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GOVERNMENT OF THE DISTRICT OF COLUMBIA
District of Columbia Public Schools
Office of the Chief Financial Officer
NEWS RELEASE
FOR IMMEDIATE RELEASE:
Thursday, September 6, 2001 |
CONTACT: Linda Wharton Boyd - DCPS (202) 442-5635
Clarice Ransom-CFO (202) 727-0058 |
DC PUBLIC SCHOOLS FACES SPENDING PRESSURES IN FY 2001
Longstanding Financial Concerns Identified; Superintendent and GPO Working
Closely to Resolve Budget Issues
Washington, DC -- Today Chief Financial Officer Natwar M. Gandhi and
Superintendent Paul L. Vance announced that the District of Columbia
Public Schools is facing spending pressures of $80 million in fiscal year
2001. The shortfall is concentrated in four key areas: special education
at $24.6 million, special education transportation at $6.1 million,
utilities at $8.6 million, and Medicaid revenue shortfalls of $38 million.
Dr. Vance and Dr. Gandhi worked together to identify gap-closing
measures of $42 million to address overspending, including spending and
procurement freezes. However, DCPS is expected to end the fiscal year with
a $38 million revenue shortfall.
Gandhi indicated that the revenue shortfall will not impact the
District's overall viability and will not impact the ongoing progress the Superintendent
is making to improve the school system. "The District's financial
forecasts included provisions for unanticipated spending pressures or
revenue shortfalls, giving us the ability to effectively handle unforeseen
budgetary challenges," said Gandhi. "I am confident that we can
absorb this shortfall in the schools' budget and still end the fiscal year
with a balanced budget. The District's overall financial strength remains
strong."
The newly appointed DCPS Chief Financial Officer, Bert Molina, in
collaboration with Dr. Vance and the Board of Education is assessing the
financial condition of the school system. Mr. Molina discovered the
shortfall late this summer as part of the comprehensive analysis initiated
during the transition to new financial management at DCPS.
*We regret that the shortfall was not identified until very late in our
fiscal year, but we are very pleased that the new CF0 is assessing this
challenge and other related issues." said Board of Education
President Peggy Cooper Cafritz. "This will not stop our progress in
transforming this school district. We will continue to work with the Chief
Financial Officer in stabilizing a budget that has had deficits in special
education spending for several years and will continue to work towards the
level of full funding required to operate a first rate system."
Dr. Vance and the School Board are pleased with the new financial
management team's commitment to provide detailed financial statements
necessary to closely monitor and manage spending against budget.
Mr. Molina is in the process of reconfiguring the CFO's office. Six
senior officials including those directly responsible for reporting on the
financial health of DCPS prior to Molina's appointment have been
terminated or removed and are being replaced with seasoned professional
with direct experience dealing with large city school budgets.
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GOVERNMENT OF THE DISTRICT OF COLUMBIA
OFFICE OF THE CHIEF FINANCIAL OFFICER
One Judiciary Square, 441 4th Street, N.W., Suite 1l50N, Washington, D.C.
20001
Phone: (202) 727-2476. Fax: (202) 737-5258. Web: www.cfo.4c.gov
September 6, 2001
STATEMENT OF THE CHIEF FINANCIAL OFFICER OF THE DISTRICT OF COLUMBIA
REGARDING FY 2001 D.C. PUBLIC SCHOOLS SPENDING PRESSURES
Good afternoon. I am Natwar M. Gandhi, Chief Financial Officer for the
District of Columbia. I am here today with D.C. Public Schools
Superintendent Paul L. Vance to report on spending pressures faced by the
Public Schools' system as we near the end of Fiscal Year 2001.
For Fiscal Year 2001, DCPS is facing spending pressures totaling $80
million. This shortfall is concentrated in several key areas: special
education overspending of $24.6 million, transportation overspending of
$6.1 million, utilities overspending of $8.6 million, miscellaneous
expenditures of $3 million, and Medicaid revenue shortfalls totaling $38
million. The CFO's office has worked with Superintendent Vance to produce
several gap closing measures that will address areas of overspending;
however, we still expect DCPS to end the fiscal year with a revenue
shortfall of $38 million.
It is important to note that although this shortfall presents us with
significant challenges as we enter the new fiscal year, it will not impact
the District's overall financial viability. Our financial forecasts for FY
2001 included provisions for unanticipated spending pressures or potential
revenue shortfalls, giving us the ability to effectively handle unforeseen
budgetary challenges such as those described today. An ability to absorb
these shortfalls, however, does not excuse anyone from the responsibility
to avoid them in the first place.
The shortfall was discovered and immediately reported to Superintendent
Vance and myself by DCPS' newly appointed agency Chief Financial Officer
Bert Molina, who has been empowered to improve DCPS' financial operations.
Six senior individuals including those directly responsible for reporting
the financial health of DCPS to key stakeholders prior to Molina's
appointment have been terminated or removed and are being replaced with
seasoned professionals with direct experience dealing with large city
school budgets.
Agency administrators and directors must be responsible for managing
their programmatic costs. Superintendent Vance and I will be working
cooperatively to address rising costs in special education and Medicaid
reimbursements so that DCPS operates within its allocated FY 2002 budget.
This concludes our statement. We would be pleased to respond to any
questions you may have.
District of Columbia Public Schools
FY 2001 Spending Pressure Issue
| Issue |
Cause |
Remedy |
| District of Columbia Public
Schools faces $80 million in spending pressures by Sept 30, 2001 |
Overspending=$42 M:
- Special Education ($24.6 M)
- Transportation ($6.1 M)
- Utilities ($8.6 M)
- Misc. ($2.7 M)
|
$28 M in Gap Closing Measures:
- Freeze procurement activities for FY01 - $17 M
- Program available revenues -$7.5M
- Misc.-$3.5M
$14 M Re-programmed Funding from the District |
Revenue Shortfalls = $38 M:
- Medicaid overpayments ($17 M)
- Lost Revenues ($12 M)
- Lower than budgeted revenue ($9M)
|
$38 M will be DCPS' Net Revenue
Shortfall for FY01:
- This will not jeopardize the District's financial viability.
- In the District's financial forecast for FY01, there are
provisions for unanticipated contingencies such as this,
allowing the District to manage these spending pressures.
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