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Chief Financial Officer Natwar M. Gandhi
Memorandum: “Urgent Need for Action in Regard to PBC”
November 14, 2000




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Office of the Chief Financial Officer

Natwar M. Gandhi, Chief Financial Officer


TO: The Honorable Anthony A. Williams,  Mayor, District of Columbia
The Honorable Linda W. Cropp, Chairman, Council of the District of Columbia
Dr. Alice M. Rivlin, Chairman, District of Columbia Financial Responsibility and Management Assistance Authority
Julius W. Hobson, Jr., Chairman, Public Benefit Corporation

FROM: Natwar M. Gandhi, Chief Financial Officer

DATE: November 14, 2000

RE: Urgent Need for Action in Regard to PBC

At our November 3, 2000 retreat I expressed my concern that unless decisive action is taken soon, the Public Benefit Corporation (PBC) will run out of cash. It is with the greatest urgency that I write to you now to reiterate that concern about the need for prompt action.

At its current rate of spending. PBC will exhaust its $45.3 million FY 2001 subsidy by the middle of March 2041. If money is set aside to maintain PBC's clinics throughout the fiscal year, D.C. General Hospital will be forced to close even sooner, perhaps by as early as two months from today. In either case. I will be unable to redirect funds from any source to continue PBC operations unless a plan to restructure PBC is approved by Congress

Because as many as 60 days would be needed to make alternative care arrangements for patients who would be affected if the hospital shuts its doors, a decision on how to proceed must be made immediately. Unfortunately. our options are limited. Fiscal constraints imposed by Congress are complicated by the need to act during the post-election recess period.

Under the FY 2001 appropriations act, Congress imposed conditions on any inter-appropriation transfer of funds to PBC. These conditions require the District to have an agreed upon restructuring plan for PBC that eliminates, at a minimum, 500 full time equivalent positions at PBC; does not contemplate any additional expenditure of federal funds; and provides Congress with 10 days prior notice of any inter-appropriation transfer of funds.

No such plan has yet been formulated. Congress is expected to be in recess until December 5, 2000. It is anticipated that Congress will adjourn again shortly thereafter until late January or early February 2001, past the point at which PBC's cash would be exhausted. It is therefore imperative that any plan to restructure PBC be in place for Congress to consider upon its return from recess on December 5.

I also believe it would be prudent to formulate a contingency plan for closure of D.C. General Hospital in the event a plan to restructure PBC cannot be agreed upon in a timely manner.

In conclusion, decisive action must be taken now to ensure adequate, continued delivery of public health care services in the District.

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