be 
used to diagnose or treat persons with this disease. Accordingly, the 
status of the District's management of its federal tuberculosis control 
grants is not directly relevant to the issue of the apparent increase 
in reported tuberculosis cases in the District.
    The Department's Tuberculosis Control Program is operating 
effectively, and it appears that the increase in the reported numbers 
of tuberculosis cases in 1996 is a temporary situation and not 
indicative of a future trend. Can more be done? Yes. In order to 
effectuate coordinated region-wide response to TB, the District's 
Department of Health in April facilitated the adoption of a Washington 
metropolitan regional agreement to coordinate a collaborative response 
to TB. The agreement includes all of the regional health departments 
and health officers.
    Second, the infant mortality rate, while still too high for us as 
health professionals, is not the highest in the nation. In the 
District, the infant mortality rate has fluctuated, and in 1995, the 
rate decreased to 16.1 deaths per 1,000 live births, its lowest rate in 
the District's history. The 1996 rates are not yet available; but, the 
infant mortality rates for the past five years are reflected in the 
chart below:

          DISTRICT OF COLUMBIA FIVE-YEAR INFANT MORTALITY TREND         
------------------------------------------------------------------------
                                                         Infant         
                     Year                       Births   deaths  IMR \1\
------------------------------------------------------------------------
1991.........................................    11,650     235    20.2 
1992.........................................    10,939     200    18.3 
1993.........................................    10,614     177    16.7 
1994.........................................     9,911     180    18.2 
1995.........................................     8,993     145    16.1 
------------------------------------------------------------------------
\1\ Infant Mortality Rate/1,000 live births.                            
                                                                        
Source: State Center for Health Statistics, D.C. Department of Health.  

    Because of the quick turn-around time, we were unable to obtain 
comparative data on the infant mortality rate with other cities. 
However, we do know that the low birth rate among black infants in the 
District and Baltimore, Maryland was the same for 1992-94--16.4.
    The program targets of our Maternal and Child Health Program are 
ward specific. In fiscal year 1998, the program will target high-risk 
areas in Wards 5, 6, 7 and 8. In 1995, these wards accounted for 55.5 
percent (4,995/8,993) of all District births; 72.4 percent (105/145) of 
all infant deaths; 73 percent of all births to unmarried Black women 
(3,922/5,320); 66.9 percent of all births to teens (931/1,392); and 
65.9 percent of all low birth weight infants (800/1,214). Through 
intensive case management, care coordination, targeted at high-risk 
women especially substance abusers, we believe that we will continue to 
decrease significantly infant mortality. Our experiences to date with 
the Healthy Start Program and Comprehensive HIV Intervention and 
Prevention Services (CHIPS) for Families Program prove that a targeted 
approach linking women to needed services provides measurable results.
    Third, the District does not have the highest rate of new AIDS 
cases in the nation. When the Centers for Disease and Prevention (CDC) 
reports AIDS statistics, the District is compared with other states. 
But, when compared to similar cities, the District ranks lower.
    While the rate of AIDS/HIV infection is high, it must be remembered 
that the District is the hub of the Washington, D.C. metropolitan 
region and many residents of the region use District facilities and 
programs that conduct anonymous HIV/AIDS testing and counseling. In 
addition, the statistics for this region include not only the District 
of Columbia, but Southern Maryland, Northern Virginia cities and 
counties, and Berkeley and Jefferson Counties, West Virginia. These 
areas are all a part of the Washington, D.C. Metropolitan Statistical 
Area (SMSA). Indicated below are two charts representing reported AIDS/
HIV cases in selected states and SMSA's.

                 REPORTED AIDS CASES BY SELECTED STATES                 
------------------------------------------------------------------------
                                                        1995      1996  
                        State                           Cases     Cases 
------------------------------------------------------------------------
Connecticut.........................................     1,645     1,112
Georgia.............................................     2,310     2,411
Louisiana...........................................     1,079     1,470
Maryland............................................     2,567     2,253
Massachusetts.......................................     1,438     1,307
New Jersey..........................................     4,400     3,613
North Carolina......................................     1,000       895
Virginia............................................     1,605     1,195
District of Columbia................................     1,027     1,262
------------------------------------------------------------------------
Source: Centers for Disease Control and Prevention. HIV/AIDS            
  Surveillance Report, 1996; Vol 8. (No.2): p.7 (Table 1).              


         REPORTED AIDS CASES BY SELECTED SMSA METROPOLITAN AREAS        
------------------------------------------------------------------------
                     Metro Area                         1995      1996  
------------------------------------------------------------------------
Atlanta, GA.........................................     1,580     1,642
Baltimore, MD.......................................     1,711     1,525
Boston, MA..........................................     1,254     1,102
Houston, TX.........................................     1,166     1,719
Los Angeles, CA.....................................     3,962     3,715
Miami, FL...........................................     2,348     2,063
New York, NY........................................    10,478    10,385
San Francisco, CA...................................     2,117     1,572
Washington, DC......................................     2,124     2,160
------------------------------------------------------------------------
Source: Centers for Disease Control and Prevention. HIV/AIDS            
  Surveillance Report, 1996; Vol 8. (No.2): p.8 (Table 2).              

    Also included at Attachment 6 is a report that was issued in March 
1997 that contains the latest HIV/AIDS Surveillance Update that is 
published by the Agency for HIV/AIDS, Department of Health, every six 
months. The updated surveillance report is under review and will be 
published within the next few weeks.
    [Clerk's note.--Attachment 6 is being held in the files of the 
subcommittee.]
    On the issue of the District taking advantage of all federal health 
grants to which it is entitled, please be advised that the District is 
attempting to apply for and obtain all federal resources for which it 
is eligible. Currently, we apply for as many grants as possible given 
the small staff we have with grant writing skills and abilities. A key 
aspect of the Department's Implementation Plan, which reflects the 
proposed increase of 40 FTE's for additional infrastructure staff, is 
intended to enhance and expand our grant writing and grant acquisition 
capabilities.
    In the area of HIV/AIDS, the Department also takes advantage of all 
federal AIDS funding to which it is entitled. These include Ryan White 
Titles I, II, and IV; CDC Prevention/Counseling Testing grants, CDC 
AIDS Surveillance grants; and housing grants from the U.S. Department 
of Housing and Urban Development for People with AIDS (HOPWA). In 
addition, the Department assists community-based HIV/AIDS providers in 
obtaining federal and private grants funds as well in various public-
private collaborative efforts.
    While it is correct that there have been systemic barriers in the 
past three years that delayed some federal grant spending, the District 
never lost any federal grant funds. Generally, the barriers were the 
result of the quarterly 25 percent budget allocation requirements, 
application of gross budget ceiling limitations that affected staffing 
and hiring, contracts and procurement difficulties, and limitations in 
the District's Financial Management System (FMS). Those problems have 
been or are being addressed.
    The gross budget concept is no longer being applied by the 
Financial Authority; the D.C. Budget Office is permitting the full 
loading of federal grants into the FMS System at the beginning of the 
fiscal year in accordance with the Department's Budget Obligation Plan 
instead of requiring a fixed quarterly allocation application. In 
addition, while the Department restructures its contracts and 
procurement function, it has executed a two-year Memorandum of 
Understanding with the Program Support Center, U.S. Department of 
Health and Human Services, to provide contracts and procurement support 
for many procurement needs in order to implement programs in a more 
effective manner, and to get services direct to the public more rapidly 
and efficiently.
    However, the Department's utilization of federal grants funds has 
been constant. It should be noted that budget grants are not lost if 
unspent at the end of a fiscal year. In most instances, federal grants 
cross fiscal and calendar years, and often includes carry-over 
authority, which means that funds not spent in a particular fiscal year 
are rolled-over into the next fiscal year. Given that appropriated 
funds are becoming more restricted as the District confronts decreasing 
revenue opportunities, the Department recognizes a need for greater 
reliance on attracting and spending federal grant funds.
    Listed below is an analysis of grant spending versus budget for the 
Commission of Public Health, the predecessor agency to the Department 
of Health:

              FEDERAL GRANT ANALYSIS--FISCAL YEAR 1991 THRU FISCAL YEAR 1996 BUDGET VS EXPENDITURES             
----------------------------------------------------------------------------------------------------------------
                                                                     Fiscal year                                
                                   -----------------------------------------------------------------------------
                                        1991         1992         1993         1994         1995         1996   
----------------------------------------------------------------------------------------------------------------
Budget............................  $40,219,883  $46,791,980  $48,717,045  $67,267,839  $70,556,482  $78,030,031
Percentage........................           80           75           81           75           67           74
Federal Grant Expenditure.........  $32,356,186  $34,880,109  $39,458,280  $50,304,596  $47,379,329  $57,819,887
----------------------------------------------------------------------------------------------------------------
Source: Office of Budget and Management, Commission of Public Health.                                           

    The Department is starting to see a turn-around. As a new 
Department, we still experience growing pains and confront glitches 
that must be resolved. But, despite budget reductions, the Department 
is making some headway. The Department is on the move, it has a vision 
and goal, and is experiencing some achievements. In fact, the 
District's Healthy Start and State Systems Development Initiative are 
known and respected nationally. Both initiatives were recently 
highlighted during this year's American Public Health Association 
Annual Meeting in New York, New York. In addition, the Department has 
received a three year grant from the CDC to improve the pediatric 
nutrition surveillance system, established a community health workers 
program, restructured the AIDS Drug Assistance Program delivery system, 
and effectuate a partnership with the U.S. Department of Health and 
Human Services' Program Support Center to provide contracts and 
procurement processing support.
                       Department of Public Works

STATEMENT OF CELLERINO BERNARDINO, ACTING DIRECTOR
    Senator Faircloth. Now, Mr. Bernardino.
    Mr. Bernardino. Good morning, Chairman Faircloth and 
members of the subcommittee on the District of Columbia. I am 
Cell Bernardino, acting director of the Department of Public 
Works. I am happy to appear before you today to answer your 
questions about our proposed fiscal year 1998 budget.

                     performance-based organization

    However, I want to take the opportunity first to bring you 
up to date on DPW's efforts to become a performance based 
organization because this information, I think, provides an 
important context for budget deliberations.
    As part of the Mayor's transformation of government, we 
have been quietly remaking DPW. Over the last year, we have 
substantially implemented, probably 60 to 70 percent complete, 
systematic measurement of performance. Performance measures 
have been developed for all of our direct services.
    In the case of sanitation services, fleet management, and 
motor vehicle services, strategic, tactical, and operational 
measures are in use, and data is being collected against them. 
The performance measures for sanitation services and motor 
vehicle services have been released to the public, together 
with a survey instrument that will be used to track the 
customer approval rating component.
    With the expert assistance and consultation of the people 
who implemented performance based operation in the national 
model, the Oregon Department of Transportation, we have trained 
over 600 employees in the development and use of performance 
measures, including a small group of internal trainers to carry 
on after the consultants depart.

                         performance contracts

    I have signed performance contracts with the managers of 
the key direct service agencies in public works. These contain 
specific accountabilities, not only for strategic performance 
measures, but for specific budget objectives and for leading 
change in helping to develop employees. These performance 
contracts provide for cash bonuses for outstanding achievement, 
but also for salary reductions and termination for poor 
performance.
    A group of people that included DPW staff and staff of the 
District's chief financial officer has been trained in the 
concepts and use of activity based costing. They have been 
trained by the people who implemented and currently oversee 
activity based costing in the city of Indianapolis, another 
model jurisdiction.

                         activity-based costing

    Activity-based costing is a prerequisite for managed 
competition, for employee gain-sharing, and for performance 
budgeting, all of which DPW has committed to implement. Jointly 
with the CFO's staff, we have examined available activity-based 
costing software and selected a package for purchase and 
installation.
    DPW's management and key technical staff have also been 
trained in the development and use of customer surveys. Point 
of service comment cards addressing service quality have been 
drafted or finalized for all of DPW's services. Strategic 
surveys which query customers' views about resource allocation 
priorities will be conducted annually.
    DPW has largely completed the slow, painstaking work of 
communicating the new departmental vision and strategy to all 
levels of employees, and involving people in the development of 
service delivery strategy and performance measures. The fruits 
of that effort can be seen in the service improvement 
initiatives that have been announced over the last 6 months, 
things like the resumption of bulk trash collection on an 
appointment-only basis; the testing of decentralized 
accountability and neighborhood-based coordination of 
sanitation services in two wards as a pilot for the rest of the 
city; the new one-stop driver licensing and vehicle 
registration areas in motor vehicles; and the eight-weekend 
pothole blitz with in-house forces.
    These initiatives were not handed down by top management, 
and they are not reactions to complaints. Rather, they were 
hatched and fleshed out by groups of employees guided by 
explicit strategic direction and performance expectations and 
armed with new concepts and tools. These employees now have the 
self-confidence to be creative and work in teams to solve 
problems. Managers, supervisors, frontline workers, and union 
officials all participated in developing these initiatives, and 
all contributed.

                     department to transform itself

    The department is poised to transform itself, and I believe 
with consistently adequate resources for the chosen level of 
service, it should be able to improve much more quickly over 
the next couple of years.
    Structurally, DPW is a diversified corporation with a broad 
range of regulatory, operational, and planning responsibilities 
that in other jurisdictions would span multiple agencies of 
municipal, county, and State government.

                         solid waste management

    The key line business units are solid waste management, 
which is responsible for residential trash collection and 
disposal, street and alley cleaning, public space rodent 
control, and enforcement of sanitation laws.

                 transportation systems administration

    The Transportation Systems Administration, which is the 
State DMV, regulates the operation of motor vehicles and the 
use of public space for parking.

          design, engineering, and construction administration

    The Design, Engineering, and Construction Administration 
which, together with the staff offices that plan for mass 
transit and overall transportation, are the State DOT. This 
administration manages most of the components in the city of 
transportation infrastructure and public space.

                    fleet management administration

    The Fleet Management Administration maintains and manages 
the majority of the District's vehicles and mobile equipment.

          facilities operation and maintenance administration

    The Facilities Operation and Maintenance Administration 
provides building management and engineering services for 37 
District-owned buildings and facilities.

                   fiscal year 1998 operating budget

    The proposed fiscal year 1998 total operating budget is 
$148.2 million and 1,901 authorized positions. This is a 
decrease of $8.4 million, or 5.4 percent, and an increase of 60 
positions from the fiscal year 1997 adjusted budget.
    The proposed fiscal year 1998 local funds budget is $95.6 
million and 1,157 positions, a decrease of $71,000 and an 
increase of 72 positions from the fiscal year 1997 adjusted 
budget. The nonlocal funds budget request is $52.5 million and 
744 positions, a decrease of $8.3 million, or 13.6 percent, and 
a decrease of 12 positions from the fiscal year 1997 adjusted 
budget.

                    fiscal year 1998 capital budget

    The fiscal year 1998 proposed capital budget and financing 
plan of $125,780,000 provides $36,902,000 for DPW projects 
budgeted in the general fund; $47,747,000 to support federally 
programmed transportation projects budgeted through the newly 
established highway trust fund; and an additional $41 million 
budgeted in the general fund for mass transit projects.

                         federal highway grants

    Federal highway grants of approximately $90 million are 
anticipated to be added to the transportation program in 
support of outyear projects.
    In addition, previously allocated Federal highway grants of 
$220,900,000 will bring the department's capital budget and 
financing plan in fiscal year 1998 to $346,549,000.
    The proposed budget includes 15 continuing projects and 
programs for Federal aid transportation and 6 for local 
transportation. It includes 10 continuing projects for 
government facilities and environmental projects and 3 
continuing projects for the Washington Metropolitan Area 
Transit Authority.
    In addition to the new authority being requested, the city 
has restructured the budget to identify the required financing 
necessary to support total project implementation. The 
financing and borrowing plan which propels the implementation 
of the capital budget has been prioritized and formulated to 
stay within the established debt ceiling and the projected 
revenue within the highway trust fund.

                       transportation facilities

    The requested program for transportation facilities 
stresses life cycle rehabilitation of bridges and highways and 
provides for reconstruction and upgrading of low-cost streets 
to full standards. New authority in financing is requested to 
support all ongoing project categories within transportation 
facilities.

               governmental and environmental facilities

    The proposed budget for governmental and environmental 
facilities will continue efforts to rehabilitate and enhance 
deteriorating District government buildings and systems to meet 
current life safety and fire code requirements. Most notable is 
the proposed upgrading of the motor vehicle information system 
and the main operational facility for motor vehicles.
    During the past several years, the Department of Public 
Works has begun the fiscal year with budget amounts that 
allowed us to begin restoring many critical services. However, 
because of the District's financial condition, our budgets have 
been revised downward later in the fiscal year.
    If the requested fiscal year 1998 budget remains the same 
for the whole fiscal year, it will allow us to make major 
improvements in service. It will allow us, for example, to 
restore regularly scheduled alley cleaning for the first time 
in a number of years.

                          vehicle replacement

    One of DPW's perennial obstacles to improving service 
delivery is the lack of funding for regularly scheduled vehicle 
replacement based on useful life. This may finally be 
addressed. The District is instituting a master lease financing 
program, and the department plans on participating in the 
program. The program will allow DPW to replace a substantial 
number of heavy and light vehicles and other equipment that is 
no longer reliable through the master lease program. The 
average age of mission-critical vehicles and equipment in DPW's 
fleet is 10-plus years. The vast majority of sanitation 
services problems and almost all of the unscheduled overtime 
results from vehicle breakdowns.

                          prepared statements

    This concludes my formal statement. I will be happy to 
respond to any questions you have at this time.
    [The statements follow:]
               Prepared Statement of Cellerino Bernardino
    Good morning, Chairman Faircloth and members of the subcommittee on 
the District of Columbia. I am Cell Bernardino, Acting Director of the 
Department of Public Works. I am happy to appear before you today to 
answer your questions about our proposed fiscal year 1998 budget. 
However I want to take the opportunity first to bring you up to date on 
DPW's efforts to become a performance based organization, because this 
information provides important context for budget deliberations.
    As part of the Mayor's transformation of government we have been 
quietly remaking DPW. Over the last year we have substantially 
implemented (60+ percent complete) systematic measurement of 
performance. First cut performance measures have been developed for all 
of our direct services. In the case of sanitation services, fleet 
management and motor vehicle services three levels of measures--
strategic, tactical and operational, are in use, and data collection 
has started. The sanitation and motor vehicles measures have been 
released to the public together with the survey instrument that will be 
used to track the customer approval rating component. With the expert 
assistance and consultation of the people who implemented performance 
based operation in the national model Oregon Department of 
Transportation we have trained over 600 employees in the development 
and use of performance measures, including a small group of internal 
trainers to carry on after the consultants depart.
    I have signed performance contracts with business unit managers 
that contain specific accountabilities not only for strategic 
performance measures but also for specific budget objectives and for 
leading change and developing employees. These contracts provide for 
cash bonuses for outstanding achievement but also for salary reductions 
and dismissal for poor performance.
    A group that included DPW staff and staff of the District's chief 
financial officer (CFO) has been trained in the concepts and use of 
activity based costing (ABC), by the people who developed and currently 
oversee ABC in Indianapolis, Indiana, another national model 
jurisdiction. ABC is a prerequisite for employee gainsharing and 
managed competition and a great help in performance budgeting, all of 
which DPW has committed to implement. Jointly with the CFO's office we 
have examined available ABC software and selected a package for 
purchase and installation.
    DPW's management and key technical staff have also been trained in 
the development and use of customer surveys. Point of service comment 
cards addressing service quality have been drafted or finalized for all 
of DPW's services. Strategic surveys which get at customers' views 
about resource allocation priorities will be conducted annually.
    DPW has largely completed the slow, painstaking work of 
communicating the new departmental vision and strategy to all levels of 
employees; and involving people in the development of service delivery 
strategy and performance measures. The fruits of this effort can be 
seen in the service improvement initiatives that have been announced 
over the last six months, things like the resumption of bulk trash 
collection on an appointment basis; the testing of neighborhood based 
coordination of sanitation services in wards 5 and 7; the new one stop 
driver licensing and vehicle registration areas in motor vehicles; and 
the eight weekend pothole blitz with in-house forces. These initiatives 
were not handed down by top management, and they are not reactions to 
complaints. Rather, they were hatched and fleshed out by groups of 
employees who, guided by explicit strategic direction and performance 
expectations, and armed with new concepts and tools, have the self-
confidence to be creative and to work in teams to solve problems. 
Managers, supervisors, front line workers and union officials all 
participated and all contributed.
    The department is poised to transform, and with consistently 
adequate resources for the chosen level of service, it should be able 
to improve much more quickly over the next couple of years.
    Structurally a diversified corporation, DPW has a broad range of 
regulatory, operational and planning responsibilities that in other 
jurisdictions would span multiple agencies of municipal, county and 
State government. Our line business units are:
  --The solid waste management administration which is responsible for 
        residential trash collection and disposal, street and alley 
        cleaning, public space rodent control and enforcement of 
        sanitation laws.
  --The Transportation Systems Administration which regulates the 
        operation of motor vehicles and the use of public space for 
        parking.
  --The Design, Engineering and Construction Administration which 
        manages most components of infrastructure and public space.
  --The Fleet Management Administration which maintains and manages 
        most of the District's fleet and mobile equipment.
  --The Facilities Operation and Management Administration which 
        provides building management and engineering services for 
        District-owned buildings and other facilities.
    The proposed fiscal year 1998 total operating budget in the 
congressional submission for all funding sources is $148.2 million and 
1,901 authorized positions; a decrease of $8.4 million, or 5.4 percent, 
and an increase of 60 positions from the fiscal year 1997 adjusted 
budget.
    The proposed fiscal year 1998 local funds budget is $95.6 million 
and 1,157 positions; a decrease of $71,000, and an increase of 72 
positions from the fiscal year 1997 adjusted budget. The non-local 
funds budget request is $52.5 million and 744 positions; a decrease of 
$8.3 million, or 13.6 percent, and a decrease of 12 positions from the 
fiscal year 1997 adjusted budget.
    In addition to utilizing operating funds to carry out its programs, 
the Department of Public Works also plans on leveraging funds from 
three other areas. First, Capital Grant Funding from the Federal 
Highway Administration, second, the District's Transportation Trust 
Fund which was established pursuant to the District of Columbia 
Emergency Highway Relief Act of 1995, and finally, the District of 
Columbia's 1998 general obligation bond borrowing.
    In fiscal year 1998, the department will receive funding of 
approximately $90 million from the Federal Highway Administration. In 
order to leverage these funds--or meet the local match requirement--we 
will use funds from the District's Transportation Trust Fund which will 
be approximately $34 million in fiscal year 1998 and we will receive 
approximately $20 million in general obligation bond proceeds for local 
street improvements.
    During the past several years, the Department of Public Works has 
begun the fiscal year with budget amounts that allowed us to begin 
restoring many critical programs and services. However, because of the 
District's financial condition, our budgets have been revised downward 
later in the fiscal year. If the requested fiscal year 1998 budget 
remains the same for the remainder of the fiscal year, it will allow us 
to make major improvements in service. For example, it will allow DPW 
to expand street cleaning and to reinstitute regularly scheduled alley 
cleaning. It also will allow the department to replace a substantial 
number of heavy and light vehicles and other equipment that is no 
longer reliable.
    The District is instituting a Master Lease Financing Program and 
the department plans on participating in the program. The program will 
allow the department to replace a substantial number of heavy and light 
vehicles and other equipment that is no longer reliable, by allowing us 
to purchase, through the master lease, new equipment. In addition to 
procuring equipment through the master lease--the department will 
spend, in fiscal year 1998, approximately $2 million of capital dollars 
for major equipment acquisition.
    The fiscal year 1998 budget request moves us closer to adequately 
funding DPW's core services.
    That concludes my formal statement. I will be happy to respond to 
any questions you have at this time. With me at the table to help 
answer your questions are Art Lawson, our Acting Deputy Director, and 
Anthony Shelborne, our Budget Officer. Gerald Tolliver our Controller, 
Pamela Graham our new agency CFO, Leslie Hotaling our Solid Waste 
Administrator, Gwen Mitchell, Administrator of Transportation Services 
and Gary Burch our Chief Engineer are also with us and available to 
help answer your questions.
                                 ______
                                 
                              Public Works
                    department of public works (ka)
Mission
    The mission of the Department of Public Works (DPW) is to improve 
the overall quality of life in the District of Columbia and enhance the 
District's ability to compete for residents, business, tourism and 
trade. This is accomplished by delivering the services and building and 
maintaining the infrastructure that together foster a safe, sanitary 
and aesthetic environment, and the safe efficient movement of people, 
goods, and information.
Organization
    Structurally, DPW is a diversified corporation, encompassing 
functions that, in most other jurisdictions, span both local and state 
government. To deliver this range of services, DPW is divided into five 
business units and several administrative units. These business units 
provide services to meet the needs of District residents and 
businesses, visitors to the District, other District agencies, the 
federal government, other jurisdictions, District employees and 
vendors.
    The business units are: Solid waste management; Transportation 
systems; Fleet management; Facilities operation and maintenance; and 
Design, engineering and construction.
    The Department is also responsible for the overall management of 
the city's mass transit, and energy assistance and conservation 
programs. The responsibilities of each business unit are described 
below.
    Solid Waste Management.--The Solid Waste Management business unit 
is responsible for sanitation functions provided by the Agency which 
are key to maintaining a clean and healthy environment for District 
neighborhoods, local businesses, and visitors to the capital city. This 
unit's mission is to help improve the District's quality of life and 
economic competitiveness by managing waste generated in the District, 
and to maintain a safe, sanitary and aesthetic physical environment for 
District residents. The major services provided by this unit include:
  --Trash collection for all residential buildings with three or fewer 
        dwelling units;
  --Street cleaning services which currently include manual cleaning of 
        major commercial strips and the city's residential and 
        commercial center core, along with mechanical cleaning of major 
        arteries and outer ring residential neighborhoods; and
  --Snow removal. Although the snow removal program is operated by 
        several control centers in the department, program funding is 
        centrally located in the solid waste administration.
    DPW also provides citizens with information, education and outreach 
services relating to proper sanitation practices along with educational 
programs in the public schools.
    Transportation Systems.--The transportation systems business unit 
promotes the efficient operation and movement of vehicles within the 
District, and assures the safety and convenience of residents and 
visitors. This unit's mission is to help improve the District's quality 
of life and economic competitiveness by ensuring the safe and efficient 
operation and movement of vehicles. This business unit encompasses a 
wide range of activities, as noted below:
  --Motor Vehicle Administration.--DPW provides the full complement of 
        typical state DMV services such as testing drivers license 
        applicants; issuing drivers licenses and other permits for 
        private and commercial vehicles; inspection and registration of 
        motor vehicles; and the removal and disposal of abandoned 
        vehicles.
  --Parking Management and Enforcement.--DPW is responsible for 
        developing parking regulations, writing parking tickets, 
        adjudicating vehicle parking and minor moving infractions, and 
        parking meter maintenance and collections.
  --Taxicab Vehicle Registration and Adjudication.--In fiscal year 
        1997, transportation systems absorbed these functions of the 
        Taxicab Commission.
    Fleet Management.--Fleet management directs all activities related 
to the District's fleet and mobile equipment program to ensure clean, 
safe and dependable transportation and other services for the conduct 
of District government business. This function directly affects other 
direct service program (i.e., snow removal, trash collection, parking 
enforcement, tree and building maintenance) provided by DPW and is 
necessary to maintain and manage the physical assets of the District. 
This unit's mission helps improve the District's quality of life and 
economic competitiveness by servicing and maintaining District 
government-owned vehicles and other equipment that make delivery of 
services to the public by DPW and other District agencies possible.
    Fleet management encompasses all District Government vehicles 
including light, heavy and specific purpose vehicles such as trash 
compactors and dump trucks. However, DPW does not provide fleet 
management to all District government agencies. Specific fleet 
management activities include: Procurement and disposal of vehicles and 
equipment; Performance of preventive and corrective maintenance and 
repair; Analysis of vehicle utilization; and Receipt, storage, and 
distribution support for the department's equipment and for leased 
equipment used in the District's snow and ice control program.
    Facilities Operations and Management.--Facilities Operation and 
Maintenance Administration (FOMA) provides building engineering 
services for 36 District owned buildings, which include: maintenance, 
repair, improvements, and warehousing of construction materials. FOMA 
activities are critical to providing safe and comfortable work spaces 
and working conditions for District citizens, visitors and employees. 
Additionally, FOMA is key to preserving the value of the District's 
physical assets. This unit's mission is to help improve the District's 
quality of life and economic competitiveness by maintaining and 
operating District government buildings and facilities and providing 
emergency repairs to privately owned facilities when required by law to 
assure the safety of District residents and visitors to the District of 
Columbia.
    In particular, FOMA does the following:
  --Surveys and monitors the condition of District-owned buildings and 
        develops standards and procedures for annual and long range 
        maintenance;
  --Prepares contract documents and administers contracts for repairs 
        and maintenance of various District-owned facilities; and
  --Provides 24-hour emergency repair service throughout the city.
    Design, Engineering and Construction.--The Design, Engineering and 
Construction Administration (DECA) manages all permanent components of 
public space in the District of Columbia. DECA is central to assuring 
the safe (i.e., in compliance with local and Federal legal standards) 
and efficient use of public space. Additionally, DECA enhances the 
District as the economic core of the larger metropolitan region. This 
unit's mission is to improve the District's quality of life and 
economic competitiveness through managing the design and construction 
of District facilities and infrastructure to ensure that they foster a 
safe, sanitary and aesthetic environment and the safe, efficient 
movement of goods, people, and information.
    This business unit is responsible for:
  --Design, construction and maintenance of streets, bridges, highways, 
        tunnels, sidewalks, public buildings;
  --Traffic control management which includes activities such as: 
        operating and maintaining traffic signals, making and 
        installing directional and safety signals, and pavement 
        markings;
  --Rehabilitation and restoration of District of Columbia Government 
        facilities and the construction of new facilities for use by 
        District of Columbia Government agencies; and
  --Storing all official land records within the District and public 
        space management through the issuance of public space permits 
        to private entities.
Programmatic Issues
    The administration views public works as an essential function of 
the District government and realizes that maintaining the physical 
infrastructure increases economic development opportunities in the 
District. In fact, physical infrastructure will be the future agency 
workgroup title as outlined in the ``Vision for America's First City, A 
Transformed Government for the People of Washington D.C.'' The 
administration and other District stakeholders are in agreement with 
the priorities being placed on the physical infrastructure needs of the 
District.
    Nonetheless, many core services have been scaled back or 
discontinued in prior fiscal years as reductions in funding and 
staffing levels have been required. Unfortunately, these past 
reductions are placing an expensive value cost on DPW, which faces a 
number of challenges in providing industry-standard levels of service 
in nearly every business unit of the Agency. These challenges are 
described below.
    Equipment Renewal and Replacement.--During the last four fiscal 
years, DPW has been unable to maintain a regular schedule of replacing 
aged vehicles and equipment when they reach the end of their useful 
life. Regular replacement has been deferred due to limited capital 
financing, one of the effects of the District's stressed financial 
position. Consequently, over 60 percent of the department's inventory 
of vehicles exceeds its useful life by more than five years. In the 
most extreme cases, vehicles with useful lives of five to six years 
have now been operating for nine to 12 years. Additionally, some 
vehicles, such as stump cutters, are no longer operative and have not 
been replaced, resulting in a lack of necessary equipment to deliver 
certain services. Two conditions result from these circumstances. 
First, vehicles breakdown more often and require repairs, second, when 
vehicles are down, services are inevitably affected.
    The Department must employ more costly techniques to insure it has 
enough vehicles to provide certain services. For instance, the 
department's fleet of snow plows were inadequate to clear snow from the 
over 1,045 miles of major arteries and neighborhood streets in the 
event of a snowstorm. As a result, during the wake of the Blizzard of 
1996, the department leased 50 vehicles to ensure the delivery of this 
very important service. The fiscal year 1997 cost to lease this 
equipment is $488,000 and is expected to remain relatively flat in 
fiscal year 1998. Therefore, resuming a regular renewal and replacement 
schedule for vehicles and equipment are priorities. To meet this 
objective, according to The District of Columbia 1998-2003 Capital 
Improvement Plan and Fiscal Year 1998 Capital Budget, DPW has committed 
a total of $4.3 million in capital funds for fiscal year 1997 and 
fiscal year 1998 toward major equipment acquisition.
    Facilities Operation and Maintenance Administration.--Because of 
the District's financial crisis, buildings and facilities maintenance 
and repair have not been regularly scheduled. DPW's annually decreasing 
budget has resulted in the department's diminished ability to provide 
these services which protect the District's physical assets. 
Additionally, because other government agencies have not been able to 
afford regular maintenance, FOMA service utilization has declined 
overall, regular maintenance service has resulted in more emergency 
service required.
    In fact, the Department's annual expenditures on building 
maintenance are estimated at $0.80 per square foot of space which is 
less than half of the industry standard of $1.75 per square foot. 
Additionally, staffing levels for facilities maintenance is 
approximately one building engineer per 125,000 square feet (40 
engineers), or 55 percent less than the industry standard for this 
ratio of 1 Building Engineer per 80,000 square feet (62 engineers). 
Furthermore, it is generally accepted that the gap between the costs of 
timely and deferred repairs widens in proportion to the age of 
buildings.
    Streets and Bridges Preventative Maintenance.--Similar to vehicles 
and equipment, during the past five fiscal years, resources devoted to 
repair and maintenance of the streets and roads in the District have 
declined. As a result, activities to prevent potholes have been 
limited, potholes have increased, and a backlog of repairs continues to 
amass.
    The District's street system comprises 1,104 miles of roadway. Of 
this, 3.15 miles is owned and operated by the Architect of the Capitol, 
and 6.1 miles by the National Park Service. DPW is responsible for 
1,094 miles of roadway, which includes 237 bridges--some of which are 
major structures crossing the Potomac River. Several studies have 
indicated that as a result of deferred maintenance, the condition of 
the District's streets and bridges is among the worst in the nation. 
Specifically, several oversight reports have indicated that 60 percent 
of the bridges in the District are either structurally deficient or 
functionally obsolete.
    Water and Sewer Authority Transition.--In fiscal year 1997, the 
water and sewer services provided by the District and the Washington 
Aqueduct were transferred to a newly created, independent Water and 
Sewer Authority (WASA). Consequently, a number of internal 
administrative costs and services which were formerly shared by the 
water and sewer program and the rest of DPW now fall solely to DPW. 
Additionally, the management information systems staff which 
administers, services and maintains the Department's LAN, and other 
computer software and hardware needs have joined the independent 
authority or left DPW. The primary challenge facing DPW as a result of 
this change is to replace lost resources resulting from the separation 
of the water and sewer administration, improve DPW's information 
services and bring most of DPW's equipment in-line with the 1990's.
    Another area effected by this transition is the snow removal 
program. In previous years, WASA provided snow removal services for 
one-third of the District. However, while DPW has filled this service 
need temporarily with the leasing of snow plows, a long-term solution 
must be put in place to manage these needs.
    Service Restoration.--As the District has faced financial 
difficulty, DPW eliminated or scaled back services to match reduced 
resources. In most cases, when these services are not provided on a 
regular basis, more costly actions are required to make up for the lack 
of regular service. For example, in the past DPW had no dedicated 
resources to perform routine scheduled alley cleaning services; 
services are now provided on a complaint basis only, usually when the 
situation is a threat to public health and safety. These services will 
be reinstated in fiscal year 1998. For a full listing of the 
Department's program priorities, please refer to the program priorities 
table.
Program Priorities
    DPW's program priorities are allocated on a $95.6 million local 
budget mark.
    DPW plans to administer eleven programs: Trash Collections and 
Disposal; Traffic and Pedestrian Operations and Safety; Street and 
Bridge Maintenance/Repairs; Fleet Management; Tree and Landscaping 
Management; Street and Alley Cleaning; Snow Removal Operations; Motor 
Vehicle Regulation; Parking Management and Other Services; Facilities 
Management; Public Space Management (business program management, 
policy, procurement, mass transit, information systems and financial 
systems).
    Included with these 11 programs are 84 subprograms. The agency's 
top priorities in fiscal year 1998 will be cleaning up the city, 
resurfacing streets, and replacing the Motor Vehicle Information 
System. Of the 84 subprograms, 59 are mandated by District law or 
federal matching requirements representing approximately $88,352,000 in 
gross funds, and 1,204 FTE's.
Performance Measures
    The agency has developed new performance measures that can more 
accurately determine customer satisfaction, labor productivity, vehicle 
downtime, public space cleanliness, waiting time for key public 
services, and parking turnover. The performance measurement program 
will build on the department-wide strategic planning already being 
undertaken as part of the pilot productivity improvements projects 
approved by the authority.
    Since the data collection for new measures is not complete, the 
existing measures are shown below through fiscal year 1998. In the 
future, the department does not plan to utilize these measures, as it 
moves forward with its performance pilot.

----------------------------------------------------------------------------------------------------------------
                                                                                    Fiscal year                 
                      Performance measures                       -----------------------------------------------
                                                                     1995        1996        1997        1998   
----------------------------------------------------------------------------------------------------------------
Tons recycled material collected................................      26,288      18,715       6,484      10,000
Tons of household solid waste collected.........................     119,971     120,043     133,500     140,000
Operator permits issued.........................................     175,000     193,000     193,000     193,000
Vehicles registered.............................................     246,000     246,000     246,000     250,000
Motor vehicles inspected........................................     324,475     324,475     324,475     150,000
Tons of asphalt for street repairs..............................       3,500       2,700       3,000       3,800
Dollar value for agency purchasing fleet maintenance service....  $4,500,000  $2,156,457  $4,300,000  $4,300,000
Number of District-owned joint/special use facility.............          37          36          36          35
----------------------------------------------------------------------------------------------------------------
Source: Measures provided by agency. Fiscal year 1997 and fiscal year 1998 represent estimated outputs.         

    As the department develops new outcome measures, it is also 
compiling benchmarking data which will allow DPW to compare its 
performance in certain areas. This data will also permit the department 
to analyze its performance for trends and identify areas for increased 
efficiency or improved performance.
                           initiatives update
    DPW has been successful in completing a number of initiatives 
identified by the agency in the fiscal year 1997 budget and financial 
plan, as described below. Notwithstanding these efforts, DPW faces 
major challenges in other areas which require attention.
Performance Pilot Program
    Initiative: Implement a pilot performance-management-for-results 
program in DPW.
    Benefit: Will help to improve services and measure performance in 
the department.
    At this time, DPW has completed phase one of the performance pilot 
project, an initiative identified in the fiscal year 1997 budget and 
financial plan to implement a pilot performance management-for-results 
program in the Agency. As part of the mayor's plan to transform 
government, the primary goal of this pilot is to transform DPW into a 
self-directed, performance based organization that (1) strives 
continuously to provide better, cheaper, faster service and (2) 
routinely achieves a level and quality of service that is nationally 
competitive as determined by benchmarking, internal performance 
measurement and regular, periodic surveys of customers.
    During phase one of this pilot, the agency has been working with an 
expert consultant to develop outcome-based objectives, performance 
measures at the strategic, tactical and operational levels, and a 
system of performance contracts with individual managers. Training of 
managerial positions in DPW is more than 70 percent complete to be 
internal consultants and trainers in performance measurement, thereby 
building and sustaining DPW's capacity to systematically plan work, as 
well as track and evaluate performance.
    Activity-Based Costing (ABC) has been the other main focus of phase 
one tasks in this pilot. ABC will allow DPW to assess the true costs of 
services and to determine individual transactions (unit costs) so that 
the department can link resources to results. Knowing the unit costs 
will facilitate meaningful comparisons with private contractor's costs 
for comparable work and allow employees to set cost-reduction targets, 
measures, and the cost reduction impacts of changes in work processes. 
ABC supports reengineering and is a prerequisite to managed 
competition. A number of DPW's financial staff are being trained to be 
internal consultants/trainers in ABC.
    Phase two of the pilot is currently underway including continued 
performance measurement and ABC training for DPW staff. The next steps 
in the pilot will include, pilot implementation of financial incentives 
including gainsharing and distribution of citizen surveys.
Parking-Related Initiatives
    Initiative: Remove recourse provision described on back of traffic 
parking ticket.
    Benefit: Estimates suggest that $600,000-$700,000 in additional 
revenue will be generated per annum.
    Initiative: Hire additional parking control aides (PCA's) to 
strengthen enforcement efforts.
    Benefit: Estimates suggest that approximately $600,000 in 
additional net revenue will be generated per annum.
    DPW implemented both of the parking related initiatives identified 
in fiscal year 1997. The first initiative was aimed at increasing DPW 
revenues by removing the recourse provisions described on the back of 
the District's traffic parking ticket. The recourse provision offered 
drivers the option of returning the ticket with an explanation for the 
offense without submitting payment. Many drivers would select this 
option and often the cases would be dropped. After elimination of this 
option, two options remain: (1) sending the payment by mail or (2) 
appearing in court to contest the ticket. As of November 1996, 
implementation of this initiative is expected to generate an estimated 
$600,000 of additional revenues in fiscal year 1997 and annually 
thereafter.
    The second parking related initiative was to hire PCA's to 
strengthen enforcement efforts. PCA's issue parking tickets and collect 
coins from the meters. Vacancies due to the retirement incentive 
programs in fiscal year 1995 resulted in fewer PCA's and therefore less 
revenue. DPW has added 20 parking enforcement officers which is 
expected to result in additional revenue of $11.4 million in fiscal 
year 1997 and annually thereafter. Assuming an annual cost for each 
officer of $30,000, this initiative generates annual net revenues of 
$600,000 per additional PCA.
Trash Collection Routes
    Initiative: Redesign truck routes for trash collection.
    Benefit: Increased efficiency and cost savings in solid waste 
management.
    Truck routes for trash collection have been redesigned to increase 
efficiency and generate cost savings. A total of five out of 51 routes 
were redesigned, resulting in a reduction of staff and overtime. As a 
result, the redesigned routes free up trash packers which can be tapped 
as reserves if other packers go down.
Recycling Alternatives
    Initiative: Explore less costly alternatives of recycling, 
including legislative changes.
    Benefit: Increased efficiency and cost savings in solid waste 
management.
    Analysis of this initiative continues. D.C. Law 7-226, the solid 
waste and multi-material recycling law, established several mandatory 
requirements that contribute to the cost of implementing the program. 
The law establishes a mandatory source separation program, including 
mandating the commodities to be included, for all properties in the 
District. This provision essentially requires a curb-side collection 
program, with a frequency of no less than twice each month.
Solid Waste Disposal Privatization Options
    Initiative: Assess privatization of the solid waste disposal system 
which is currently operated at two transfer stations at Fort Totten and 
Benning Road.
    Benefit: Increased efficiency, reduced disposal costs and an 
estimated $15 million in one-time avoided repair costs which will be 
needed to maintain the fleet in safe and operable condition.
    Analysis of this option continues and DPW expects the initiative to 
move forward in fiscal year 1998. Currently, a solicitation is in 
progress to hire a contractor to provide hauling services. One year 
from now, the department plans to issue a second request for proposal 
which will be broader in scope and aimed at procuring private services 
which would optimize its solid waste disposal operations. The contract 
to privatize would be structured in such a way as to guarantee the 
delivery of solid waste collected by DPW and encourage the bidder to 
provide capacity for commercial and multi-family waste in the District. 
If more solid waste can be disposed of at these facilities, the 
District's disposal costs would be reduced as commercial and multi-
family waste would provide revenue to pay indirect costs and associated 
facility maintenance costs.
Rights of Way
    Initiative: Charge public utility companies, communication 
providers, and other private entities for the use of public rights of 
way, public space, and public structures in the District.
    Benefit: Generate new revenue.
    At this time, the department has awarded a contract to an expert 
firm to determine the fee structure for the leasing of rights of way. 
Annual fee revenue under franchise and rental agreements can be 
estimated at $5 to $20 million based upon fee revenue received by 
comparable municipalities for the use of public rights of way and 
infrastructure by utilities and communications providers. Nonetheless, 
the initiative is moving forward and the legislation has been passed by 
the District Council and the department is proceeding to implement the 
initiative. The Authority and the Administration will work with the 
Department to ensure that the fee does not impede economic development 
activity in the District.
Trash Collection Crews
    Initiative: Reduce size of trash collection crews.
    Benefit: Possible increased efficiency and cost savings in solid 
waste management.
    The Department reviewed this alternative as part of the research to 
redesign trash collection routes. After completing its review, DPW 
concluded that this initiative is not feasible for the District. 
Currently, DPW utilizes 40 three-person crews in its household trash 
collection program. Under this configuration, two crew members work the 
back of the truck, either emptying cans from both sides of the street 
or alley, or setting up loose bags for collection. The District's trash 
collection program is exclusively residential, picking up small 
quantities of trash from the District's single family properties. At no 
time does the truck park and the crew work to load a large amount of 
trash onto the truck.
    Additionally, two-person crews are not expected to generate cost 
savings, since routes would have to be shortened to make allowance for 
slower collection. Additional routes would have to be developed, which 
would require more trucks and eliminate any possible staff reductions. 
Also, overtime would likely increase if all of the routes could not be 
completed in the same time as before. Therefore, the department does 
not plan any additional action related to this initiative.
Expand Fleet Management Administration
    Initiative: Expand fleet management administration to include all 
aspects of fleet management in the District and the feasibility of 
privatizing the fleet.
    Benefit: Possible savings realized from economies of scale.
    Implementation of this initiative is unlikely. As noted later in 
this presentation, DPW's capacity to manage the existing fleet within 
its current resources is strained. Furthermore, police and fire want to 
maintain their own vehicles. Expanding the existing program under 
current fiscal conditions is not feasible and the Department does not 
plan continued review of this initiative.
Solid Waste Collection Privatization
    Initiative: Conduct a competitive cost comparison to determine 
whether waste and refuse collection should be privatized.
    Benefit: Increased efficiency and cost savings in solid waste 
management.
    Implementation of this initiative is unlikely. The department does 
not believe that privatization would improve service or save money. In 
general, the department supports managed competition as a superior 
alternative to privatization for Mayor services.
         fiscal year 1998-fiscal year 2001 programmatic changes
Parking Management and Enforcement Enterprise Fund
    A proposed policy change to enhance the parking function is the 
creation of an independent enterprise fund for the administration of 
parking services in the District of Columbia. All parking services will 
be included in the fund such as the maintenance of parking meters, the 
collection of parking meter revenue and the enforcement of parking 
infractions through ticketing and booting. The enterprise fund 
structure will allow for the costs of services to be recovered through 
parking meter and ticket revenues. Any excess in revenues over 
expenditures generated by the enterprise fund will be transferred back 
to the general fund.
    Parking services are suitable for enterprise fund financing because 
parking revenues are directly tied to the expenditures allocated to the 
service. An increased investment in parking personnel and equipment is 
expected to generate increased revenues. However, the current budgetary 
environment limits the resources which can be invested in parking 
services. The creation of an enterprise fund will allow the parking 
function to fully invest in the service and maximize revenues. Possible 
future expansion of parking services in the District, such as the 
construction of a municipal parking garage, will be enhanced by the 
creation of an enterprise fund. As of this budget submission, the 
Council voted against the legislation to establish the fund. DPW, 
however, plans to revisit the issue next fiscal year.
    In addition, DPW is interested in including additional motor 
vehicle services, such as licensing and permitting, within the 
enterprise fund structure. The office of the chief financial officer 
will analyze the inclusion of additional services within the proposed 
enterprise fund.
Parking Meter Privatization
    The department has issued an REP to potential providers for parking 
meter installation, replacement, repair and coin collection services. 
Although this initiative is not expected to generate cost savings, it 
is expected to protect the existing parking meter revenue base and 
generate additional parking meter revenues over the long term since the 
privatization of these functions will result in the upgrade of existing 
aged meters. The current inventory of meters is often broken or 
vandalized which hampers DPW's ability to collect parking meter fees 
and reduces the total amount of collectible fees. New electronic meters 
which are more resistant to vandalism and may be programmed to allow 
differential pricing are expected to replace the existing inventory.
Auto Inspection Privatization
    Historically, DPW has performed all required vehicle safety and 
emissions inspections in-house at its own facilities. In fiscal year 
1998, the department is required to implement new, enhanced vehicle 
emissions inspections in order to comply with a federal mandate 
required by the Clean Air Act. While preparing to provide these new 
inspections operations, the department has determined that it could 
reduce its annual operating costs by approximately one million dollars 
by privatizing its existing vehicle inspection operations along with 
the new federally mandated services. An RFP is being developed to 
solicit these services and it is expected that the process will utilize 
the design-build-operate privatization model.
Replace the Motor Vehicle Information System (MVIS)
    The information systems, which are used to maintain and manage 
motor vehicle records are old and regularly experience system crashes 
and frequent downtime. When this system goes down, customer service 
suffers tremendously and revenue collection is delayed.
    A solicitation is currently open to update and operate these 
systems, including re-programming to fix the year 2000 problem.
Fleet Management
    Several management audits performed for DPW suggested that the 
department convert the current system of fleet management operations to 
a leasing company format. Under the current system, various agencies 
throughout the District purchase their own vehicles and bring them to 
DPW for maintenance. Often times, no regular schedule of preventative 
maintenance has been followed, and maintenance is sought when more 
costly repairs are needed to operate the vehicle. Additionally, under 
the existing system, the size of the District fleet has increased while 
overall budget authority for maintenance has been reduced. This 
initiative proposes to consolidate the purchasing of certain District 
fleet through DPW who would own and maintain the vehicles and lease 
them to various other agencies. DPW would be responsible for regular 
scheduled maintenance and estimates that the size of the District's 
fleet could be reduced by 10 to 20 percent.
Implement Community Based Coordination of Sanitation Services
    The department is planning a pilot program to test community based 
coordination of sanitation services. Under the existing system, 
sanitation services (i.e. trash collection, bulk trash collection, 
street and alley cleaning) are provided from a centralized service 
provider which does not allow for services to be customized according 
to the particular sanitation needs of a neighborhood. In the pilot 
program, DPW will designate a ward manager who will be responsible for 
monitoring the cleanliness of his or her ward and deploying the 
Sanitary services needed by that particular ward from the centralized 
service provider. This approach will decentralize program 
responsibilities for sanitation services and is expected to improve 
customer satisfaction. Although this initiative is not expected to 
produce cost savings or generate new revenues, it does not require an 
increase of current funding for DPW's sanitation programs which 
demonstrates the department's efforts to involve service delivery and 
customer satisfaction within existing fiscal constraints.
                             budget summary
    The proposed total budget from all funding sources for fiscal year 
1998 is $148.2 million, a net reduction of $8.4 million from the fiscal 
year 1997 adjusted budget. The total FTE positions proposed for fiscal 
year 1998 is 1,901, an increase of 60 FTE's, or 3.2 percent, over the 
fiscal year 1997 adjusted budget. Personal services expenditures 
represent 54 percent of the proposed fiscal year 1998 total budget; 
nonpersonal services, 46 percent.
Local Funds
    The proposed local funds budget for fiscal year 1998 is $95.6 
million and 1,157 FTE's, which is $71,000 less than the fiscal year 
1997 adjusted budget. Major changes include the following:
  --An increase of $4.1 million and 72 FTE's to support an expansion in 
        the street and alley cleaning program. This funding will allow 
        the agency to deploy 36 two-person crews, along with the 
        requisite supplies, equipment and materials, throughout the 
        city to routinely clean the District's streets and alleys. 
        While streets will have dedicated crews, the main focus of this 
        increase will be on alley cleaning. Currently, alleys are 
        cleaned on an emergency basis only. This has been the case 
        since regularly scheduled alley cleaning was discontinued after 
        fiscal year 1993. The objective of this effort is to have 
        cleaner alleyways and better sanitary conditions in our 
        neighborhoods.
  --An increase of $1 million to support citywide pothole repairs. This 
        funding will permit DPW to repair the numerous potholes that 
        the severe 1995-96 winter season created.
  --$1.3 million has been allocated to restore the recycling to 
        District residents on a biweekly basis. An additional $1.1 
        million is to be generated from management efficiencies, 
        bringing recycling funding to a total of $2.4 million for 
        fiscal year 1998.
  --$300,000 has been allocated for the disposal of household hazardous 
        waste. This funding will allow DPW to notify the public of its 
        intent to collect such material, identify drop-off points 
        within the city to receive hazardous household waste and 
        collect and properly dispose of the hazardous waste four times 
        yearly. The objective of this effort is to improve the delivery 
        of basic solid waste management activities to the District 
        residents.
  --A reduction of $2.9 million for projected District-wide savings 
        from lease renegotiations, security services, overtime, and 
        energy costs, as appropriate, to be achieved in fiscal year 
        1998. Savings in overtime will be achieved due to the 
        requirement that employees will receive compensation only for 
        overtime work in excess of 40 hours per week of work actually 
        performed (or other applicable tour of duty). It is projected 
        that additional savings will be achieved from lease 
        renegotiations and reduced energy costs. Additional savings 
        will be achieved in security services by reducing Manhour 
        coverage through the use of electronic surveillance systems.
  --A reduction of $318,000 for projected workforce distribution 
        savings.
  --The District has approved a plan to finance capital related items, 
        such as vehicles and heavy equipment, through a master lease 
        purchase program. The Department of Public Works plans to 
        finance $4,498,000 of its equipment needs over a five-year 
        period. DPW has reduced its fiscal year 1998 equipment budget 
        by $4,498,000 which results in a reduction in fiscal year 1998 
        spending authority.
    In comparison to fiscal year 1996 actual spending of $83.0 million, 
the fiscal year 1998 local funds budget request represents an increase 
of $13.9 million, or 18 percent. This increase is largely attributed to 
the restoration of services that were discontinued or eliminated in 
prior years.
    The District's budget for the DPW does not include the following 
Authority adjustments: An increase of $1.3 million for the cost of 
financing equipment over a five-year period; and a $30,000 reduction 
for one employee detailed to the Mayor's office.
Nonlocal Funds
    The proposed nonlocal budget for fiscal year 1998 is $525 million, 
a decrease of $8.3 million, or fourteen percent, from the fiscal year 
1997 adjusted budget. Almost 75 percent of DPW's nonlocal budget 
request is for intra-District funds to support personnel in the fleet 
management, facilities operations and maintenance, and design 
engineering and construction programs.
    Fiscal year 1996 actual spending for all funding sources was $132.9 
million, or 12 percent, below the originally approved gross budget of 
$151.7 million. Additional nonlocal budget authority was approved by 
the Authority during fiscal year 1996. The final gross budget for 
fiscal year 1996 was $153.8 million.
                             federal grants
    Federal grants are provided to DPW to help the agency achieve its 
objectives. The proposed federal funding level for fiscal year 1998 is 
$3,350,000. Federal grants have been awarded to DPW in the following 
programmatic areas:
                      state planning and research
    The Office of Policy and Planning within the Department of Public 
Works administers the Federal State Planning and Research Program. This 
program is funded 80 percent from federal funds, and 20 percent local 
funds. Federally mandated planning and research activities related to 
the District's Transportation Improvement Program are performed with 
these grant funds. A portion of the funds are required by federal 
mandate to be passed through to the Metropolitan Washington Council of 
governments to perform regional transportation planning and 
coordination functions.
Transportation Efficiency
    The Intermodal Surface Transportation Efficiency Act provides 
funding for DPW street and bridge construction activities. Through the 
Act and National Highway System Funding, the agency awards contracts 
that are either 100 percent federally funded or funded on a 90/10 or 
80/20 matching basis for certain infrastructure repair activities on 
roads and bridges that are eligible for federal-aid-transportation 
funding.
Safety
    Grants are provided to assist the District in performing safety 
related data collection and programs to improve safety conditions on 
the District's roadway system. DPW works with the Metropolitan Police 
Department to identify highway safety problems, establish performance 
goals, and develop programs and projects to decrease roadway deaths.
Elderly and Handicapped
    The Office of Mass Transit within DPW administers the Federal 
16(B)(2) program. This program allows private nonprofit organizations 
to apply for funds on a 80/20 matching basis to buy vehicles to 
transport elderly and physically challenged individuals.
Foresting
    The U.S. Interior Department's National Park Services provides 
grant funds to the District to promote community involvement in tree 
planting and other horticultural activities.

                                                                     FEDERAL GRANTS                                                                     
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Fiscal year                              
                                                                               -------------------------------------------------------------------------
                                                                Fund   Revenue                                                     1998         1998    
                     Revenue source name                        code   source      1997        1997        1998        1998      Estimated    Estimated 
                                                                        code     Carryover   Carryover   Estimated   Estimated     grand    obligational
                                                                                            obligation     total    obligation     total      authority 
--------------------------------------------------------------------------------------------------------------------------------------------------------
BRDG INSPCTN-94..............................................   87AV       100  ..........  ..........  ..........  ..........  ..........  ............
CMG 999 (707)................................................    100      87AZ  ..........  ..........  ..........  ..........  ..........  ............
FORESTRY SRVC FISCAL YEAR 1993...............................    100      87BA  ..........  ..........  ..........  ..........  ..........  ............
IVH 9311601..................................................    100      87BM     $10,000     $10,000  ..........  ..........     $10,000      $10,000 
ELDERLY/HANDICAP FISCAL YEAR 1993............................    100      87DB  ..........  ..........  ..........  ..........  ..........  ............
T.R. BRDG/MOVABLE BARRIERS/FED...............................    100      87DS  ..........  ..........  ..........  ..........  ..........  ............
T.R. BRDG/MOVABLE BARRIERS/VA................................    100      87DT  ..........  ..........  ..........  ..........  ..........  ............
TRANSIT PLANNING FISCAL YEAR 1994............................    100      87EL  ..........  ..........  ..........  ..........  ..........  ............
FORESTRY SRVC FISCAL YEAR 1994...............................    100      87FK  ..........  ..........  ..........  ..........  ..........  ............
SPR 001 34...................................................    100      87FT  ..........  ..........  ..........  ..........  ..........  ............
SPRPL 0001 34................................................    100      87FU  ..........  ..........  ..........  ..........  ..........  ............
ELDERLY/HANDICAP FISCAL YEAR 1994............................    100      87GC  ..........  ..........  ..........  ..........  ..........  ............
FORESTRY SRVC FISCAL YEAR 1995...............................    100      87GK      20,000      20,000  ..........  ..........      20,000       20,000 
TRANSIT PLANNING FISCAL YEAR 1995............................    100      87GM      42,375      42,375  ..........  ..........      42,375       42,375 
HPRPR 1 34...................................................    100      87HA     633,756     633,756  ..........  ..........     633,756      633,756 
MCSAP/CDL/MC-95..............................................    100      87JA  ..........  ..........  ..........  ..........  ..........  ............
ELDERLY/HANDICAP FISCAL YEAR 1995............................    100      87KF      20,000      20,000  ..........  ..........      20,000       20,000 
NHTSA FISCAL YEAR 1997.......................................    100      87KK   1,000,000   1,000,000  ..........  ..........   1,000,000    1,000,000 
FHA-FISCAL YEAR 1997.........................................    100      87KL     100,000     100,000  ..........  ..........     100,000      100,000 
FORESTRY SRVC FISCAL YEAR 1996...............................    100      87KX      10,000      10,000  ..........  ..........      10,000       10,000 
TRANSIT PLANNING--FISCAL YEAR 1996...........................    100      87LK      42,365      42,365    $615,695    $615,695     658,060      658,060 
LABOR MGMT PRTNRSHP/FLT MGMT.................................    100      87PE      33,487      33,487  ..........  ..........      33,487       33,487 
INTRNTNL REGSTRTN PRGRM/MC...................................    100      87PX  ..........  ..........  ..........  ..........  ..........  ............
ELDERLY/HANDICAP FISCAL YEAR 1996............................    100      87QF     138,242     138,242  ..........  ..........     138,242      138,242 
ELDERLY/HANDICAP FISCAL YEAR 1991............................    100      88VT  ..........  ..........  ..........  ..........  ..........  ............
AIR RIGHT/SOUTHEAST FREEWAY..................................    100      88YZ  ..........  ..........  ..........  ..........  ..........  ............
TRANSIT PLANNING--FISCAL YEAR 1992...........................    100      88ZW  ..........  ..........  ..........  ..........  ..........  ............
ELDERLY/HANDICAP FISCAL YEAR 1992............................    100      88ZX  ..........  ..........  ..........  ..........  ..........  ............
ELDERLY/HANDICAP--FISCAL YEAR 1997...........................  .....  ........     248,968     248,968     230,000  ..........     478,968      248,968 
ELDERLY/HANDICAP--FISCAL YEAR 1998...........................    100  ........  ..........  ..........  ..........  ..........  ..........  ............
FHA-FISCAL YEAR 1998.........................................    200  ........  ..........  ..........  ..........  ..........  ..........  ............
FORESTRY SERVICE FISCAL YEAR 1997............................    100  ........      80,000      80,000  ..........  ..........      80,000       80,000 
NHTSA FISCAL YEAR 1998.......................................    100  ........  ..........  ..........      54,500      54,500      54,500       54,500 
TRANSIT PLANNING FISCAL YEAR 1997............................    100  ........      85,022      85,022  ..........  ..........      85,022       85,022 
TRANSIT PLANNING FISCAL YEAR 1998............................    100  ........     257,028     215,632  ..........  ..........     257,028      215,632 
                                                              ------------------------------------------------------------------------------------------
      SUBTOTAL...............................................  .....  ........   2,721,243   2,679,847     900,195     670,195   3,621,438    3,350,042 
                                                              ==========================================================================================
CAPITAL GRANTS: \1\                                                                                                                                     
    ELECTRICAL SYSTEM IMPV...................................  .....       ADT  ..........  ..........  ..........  ..........  ..........  ............
    HIGHWAY MATCHING FUND....................................  .....       AFT  ..........  ..........  ..........  ..........  ..........  ............
    BARNEY CIRCLE............................................  .....       AP6  ..........  ..........  ..........  ..........  ..........  ............
    WHITEHURST FREEWAY.......................................  .....       AV6  ..........  ..........  ..........  ..........  ..........  ............
    RIDGE REHAB/REPL.........................................  .....       CDT  ..........  ..........  ..........  ..........  ..........  ............
    ROADWAY RESURFACE........................................  .....       CET  ..........  ..........  ..........  ..........  ..........  ............
    ROADSIDE IMPROV..........................................  .....       CGT  ..........  ..........  ..........  ..........  ..........  ............
    ROADWAY UPGRADE..........................................  .....       CHT  ..........  ..........  ..........  ..........  ..........  ............
    TRAFFIC OPER IMPR........................................  .....       CIT  ..........  ..........  ..........  ..........  ..........  ............
    ROADWAY RECONSTRU........................................  .....       CKT  ..........  ..........  ..........  ..........  ..........  ............
    MITIGATION AIR QUAL......................................  .....       CMT  ..........  ..........  ..........  ..........  ..........  ............
    TRAFFIC SAFETY IMPR......................................  .....       CPT  ..........  ..........  ..........  ..........  ..........  ............
    FED PLAN AND MGMT SYS....................................  .....       PMT  ..........  ..........  ..........  ..........  ..........  ............
                                                              ------------------------------------------------------------------------------------------
      SUBTOTAL...............................................  .....  ........  ..........  ..........  ..........  ..........  ..........  ............
                                                              ------------------------------------------------------------------------------------------
      AGENCY TOTAL...........................................  .....  ........   2,721,243   2,679,847     900,195     670,195   3,621,438    3,350,042 
      ESTIMATED IDCR.........................................  .....  ........  ..........  ..........  ..........  ..........     348,705  ............
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Capital grants data not provided by agency.                                                                                                         

    The following tables detail expenditures and FTE's at the object 
class level for the agency. Differences between budget and actual 
results are also presented.

   DEPARTMENT OF PUBLIC WORKS (KA) FISCAL YEAR 1997-FISCAL YEAR 2001 BUDGETED AND PROJECTED GROSS EXPENDITURES  
                                          [In thousands of dollars \1\]                                         
----------------------------------------------------------------------------------------------------------------
                                                     Adjusted                          Projected--Fiscal year   
                                                      fiscal   Proposed            -----------------------------
                    Object class                       year     fiscal    Variance                              
                                                       1997      year                 1999      2000      2001  
                                                     approved    1998                                           
----------------------------------------------------------------------------------------------------------------
EXPENDITURES:                                                                                                   
    Personal Services:                                                                                          
        Regular Pay................................    58,720    53,775    (4,945)    54,797    55,838    56,899
        Other Pay..................................     6,849     5,380    (1,469)     5,482     5,586     5,693
        Additional Gross Pay.......................     4,049     3,894      (155)     3,968     4,043     4,120
        Fringe Benefits............................    10,680     9,519    (1.161)     9,700     9,700     9,884
                                                    ------------------------------------------------------------
          Subtotal Personal Services...............    80,298    72,568    (7,730)    73,947    75,167    76,596
    Non-Personal Services:                                                                                      
        Supplies and Materials.....................     5,815     6,307       492      6,427     6,549     6,680
        Utilities..................................    10,045     8,570    (1,475)     8,570     8,570     8,570
        Communications.............................     2,408     2,403        (5)     2,468     2,517     2,558
        Rent.......................................     1,217     1,217  .........     1,193     1,169     1,145
        Other Services and Charges.................    54,384    52,643    (1,741)    54,222    55,849    57,524
        Subsidies and Transfers....................       887     1,115       228      1,136     1,165     1,194
        Depreciation and Land......................  ........  ........  .........  ........  ........  ........
        Equipment..................................     1,533     3,375     1,842      3,439     3,549     3,663
        Debt Service and Other.....................  ........  ........  .........  ........  ........  ........
                                                    ------------------------------------------------------------
          Subtotal Non-Personal Services...........    76,289    75,630      (659)    77,455    79,368    81,334
                                                    ============================================================
          TOTAL EXPENDITURES.......................   156,587   148,198    (8,389)   151,402   154,535   157,929
                                                    ============================================================
AUTHORIZED SPENDING LEVELS \2\                                                                                  
    By revenue type:                                                                                            
        Local......................................    95,746    95,675       (71)    97,715    99,624   101,761
        Federal....................................     3,047     3,350       303      3,434     3,533     3,634
        Private and Other..........................     9,958    10,030        72     10,247    10,481    10,723
        Intra-District.............................    47,836    39,143    (8,693)    40,005    40,897    41,812
                                                    ------------------------------------------------------------
          TOTAL AUTHORIZED SPENDING................   156,587   148,198    (8,389)   151,402   154,535   157,929
                                                    ============================================================
AUTHORIZED STAFFING (FTE's):                                                                                    
    Local..........................................     1,085     1,157        72   ........  ........  ........
    Federal........................................        32        51        19   ........  ........  ........
    Private and Other..............................        68        76         8   ........  ........  ........
    Intra-District.................................       656       617       (39)  ........  ........  ........
                                                    ------------------------------------------------------------
      TOTAL FTE's..................................     1,841     1,901        60   ........  ........  ........
                                                    ============================================================
AGENCY PROGRAM CHANGES:                                                                                         
    Local..........................................  ........  ........  .........  ........  ........  ........
    Workforce program changes \3\..................  ........  ........  .........  ........  ........  ........
    Non-workforce Program changes \4\..............  ........  ........  .........  ........  ........  ........
    Federal........................................  ........  ........  .........  ........  ........  ........
    Private and Other..............................  ........  ........  .........  ........  ........  ........
    Intra-District.................................  ........  ........  .........  ........  ........  ........
                                                    ------------------------------------------------------------
      TOTAL AGENCY PROG. CHANGES...................  ........  ........  .........  ........  ........  ........
                                                    ============================================================
      TOTAL AUTHORIZED SPENDING....................   156,587   148,198    (8,389)   151,402   154,535   157,929
----------------------------------------------------------------------------------------------------------------
\1\ Totals may not sum due to rounding.                                                                         
\2\ Net of agency program changes.                                                                              
\3\ Amount shown is 75 percent of maximum possible savings.                                                     
\4\ Amount shown is 60 percent of maximum possible savings.                                                     


    DEPARTMENT OF PUBLIC WORKS (KA) FISCAL YEAR 1996-FISCAL YEAR 1997 ACTUAL AND BUDGETED GROSS EXPENDITURES    
                                          [In thousands of dollars \1\]                                         
----------------------------------------------------------------------------------------------------------------
                                                                                                        Adjusted
                                                        Budgeted    Actual                Fiscal year    fiscal 
                     Object class                        fiscal     fiscal    Variance       1997      year 1997
                                                       year 1996  year 1996              approved \5\   approved
----------------------------------------------------------------------------------------------------------------
EXPENDITURES:                                                                                                   
    Personal services:                                                                                          
        Regular pay..................................     28,243     47,475    (19,232)       59,367      58,720
        Other Pay....................................     28,134      5,237     22,897         6,911       6,849
        Additional Gross Pay.........................      4,418      6,789     (2,371)        4,049       4,049
        Fringe benefits..............................     11,805      9,145      2,660        10,703      10,680
                                                      ==========================================================
          Subtotal Personal Services.................     72,600     68,646      3,954        81,030      80,298
                                                      ==========================================================
    Non-Personal Services:                                                                                      
        Supplies and Materials.......................      9,667      3,521      6,146         6,178       5,815
        Utilities....................................      8,590      5,434      3,156        10,045      10,045
        Communications...............................      2,438      2,242        196         2,408       2,408
        Rent.........................................      1,292      1,330        (38)        1,217       1,217
        Other Services and Changes...................     53,655     49,767      3,888        55,744      54,384
        Subsidies and Transfers......................        916        790        126           887         887
        Depreciation and Land........................  .........  .........  ..........  ............  .........
        Equipment....................................      2,571      1,217      1,354         1,533       1,533
        Debt Service and Other.......................  .........  .........  ..........  ............  .........
                                                      ----------------------------------------------------------
          Subtotal Non-Perstonal Services............     79,129     64,301     14,828        78,012      76,289
                                                      ==========================================================
          TOTAL EXPENDITURES.........................    151,729    132,947     18,782       159,042     156,587
                                                      ==========================================================
AUTHORIZED SPENDING LEVELS: \2\                                                                                 
    By revenue type                                                                                             
        Local........................................     87,494     83,016      4,478        98,201      95,746
        Federal......................................      2,682      4,958     (2,276)        3,047       3,047
        Private and Other............................     13,648      6,317      7,331         9,958       9,958
        Intra-District...............................     47,905     38,656      9,249        47,836      47,836
                                                      ----------------------------------------------------------
          TOTAL AUTHORIZED SPENDING..................    151,729    132,947     18,782       159,042     156,587
                                                      ==========================================================
AUTHORIZED STAFFING (FTE's):                                                                                    
    Local............................................      1,140      1,149         (9)        1,143       1,085
    Federal..........................................         32         26          6            32          32
    Private and Other................................         68         54         14            68          68
    Intra-District...................................        656        508        148           656         656
                                                      ----------------------------------------------------------
      TOTAL FTE's....................................      1,896      1,738        158         1,899       1,841
                                                      ==========================================================
AGENCY PROGRAM CHANGES:                                                                                         
    Local:                                                                                                      
        Workforce Program Changes \3\................  .........  .........  ..........  ............  .........
        Non-workforce Program Changes................  .........  .........  ..........  ............  .........
        Federal......................................  .........  .........  ..........  ............  .........
        Private and Other............................  .........  .........  ..........  ............  .........
        Intra-District...............................  .........  .........  ..........  ............  .........
                                                      ----------------------------------------------------------
          TOTAL AGENCY PROG. CHANGES.................  .........  .........  ..........  ............  .........
                                                      ==========================================================
          TOTAL AUTHORIZED SPENDING..................    151,729    132,947     18,782       159,042     156,587
----------------------------------------------------------------------------------------------------------------
\1\ Totals may not sum due to rounding.                                                                         
\2\ Except for fiscal year 1997 Approved, figures are net of agency program changes.                            
\3\ Amount shown is 75 percent of maximum possible savings.                                                     
\4\ Amount shown is 60 percent of maximum possible savings.                                                     
\5\ Public Law 104-194. Agency budget does not reflect unallocated initiatives or an additional $25 million of  
  reductons required by the Congressional deficit ceiling.                                                      

                                 ______
                                 
 Prepared Statement of Michael C. Rogers, City Administrator, District 
                              of Columbia
    Good morning, Chairman Faircloth and Members of the Subcommittee on 
the District of Columbia. I am Michael C. Rogers, City Administrator 
for the District of Columbia.
    I thank you for the opportunity to discuss the fiscal year 1998 
budget requests for the Departments of Health, Human Services, and 
Public Works. This hearing evidences your commitment to the 
revitalization of the Nation's Capital.
    The three agencies whose budgets we are to discuss are three of the 
key operating agencies in the District. Their activities touch the 
lives of the residents of the District in one way or another every day. 
Their combined functions directly affect the well-being of the full 
range of the District's residents, visitors, and neighbors.
    The fiscal year 1998 budget request for the Department of Health is 
$961.3 million and 776 FTE's. This request includes $826.6 million and 
71 FTE's for the Medicaid Program.
    The request for the Department of Human Services is $637 million 
and 4,891 FTE's. $357 million is local funding and $279 million is non-
local funding--primarily Federal grants. The fiscal year 1998 budget 
has 264 FTE's less than the revised fiscal year 1997 budget.
    The request for the Department of Public Works is $148 million and 
1,901 FTE's. $95.6 million is local funding and $52.5 million is non-
local funding. This request represents a decrease of $8.4 million and 
an increase of 60 FTE's from the revised fiscal year 1997 budget.
    Mr. Chairman, before we get into more detail on the budgets and 
operations of these departments, please allow me take some time to 
discuss the issue of management in and of the District of Columbia.
    In the recent past there has been a lot of discussion on the 
management or lack thereof in the District of Columbia. Because I am 
the appointed Operations Officer for the city, I believe it incumbent 
upon me to address such issues.
    Public management, in its broadest terms is the manipulation of 
people and resources to achieve the ``public good.'' Any public 
manager, whether called a city manager, a chief operations officer, or 
a city administrator, must evaluate resources, including personnel, to 
identify deficiencies and to develop appropriate solutions. The mark of 
the effectiveness of a public manager is not whether he can identify 
problems. Anyone, in fact, everyone can do that. The mark of a public 
manager's success is the implementation of measures designed to fix 
identified and anticipated deficiencies. In developing solutions, one 
of the primary responsibilities of management must be to remove 
obstacles, including laws and regulations, that prevent employees from 
providing quality services to the public.
    Over the past twenty-eight months, this administration has 
evaluated its resources, identified deficiencies and implemented or 
proposed plans to cure identified and anticipated inadequacies.
    To begin with, we developed a plan to transform the government of 
the city into the kind of organization we thought it should be in the 
year 2000. This plan was unique and unprecedented in that it sought to 
move a large, labor-saturated, labor intensive government which 
attempted to do all things for all people, to an operation that was 
focused, effective, and technologically advanced. Implementation of 
this plan required significant repair and often creation of the 
internal infrastructure necessary to support this transformation.
    Twenty-eight months ago, the management sector of the government of 
the District of Columbia, like everyone else, recognized there were 
fundamental problems with the structure and operation of the 
government.
    Consequently, it is not news to say there have been and continue to 
be problems with the procurement system. The real news is that in fall 
of 1995 the District government commissioned a study of its procurement 
system--to analyze the deficiencies in the system and to develop an 
implementation strategy. To implement the strategy, we drafted and 
submitted to Council the ``Procurement Reform Amendment Act of 1996.'' 
The act, which was passed by Council, allows the city to:
  --Raise the small purchase threshold from $10,000 to $25,000 and 
        $50,000 for construction.
  --Permit the use of purchase cards for items costing up to $2,500.00.
  --Utilize evolving technology to manage procurement making contract 
        decisions based on ``best value.''
  --Revise the contract appeals process.
    The net effect of these changes in the law regarding the 
procurement process is to streamline that process.
    To implement the strategy, management recognized the need to train 
personnel and to revise regulations. Management also initiated a 
massive effort toward automation. By the end of this fiscal year, the 
procurement process will largely be automated.
    Likewise, it is not news to observe or report problems with the 
District's personnel rules and regulations. Because we recognized the 
problems, we proposed and forwarded to the City Council legislation 
that would create a flexible personnel system that will allow 
management to more easily recruit, to better train, to better 
compensate, and to more easily separate those employees who do not 
perform to standard.
    It is also not news to observe or to report problems with the way 
the District handled its real estate transactions. The real news is: A 
public/private partnership of real estate executives and city managers 
was created to identify opportunities for cost savings; to insure 
better return on the District's real property assets; and, to create an 
effective space plan for the future. Consequently, the following steps 
have been taken:
  --An independent CPA firm has been hired to conduct audits of all the 
        District's leases and to identify deficiencies.
  --A regional law firm has been retained to pursue claims against 
        landlords who have improperly invoiced the District.
  --Contracted with two nationally recognized firms to act as 
        representatives for the city in the negotiation and 
        administration of leases.
  --Drafted and submitted to the Council, legislation which will 
        overhaul current law and create a comprehensive, modern and 
        less burdensome legal environment for the District.
    Another management improvement measure has been the development of 
a comprehensive performance management system. You will hear from the 
Department of Public Works on the strides that they have made in 
creating a performance-based organization.
    This system when completed will allow us to measure and evaluate 
the effectiveness of the various departments and enhance public 
accountability. Specific performance measures for programs and services 
have been developed for the Departments of Health, Human Services, 
Public Works, Recreation and Parks, consumer and regulatory affairs, 
personnel, fire, corrections, and administrative services.
    Extensive training in performance measurement has taken place for 
senior managers. By the beginning of the next fiscal year, I will have 
entered into performance contracts with department directors.
    Every manager knows that the best plan will fail if the people 
expected to implement the plan are not properly trained and are not 
properly led. The management sector recognized early in the process, 
that the extreme pace of downsizing, and the absence of technological 
support would deplete the management infrastructure that had been in 
place for years and would leave untrained and inexperienced managers.
    To address the problem, the Mayor budgeted a significant amount of 
money ($8.5 million) for training in the 1997 budget. To replace the 
infrastructure lost to downsizing, we entered into a public private 
agreement with George Washington University to provide a more advanced 
level of training and leadership development to our employees.
    Participants in the Center for Excellence for Municipal Management 
are chosen on the basis of merit and not politics. Each year we will 
graduate 120 managers and every successful candidate will be qualified 
as a certified public manager.
    Senator Faircloth, this administration inherited severe and complex 
problems which could not, and cannot be fixed overnight. Complex 
problems require carefully drawn and thoroughly considered plans. That 
planning process has been implemented and continues in the management 
sector of the government of the District of Columbia.
    No matter how much they would like to, no city manager can function 
outside the law and regulations in effect in his jurisdiction. Our 
efforts over the past twenty-eight months evidence that we recognized 
when and where existing law hampered effective and efficient 
management. We have taken and continue to take the initiative to 
develop and to submit to the City Council new legislation which will 
make management of the city's resources more effective and more 
efficient. As you know from your experience in this body and more 
importantly from your experience in local and State government, the 
legislature is not required to agree with the manager's assessment or 
proposed solutions. The process of identifying deficiencies, developing 
solutions and working through the legislative process to implement a 
plan requires time.
    No one should legitimately expect this city, or any other 
governmental entity, to respond overnight, to every deficiency 
identified by even an informed observer. Our obligation to our citizens 
and to this body, is to work continually to resolve problems in an 
orderly and thoughtful manner with due regard for the law and the 
legislative process. We are doing this.
    At this time allow me to introduce Dr. Marlene Kelly, the Interim 
Director of the Department of Health; Mr. Wayne Cassey, the Interim 
Director of the Department of Human Services, and Mr. Cell Bernardino, 
the Acting Director of the Department of Public Works. They will in 
more detail discuss their respective agency's budget request.

                     interim or part-time directors

    Senator Faircloth. Thank you, Mr. Bernardino.
    The first question that occurs to me is that all three of 
you are either interim or part time. Mr. Casey, how long have 
you been an interim director?
    Mr. Casey. Approximately 15 months.
    Senator Faircloth. Who was there before you?
    Mr. Casey. Vernon Hawkins.
    Senator Faircloth. How long was he there?
    Mr. Casey. He was there about 1\1/2\ years.
    Senator Faircloth. Who was before him?
    Mr. Casey. Vincent Gray.
    Senator Faircloth. How long was he there?
    Mr. Casey. He was there the total of the Kelley 
administration, 4 years.
    Senator Faircloth. Why are you interim? Why have you not 
been appointed?
    Mr. Casey. I have not sought the position as director. I am 
not a candidate for the job.

                     time limit on interim director

    Senator Faircloth. Well, I thought there was a rule that an 
interim job be held for only 90 days. Is that correct?
    Mr. Casey. I do not know the exact timeframe. I think there 
has been some difficulty in trying to find a director.
    Senator Faircloth. I was not asking that. How long are you 
supposed to be interim?
    Mr. Casey. I cannot give you the exact number of days that 
that holds. Someone here probably can.
    Senator Faircloth. Does anybody know?
    Mr. Casey. One hundred eighty days.
    Senator Faircloth. How long have you been there?
    Mr. Casey. As I indicated, 15 months.
    Senator Faircloth. Why was it not changed at 180 days?
    Mr. Casey. I think one of the reasons was they were not 
able to find a replacement.

                  tenure of directors of public health

    Senator Faircloth. So, the fact that the law says 180 days 
does not mean anything to the Mayor.
    Dr. Kelley.
    Dr. Kelley. Yes, sir.
    Senator Faircloth. I understand you have been there about 1 
week, so you are brand new.
    Dr. Kelley. Yes, sir.
    Senator Faircloth. Who preceded you?
    Dr. Kelley. Dr. Harvey Sloan.
    Senator Faircloth. How long was he there?
    Dr. Kelley. Two years.
    Senator Faircloth. Two years.
    Who preceded him?
    Dr. Kelley. Dr. Mohammed Akhter.
    Senator Faircloth. How long was he there?
    Dr. Kelley. Approximately 2 years, almost 2 years.
    Senator Faircloth. Do you know who preceded him?
    Dr. Kelley. Reed Tuckson, Dr. Reed Tuckson.
    Senator Faircloth. How long was he there?
    Dr. Kelley. I think he was only there 1 year.
    Senator Faircloth. Well, you have sure had stability and 
continuity in your department, have you not?
    How long do you think you will be there?
    Dr. Kelley. Well, sir, I have been with the District 
government for quite some time, so I will be there until the 
candidate arrives that is to assume----
    Senator Faircloth. I am sorry, ma'am.
    Dr. Kelley. I will be in this position until the candidate 
who has been selected for the position arrives.

                  tenure of directors of public works

    Senator Faircloth. Mr. Bernardino, I see you are acting or 
temporary. How long have you been there?
    Mr. Bernardino. I have been acting director since October 
of last year.
    Senator Faircloth. October.
    Who was there before you?
    Mr. Bernardino. Larry King.
    Senator Faircloth. How long was he there?
    Mr. Bernardino. About 2, 2\1/2\ years.
    Senator Faircloth. Who was before him?
    Mr. Bernardino. Betty Francis.
    Senator Faircloth. How long was she there?
    Mr. Bernardino. She was there for the 4 years of the Kelley 
administration.
    Senator Faircloth. Well, we are just seeing a pattern that 
is what we have known, that so much of the city is simply out 
of control.
    Mr. Casey, I noticed you have Human Services employees. Of 
course, I say you. Nobody has been here long enough to get any 
continuity to answer the questions of why the problems are 
there.

          number of locations for department of human services

    But you have people working in 130 office buildings?
    Mr. Casey. We provide a variety of services throughout the 
District of Columbia: child care services, youth services, 
nursing services. A lot of our services are administrative 
functions.
    Senator Faircloth. Well, what kind of functions?
    Mr. Casey. Administrative functions. We provide a lot of 
different services to a lot of different people who are in 
need. I think it justifies the number of locations that we are 
in because we do what we can to get to where the people are, 
and they are all over the city. The poorest of our people are 
in wards where they can ill afford to get transportation. So, 
we provide services where they can come to the services, if 
needed.

                 real estate company to look at leases

    Senator Faircloth. Do you think you need 130 offices?
    Mr. Casey. We have looked at all of our office locations, 
all of our space. We are doing a space review just as we speak. 
The city administrator has hired a real estate company to come 
in and meet with our facilities administration people to look 
at where we are in month-to-month leases and where we are in 
long-term leases to try and consolidate where appropriate, and 
we are in the process of doing that now.
    Senator Faircloth. There has been great criticism that you 
pay far more for leases than they are worth; that the city has 
property and is still leasing property; that a lot of leases 
are going to friends of the Mayor and the administration and 
that they are not going to the cheapest lease. What do you 
respond to that?
    Mr. Casey. The Department of Human Services does not 
negotiate leases.

         department of administrative services negotiate leases

    Senator Faircloth. Who does?
    Mr. Casey. The Department of Administrative Services 
negotiate leases. We tell them what our needs are and they work 
with us to try----
    Senator Faircloth. They give you the key and you go to it.
    Mr. Casey. Yes.
    Senator Faircloth. All right.

                 mental health services in receivership

    Mental Health Services has been placed in receivership. 
According to Judge Robinson, the Mayor and other city officials 
have failed to serve the District's 10,000 mentally ill 
residents. This is the fourth receiver order to run a city 
program due to the city's management failures.
    To make a bad situation worse, the commission has spent 
$180 million per year for the past 2 years. It seems an 
extremely high price to pay for receivership.
    Has a receiver been named to run the commission during its 
receivership?
    Mr. Casey. Yes; there is an interim director who was on 
board before the judge made the decision to place it in a 
receivership, Mrs. Arlene Elias, and she has been there for 
about 3 or 4 months and was there when the judge made that 
decision. I mean interim director. Not receiver.
    Senator Faircloth. Why did the judge give the decision?
    Mr. Casey. I think for the reasons that you've stated. We 
were concerned about our ability to process services, to do it 
effectively.
    Senator Faircloth. You mean you asked for it?
    Mr. Casey. No, no; we did not ask for it. We did everything 
we could to hold it off. The Mayor put in place a number----
    Senator Faircloth. Well, you said you were concerned. What 
does that mean? You say you were concerned about it. I asked 
you why he was appointed, and you said you were concerned, the 
implication being that you had asked----
    Mr. Casey. The judge was concerned about our ability to 
process and deliver services in a fashion that he thought we 
were not very effective at. So, he decided a receiver would 
need to be in place to do that. The Mayor had put in place a 
number of administrative functions, but they did not have time 
to work before the judge made his decision.
    Senator Faircloth. Was the judge right in making his 
decision?
    Mr. Casey. I do not think so. I think we were on our way to 
handling those problems. We had hired a commissioner out of 
Massachusetts who had a background in working in mental health 
and did a wonderful job in Massachusetts, but the judge did not 
think that that was what he wanted to hear at that particular 
time.
    Senator Faircloth. Dr. Kelley, you have been with the 
department a long time, although you have just become the 
director.
    Dr. Kelley. That is correct.

                     chartered health care contract

    Senator Faircloth. In May there was a lot of publicity on a 
contract between the District and Chartered Health Care. As I 
understand, Chartered Health Care has a contract with the 
District to provide services to patients covered by Medicaid. 
The District then reimburses Chartered for its services.
    There is a dispute as to whether Chartered is entitled to 
$37 million to cover services it provided between 1992 and 
1994. The chief financial officer has blocked the payment to 
Chartered.
    Could you tell us just exactly in plain language what is 
going on?
    Dr. Kelley. With your indulgence, I would like to ask Dr. 
Offner to come----
    Senator Faircloth. I am sorry?
    Dr. Kelley. I would like to have Dr. Offner come to the 
table, please. He is our deputy director for Health Care 
Finance.

                    money owed chartered health care

    Dr. Offner. Mr. Chairman, the answer to the question is 
that there has been, as you said, a disagreement about how much 
money was owed Chartered. The chief financial officer has 
written Chartered indicating that it is his view that all the 
District owes Chartered is a little in excess of $6 million. At 
this point the chief financial officer informed Chartered it is 
up to them to either accept that or indicate that they are not 
going to accept that. To date they have not done that yet.
    Senator Faircloth. How much was first proposed to pay them?
    Dr. Offner. I beg your pardon?
    Senator Faircloth. Was $18 million proposed at one point to 
pay to Chartered?
    Dr. Offner. My agency signed an audit settlement, of I 
believe, around $18 million, and that has, as I said, been held 
up by the chief financial officer.
    Senator Faircloth. Was it not the Mayor's desire to send 
them the $18 million? Was your department not ready to send 
them $18 million with the acquiescence of the Mayor?
    Dr. Offner. That is my understanding.
    Senator Faircloth. You mean you do not know?
    Dr. Offner. Well, Mr. Chairman, I do not know that the 
Mayor has ever expressed himself on this subject, but that was 
certainly my understanding of his position.
    Senator Faircloth. Well, how anybody could propose or think 
about sending $18 million for a $6 million bill is more than I 
can comprehend.
    But the chief financial officer stopped it.
    Dr. Offner. That is correct.
    Senator Faircloth. And has offered what?
    Dr. Offner. He has offered the amount of a little over $6 
million.

                      audit chartered health care

    Senator Faircloth. Were you in on the audit?
    Dr. Offner. My agency conducted the audit.
    Senator Faircloth. How much do we owe them?
    Dr. Offner. The audit conclusion was the amount that the 
chief financial officer has authorized, a little in excess of 
$6 million.
    Senator Faircloth. Your department said you owed them $6 
million.
    Dr. Offner. Well, Mr. Chairman, it is unfortunately a 
little more complicated than that. At the time in question, 
between 1992 and 1994, Chartered was being paid on a cost 
basis. Then Congress in its wisdom 2 years ago changed the law 
to retroactively change the rules in effect under which 
Chartered was paid. So, there's a dispute now about the 
methodology on the basis of which Chartered should be paid.
    Senator Faircloth. But your department decided that you 
owed them $6 million.
    Dr. Offner. That is correct.
    Senator Faircloth. All right. Why would you consider paying 
them more? All right, thank you.

                   tenure of director of public works

    Mr. Bernardino, you have been here 18 months you said. You 
came in October.
    Mr. Bernardino. Yes; I think it is 10 months, but I was the 
deputy director for the 4\1/2\ years before that.
    Senator Faircloth. For how long?
    Mr. Bernardino. I was hired when I came to Washington to 
DPW in December 1991. I was hired as the deputy director.
    Senator Faircloth. You were hired when?
    Mr. Bernardino. December 1991.
    Senator Faircloth. I assume from the speech you gave that 
you have done an enormous amount of research into the history 
of what has gone on in the city and the Department of Public 
Works. In good, plain language, tell me why the city is in such 
an absolute dismal shape as far as public works is concerned. 
What happened?
    Mr. Bernardino. Let me just say that the per capita 
spending on public works, as you have seen, for street repair 
and sanitation is among the lowest in the country, and it was 
lower than the other cities surveyed by the Control Board.
    Senator Faircloth. Wait 1 minute. Was the money not 
appropriated by the Federal Department of Transportation? Was 
the money not sent to the city for street repair?

             Forty percent of streets federal aid eligible

    Mr. Bernardino. Only 40 percent of the District's streets 
are Federal aid eligible. So, the situation that we have is 
that we have money to resurface and occasionally reconstruct 40 
percent of the District's streets. In the 5-plus years that I 
have been there--and my understanding is for at least the last 
decade--there has been very little local funding available for 
the other 60 percent of the streets, and there has been no 
maintenance.

                         maintenance of streets

    Senator Faircloth. There has been no maintenance.
    Mr. Bernardino. As a former public works director, I am 
sure you know that resurfacing is not enough. You must crack 
seal periodically. You must slurry seal. The District has 
simply not had the funding and has not done the maintenance 
over the last decade. So, what we are seeing in terms of the 
potholes is a decade of neglected maintenance coming home to 
roost.
    Senator Faircloth. The streets of Washington have been 
neglected for a decade or more. Is that not right?
    Mr. Bernardino. Well, in terms of maintenance, the funding 
has just not been there at least in the 5\1/2\ years that I 
have been there. My understanding is that the department has 
not been able to do systematic crack sealing, slurry sealing, 
and other maintenance.
    As you are aware, the Federal funding is not available for 
maintenance and, as I said, is only available for 40 percent of 
the streets. That forces public works to compete with every 
other department for limited capital funding, and that is a 
situation that other States and cities do not find themselves 
in.
    Senator Faircloth. This funding comes on a matching basis, 
is that not right?
    Mr. Bernardino. Correct.

                    matching money for federal funds

    Senator Faircloth. All right. Did Washington always have 
the matching money to receive the Federal funds?
    Mr. Bernardino. Well, always except for the situation we 
got in 2 years ago when we did not have the match and the 
Congress voted to provide a deferral of match for 2 years.
    Senator Faircloth. Has money been diverted from the Public 
Works Department, and money that should have gone to the public 
works, has it been diverted to some other aspect of government?
    Mr. Bernardino. Well, I do not think it is a question of 
diversion. It is a question of priorities and limited funding. 
Everything that the funding gets used for, whether it is 
police, fire, is important, and there is a limited pot. As I 
said, it is kind of a unique situation where road maintenance 
and road reconstruction has to compete with hospitals and 
schools and other capital items.
    Senator Faircloth. How many ladder fire trucks have you got 
today that are cocked, primed, ready to fight a fire? You have 
got 16. How many of them are ready to go at this moment?
    Mr. Bernardino. I have no responsibility for fire. I would 
have to defer.
    Senator Faircloth. You what?

                   responsibility for fire department

    Mr. Bernardino. I don't have any knowledge of or 
responsibility for the Fire Department. We do not handle their 
fleet. The Fire Department does its own vehicle maintenance. 
Police, fire, and schools do their own. We do the rest.
    Senator Faircloth. Have funds paid to the utilities been 
put into the general fund?
    Mr. Bernardino. Funds paid to the utilities?
    Senator Faircloth. The utility funds. Have they gone into 
the general fund and not come back for the maintenance of 
utilities?
    Mr. Bernardino. I am not sure what you are referring to, 
sir. If you are referring to the rights-of-way funding, that 
has not been implemented yet.

                              water funds

    Senator Faircloth. I am asking aboat money from, say, the 
water department. Has that gone back into the general fund? How 
is that handled? Pay the water bill. Where does the money go?
    Mr. Bernardino. Well, the water funding--and again, I am 
going to have to defer because that is no longer part of public 
works. That is now a separate authority.
    But traditionally for the time I have been here, it has 
been a separate enterprise fund for water and sewer, separate 
from the public works budget.
    Senator Faircloth. You know, 59 percent of the city's 
contracts--I feel like I am just somewhat wasting my time here 
because nobody has been on the job, nobody can give us an 
answer. You have been there since October and there is 
consistent shifting.

                    percent of contracts sole-source

    But 59 percent of the city's contracts are sole-sourced. 
Now, can you give me an explanation of that?
    Mr. Bernardino. Not for the city's contracts.
    Senator Faircloth. Not what?
    Mr. Bernardino. Are you speaking about just public works?
    Senator Faircloth. Public works.
    Mr. Bernardino. Fifty-nine percent?
    Senator Faircloth. Yes.
    Mr. Bernardino. No; you mean citywide.
    Senator Faircloth. No; this is total city contracts.
    What percentage of yours are sole-sourced?
    Mr. Bernardino. I am being told probably less than 5 
percent.
    I am being told by staff that it is less than 5 percent in 
DPW.
    Senator Faircloth. All right. Then 59 percent of city 
contracts are sole-sourced. Mr. Casey, can you tell me what 
percent of yours are?
    Mr. Bernardino. It would be a small percentage of our 
contracts. All of our contracts are competitively bid. There 
are some cases where there is a continuity of services and that 
you would want the same contractor, but that is rare. That is 
not the rule.
    Senator Faircloth. Dr. Kelley, could you tell me what 
percent of the contracts in your department are sole-sourced?
    Dr. Kelley. No; I cannot tell you exactly, but I do know 
that----
    Senator Faircloth. Well, I will take close figures.
    Dr. Kelley. No; I do not have any figures at all, but I can 
say it is a very small number.
    Senator Faircloth. Well, if you have a small number, Mr. 
Casey has a small number, Mr. Bernardino has a small number, 
how does it wind up that 59 percent of the total contracts of 
the city are sole-source? Now, we heard testimony from Dr. 
Brimmer that contract after contract was coming through just 
below the amount that required supervision. In other words, 
contracts that were repetitive were coming through.
    Mr. Casey. In the last 2 years, we have paid real close 
attention to what was a competitive sole-source process for 
years. The numbers you are talking about are 1995 numbers. In 
1996 and 1997, we have done everything humanly possible not to 
let sole-source contracts out, and the Control Board, who 
oversees our contract process, does not let that happen.
    Senator Faircloth. What is the limit to which a contract 
does not have to go before the City Council?
    Mr. Casey. Under $1 million.
    Senator Faircloth. What?
    Mr. Casey. Under $1 million.
    Senator Faircloth. Well, Dr. Brimmer was saying a lot were 
coming through and had in the past come through for under $1 
million.
    Mr. Casey. And I agree in the past that was the case. In 
1996 and 1997, we have made a concerted effort for that not to 
be the rule.
    Senator Faircloth. Ms. Kelley, do you read the Washington 
Post?
    Dr. Kelley. Yes; I do.

                   management of district of columbia

    Senator Faircloth. Did you see the article that ran Sunday 
and Monday?
    Dr. Kelley. Yes; I did.
    Senator Faircloth. What did you think?
    Dr. Kelley. From the perspective of the Department of 
Health? I thought that there was some misinterpretation of some 
of the figures and some miscommunication as to the kinds of 
things that we do. I am not denying that there may not be some 
problems within the District government in terms of our 
delivery of services.
    Senator Faircloth. There may not be some problems. That is 
an understatement, but go ahead. I am sorry.
    Dr. Kelley. But there were some discrepancies in terms of 
the way the figures were presented.
    Senator Faircloth. As a citizen of the city of Washington--
do you live in Washington?
    Dr. Kelley. Yes; I do.
    Senator Faircloth. What did you think of it as a citizen 
when you read the whole thing?
    Dr. Kelley. Well----
    Senator Faircloth. Were you proud to be a citizen of 
Washington after reading that?
    Dr. Kelley. I will always be proud to be a citizen of 
Washington. I do think that there are areas where there is 
improvement needed. There are areas where we are in the process 
of making improvements, and I will always, as I said, be proud 
to be a citizen of the District of Columbia.
    Senator Faircloth. Well, I understand that. It is the 
Capital of the Nation. We are all proud of it.
    Mr. Casey, did you read it? What did you think?
    Mr. Casey. Let me talk about this from a manager's point of 
view. I am a manager of managers. The city has taken an effort 
to improve the quality of managers. We have people----
    Senator Faircloth. When did this take place?
    Mr. Casey. When did which take place?
    Senator Faircloth. We have been hearing the same thing now 
for years.
    Mr. Casey. That is why I am telling you----
    Senator Faircloth. The management of Washington did not 
start last week. It started years ago, and we have been talking 
and hearing about the improvements that were going to happen, 
and none of them have happened.

               improvement in the city of washington, dc

    Mr. Casey. Let me say that I am a living witness to it, 
that there are improvements in the city of Washington, DC. I 
have been a part of those improvements. We have done the kinds 
of things that the Control Board suggested and the Congress 
suggested by downsizing and cutting the budget to comply with 
the Congress' 1998 budget mandate. We have done everything 
humanly possible to make all those kinds of things happen.
    We had a symposium for over 300 managers 2 weeks ago. It 
was well attended. The managers thought it was an excellent 
symposium. We have other symposiums planned for the future. We 
are addressing the lack of management skills in the District 
government. When people retired, they left a void and we 
understand that. The government and the Mayor and the city 
administrator have done everything humanly possible to identify 
those managers who have weak skills. We are moving forward with 
that, and I am pleased to say we are making progress.
    Senator Faircloth. Mr. Bernardino, did you read it?
    Mr. Bernardino. Yes.
    Senator Faircloth. What did you think?
    Mr. Bernardino. Well, on balance, first of all, the 
commentary on public works was positive.
    Senator Faircloth. The article was positive on public 
works.

             per capita spending on sanitation and streets

    Mr. Bernardino. On public works.
    I thought that the media continues to not report all the 
things that we have done in terms of becoming a performance 
based organization.
    I also thought that the areas where problems were 
identified--and there were two, sanitation and streets--
correlated with the spending which shows us lowest among all 
the cities surveyed on per capita spending on sanitation and 
streets.
    But overall, there was acknowledgment of some of the 
efforts we were making in public works, and I thought it was 
balanced coverage.

                       director of public health

    Senator Faircloth. Dr. Kelley, do you know why the Mayor 
fired Dr. Sloan?
    Dr. Kelley. No, sir.
    Senator Faircloth. Was he fired for speaking out and saying 
what he thought?
    Dr. Kelley. I do not think that Dr. Sloan has been fired. 
Dr. Sloan is still working within the government in a policy 
area in the Mayor's office.
    Senator Faircloth. Why was he replaced as health director?
    Dr. Kelley. I think that, as far as I know, he was in an 
acting position. Once the new department was formed and it was 
understood that there would be a search, a nationwide search, 
for a new director of the Department of Health, he was one of 
the candidates. It is my understanding that of the candidates 
that were available to the Mayor, he then made a selection and 
Dr. Sloan was not the selectee.
    Mr. Casey. Senator, I think Mr. Rogers is here. That person 
reported directly to Mr. Rogers. I think he would be the 
appropriate person to respond to that and some other issues 
that you raised, if you would allow that.
    Senator Faircloth. Who was that now?
    Dr. Kelley. City administrator, Mr. Rogers.
    Senator Faircloth. Mr. Rogers had an opportunity to 
testify. He knew about the hearing. He did not request to do 
so. We cannot have hearings in which people simply walk in to 
testify. We have to have notice in advance, and he did not give 
us advance notice. There will be other hearings, I can assure 
you, and Mr. Rogers will be given an opportunity to testify.

                 deterioration of basic infrastructure

    I have listened to the testimony and it is testimony we 
have heard before, not by you all, as there has been a constant 
change in people. What we have seen is a constant deterioration 
of the basic infrastructure of the city over the years. I am 
talking on the long haul, as you said, Mr. Bernardino, 10 years 
with no maintenance to the street system.
    This is a problem of concern that faces not only the 
citizens of Washington but the people of the Nation because it 
is the Capital. I hear the reports of what is going to happen 
and how it is happening. Yet we have heard these reports and 
commitments from the Mayor many, many years in the past, and we 
have seen a continuous deterioration of the infrastructure of 
the city and the management of it.
    I must say that you all, each of you is relatively new on 
the job--Mr. Bernardino since October; Mr. Casey, 18 months; 
and Dr. Kelley, a couple of weeks. You are in an extremely 
difficult position to try to defend the deterioration in 
various departments that has gone on for literally a decade and 
more.
    I thank you for coming. I thank you for being here, and I 
thank you for your testimony. We will have other hearings later 
on.
    Mr. Casey. May I say something in closing, Senator?
    Senator Faircloth. Yes.
    Mr. Casey. The Mayor has never interfered not one time in 
my day-to-day operation of the Department of Human Services.

                      changing of management style

    Let me say we are on the upswing. We are going to be a 
different city when we get through this budget crisis, and we 
have had serious budget reductions. We have lost thousands and 
thousands of employees. We know we have to go through that 
because with that, there is some pain. In order to improve the 
city's quality of life, we have got to go through that process, 
but we are going through it. We have held our heads high. We 
have made the tough decisions that we need to make to improve 
service delivery.
    I think we have been on a kick Washington, DC, bandwagon 
for some time, and that needs to change because we are changing 
our management style. We are changing the way that we deliver 
services. We are committed to providing quality services to the 
citizens of the District of Columbia and anybody who comes to 
visit the city. I think the Mayor has done a wonderful job in 
that regard with transformation. It is painful. We have gone 
through it, and we are going to improve the quality of life in 
the city.
    I have been a government employee longer than I have been 
in the Department of Human Services, and I am committed to that 
personally.

                     Additional committee questions

    Senator Faircloth. Well, there is a Nation and a city out 
there hoping that what you say is true.
    Mr. Casey. It will be true. Thank you.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]
                Questions Submitted by Senator Faircloth
    Question. The city's fiscal year 1998 budget proposal reports that 
the department provides educational programs in the D.C. Public 
Schools. Please describe these educational programs. What do these 
programs cost? Are the programs funded by city or federal funds?
    Answer. The D.C. Public Schools program is one of the components of 
the Solid Waste Education and Enforcement Program within the Department 
of Public Works (DPW) Solid Waste Management Administration. The goal 
of the school program is to shape the sanitation habits of the city's 
youth so that they will engage in clean, healthy and safe practices as 
adults. Sanitation presentations are made to students, pre-K through 
12th grade, about their responsibility to practice proper sanitation. 
In-class sessions are reinforced through a variety of methods including 
school cleanups and projects, alley walk-throughs where students 
actually see the effects of poor sanitation habits (i.e., active rat 
burrows), and poster campaigns. This program reached 2,116 students in 
33 educational sessions across the city during the 1996-97 school year.
    The DPW employees who present educational programs in the D.C. 
Public Schools do so in addition to their other responsibilities 
without additional pay. These employees are also responsible for 
compiling data about rat infestation in targeted District 
neighborhoods, meeting with community groups, and implementing 
neighborhood clean-up assistance, our Helping Hand program. Without a 
job costing system there is no accurate method to isolate the cost of 
the educational program in the schools.
    In the proposed fiscal year 1998 budget, the Solid Waste Management 
Administration developed its annual funding needs on a program-by-
program basis. The Helping Hand/School Outreach program is projected to 
cost $140,227 in fiscal year 1998, and the program is to be funded out 
of Local (appropriated) funds.
    Question. The Metropolitan Police Department entered into its 
Memorandum of Understanding with the Mayor, Police Chief, City Council 
Chair and others to carry out badly needed reforms. The results were 
immediate--arrests are up and crime is down. Do you think putting in 
place a model like the Police Department's MOU would benefit the 
department?
    Answer. That greater independence and flexibility would be required 
for DPW if the department was to fully implement performance based 
management was recognized shortly after the Financial Authority 
dedicated funds in the fiscal year 1996 budget for DPW's ``Performance 
Pilot''. A year's worth of work has already gone into the development 
of an MOU that would provide the director of DPW with more flexibility 
to innovate, more authority to hire, fire and conduct procurement and 
legal reviews within the department, and other relief from the 
unpredictable and uncontrollable timeframes associated with central 
reviews and approvals. This enhanced authority and flexibility would be 
granted in return for a commitment to develop and be held strictly 
accountable for measurable outcomes, within the framework of 
performance based management. The MOU is currently at the Financial 
Authority for review.
    Question. In the Department's 1998 budget request, the number one 
priority for next year is ``cleaning up the city''. To achieve that 
goal the department has asked for an increase of $4.3 million and 72 
FTE's to support an expansion in the street and alley cleaning program. 
The Mayor recently requested the federal government to expand the 
definition of ``work'' to include unpaid volunteers so the city can 
comply with the welfare reform law. Has your Department given any 
consideration to recruiting such volunteers for the cleaning program as 
a way of preventing current welfare recipients from being denied their 
benefits after October 1, 1997? What are the Department's thoughts 
about such a proposal?
    Answer. The Department has always been open to the use of 
nontraditional labor to assist us in our efforts to keep the District 
clean. Several years ago, the Solid Waste Management Administration 
participated with the D.C. Superior Court and Office of the Public 
Defender in a weekend alternative sentencing program for minor 
offenders (e.g., DWI, DUI). Participants in this program cleaned large 
public areas including roads, hillsides and tree boxes. While this 
program lapsed due to inconsistent participation, the Department is 
investigating the logistics of its resumption. To date we have not 
focused on recruiting welfare recipients. The Department is currently 
using inmate labor to clean problem public spaces and abate sanitation 
violations on vacant lots. This program is quite effective, and to the 
Department proposes to double the funding to pay for the inmate labor 
in fiscal year 1998.
    The Department will meet with the Department of Human Services to 
explore how we can further the Mayor's proposal to effectively utilize 
volunteers who receive welfare benefits.
    Question. It has been reported that the District's procurement 
officers recently attended a week of classes. How many procurement 
officers are employed by the Department?
    Answer. Since July 1996, a series of one week procurement courses 
were offered to all District procurement personnel. Of the six (6) 
courses, all procurement personnel were required to take the General 
Public Purchasing and Materials Management classes. All DPW procurement 
personnel have taken at least two (2) of the courses.
    The following is a course listing: General Public Purchasing and 
Materials Management; Government Contract Law; Writing Performance 
Based Statements of Work; Cost & Price Analysis; Negotiations vs Sealed 
Bidding; and Contracting Officer's Technical Representative.
    There is one Agency Chief Procurement Officer and twenty-three 
Contract Specialists in the Department of Public Works.
    Question. Solid Waste Management is responsible for trash 
collection, street cleaning and snow removal. These jobs involve the 
use of expensive equipment. Have any of these services been contracted 
out to private companies? If so, what percentage? If not, why not?
    Answer. The Department's Solid Waste Management Administration 
contracted with a private company for its curbside recycling 
collection, processing and marketing service prior to the program's 
suspension in January, 1997.
    The Department is currently in the process of contracting out its 
solid waste disposal operations. The solid waste disposal program is a 
support operation that does not provide direct service to citizens of 
the District. It is an industrial operation, and maintenance of the 
facilities is expensive. The two in-town transfer stations are old and 
require millions in capital funds to upgrade and modernize. We believe 
that this service could be provided by the private sector in a more 
cost effective manner. A Request for Proposals (RFP) is being crafted 
to provide a long-term (15 years) solution to handling the 200,000+ 
tons of waste moving through the transfer stations each year. The REP 
will request offerors to provide a comprehensive solution for our 
disposal needs, and offer the use of either or both of the two in-town 
facilities, if private capital is invested in them. Our target start 
date is the winter of 1999. The Department is also considering testing 
managed competition on public litter can installation, maintenance and 
collection.
    Question. One of the most difficult questions to answer about the 
District's government is how many people are actually employed by the 
different departments. How many people are employed by the department? 
Please break this number down into full-time and part-time employees.
    Answer. In the original fiscal year 1995 budget, DPW was authorized 
2,509 positions overall, and 1,366 locally-funded positions. In fiscal 
year 1997 the agency has a total of 1,841 authorized positions overall 
and 1,085 locally-funded positions.
    Of the total authorized positions within the agency, there were 
1,669 filled as of June 30, 1997 of which 1,132 were locally-funded 
positions. There are 4 employees who are part-time within the 
Department of Public Works.
    Question. The fleet management division of the department is 
responsible for all of the District's fleet and mobile equipment. Is 
any of this equipment leased by the District? If so, what percentage is 
leased, and what are the cost savings to the District by leasing this 
equipment?
    Answer. DPW's Fleet Management Administration (FMA) is responsible 
for servicing all of the District's fleet and mobile equipment with the 
exception of police, fire and public schools. Leased equipment/vehicles 
account for about 6 percent of the total serviced by FMA. Currently 
each District agency (including the business units within DPW) owns its 
own vehicles. Decisions about fleet size and compliment, acquisition 
and replacement, even maintenance are made by the owner, sometimes but 
not always in consultation with FMA. Under this structure DPW is not in 
a position to control or even track citywide vehicle costs, and finds 
it very difficult to influence vehicle utilization, control fleet size 
or enforce maintenance schedules. Three different management audits 
over the last five years, including one done pro bono by PEPCO have 
recommended that DPW's Fleet Management Administration own all of the 
vehicles it services and lease them to users.
    Based on the recommendations of these management audits DPW 
developed a comprehensive strategy and plan to transform FMA into the 
District's ``Full Service Vehicle Leasing Company.'' FMA would own all 
of the vehicles it services and support not only maintenance and repair 
operations but also regularly scheduled vehicle replacement out of 
mileage and usage fees charged to users. Unfortunately we have not been 
able to implement this new approach because like any other business 
start up it would require substantial up front capital (we estimate $7-
$8 million) which has not been available. We project that this 
arrangement would allow FMA to reduce the overall size of the fleet it 
services by 10-15 percent because having to make monthly or quarterly 
lease payments (as opposed to buying vehicles with capital funds) would 
encourage user agencies to be more disciplined about planning vehicle 
utilization and controlling vehicle related costs. FMA would also be 
able to charge financial penalties for missing scheduled maintenance.
    Leasing vehicles, particularly through the kind of fleet master 
leasing program that other cities and states have used has the 
potential to reduce vehicle costs. However that option will be 
available to District agencies for the first time in fiscal year 1998. 
The FMA ``leasing company'' being performance based will have 
incentives to get the best deal it can. It will buy and/or lease 
vehicles and equipment for lease to user agencies based on costs and 
customer requirements.
    While there is certainly the potential to save money by using 
different financing mechanisms, the biggest challenge for DPW is 
finding a way to replace vehicles on a schedule, based on their useful 
life. There has been no funding available to support systematic vehicle 
replacement. As a result the mission critical heavy vehicles and 
equipment that are used to provide DPW's core services have an average 
age of 10+years (by contrast, Indianapolis turns over its entire fleet 
every five years, systematically replacing one-fifth each year out of 
the operating budget). We regularly spend more on maintaining vehicles 
than they are worth, but user agencies are afraid to dispose of old 
vehicles because it is so hard to get replacements.
    Question. A recent Washington Post article indicates that some city 
services are lean and reasonably efficient. The article compliments the 
department for some of the management improvements the department has 
initiated, such as having successfully repaired snow plows and 
sanitation trucks and redesigned garbage routes. The articles also 
indicate that the department will soon hold managers responsible for 
the cleanliness of their sanitation districts. At the same time, the 
article cites that in some areas, District spending is ``arguably 
undernourished'' because the city spends less on pothole repair and 
resurfacing than do most cities. The article indicates that in your 
case--in contrast to most other departments in the District--the lack 
of resources may very well be a legitimate problem. What can you tell 
the committee about this situation?
    Answer. DPW's core services, all ones that people value most have 
been underfunded for many years:
  --Appropriated or Local funds (i.e., funds derived from local 
        revenue), which constitute the budget for DPW's core service 
        (sanitation, infrastructure maintenance, motor vehicle 
        inspection, licensing, registration and related activities, 
        tree, streetlight and traffic signal maintenance, etc.) 
        declined from $106.5 million in fiscal year 1988 to $79.8 
        million in 1994. The fiscal year 1995 appropriated budget 
        increased to $89.1 million, but was down again to $84.1 million 
        in fiscal year 1996 (after a mid-year adjustment). The increase 
        to $95.7 million for fiscal year 1997 sounds promising when 
        compared with prior years and allows DPW to resume suspended 
        core services like bulk trash collection and scheduled alley 
        cleaning. However our rough estimate (activity based costing 
        will facilitate more accurate projections) of the level of 
        Local funding that would be necessary annually to provide all 
        core services at a level that the vast majority of residents 
        would consider satisfactory is in the range of $120-$140 
        million.
  --Appropriated/Local funds positions (almost all of the direct 
        service positions) have declined from 1,939 in fiscal year 1988 
        to 1,085 in fiscal year 1997. This loss of personnel has been 
        compounded by the series of ``easy out'' and ``early out'' 
        retirement incentives that resulted in the loss of many of 
        DPW's most experienced employees, and the positions that they 
        formerly occupied.
  --The structure of DPW's budget makes it difficult to prioritize 
        mandatory budget reductions. Sanitation has ended up absorbing 
        proportionally more cuts because it accounts for the largest 
        share of appropriated/local funds and produces little revenue. 
        The Transportation Systems Administration by contrast (the DMV 
        functions) is hard to cut because almost everything it does is 
        revenue producing.
  --The District's federal aid eligible roads and bridges account for 
        only 40 percent of the city's mileage. The other 60 percent 
        (the ``neighborhood streets'') have to compete with schools, 
        hospitals, fire equipment, the WMATA subsidy, etc. for limited 
        G.O. bond debt funds. On the federal aid side the District 
        (with the exception of 1995 and 1996) has been able to match 
        the annual FHWA allocation. However unlike many state DOW's, 
        DPW cannot afford to have designs on the shelf or to spend at a 
        rate that moves projects to construction as quickly as FHWA 
        would like, thereby avoiding a backlog of projects. We estimate 
        that the District's (recently created) $33 million 
        transportation trust fund would have to provide at least $45 
        million annually in order for DPW to match the performance with 
        federal aid projects of the state DOT's that it is frequently 
        compared with. On the local side we estimate that there are at 
        least $80 million in critical local street repair needs that 
        would be addressed on a priority basis in the next two years if 
        funding was available. If that investment was made we would 
        then need to spend $20-$25 annually on local street repair and 
        maintenance, to keep them in good shape. Compare these 
        estimates with the average annual amounts budgeted for local 
        street repair ($15 million) and maintenance ($4 million) of 
        over the last five years and its easy to understand why there 
        are potholes. Our estimates are conservative and we believe 
        that the Federal Highway Administration would concur with them.
  --DPW generates between $110-$120 million in revenue (considerably 
        more than it gets back in budget) each year and may be able to 
        operate more effectively as a revenue driven enterprise that 
        makes greater use of direct charge fees for service. While 
        people tend initially to react negatively to this proposal, 
        viewing it as an addition to their already high tax burden, 
        taxes can be reduced proportionally. The benefit of this 
        approach is a relatively predictable and stable revenue stream 
        which would allow DPW to plan, and to guarantee a level and 
        quality of service to its customers from year to year instead 
        of being hostage to annually fluctuating appropriations. This 
        approach would compliment performance based operation.
                         public parking spaces
    Question. On average, and not counting designated ``rush hour'' 
times, how many public parking spaces are there currently available for 
privately-owned vehicle parking in the District? Has that number 
increased or decreased over the last ten years, and by how much? What 
activities has the District recently taken or is it currently taking to 
improve the availability of parking in the District of Columbia?
    For the last ten fiscal years, how much gross revenue has public 
space parking generated for the District of Columbia, enumerated by 
year?
    From fiscal years 1987 to 1997 under the D.C. proposed fiscal year 
1998 budget, how many District employees (FTE's) in DPW or elsewhere 
have been and are responsible for the regulation, enforcement, 
collection, adjudication, administration, and other activities related 
to public space parking?
    Are DPW parking control aides (``meter maids'') given any 
incentive, of any kind, positive or negative, that are intended to or 
that influence the number of parking tickets they issue?
    Answer. There are 263,500 on street parking spaces available for 
the parking of privately-owned vehicles in the District of Columbia. 
This consists of metered spaces, restricted zone parking for residents 
and other unrestricted spaces. The number of on-street parking spaces 
has increased over the last ten years by some 3,200 spaces as a result 
of removing obsolete restrictions; e.g. entrances, no parking zone, 
etc. Additionally, in December 1993, 260 off-street parking spaces were 
made available at the Mt. Vernon & L Street, N.W., Municipal Parking 
Lot. (The municipal parking lot, an interim facility, is physically 
located on the proposed site for the convention center and will no 
longer be available for parking once construction begins).
    There are on-going efforts throughout the City toward improving 
parking availability through monitoring existing on-street parking 
regulations. We recently completed a study in the Georgetown area where 
over 400 additional on-street parking spaces have been identified by 
removing obsolete restriction. The appropriate sign revisions should be 
completed by early fall.
    The District's State Transportation Plan proposes parking garages 
or lots at locations where drivers could park once and get on transit 
or take some other form of transportation and get around the city. It 
is anticipated that these parking facilities would be developed in 
partnership with and be operated by the private sector parking 
industry.

                                                         GROSS REVENUE FROM PUBLIC SPACE PARKING                                                        
                                                                                                                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            1256 Meter                  
                     Revenue source                       1501 Ticketing  1504 Boot fees   1505 Tow fees   1506 Storage       revenue          Total    
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal year:                                                                                                                                            
    1987................................................     $35,808,223        $337,377        $639,722        $188,342      $9,718,017     $46,691,681
    1988................................................      41,590,392         390,790         688,968         126,435      10,507,811      53,304,396
    1989................................................      44,404,760         421,000         598,854         131,934      10,471,775      56,028,323
    1990................................................      52,871,493         642,950         492,103         184,010      11,080,112      65,270,668
    1991................................................      55,746,019       1,232,995         855,265         285,531      12,325,184      70,444,994
    1992................................................      57,222,126       1,031,675         566,340         193,390      13,164,140      72,177,671
    1993................................................      56,302,185       1,107,650         761,715         240,525      13,015,764      71,427,839
    1994................................................      51,634,382         976,860         885,611         289,033      12,818,822      66,604,708
    1995................................................      46,292,015         459,450         778,005         235,814      12,648,209      60,413,493
    1996................................................      46,312,437         382,036         436,565         191,441       9,497,322      56,819,801
    1997................................................      41,595,129         226,850         436,481         167,795       4,506,732      46,932,987
                                                         -----------------------------------------------------------------------------------------------
      Total.............................................     529,779,161       7,209,633       7,139,629       2,234,250     119,753,889     666,116,562
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Revenue collected from October 1996 through June 1997.                                                                                            

    All funds generated from public space parking have been placed in 
the General Fund. The total employees responsible for parking 
enforcement and management since fiscal year 1987 are as follows:

        Fiscal year
1987....................................................................
1988....................................................................
1989..............................................................   291
1990..............................................................   291
1991..............................................................   285
1992..............................................................   295
1993..............................................................   335
1994..............................................................   328
1995..............................................................   290
1996..............................................................   245
1997..............................................................   245

    Parking Control Aides (PCA's) are salaried employees responsible 
for enforcing parking regulations through the issuance of notice of 
infraction (tickets) to violators of the District of Columbia Municipal 
Regulations. There are no incentives, positive or negative, to 
influence the number of parking tickets issued by PCA's. Note that 
studies show that no more than 10-15 percent of parking infractions are 
caught.

                         conclusion of hearings

    Senator Faircloth. Thank you, Mr. Casey, and this concludes 
our hearings.
    [Whereupon, at 11:12 a.m., Wednesday, July 23, the hearings 
were concluded, and the subcommittee was recessed, to reconvene 
subject to the call of the Chair.]


       LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS

                              ----------                              
                                                                   Page
Barry, Hon. Marion Jr., Office of the Mayor......................     4
    Letter From..................................................    54
    Prepared statement...........................................     9
Bernardino, Cellerino, acting director, Department of Public 
  Works..........................................................   155
    Prepared statement...........................................   158
Boxer, Hon. Barbara, U.S. Senator from California, questions 
  submitted by...................................................    79
Brimmer, Andrew F., chairman, Financial Responsibility and 
  Management Assistance Authority................................    29
    Prepared statement...........................................    39

Casey, Wayne D., interim director, Department of Human Services..   137
    Prepared statement...........................................   138
Cropp, Linda W., acting chairperson, Council of the District of 
  Columbia.......................................................    17
    Prepared statement...........................................    23

Faircloth, Hon. Lauch, U.S. Senator from North Carolina, 
  questions submitted by.........................................
  25, 76, 103, 130, 140, 149, 186................................

Hutchison, Hon. Kay Bailey, U.S. Senator from Texas, prepared 
  statement......................................................    92

Kelley, Marlene, M.D., interim director, Department of Health....   147
    Prepared statement...........................................   148

Moore, Margaret, director, Department of Corrections.............   107
    Prepared statement...........................................   110

Rogers, Michael C., city administrator, District of Columbia, 
  prepared statement.............................................   174

Soulsby, Larry, police chief, Metropolitan Police Department.....    93
    Prepared statement...........................................   100


                             SUBJECT INDEX

                              ----------                              

                          DISTRICT OF COLUMBIA

                  Council of the District of Columbia

                                                                   Page
Budget:
    Director available...........................................    21
    Hearing on fiscal year 1998..................................    20
    Increase in fiscal year 1998.................................    20
Council and Authority budgets, difference between................    18
Council's budget, support of.....................................    17
Department of Corrections, difference between Council and 
  Authority in...................................................    19
Economic development, difference in..............................    18
Government direction and support, reductions in..................    20
Management problem...............................................    21
Medicaid cost....................................................    22
Pension liability, unfunded......................................    22
Police Department, difference between Council and Authority in...    19
Regulatory commission............................................    21
Spending, hearing on actual fiscal year 1996.....................    20
Structural problems..............................................    22
Tenant assistance program........................................    19
Training.........................................................    21

                       Department of Corrections

Accomplishments of past 3 years..................................   110
Additional $15 million...........................................   118
Applicants, pool of..............................................   129
Budget:
    Council's proposed...........................................   108
    Fiscal year 1998 Department of Corrections...................   108
    Recommendation on fiscal year 1998...........................   125
Communication system.............................................   117
Correction system, privatization or federalization of............   123
Correctional employees in need of pay raise......................   122
Court orders, number of..........................................   127
D.C. General Hospital, services rendered by......................   109
D.C. jail:
    Population...................................................   127
    Receiver at..................................................   127
Department of Corrections:
    Comprehensive study of.......................................   129
    Mismanagement in.............................................   126
    Overtime pay in..............................................   120
Drug testing program.............................................   120
Drugs:
    Number of inmates testing positive...........................   121
    Number testing positive for..................................   120
Facilities, inadequacies of......................................   123
Federal Bureau of Prisons, payment to............................   110
Felons in system, number of......................................   124
Georgetown coffee shop murders...................................   115
GSA doing purchasing request.....................................   119
Guards to inmates, number of.....................................   127
Halfway house beds, contract.....................................   109
Incidences of violence...........................................   107
Lorton:
    Escapes at...................................................   121
    Security at..................................................   121
Mayor's Office, employees detailed to............................   124
Mayor's Security detail..........................................   114
Medical receiver.................................................   108
Medical services.................................................
  108, 126.......................................................
National Institute of Corrections, study by the..................   107
Park Police:
    Provides help................................................   117
    Utilization of...............................................   117
Police agencies, twenty-three different..........................   117
Private sector/management flexibility............................   124
Procurement system process.......................................   119
Recruiting process...............................................   129
Repeat offenders, number of......................................   122
Report ``A Crisis in Management''................................   118
Should system be privatized......................................   128
Sick inmate population...........................................   126
Sworn police officers, number of.................................   128
Tourism..........................................................   115

                          Department of Health

Department of Health, fiscal year 1998 budget for................   147
Medicaid Program.................................................   147
Professional licensing functions, assumption of..................   148

                      Department of Human Services

Budget, Department of Human Services.............................   137
Homemaker services...............................................   137
Mismanagement....................................................   136
Performance-based organization...................................   136
Road maintenance.................................................   135
State functions..................................................   136
Welfare Reform Program...........................................   138

                       Department of Public Works

Activity-based costing...........................................   156
Basic infrastructure, deterioration of...........................   185
Budget:
    Fiscal year 1998 capital.....................................   157
    Fiscal year 1998 operating...................................   157
Chartered Health Care:
    Audit........................................................   180
    Contract.....................................................   179
    Money owed...................................................   179
City of Washington, DC, improvement in the.......................   184
Department of Administrative Services negotiate leases...........   178
Department of Human Services, number of locations for............   177
Department to transform itself...................................   156
Design, Engineering, and Construction Administration.............   157
Director of public health........................................   185
Director of public works, tenure of..............................   180
Directors of public health, tenure of............................   176
Directors of public works, tenure of.............................   177
Directors, interim or part-time..................................   176
District of Columbia, management of..............................   183
Federal aid eligible, forty percent of streets...................   181
Federal funds, matching money for................................   181
Federal highway grants...........................................   157
Fire Department, responsibility for..............................   182
Fleet Management Administration..................................   157
Governmental and environmental facilities........................   158
Interim director, time limit.....................................   176
Leases, real estate company to look at...........................   178
Maintenance of streets...........................................   181
Management style, changing of....................................   186
Mental Health Services in receivership...........................   178
Performance contracts............................................   155
Performance-based organization...................................   155
Sanitation and streets, per capita spending on...................   185
Sole-source, percent of contracts................................   182
Solid waste management...........................................   156
Transportation facilities........................................   158
Transportation Systems Administration............................   156
Vehicle replacement..............................................   158
Water funds......................................................   182

      Financial Responsibility and Management Assistance Authority

Authority's mark compared to Council's...........................    32
Bidding versus sole source.......................................    72
Budget:
    Carefully worked.............................................    39
    Detailed and exacting........................................    53
    Development of fiscal year 1998..............................    31
    Difference in school's.......................................    54
    Impact of court orders on....................................    63
    Process......................................................    31
City:
    Income earned in.............................................    67
    Number of cars coming into...................................    69
Code violations, $2 billion in...................................    64
Commuter tax.....................................................    66
Contracts:
    Above and below $1 million...................................    72
    Consideration and approval of................................    71
    Rebid of.....................................................    72
    Types of emergency...........................................    71
Corrections contracted additional beds...........................    30
Court order:
    Mental health................................................    61
    Number of segments under.....................................    62
    On population cap at jail....................................    62
    Services under...............................................    61
Court orders:
    Child welfare area...........................................    61
    Cost of......................................................    63
D.C. General, food service contract at...........................    73
Department of Administrative Services............................    38
Economic development.............................................    38
GSA, buying from.................................................    74
Juvenile detention center, population cap at.....................    63
Mayor's office, staff from agencies working in...................    75
Opening schools, court mandates on...............................    64
Performance Accountability Act...................................    60
Police pay raise, funds for......................................    30
Procurement:
    Process, number of employees in..............................    73
    Process......................................................    70
    Strategic plan for...........................................    74
    System.......................................................    69
Public management, transformation plan for.......................    53
Public safety....................................................    38
Public schools supplemental request..............................    29
Quality of services..............................................    67
Resources to fix schools.........................................    65
Revenue initiatives..............................................    39
School boilers, repair of........................................    66
Supplemental appropriation.......................................    29

                     Metropolitan Police Department

Arrests up for first 6 months....................................    95
Change schedule, suspension of 28-day notice to..................    99
Court orders.....................................................    92
Crime, reduction in..............................................    94
Decentralizing of authority......................................    97
Drug testing, random.............................................    98
Drug use in prison...............................................    91
Entry level standards reviewed...................................    99
Helicopter branch, closing of....................................    94
Improve management...............................................    97
Infrastructure, improvement in...................................    98
Memorandum of understanding......................................    95
New mission statement............................................    96
New operating model, implementation of...........................    96
Pay raise, ten percent...........................................    98
Performance and accountability...................................   100
Performance management system....................................    99
Police chief, new powers of......................................    92
Police department:
    Better services by...........................................    96
    Fiscal year 1998 budget for..................................    93
    Problems confronting.........................................    94
Police performance up significantly..............................    95
Police service areas, establishment of 83........................    96
Recruiting unit reorganized......................................    99
Training program.................................................    98

                          Office of the Mayor

City Council and Control Board budgets, spending for.............     1
Bond rating......................................................     7
Budget process, design a.........................................     4
City:
    Business leaving the.........................................     7
    Number of residents leaving..................................     2
    Revitalization of............................................     3
Commendation of chairman.........................................     4
Control Board:
    Elected officials part of....................................     6
    Established to rescue city...................................     2
    Why a........................................................     2
Council's budget.................................................     8
Deficity of $335 million.........................................     5
Government, reduction in size of.................................     6
Health Department, establishment of..............................     7
Management reform................................................     3
No consensus budget..............................................     4
Police officers on street, additional............................     8
President's plan.................................................  3, 8
Privatization....................................................     6
Programs under court order.......................................     2
Summer jobs program..............................................     5