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Mayor Adrian Fenty
Testimony on proposed FY2008 budget
March 26, 2007




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MONDAY, MARCH 26, 2007


Chairman Gray and members of the Council, it is my pleasure to be here today to speak to you about my Fiscal Year 2008 Budget and Financial Plan, entitled "Moving Forward Faster."

I want to note that for the past six years, I took part in this process by sitting where you now sit. This is my first budget proposal as Mayor. I would like to thank you for your leadership, cooperation and friendship in putting the budget together.

We looked at the District Government agency by agency and line by line. In looking at what works and what doesn't, we have developed a budget that will invest in. some areas and reduce in others. We have major improvements in store in the areas of education; public safety; healthcare; human services; infrastructure and environment; economic development and affordable housing; and government operations and financing.

Budget Summary

We're confronted with budget pressures in Fiscal Years 2007 and 2008 totaling more than $300 million. So my administration has worked closely with Chief Financial Officer Natwar Gandhi to develop a budget that rose to the financial challenges while delivering the services our residents expect. This is a $9.2 billion spending plan with $5.4 billion in local funds. We have found economies, but propose targeted investments in areas of high priority. This document is the product of a series of exhaustive, agencyby-agency meetings conducted with the CFO's office and begun during my transition into office. The budget is balanced and fulfills promises in my "100 Days and Beyond" plan while addressing key Council priorities.

The budget also includes recommendations for a 6-year capital program representing long-term investments worth more than $3.3 billion, including $580 million in FY 2008 spending of General Obligation, Pay-As-You-Go, and Master Lease capital funds. Some of the highlights for each area are described below.


This budget proposes to increase the uniform per-pupil funding formula for the DC Public Schools and DC Public Charter Schools by 4 percent. I also propose to fully fund the historical costs of Special Education transportation-and I will work with the Council to drive down that cost by improving the quality of special education offerings in local schools. In addition, this budget rationalizes the per-student funding for DCPS and charter schools. I propose to discontinue the prior practice of funding public charter schools for next year's projected enrollment while funding the public school system for last year's actual enrollment - a practice that resulted in the double-counting of thousands of students. Both public and public charter schools will be funded based on estimated enrollment for the coming school year. To ensure dollars are available if actual enrollment exceeds estimates, I propose creating a stabilization fund similar to one that has been used for charter schools.

Finally, the FY 2008 proposal also includes, consistent with my Education Reform bill, a new firewall between funding for local schools and state education activities, which previously had been intermingled within the budget of DCPS - contradicting existing law. My proposed education budget, including funds set aside for state education activities in the District's Non-Departmental account, will support implementation of my Education Reform initiative upon passage of the legislation.

Other education investments include a 7 percent increase in local funding for the University of the District of Columbia and a 12 percent increase in funding for the public libraries. Library funding will continue Sunday and extended hours added last year, and fund new technology upgrades and expanded youth programs. In addition, this budget reflects my full commitment to the comprehensive School Modernization capital program and to a sustained, multi-year effort to bring library facilities into the digital age.

Public Safety

I propose to invest across the public safety cluster an increase of $67 million in Local funds, or 8 percent, over FY 2007 levels to support a safer and better protected city. A $48 million Local funds increase in the budget of the Metropolitan Police Department will enable MPD to phase in the civilianization of 82 positions and ramp up to 300 additional officers on patrol in our neighborhoods. A targeted investment in technology, protective gear and training will ensure that the force becomes more efficient and better equipped as it grows.

An increase of $470,000 in personnel costs to the District's Forensic Technician Training Program located at the FBI Forensic Laboratory continues the city's investment in crime fighting tools, and helps pave the way for a new and fully-staffed, state-of-the-art consolidated lab facility, one of my top capital budget priorities.

The Fire and EMS Department budget also grows by 7 percent, nearly $12 million in local funds, with an emphasis on improving medical outcomes. Recognizing the tremendous cost to the city from ambulances stuck waiting at hospitals, the budget proposes an innovative program to put FEMS staff at six local hospitals to ensure that our ambulances get back on the streets quicker. Additional funds are also provided for upgraded technology, equipment and training. The capital budget funds major renovations and repairs to the District's fire houses over the next six years.

The Homeland Security and Emergency Management Agency will receive additional resources to carry out its expanded responsibilities under the Homeland Security, Risk Reduction and Preparedness Act. In addition, HSEMA will become the lead District agency collecting and allocating the annual federal Homeland Security grants. Additional resources in the Office of the Chief Medical Examiner will support mass casualty planning as well as expanded death investigations and certifications.

For the Department of Corrections, I propose a funding level that allows substantial improvements in the administration of the District's correctional system. The Mayor's Budget funds 35 additional correctional officer positions to allow for a smooth transition for retiring officers. In addition, the budget provides both operating and capital funds for enhanced jail security and prisoner monitoring.

The Office of Unified Communications sees an increase of more than one-third of its gross funds budget, funded by more fully maximizing the existing Special Purpose Revenue Fund for critical E911 services and operations, as proposed in the OCFO-developed baseline budget. The OUC budget also includes the consolidation of the DMV and DHS call centers with the Mayor's City-Wide Call Center, in keeping with my promise to implement best practices from other major cities.

The Mayor's budget also provides enhanced funding for the Attorney General's office - a 7% increase to allow for better agency representation, a stronger defense against claims, and improved training and professional development for staff attorneys. Funds will support the continuation of the innovative Access to justice initiative to help those of limited financial means gain access to legal representation.

Finally, additional resources in the Inspector General's office will support expanded audits of the Medicaid function across all District agencies, to enhance the integrity of the program.


By supporting continued enrollment growth in Medicaid and the Locally funded Alliance, the FY 2008 Budget moves the District one step closer to universal health care coverage. In addition, targeted investments will expand programs in HIV/AIDS surveillance, improve outreach and intervention to reduce infant mortality, and support an analysis of medical provider rates. While the budget reflects conservative estimates of expected participant enrollment, costs, and estimated Medicaid reimbursements, there is room for potential savings in FY 2008 in these areas. I will make it a priority to recapture as much as possible through Medicaid reimbursements. In addition, a new set of contracts will soon be negotiated for both Medicaid and Alliance providers that could yield program savings.

My investments in healthcare also extend to the area of mental health. Here I propose additional investments necessary to meet the terms of a settlement with the justice Department -- and to move the Department beyond receivership and toward providing high-quality mental healthcare for our residents. Increases will fund more appropriate staffing levels at Saint Elizabeth's Hospital, a mobile crisis response team for children, and a 72-hour emergency psychiatric center.

Human Services

In keeping with my vision for a more inclusive city, the Mayor's Budget includes funding increases across several Human Services areas, while realigning agencies in accordance with recently adopted law. The Department of Human Services will become a leaner, more focused agency. The proposed budget funds additional cash assistance to families receiving monthly Temporary Assistance to Needy Families (TANF) benefits, expands the Adult Protective Services division, and maintains subsidized early care programs enrolling more than 23,000 District children.

In FY 2008, the new Department of Disability Services will include the former Mental Retardation and Developmental Disabilities Administration and the Rehabilitation Services Administration. The new agency's budget is realistic and sets an aggressive, achievable goal of increasing federal reimbursements through better use of funding from sources like the Medicaid waiver.

The budget reflects substantial continued investments in the Child and Family Services Agency and the Department of Youth Rehabilitation Services (DYRS) to support the progress of these agencies. CFSA will have resources to subsidize hundreds of additional adoption and guardianship placements, ensuring more children can be diverted from the foster system and receive the benefits of permanent family placements. The Mayor's Budget will permit DYRS to continue development of an effective, community-based continuum of care for youth involved with the juvenile justice system.

The Mayor's Budget also includes funding for the new Office of Disability Rights to ramp up to 10 FTEs over the course of FY 2008. In addition the budget provides Local funds increases to both the Office of Human Rights as well as the Office of Aging, which plans to open a new senior wellness center in Ward 1 in FY 2008.

Infrastructure and Environment

The Mayor's Budget continues investment in infrastructure maintenance and improvements while also recognizing the importance of our environment, parks, and recreation facilities. The biggest single gain is in the Department of the Environment (DOE) with a proposed Local funds increase of nearly $10 million proposed for FY 2008. This increase will fund enhanced programs in enforcement, expanded home heating assistance for low-income households, coordinated lead abatement, and an initiative to investigate energy savings in government facilities. The FY 2008 funding commitment by the Fenty Administration will ensure that the new DOE can begin to be an effective player in protecting and enhancing our environment.

The road maintenance and transportation management capacity of the District Department of Transportation (DDOT) will be expanded through a one-time infusion of PAYGO capital funds. Increased funding flexibility is provided to the agency through a legislative proposal that would reduce the number of funds and create a unified transportation fund for local roads operating, maintenance and capital investments. DDOT will also assume unified control over traffic aides and school crossing guards - giving the agency on-the-ground presence in its efforts for pedestrian safety improvements. Finally, the Department's Urban Forestry Administration will assume responsibility for managing the trees on the grounds of Parks and Recreation facilities.

With a 5 percent increase in local funds, and larger percentage increases in other fund sources, the Department of Public Works will expand its neighborhood cleaning activities and enhance parking enforcement. The Department of Motor Vehicles (DMV) will reinvest savings from increasing the time between inspections and license renewal in customer service improvements. A sizable capital investment will help prepare DMV for the forthcoming Real-ID Act requirements for enhanced license security.

Additional funding in the Department of Parks and Recreation will be used to restore lost Federal funds for summer programming as well as enhance facility and ballfield maintenance. The six-year capital budget contains roughly one-quarter of a billion dollars in parks and recreation facility investments, including several new recreation centers and some key neighborhood park investments prioritized with input from the Council. The Mayor's Budget also creates a pool of funds to allow for targeted park investments as well as to support project acceleration. A provision in the budget legislation will target additional revenue for further use in park investment acceleration.

Finally, recognizing the important and expanding role that Metro plays in serving our citizens mobility needs, the budget provides a 13% increase in WMATA operating subsidies. Included in these totals are investments in improved bus service, including expansion of the popular Circulator service into other neighborhoods such as Georgetown and Adams Morgan.

Economic Development and Affordable Housing

The FY 2008 Mayor's Budget also expands targeted investments in economic development and affordable housing activities. The Office of the Deputy Mayor for Economic Development and the Commission on Arts and Humanities each have enhanced proposed budgets to support a variety of high-priority economic development and cultural investments that have been identified in close consultation with Councilmembers and community groups. In addition, expanded resources in the Department of Employment Services will be focused on job training and placement for young people, re-entrants, and low-income District residents.

The proposed budget supports the Office of Planning's effort to assist in rewriting the zoning regulations and in implementing inclusionary zoning. Additional investments will be made in enhanced transportation planning, and historic preservation outreach and education.

The Department of Small, Local Business Development receives a $115,000 increase to allow for its continued ramp-up to a full staff complement, focused on eliminating the backlog of LSDBE certifications and comprehensive development of small and local businesses.

The Department of Consumer and Regulatory Affairs (DCRA) shifts more of its funding from local to other revenue sources, while making investments in enhanced information technology and automation that are designed to improve its business operations.

Funding for the Housing Authority (DCHA) subsidy, the Department of Housing and Community Development (DHCD), and the Department of Employment Services (DOES) are increased. DCHA receives an increase of 4% to cover increased costs of housing vouchers, rent supplements, and housing security. Nearly all housing-related functions will be consolidated within DHCD. At the same time an independent, expanded Office of the Tenant Advocate will provide tenant advocacy and technical assistance.

Government Operations and Finances

The proposed budget includes a number of important changes in the manner in which the District Government will operate in FY 2008. Chief among the improvements on my to-do list are fixes for both the procurement and personnel activities. My budget proposes an exciting change to the way these programs are funded, while dramatically

 expanding the investment in both. Under the proposed budget, both procurement and personnel would be funded by intra-district assessments on each agency -based on the amount of support services consumed. Personnel would be assessed on a per-FTE basis and procurement on a percentage of overall contractual spending. Agencies will also be given the opportunity, over time, to gain a measure of delegated authority and control over these functions, earning back some portion of their assessments in subsequent budgets.

The personnel and procurement budgets were also increased to allow for new, expanded investments in procurement employee training and enhanced internship programs. In particular, the Capital City Fellow program will be fully funded through the new DC Department of Human Resources, and agencies will compete to have a fellow placed with them for a rotation. Similar programs will be started for college and high school interns as well.

The Office of the Chief Technology Officer will see a substantial infusion of local operating resources, nearly $22.5 million, or 63% more than the FY 2007 level. These funds replace an equivalent amount of capital and master lease funds that were annually appropriated for these activities. This change recognizes that past budget practices were inappropriate and have had lasting effects on the cost of debt financing for the District. This change sets a realistic and conservative operating fund level for our substantial technology program.

Finally, substantial increases are seen in overall financing accounts such as employee retirement health financing, an increase of $106 million in FY 2008 alone - the single largest increase of any one budget item over FY 2007. Additional, large increases are associated with the cost of borrowing for both long and short term debt associated with capital improvements and schools modernization.

My proposed budget would also reduce the residential property tax rate by two cents, if the Chief Financial Officer certifies continued strength of revenues.


Overall, I have proposed a fiscally conservative budget with targeted investments, a number of programmatic innovations and no taxes added to the OCFO baseline revenues.

But the work on this budget, and that of the current fiscal year, does not stop with this submission. In fact, the City Administrator and I, through our continuous assessment tool, CapStat, will continue to monitor agency spending and performance with an eye toward cost savings and service improvements. With this budget, the Fenty Administration is taking the first step down a long road of continuous improvement, service enhancement and program efficiency. We look forward to working with all the members of our Administration Team, the Council and our citizen partners in making this government world class in every respect.

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