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Mayor Anthony A. Williams
Expenditure Growth
March 6, 2002

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Context

Focus of Expenditure Growth

  • Overall, District expenditures rose by:
    • 9% in FY00
    • 11% in FY01
  • Increases were concentrated in four agencies:
    • DCPS
    • Charter schools
    • PBC (and transition costs)
    • Mental health
  • Excluding these agencies, the rest of the Districtís budget grew by:
    • 2% in FY00
    • 4% in FY01

Focus of Overspending

  • The four agencies with major growth collectively overspent their budgets by:
    • 15% in FY00
    • 31% in FY01
  • Excluding these agencies the rest of the Districtís budget was underspent by:
    • negative 4% in FY00
    • negative 3% in FY01

Financial Experience of Other States

Funding Pressures

  • 45 states show revenue shortfalls
  • 28 states show spending over budget
  • 23 states show Medicaid over budget (other common program overspending includes mental health, corrections, and education)

Gap Closing Measures

  • 30 states have reduced budgets to close gaps
  • 15 states have used reserves (and 10 more may)
  • 8 states have or will consider using tobacco funds
  • 7 states have delayed, reduced, or canceled capital projects
  • 9 states have proposed or enacted delays/repeals of tax cuts
  • 14 states have proposed or enacted tax increases

FY 2002 Spending Pressures ($ in millions)

Agency Explanation Spending Pressure Closed by Agency Proposal for Gap Closing
DCPS - Medicaid & Non-Medicaid Medicaid revenue shortfall ($27m); cost overruns in Special Ed and Transportation, lifting of Special Ed fee cap, and teacher pay raises ($98m) 125 (35) 90
Dept. of Mental Health Medicaid revenue shortfall ($26m) and annualized effect of pay raises in 1/01 ($3m) 29 (3) 26
Dept. of Health Proposal to increase rates for specialty Medicaid providers has been deferred 11 (11) -
Assessment Contracts One-time costs for consultants to assess Districtís Medicaid programs. 3 - 3
Health Care Safety net Additional PBC close-out costs 14 - - 14
Child & Family Services Agency Increased adoption case rates; higher case loads for adoption and emergency group home utilization 13 (2) 11
State Education Office Mandated census audit ($1 m) and LEAP program match and administrative costs ($0.5m) 2 - 2
Police Dept. Overtime, terminal leave due to longevity bill, civilianization for one quarter, and modification of red light & photo radar contracts 7 (2) 5
Corrections Dept. Delay in RIF of 400 employees, overtime and additional gross pay, and higher contract costs 15 (6) 9
Fire Dept. Overtime, fixed cost and prior-year GSA bill 8 (7) 1
Labor Costs Based on status of current negotiations 10 0 10
DMV Additional adjudication costs associated with photo radar and red light programs, and meter ticketing 1 - 1
Dept. of Public Works New impound lot and unbudgeted rate increases for contracts 9 (8) 1
TOTAL   247 (74) 173

FY 2002 Gap-Closing Actions ($ in millions)

Funding Source Notes Amount
FY 01 Unspent Reserve Reflects deposit of $5m for the Highway Trust Fund 41
FY 02 Reserve Relief Entire reserve relief will be used to fund DCPSís pressures 30
FY 2002 Budgeted Reserve An additional $39m is held as offset against revenue shortfall 80
Agency Reductions Deputy Mayors are working with agencies to identify cuts 18
Red Light/Photo Radar Revenue Based on higher-than-estimated first quarter collections 4
Total, Gap-Closing Actions   173

One-Time and Recurring Spending Pressures

    FY 2002 FY 2003
One-time FY 2002 pressures:    
  Citywide Medicaid contracts 3  
  PBC closeout costs 14  
  MPD contract modifications 5  
  SEO census 2  
  Workforce investments 10  
  DMV 1  
Subtotal, one-time FY 2002 pressures: 35  
       
FY 2002 pressures that recur in FY 2003:    
  DCPS Medicaid, special ed, transportation 90 76
  DMH Medicaid 26 26
  CFSA adoption rates and case loads 11 15
  Corrections PS and contracts 9 11
  DPW impound lot 1 1
  FEMS overtime and fixed costs 1 8
Subtotal, FY 2002 pressures that recur in FY 2003: 138 136
       
New FY 2003 pressures:    
  CFSA compliance with mandates   9
  DHS compliance with mandates   13
  DOH specialty provider fees   11
  MPD communication center   2
Subtotal, new FY 2003 pressures   35
Total, spending pressures: 173 172

Multi-Year Spending Pressures

Agency Basis for Cost Increase Cost Increase (in 000s)
DCPS
  • Increase in Special Education (SE) tuition
  • Increase in SE transportation costs
  • Increase in SE attorney fee caps
$75,921
DOH
  • Legal requirement that rates must not fall to a level where services is compromised
  • Specialty rate provider increase is needed
$11,358
DHS
  • Court ordered staffing increases for YSA
  • Court ordered staffing, equipment, and facility improvements for MRDDA
$13,272
CFSA
  • Adoption subsidy increase
  • Updated estimate of past rate increases for therapeutic foster homes
  • Increase in emergency group homes and other expensive placements

 

$24,000
DMH
  • Medicaid reserve fund needed in anticipation of revenue shortfalls
$25,000
MPD
  • Operating costs associated with Public Safety Communications Center
$2,437
FEMS
  • Account for historical increase in overtime for HAZMAT unit
  • Provide overtime (including overtime for 55 additional paramedic FTEs)
$7,948
DOC
  • Adjustments to reconcile funding for appropriate staffing level
  • Rate increase in contracts for inmate health care and halfway house beds
$11,156
DPW
  • Rent for Impound Lot at Addison Road, due to Brentwood development
$1,000
TOTAL   $172,092

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