[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]




                     DISTRICT OF COLUMBIA APPROPRIATIONS
                               FOR 2000

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                              FIRST SESSION
                                ________

          SUBCOMMITTEE ON DISTRICT OF COLUMBIA APPROPRIATIONS

                ERNEST J. ISTOOK, JR., Oklahoma, Chairman

 RANDY ``DUKE'' CUNNINGHAM, California    JAMES P. MORAN, VIrginia
 TODD TIAHRT, Kansas                    JULIAN C. DIXON, California
 ROBERT B. ADERHOLT, Alabama            ALAN B. MOLLOHAN, West Virginia
 JOP ANN EMERSON, Missouri
 JOHN E. SUNUNU, New Hampshire
 JOHN E. PETERSON, Pennsylvania  

 NOTE: Under Committee Rules, Mr. Young, as Chairman of the Full 
  Committee, and Mr. Obey, as Ranking Minority Member of the Full 
  Committee, are authorized to sit as Members of all Subcommittees.

                AMERICO S. MICONI Staff Assistants
                                ________
                                 PART 1

                             (PAGES 1-1290)
                                                                  Page
 Mayors Short-Term Action Plans and Preliminary
   Fiscal Year 2000 D.C. Budget ................................    9
 Corrections; Court Services and Offender Supervision;
   and Public Defender Service .................................   97
 Courts (Financial Problems) ...................................  415
 Health Care Initiatives .......................................  717
 Schools (Including Public Charter Schools) ....................  801
 Budget for FY 2000 ............................................  989
 Enforcement of Drug Control Laws .............................. 1143

                                ________
         Printed for the use of the Committee on Appropriations
                                ________

                    U.S. GOVERNMENT PRINTING OFFICE
 62-688                     WASHINGTON : 2000

_______________________________________________________________________

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                       COMMITTEE ON APPROPRIATIONS

                   C. W. BILL YOUNG, Florida, Chairman

 RALPH REGULA, Ohio                   DAVID R. OBEY, Wisconsin
 JERRY LEWIS, California              JOHN P. MURTHA, Pennsylvania
 JOHN EDWARD PORTER, Illinois         NORMAN D. DICKS, Washington
 HAROLD ROGERS, Kentucky              MARTIN OLAV SABO, Minnesota
 JOE SKEEN, New Mexico                JULIAN C. DIXON, California
 FRANK R. WOLF, Virginia              STENY H. HOYER, Maryland
 TOM DeLAY, Texas                     ALAN B. MOLLOHAN, West Virginia
 JIM KOLBE, Arizona                   MARCY KAPTUR, Ohio
 RON PACKARD, California              NANCY PELOSI, California
 SONNY CALLAHAN, Alabama              PETER J. VISCLOSKY, Indiana
 JAMES T. WALSH, New York             NITA M. LOWEY, New York
 CHARLES H. TAYLOR, North Carolina    JOSE E. SERRANO, New York
 DAVID L. HOBSON, Ohio                ROSA L. DeLAURO, Connecticut
 ERNEST J. ISTOOK, Jr., Oklahoma      JAMES P. MORAN, Virginia
 HENRY BONILLA, Texas                 JOHN W. OLVER, Massachusetts
 JOE KNOLLENBERG, Michigan            ED PASTOR, Arizona
 DAN MILLER, Florida                  CARRIE P. MEEK, Florida
 JAY DICKEY, Arkansas                 DAVID E. PRICE, North Carolina
 JACK KINGSTON, Georgia               MICHAEL P. FORBES, New York
 RODNEY P. FRELINGHUYSEN, New Jersey  CHET EDWARDS, Texas
 ROGER F. WICKER, Mississippi         ROBERT E. ``BUD'' CRAMER, Jr., 
 MICHAEL P. FORBES, New York          Alabama
 GEORGE R. NETHERCUTT, Jr.,           MAURICE D. HINCHEY, New York
Washington                            LUCILLE ROYBAL-ALLARD, California
 RANDY ``DUKE'' CUNNINGHAM,           SAM FARR, California
California                            JESSE L. JACKSON, Jr., Illinois
 TODD TIAHRT, Kansas                  CAROLYN C. KILPATRICK, Michigan
 ZACH WAMP, Tennessee                 ALLEN BOYD, Florida               
 TOM LATHAM, Iowa
 ANNE M. NORTHUP, Kentucky
 ROBERT B. ADERHOLT, Alabama
 JO ANN EMERSON, Missouri
 JOHN E. SUNUNU, New Hampshire
 KAY GRANGER, Texas
 JOHN E. PETERSON, Pennsylvania   
 ROY BLUNT, Missouri              
                                  
                 James W. Dyer, Clerk and Staff Director

                                  (ii)


   
                                CONTENTS

                                ________

                         PART 1 (PAGES 1-1290)

            1. THURSDAY, APRIL 15, 1999, ROOM 2362, RAYBURN
                                                                        Page
 Mayors Short-Term Action Plans and Preliminary D.C. Budget for FY 2000   1
    Mayor Anthony A. Williams
    Council Chairman Linda W. Cropp
    Control Board Chairman Alice M. Rivlin

            2. WEDNESDAY, APRIL 28, 1999, ROOM h-144, CAPITOL

 Corrections .........................................................   97 
 Court Services and Offender Supervision
 Public Defender Service

            3. TUESDAY, MAY 18, 1999, ROOM H-144, CAPITOL
 D.C. Courts (financial problems) ...................................   415
 General Accounting Office

            4. WEDNESDAY, JUNE 16, 1999, ROOM H-144, CAPITOL

 Health Care Initiatives for D.C .....................................  717
    Mayor's Office of Policy and Evaluation
    D.C. Department of Health
    D.C. General Hospital (Public Benefit Corporation)

            5. TUESDAY, JUNE 22, 1999, ROOM 2362, RAYBURN

 Public Schools (Including Charter Schools) ..........................  801
    Public Witnesses .................................................  804
    Public Charter Schools ...........................................  857
    Public Schools ...................................................  907

            6. WEDNESDAY, JUNE 23, 1999, ROOM 2362, RAYBURN 

 Budget for FY 2000 ..................................................  989
    Mayor Anthony A. Williams
    Council Chairman Linda W. Cropp
    Control Board Chairman Alice M. Rivlin

            7. WEDNESDAY, SEPTEMBER 29, 1999, ROOM 2359, RAYBURN

  Enforcement of Drug Control Laws ................................... 1143
    District of Columbia Officials
    Federal Officials
    Other Witnesses

                         PART 2 (PAGES 1-2385)

 8. BUDGET JUSTIFICATION MATERIAL ...................................1-2385





 
              DISTRICT OF COLUMBIA APPROPRIATIONS FOR 2000

                              ----------                              

                                          Thursday, April 15, 1999.

                    MAYOR'S SHORT-TERM ACTION PLANS

                                  AND

                      FISCAL YEAR 2000 D.C. BUDGET

                               WITNESSES

HON. ANTHONY A. WILLIAMS, MAYOR
HON. LINDA W. CROPP, CHAIRMAN, COUNCIL OF THE DISTRICT OF COLUMBIA
ALICE M. RIVLIN, CHAIRMAN, D.C. FINANCIAL RESPONSIBILITY AND MANAGEMENT 
    ASSISTANCE AUTHORITY


                   opening remarks of chairman istook


    Mr. Istook. The Committee will come to order.
    I would like to welcome everyone to the first hearing this 
Congress of the District of Columbia Subcommittee of the House 
Appropriations Committee.
    Mr. Mayor, Madam Chairman, Madam Chairman. Very good to 
have you here too, Mrs. Norton. I am pleased to have for this 
first hearing the officials from the District of Columbia. I 
would like to welcome you all.
    Let me make just a couple of brief comments before we 
proceed and recognize our Ranking Member, Mr. Moran.


                      improved financial situation


    I think everyone is very pleased that the District has an 
improved financial situation. We would never want to mistake 
movement in the right direction for full and complete success, 
but I think everyone has been working diligently, very 
cooperatively. I want to express my sincere appreciation for 
that.
    I am also very grateful on coming into the chairmanship of 
this Subcommittee to inherit better circumstances than some 
other people did. I am very fortunate in that regard too.


                         revitalization process


    I think it is important that we understand the significant 
amount of progress that has been made. In addition to the work 
of the control board, the Mayor and the Council, there is also 
involved here a change in the congressional relationship with 
the District--the revitalization process--whereby a number of 
functions were assumed by the Federal Government, whether it be 
the $5 billion in pension funding, the annual cost of 
corrections or the criminal justice system; they all made a 
significant difference.


                     elimination of federal payment


    So, yes, we eliminated the annual Federal payment of about 
$660 million. That has made a big difference because, frankly, 
the amount that Congress has assumed is greater than the amount 
of the Federal payment that was being made. Let's not leave out 
of that equation the extra Medicaid expenses that are being 
paid or reimbursed to the District too.
    So I think that is an important measurement, to realize 
that every member of the team, whether it is the Congress, the 
Council, the control board, or the Mayor's office, each has had 
a significant role. Nobody knows for sure and nobody wants to 
know with certainty what the city's financial situation would 
have been had these measures not been undertaken.
    [CLERK'S NOTE.--See ``Clerk's Note'' at bottom of this 
page.]

                           budget submission


    I wanted to point that out and ask that this cooperation 
extend to a very key area. I realize there is a statutory 
deadline of June 15th to have a consensus budget submission 
available to the Congress. I would certainly hope that it will 
be possible to have that done by May 15th so that we can go 
through our internal processes and meet our congressional 
deadlines so that we can have the District appropriations 
measure completed through the House of Representatives by the 
end of June before the July 4th district work period. That is 
what I want to say by way of preliminary comments.

    [CLERK'S NOTE.--Regarding the District's improved financial 
situation, the following should be helpful and informative to 
the reader.
    First, Congress had to cut the budgets that were sent to 
Congress by the mayor, council and control boards. Those cuts 
since FY 1995 total over $1.4 BILLION cumulatively, with the 
budget base being reduced by over $315 million. If those budget 
reductions had not been made, there would not have been a 
surplus of $185 million for FY 1997; instead, the District 
would have ended up with a $130 million DEFICIT. And the 
surplus for FY 1998 would not have been $445 million; it would 
have been $130 million.
    Second, the Revitalization Act (title XI of Public Law 105-
33) shifted $900 million in so-called ``State'' functions to 
the Federal government along with $5 plus billion in unfunded 
pension liabilities. Congress also eliminated the Federal 
payment of $660 million. The arithmetic shows that the city was 
broke and woke up the day after the President signed the 
Revitalization Act with over $200 million cash in the bank. And 
instead of a $445 million surplus for fiscal year 1998, there 
would have been a $70 million DEFICIT ($445 less $315 less 
$200).
    Third, in last year's appropriations bill Congress added 
over $150 million in Federal funds for the District.
    Fourth, the national economy and stock market boom have 
generated an infusion of tax revenues into the city's treasury.
    Basically, the District's newfound prosperity is not 
necessarily due to extreme sacrifices made by the District, 
including the control board. Some would say the budgets as 
submitted by District officials, including the control board, 
reflect a `business as usual' attitude. The city has had only 2 
years of surplus and positive fund balances--that does not 
necessarily signal that the District should resort to its prior 
spending habits and less than stellar management practices. The 
District still has to be careful about its spending and should 
be careful not to jeopardize its precarious financial well 
being.]
    Let me recognize Mr. Moran, the Ranking Member.


                  opening remarks of congressman moran


    Mr. Moran. Thank you very much, Mr. Chairman, and thank you 
for having this hearing. It is nice to see such first-class 
people representing the District before us: Mayor, Chairwoman 
Cropp, Dr. Rivlin and Congresswoman Norton. We thank you for 
all you do in behalf of the District's residents and really the 
entire metropolitan Washington region.
    Your election to office marks the beginning of a new era 
for the District. It is one of professionalism and fiscal 
responsibility and social progress. I think we are going to 
find increasingly that, one, you can't have one without the 
other. You can't have sustainable social progress without 
fiscal responsibilities and vice versa. But two, it is also an 
era of goodwill not just between the District of Columbia 
government and its citizens but also between D.C. and its 
suburbs and I think between the Congress and the city.


                    d.c. management restoration act


    The D.C. Management Restoration Act was passed in record 
time. That is a reflection of this new era of goodwill. It was 
introduced February 2 and signed into law March 1. That breaks 
virtually all records. I think deliberately so. It sent a clear 
signal.
    In your inaugural address, Mr. Mayor, I am going to quote a 
little: You said, ``Self-governance is a prerequisite oftrue 
freedom. A city that governs itself makes decisions that voters can 
evaluate, a joy in solving problems. The epicenter of democracy must 
reflect the core values of democracy.'' And you promise that the 
Williams' administration will be a tireless champion of that cause.
    I know they were not only good words. That was a true 
personal commitment that you were expressing.
    I hope and trust and expect that Congress is going to 
follow your lead and limit its direct involvement in the 
affairs of the D.C. government to only those issues that 
directly involve Federal appropriations.

               chairman istook's visits to d.c. agencies

    Mr. Chairman, I want to compliment you on your commitment 
to understand and to address District of Columbia issues. I 
have talked with a number of members of the subcommittee. All 
of them have been asked by you to go out and to see what is 
happening around us, not just to stay on Capitol Hill but to 
see what is happening in D.C.'s neighborhoods. I know that your 
effort is a sincere effort, and I know that you personally have 
devoted a considerable amount of time to touring the District 
schools, looking at its low-income housing and the local 
agencies. You have met with District officials. You 
familiarized yourself with local issues. That is a clear 
demonstration of goodwill. I do think it marks a new chapter in 
Congress' relationship with the District of Columbia.
    So with the last mayoral election and with this City 
Council and obviously with this tireless advocate as our 
colleague in the Congress and now with this inaugural hearing 
of the D.C. Appropriations Committee, this is a chapter that I 
think people are going to look back on with fondness, and it is 
a critical one and a very positive one. So I thank everybody 
that is writing it, and we can get on with the business of 
doing so.
    Mr. Chairman, thank you.

                       introduction of witnesses

    Mr. Istook. Thank you very much, Mr. Moran.
    There is something very unique about the District of 
Columbia with its relationship to Congress; and because of 
that, before we hear from the witnesses, I would like to allow 
the delegate from the District of Columbia, Mrs. Eleanor Holmes 
Norton, to be the one to introduce our panelists to us.
    Ms. Norton.
    Ms. Norton. Thank you very much, Mr. Chairman.
    I very much appreciate the approach you are taking to your 
chairmanship, and I must express that appreciation before I 
introduce the three officials that have come here this 
afternoon.
    We appreciate this early introductory hearing. I appreciate 
what you just said, Mr. Chairman, that you have put fire in the 
District to get the budget here early because you intend, if 
you get it early, to get it out early. That would be a 
turnaround for the District and would be very much appreciated, 
to be the first out or among the first out rather than the last 
out.
    I very much appreciate your visiting units of the District 
government to see for yourself what is happening there. Mr. 
Chairman, you have even resisted the calls I know that you must 
have been receiving from the press who expect you to opine on 
any and everything even before you have gotten used to handling 
your gavel.
    I want to thank you for all of your courtesies to me for 
coming to see me when you initially became chairman, for then 
seeing the Mayor and me and for asking who else you should see 
and then seeing the Superintendent of Schools Arlene Ackerman 
and Police Chief Charles Ramsey.
    The three top officials you see before you today are among 
the very best doing anything in any city in the United States 
today.
    Chairman Linda Cropp is providing very able leadership to 
an entirely revitalized City Council where oversight is now the 
watchword.
    Alice Rivlin is the only one among us sitting here who 
isn't paid, Mr. Chairman, at least not by the District of 
Columbia. The District didn't have a lot of good fortune in the 
1990s, but it had the best of good fortune when it was able to 
attract to chair its Financial Authority one of the Nation's 
leading economists, a founding director of the CBO, the vice 
chair of the Federal Reserve Board and a long-time 
Washingtonian with hands-on experience and knowledge about this 
city that few of us have.
    I come now to our new mayor who, it must be remembered, 
came to office with the very experience that a mayor most needs 
to run a big city today and that was experience, proven 
experience, prudently managing the finances of a big city.
    The people of the District of Columbia clearly recognize 
Mayor Williams as one of the chief architects of its financial 
recovery when it elected this person who is new to the city as 
its mayor.

                      mayor williams' first budget

    Mayor Williams is now doing for city services what he did 
for city finances before becoming mayor. He has submitted his 
first budget. It is the first budget that is also a policy 
document I can remember seeing from the District of Columbia, I 
might say. It has promoted some comment within the District, 
but that is exactly what a budget ought to do, and we finally 
see a budget that makes people think and makes them know what 
they are for and what they may not be for.
    I am very pleased to introduce the new Mayor of the 
District of Columbia to tell you the long story.
    Thank you, Mr. Chairman.
    Mr. Istook. Thank you very much, Mrs. Norton.
    The hearing this afternoon is intended to focus on two 
issues, the fiscal year 2000 budget, which currently is in the 
form of the Mayor's submission; and also the short-term action 
plans that Mayor Williams has been pursuing. We realize, of 
course, the budget is still in process with the Council and the 
control board.

                            witnesses sworn

    Just to let the witnesses know, it is standard procedure to 
require that all witnesses be sworn in as provided by Rule XI 
Clause 2(m) of the Rules of the House and section 1(b) of the 
Rules of the Committee.
    So to administer the oath, if each of you would stand and 
raise your right hand.
    [Witnesses sworn.]
    Mr. Istook. Thank you very much.
    Of course, we have your written statements for the record. 
There is certainly no need to go through the entire depth and 
length of those. Feel free to depart from them as you wish, 
because the entirety of your statement will be placed in the 
Committee's hearing record.
    Mayor Williams, I am really happy to have you here. There 
is a lot of faith and hope that rests on your shoulders. I 
don't think anybody has seen or expressed anything that is 
inconsistent with the fact that that faith and hope seems to be 
very well placed. We are happy to hear from you at this time.

                   opening remarks of mayor williams

    Mayor Williams. Thank you, Mr. Chairman, and thank you for 
having me here as well as my colleagues, Linda Cropp and Alice 
Rivlin. We are a team working together for the future of our 
city. We have a good working relationship; and also I am proud 
of the relationship we have with Eleanor Norton, who is our 
fearless advocate on the Hill for the needs of our city.

                  nato--50th anniversary commemoration

    I would like to say, Mr. Chairman, to the folks in the 
District in a couple of weeks we commemorate the 50th 
anniversary of NATO as the strongest alliance in history--
political and military alliance--and celebrate democracy. It is 
important we can show that democracy works in the District and 
work towards full representation. We do that in a number of 
different ways but, most importantly, we show it as a community 
working together and coming together and succeeding together on 
the problems and challenges that face us.

                  moving toward performance management

    Along those lines, because I have submitted my written 
testimony for the record, I just want to talk about two things 
briefly, the track our government is moving in towards 
performance management and the role of short-term action plans 
in that respect and a couple of highlights from the budget.
    First, in terms of providing better services from the 
government, we believe that one of the most important things we 
need to do is restore the faith and confidence of District 
residents in their government. Those expectations are very, 
very high. They have to be managed. Those expectations, if they 
are dashed, can prove treacherous for all of us. I realize 
that. But suffice it to say I think it is important that we 
provide real, tangible, concrete benefit for our citizens as we 
get started in this effort to bring this government forward.
    What we wanted to do was to leverage the reform work begun 
by the control board, the long-term systems improvements 
already under way in the agencies; and, in a way, that focused 
those efforts in a way that our citizens can see, touch and 
feel. What we decided to do was to put our agencies on a path 
of saying we are going to produce a cleaner city, we are going 
to produce a more customer-friendly city, we are going to 
become a more business-friendly city, and that not only speaks 
to those in need but actually delivers to those in need in a 
meaningful, tangible way.

                           goals established

    We have set out a list of goals that I submitted to the 
Committee. I will say, in summary, that we are succeeding in 
many of those goals.
    When we first laid the goals out, I would be called naive. 
It was said I didn't know what I was doing, and I took abuse, 
abuse that if I understood politics I would never establish 
concrete goals because I would only fail in those goals. In 
fact, our agencies have delivered on many of those things, from 
the most simple--doing a better job with electrical 
inspections, with neighborhood inspections, collecting phone 
calls and managing our phone calls better--to the more 
elaborate.

                        homeownership as a goal

    We said we would turn over at least 100 houses in private 
homeownership throughout our neighborhoods. It turns out that, 
one, because our agency folks have been working very, very hard 
and, two, because we have an economy now that is, in many, many 
cases, a demand economy, we now have the opportunity to turn 
over far in excess of 100 houses in homeownership within the 
time allotted.

             motor vehicle services still need improvement

    So we set very ambitious goals and we are achieving many of 
those goals, with the notable exception of cars and motor 
vehicles. While there is better customer service--we hear from 
many, many citizens throughout the city they have actually 
gotten better treatment in getting their license renewed and 
that service--there are still long lines for people getting 
their first registration and first license in the District, 
which brings to mind the need for something longer term.
    What I think we need longer term is to fold together 
citizen input and neighborhood building, at a local level, into 
a sense of real performance management in the District, which 
is a fancy way of saying building a consensus of District 
residents, the business community, the foundation community, 
faith community, everyone out in our neighborhoods and our 
government on the goals of our government, agreeing on where we 
are starting, agreeing on where we want to go and holding 
ourselves accountable for getting there point by point, step by 
step, measure by measure, and making that information available 
most importantly to the public and to the local legislature, 
the Council and, during the control period, the control board 
for needed oversight. That isn't just another meeting but is 
oversight that actually has some traction.

                strategic planning process is beginning

    We are going to be meeting with our agency heads beginning 
this week. We have had a couple of meetings. We are meeting 
intensively this week to begin with them on this strategic 
planning process. We are holding a number of sessions with the 
public to build public input into this process. We have placed 
a customer survey to fold in real citizen input on what the 
conditions of the government are and, again, were this to be a 
State, where we want to realize we should be. All of this is an 
important part in my mind of setting out a set of goals and 
keeping a scorecard on how we are achieving those goals.
    I think a new model, a new paradigm for our city, but I 
travel to other cities, and it is working well in other 
contexts. I think it can work well here in our Nation's 
capital.

                           new labor strategy

    Along the lines of moving our government forward, we have 
included in our budget a number of steps that we hope will 
encourage and promote productivity in our government. Along 
with this general goal of performance management we have 
brought together a group of law firms in the District working 
with us on a pro bono basis to develop with us a new labor 
strategy for the District. This new strategy is intended to 
invest in our workers and by investing in our workers create a 
state of conditions, a context where we have the flexibility 
and have the kind of productivity we need to have our agencies 
perform for our people.

                       gain sharing by employees

    You will find in our budget an emphasis on what we call 
``gain sharing'', which is allowing our employees and work 
teams to reap the benefits of greater performance.
    You will see an effort and intent on our part to 
rationalize the relationship between nonunion and union pay 
scales.

                 middle managers now at-will employees

    You will see an effort in our budget to create, pursuant to 
an act actually passed by the Council, to create a first-rate 
cadre of middle managers who are at-will employees but are well 
paid, well compensated and well trained to manage our agencies 
and deliver services for the people.

                          managed competition

    You will find in the budget something called ``managed 
competition'', something done in Philadelphia, 
Indianapolis,Portland, many cities and States now. And I say ``managed 
competition'' as opposed to introducing competition because I am a firm 
believer that our government and our city already is exposed to 
competition for that matter. The idea of managed competition is to 
manage the competition in a way that our workers have a legitimate 
chance of winning that competition and doing a better job for our 
people.

                    investment in employee training

    In that respect, we have invested in training, we have 
invested in the tools that are going to be needed to make this 
process work. They include doing the right kind of 
reengineering, the right costing of our activities, very, very 
importantly working with our labor unions to help establish the 
framework of managed competition and how it will work.
    I believe if we do these things our workers and the city 
has shown we will not only survive that competition, in most 
cases we will win that competition, because I have confidence 
in our people to do that.

                         committed to children

    Just a couple of other areas. We have a major emphasis on 
children in our budget, and our commitment is not to simply 
take an additional amount of money and give it to the 
government in a traditional way but to think anew, boldly 
addressing the needs of children where two out of five still 
live in poverty, one of ten die before the age of 3. We have 
the highest percentage, 14 percent, of low-birth-weight babies. 
There are 3,100 foster care children in the District, and 98 
percent of them are African American, all numbers of different 
problems across the spectrum of children in the District.
    This is an effort to set aside the resources and to create 
a coalition of the faith community, the foundation community, 
local business and government working together to provide the 
overall needs of children to allow them to perform not only 
better in school but to perform better in their lives. I think 
this is very, very important that we do it in a way that 
encourages performance and encourages innovation.

                          economic development

    Finally, we also talk about economic development in the 
budget in the following ways: One, we work to rebuild the 
infrastructure of economic development in the city. There is 
support for the National Capital Revitalization Corporation, 
rebuilding the planning office, not a whole new, separate 
facility but an office that will leverage and complement the 
resources already available in the Federal Government, 
particularly in the National Capital Planning Commission.

                             tax reduction

    In addition to that, to make an investment in tax 
reduction. I believe that tax reduction is important. I believe 
that tax reduction can be an important stimulus for economic 
development in the city, but I also believe that tax reduction 
has to keep the following in mind, that is, that throughout 
this we are trying to promote not only overall economic 
recovery but we are also trying to protect and promote the 
fiscal and financial stability in the District, and my only 
question is, at all times and at what benefit and at what cost 
are any of our initiatives met? And where I am satisfied those 
tests are met I, like any other normal politician, am more than 
happy to offer a tax cut to our citizens. It would be foolhardy 
to argue otherwise.
    If we look at all those things, Mr. Chairman, we are 
talking about a budget that envisions a city that is thinking 
anew, creating a climate for investment, a city working much 
better and, very, very importantly, building a community, a 
fundamental element of returning democracy to our Nation's 
capital.
    I thank you very much to testify to you.
    Mr. Istook. Thank you, Mr. Mayor. I know we will all have 
questions for you after we hear from the other panelists.

            prepared statement of mayor anthony a. williams

    [The prepared statement of Mayor Williams follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Istook. Chairman Cropp.

               opening statement of chairman linda cropp

    Ms. Cropp. Good afternoon, Chairman Istook, Mr. Moran and 
other Members of Congress and staff. I am pleased to be here 
with my colleagues, the Mayor Tony Williams and with Alice 
Rivlin from the Financial Authority and our representative on 
the Hill, Eleanor Holmes Norton. I want you to know it feels 
good, as many of you have said, to sit here as part of a city 
that is turning itself around. It feels very good, extremely 
good, to sit here and to walk through the streets of our town 
with our citizens holding their shoulders back, their heads up 
high and smiles on their faces and to know we are a part of 
this turnaround.
    Our resolve as elected officials is to sustain this type of 
change in our city and to improve the service delivery to our 
citizens.
    Let me give you just a brief update as to where we are in 
the Council, what the Council has been doing since the Mayor 
submitted his budget March 15.

                         budget review process

    We are currently in the process where we are having our 
budget review. It is systematic, extensive and a rigorous 
exercise where the committees are charged with promoting a 
public dialogue on the budget among the agencies, the community 
and the private sector.
    After the budget submission, the Council immediately 
conducted a series of hearings that lasted for several weeks, 
including weekends and even during the recess. Agency heads, 
staff, city workers are invited to discuss the specific needs. 
This is the point at which the public will have an opportunity 
to come in and give its input after having the review of the 
budget as the Mayor has submitted it to us. It gives us all the 
opportunity to hear these comments and to also hear from other 
individuals. Some may be experts in certain areas and elements 
of the budget. The final product will be one hopefully that we 
have all come together and developed.

                        consensus budget process

    We are looking at a consensus process where the Mayor and 
the Financial Authority will come together and discuss all of 
these issues and come together with a decision. Probably in the 
outcome we don't always agree to everything as the way it 
usually is, but we are committed to work together and come 
together with a budget that will meet the needs of the citizens 
of the District of Columbia.

                         budget markup process

    Following our public hearings, the budget markup process 
will start. In fact, we will start part of that process in the 
very near future so that we can meet the guideline and time 
lines that Chairman Istook has suggested may be beneficial to 
the city as a whole, and we are going to try very hard to do 
that.
    In some cases, revisions to the funding levels will be 
recommended. These revisions will be the culmination ofefforts 
of the committees, the testimony by public witnesses and the priorities 
of the Council.
    After the committees report their recommendations, the 
Committee of the Whole will put together a final budget. The 
final budget the Committee of the Whole will put together will 
be an outcome of all of us working together, from the Mayor to 
the Financial Authority and the Council, in a consensus budget 
process.

                 Pending Budget Request--Two Scenarios

    The budget request which is now pending before the Council 
has two scenarios. One is the budget that we have said is the 
``legal budget''. That is the framework that Congress has set 
before us. It does have a $150 million reserve as required by 
the Congress. And then there is the Mayor's ``alternative 
budget'', which presents a budget where the Mayor is showing a 
lot of new ideas and his vision for the city.

              Problem with the $150 Million Rainy Day Fund

    One problem that we are facing is that some of those 
priorities and some of those ideas the Mayor would like to put 
into effect, we have a problem if that $150 million rainy day 
fund stays in there. I would refer to the spending plan with 
the $150 million reserve as the legal budget and the one 
without as the alternative budget.
    There are many reasons why we support the budget without 
the rainy day fund. I am going to talk about what we mean by 
that. It does not mean we don't believe in a reserve. We truly 
do believe there should be a reserve. We have balanced our 
budget for 2 consecutive years, and we expect to do so for 
fiscal year 1999. In fact, we now project that we have 
accumulated a surplus of $312 million that will probably even 
grow. This is an outgrowth of an awful lot of different things 
that have taken place to reduce spending within the city and, 
too, our revenue estimates have been extremely conservative.
    These funds are, in effect, reserved in an amount twice as 
big as the $150 million rainy day fund. Given this financial 
good news, this provision is somewhat outdated because it does 
not reflect our current financial situation. Moreover, this 
requirement prevents us from investing in and improving basic 
municipal services such as a good public school system, 
efficient public service and an effective police force.

                          Council's Priorities

    For fiscal year 2000, the Council has emerged with a list 
of priorities. We have several financial management targets to 
accomplish. These targets range from debt policy, establishing 
a cash reserve and possible prefunding of some expenditures. We 
are considering tax reforms that will allow more supermarkets 
and retailers not just downtown but also in the underserved 
areas, because such activities will increase the city's revenue 
as well as improve the quality of life. We intend to upgrade 
our workforce and make city workers more competitive and 
professional.
    We face an enormous human challenge in our health care 
system because we need to take care of our indigent and 
vulnerable. We must build a superior school system because we 
owe it to our children. So the priorities are many, and choices 
will be difficult, but that is why we are here.

                          Revitalization Plan

    Since the revitalization plan was enacted in 1997, the city 
has rebounded financially. The assumption of the pension 
liability by the Federal government has lifted an onerous 
burden off our shoulders, and we are quite grateful for that. 
To sustain the momentum of progress the city is taking 
additional monies from the Federal government, especially in 
the areas of mental health and special ed.

                     Citizen Complaint Review Board

    We ask Congress to fund the Citizen Complaint Review Board 
for fiscal year 2000.

                           Tobacco Settlement

    Furthermore, we would like to request that you look at that 
70 percent Federal recoupment of the tobacco settlement to be 
returned not only to the District but to other States as we 
look at approaches for us to deal with this tobacco settlement 
money nationwide.
    As we continue to collaborate with the Mayor and Financial 
Authority, the role of the Council is to present a good product 
to you in June, a responsible consensus budget. As you help us 
steer this good product through Congress, we ask that this 
budget, which will be diligently put together by locally 
elected officials, be left intact and free of unnecessary 
riders.
    The District is one city. This city now has one government 
headed by an elected mayor. Be it the budget or the visible 
service improvements, we are committed to working side by side 
with him.

                              Two Reserves

    I talked a little bit about the $150 million cash reserve. 
Actually, there are two reserves. It is the cash reserve but, 
in addition, it is the accumulated reserve. By the end of this 
fiscal year I want to make it clear the city will have probably 
about $312 million accumulated reserve over the cash reserve.
    I certainly believe we need to have money in reserve for 
unforeseen challenges that we may have and also for sometimes 
when the economy is not as strong as it is now. But what we are 
expected to do at this point is much more than what is required 
of any other government, and so I would hope that you would 
look at that.
    As we all work together to make this city improve, we want 
you to know we have been working and we urge you to support the 
process and endorse the budget that we will be submitting to 
you, and we want you to join our consensus team as we all work 
together to move this city forward.
    Thank you so very much for this opportunity.
    Mr. Istook. Thank you, Chairman Cropp.
    [The prepared statement of Chairman Linda Cropp follows:]

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    Mr. Istook. We heard from two branches of government, and 
you might normally think we have three branches of government, 
but it is a little different with the control board. So we are 
pleased to hear from our third panelist, Dr. Rivlin.
    Ms. Rivlin. Yes it is a little----
    Mr. Istook. You are the judiciary maybe?

               Opening Statement of Chairman Alice Rivlin

    Ms. Rivlin. Right. In any case, I represent the peculiar 
institution known as the control board, which was put in place 
temporarily and which we fondly look forward to getting out of 
business in the not-too-distant future. However, it is a very 
exciting spot to be in at the moment; and despite, as 
Congresswoman Norton has pointed out, the fact I don't get paid 
I think I am getting amply paid in the rewards of working in 
the city which is turning around, which has vigorous political 
leadership dedicated to the future of the city, and where the 
fiscal situation which was a disaster 3 or 4 years ago, as no 
one needs to remind this Committee, is now in much better 
shape.
    Now, one can't overestimate the fiscal progress. Although 
it has been very gratifying, the city still faces an uncertain 
financial future. It has a narrow tax base, and it can only 
grow if we make vigorous efforts to bring in new residents and 
new business.

         City's Deferred Maintenance, Crumbling Infrastructure

    We also have a legacy of deferred maintenance, 
crumblinginfrastructure, as well as poor services that have to be 
repaired. But we have a will in the city, led by this new leadership, 
to tackle those problems. We at the control board want very much to 
support the elected leadership and get this government moving forward, 
and then get out of the way.

                        Memorandum of Agreement

    In recognition of the new era in the District, the 
Authority and the Mayor in January signed a memorandum of 
agreement that described their new relationship, and this 
memorandum of agreement made clear that while the Authority 
retains all the responsibilities that it has under the statute 
the Mayor is in charge of the day to day running of the city 
and the supervision of the executive branch departments. That 
is as it should be. He also has responsibility for program and 
policy matters related to these departments and agencies.
    In recognition of this new development in responsibilities, 
the Congress recently passed legislation that places this basic 
agreement that we did together into law, for which we are very 
pleased.
    Perhaps the symbol of this new working relationship is that 
we all meet together very frequently. We meet regularly on 
Wednesday afternoons, the control board, Chairman Cropp and the 
Mayor. We also have other meetings, and we meet with the whole 
Council.
    Yesterday afternoon we turned our regular meeting into a 
meeting with the full Council. We had to get out of our little 
conference room, which wasn't big enough for all these people, 
but we had the full Authority, the full Council, and the Mayor 
and some staff.

                     Assumptions in Baseline Budget

    It was our second meeting on the year 2000 budget. We 
cleared up I think any disagreements that we had on what were 
the assumptions in the baseline budget. That is the first thing 
you have to do if you are going to make a budget, you must make 
sure everybody is working from the same assumptions. We spent 
time with the Mayor talking about his priorities; we spent time 
with Chairman Cropp and her colleagues, talking about how their 
priorities differ; and then we worked out a process for coming 
to consensus over the next couple of weeks. We don't have a lot 
of time if we are going to get this budget up here early. We 
are hoping for the middle of May.

                  Several Differences on Major Issues

    But we are establishing some working groups in which the 
Mayor, the Council and the Authority will be represented to 
work out difficulties or differences on major issues where we 
know now there will be some differences of point of view. Tax 
reform is one. How to treat the health system is another. 
Exactly what to do with this youth initiative is another. 
Everybody wants to take care of kids, but people have a little 
different idea about what that should be.
    So, as the others have said, we are well launched on the 
consensus budget process. It will not be easy, in part because 
there are so many things that need to be fixed or need to be 
done that cost money and because, although the revenue picture 
is a lot better, it isn't terrific yet. We are still losing 
population. And because we do have this obligation under the 
law to set aside the $150 million rainy day fund in addition, 
as Linda pointed out, to our growing balances in the general 
fund. So we do that because that is what the law says, but 
those things all make for a difficult budget process.

                       Control Board's Priorities

    I am, however, confident our only role here is to pull the 
two sides together into a consensus budget. One of Linda's 
colleagues from the Council asked me in the hearing yesterday 
what are the Authority's priorities, and we said we don't have 
priorities except to get a balanced budget in compliance with 
the law up to the Congress on time. We will hope to assist the 
elected authorities in doing that.
    In the longer run, there must be economic development, as 
the Mayor and the Chair have said. We must improve the 
infrastructure, and we must improve the schools in particular. 
That is a particular concern at the Authority.
    Then we must all work together to convince ourselves and to 
convince you that this city is really working and it is time to 
get back to what I think of as normal governance, namely a city 
run by its own elected officials.
    Thank you.
    Mr. Istook. Thank you very much, Dr. Rivlin.
    [The prepared statement of Dr. Alice Rivlin follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Istook. I want to mention before we have questions from 
the members of the subcommittee, we have the 5-minute rule on 
addressing the members of the subcommittee, and intend to 
follow the practice of taking people, alternating parties, but, 
beyond that, taking it in the order of arrival at this hearing.
    I better set the example and make sure I adhere to the 5-
minute rule myself. My time is running.

                        Questions About Tax Cuts

    This is a question to each of the panelists, because I 
think a large part of our mission is making sure that you have 
the tools to do the job, not that you are asked to do something 
that cannot be done. There is a lot of positive discussion 
about significant tax cuts for taxpayers in the District. I 
applaud this. I think a favorable tax environment is an 
absolute necessity to attract businesses and residents back to 
the District. That may be the most important part of economic 
development that you can undertake.
    I also believe a more vigorous economy will create some 
positive revenue benefits for the District, too. But it is 
important to recognize how is this going to fit into the 
framework of what we have been trying to do?
    I am not trying to argue figures with anyone. I have been 
told, for example, that if the Federal government hadnot 
assumed the extra District responsibilities that we have assumed that 
for fiscal year 1998, rather than a $445 million surplus, the District 
may have had a deficit of about $70 million. Now, I don't want to argue 
which reform, whether Congress or the control board or personnel 
policies were the most significant, but it is important to understand 
there are still structural things that you as leaders of the District 
are working upon.
    But when we try to fit this into the situation with tax 
cuts and also concerns about some programs, trying to help some 
of the accumulated social problems within the District, how do 
you fit it together? For example, ending oversight by the 
control board, which is a prime objective I know for people 
concerned with Home Rule, requires keeping the budget balanced. 
There is talk about wanting to spend the $150 million special 
reserve. Yet might it be the stabilizing needed to make sure 
that things remain in balance?

                   expansion of services and tax cuts

    There are some proposals that involve expansion of some 
city services and programs, especially regarding health care 
and children. So the real question is whether the city--that 
means the Mayor, the Council, the control board--are prepared 
to make the adjustments necessary to provide a tax cut and that 
it occurs to me, Mr. Mayor, that things such as you propose in 
the Services and Improvement Act may be a key part of this.

                waste and inefficient personnel policies

    I don't think anybody is claiming that all the waste has 
been purged out of the system in District government, that all 
the difficulties with personnel policies have been totally 
purged out. There are still some gains to be squeezed out of 
the system if people are willing to do so.
    So I want to ask each of you, how aggressive are you 
willing to be in even accelerating some of the reforms within 
the District to make possible these tax cuts that seem to be a 
vital key to a lot of the city's future?

                    Better quality of life is needed

    Mayor Williams. Well, for myself, Mr. Chairman, I believe 
that there really are three overarching things we are looking 
at all the time in terms of questions. What is rightsizing our 
government and getting it to a competitive level when you 
compare many of our agencies to best practices around the 
country or benchmarking against ownership service levels around 
the country? You will find we still have room for improvement 
there. You will find that we have to expand our economy, as 
opposed to increase taxes, to provide not only the needed 
revenue for our government to do its job but a better quality 
of life for all, which is really our intent, and finally 
building on the Federal relationship.

                          credit for recovery

    As it goes to the Federal relationship, I agree with you 
this is one of these old theological arguments. It is almost 
impossible to fathom out what led to the recovery. Was it a 
better tax plan, outside control? It all contributed. It is all 
there now.

    [CLERK'S NOTE.--See ``Clerks Note'' at bottom of page 2.]

                          $150 Million reserve

    The $150 million is different from the requirement that we 
have a rainy day fund. It is really something different to me. 
The $150 million is saying that in any given year you have to 
protect against overspending by setting aside $150 million 
which you can only spend under special provisions.
    I think we have firmly established a track record where we 
conservatively, to say the least, estimated expenditures and 
revenues. Where you have positive swings year to year of $300 
million, to say you have to set aside $150 million to make sure 
you don't have a negative swing seems to me to be somewhat--a 
little bit redundant. So I would say that we have established 
that track record.
    As relates to funds left over, my view is that where there 
are funds left over as we bring this government into balance 
and get ourselves into the right fiscal situation I would make 
sure that we have made intelligent, prudent, responsible 
investments in children and education, because that is an 
economic development tool; to make sure we have made 
responsible investments in infrastructure, because that is an 
economic development tool; that we did a better job with street 
sweeping and snow removal. It is not rocket science. We just 
got more snowplows. So when people were actually able to go out 
there and plow--and then, finally, yes, that we make room for 
tax reduction because you are talking about the people's money, 
not the government's money. I agree with that.

                  tax reductions as a braking service

    I also agree that, as a general rule, tax reduction can act 
as a brake or as a framework to keep government in its right 
size in overall society. That is a good thing. But a question 
has to be asked, too: What is the intended benefit from the 
particular reduction?
    My particular druthers are that we focus tax reduction 
where we can see the benefit. Where in my budget we talk about 
tax reduction, it focused in a major way on small business 
because it is a big part of our economy. I think it is 
sensitive to that, and it is where you have an extraordinary 
discrepancy between what our small businesses are paying 
taxwise. And these are the emerging industries incidentally--
biotech, computer technology, for example--compared to the 
surrounding area.

              support for pending federal tax relief bill

    As relates to individual tax relief, my personal druthers 
are I support our Congresswoman's bill she has before the 
Congress because I think the Federal Government can do a lot to 
provide that dramatic individual relief we need. But that is my 
view.
    Mr. Istook. Ms. Cropp.

                   tax cuts require fiscal discipline

    Ms. Cropp. When we look at tax cuts, there is no question 
we really need to take a multiple fund approach. Tax cuts in 
isolation probably will put us back into the position we were 
in a few years ago.
    Mr. Istook. As far as fiscal discipline that you have to 
exercise.
    Ms. Cropp. Exactly. When you deal with tax cuts you have to 
look at them in a sense of how they help the economy grow, tax 
cuts that bring in more revenues in the long run, expand our 
tax base. As we do that we have to look at the impact that a 
revenue change will have on service delivery. I think everyone 
is in favor of some form of tax cuts.

                         defining the tax cuts

    I think the challenge before us currently is how we define 
the tax cuts. What type of tax cuts are we talking about? The 
Mayor in his budget has I think about $64 million in tax cuts 
that are going towards small businesses. Several members of the 
Council have put out tax cuts that would reduce income tax and 
property tax and business taxes. For that the dollars will come 
from some part of the surplus.

                     need savings to have tax cuts

    Mr. Istook. Let me ask, are you prepared to bite the bullet 
on some programs and spending to make this possible?
    Ms. Cropp. The proposal that has been introduced by Council 
members does not necessarily require that in the way that it 
has been introduced. But it seems to me that as we look--what 
we have to do is look at the long-range outcome ofwhat any type 
of tax cut would happen, and it does also require for efficiencies and 
economies in government as a whole. Part of what we have to continue to 
do is to make our government more efficient and, while we are trying to 
bring in additional revenues, to see if there are approaches that 
things don't cost quite as much. You will see some of that in this 
budget. I think the executive branch has done an outstanding job in the 
new procurement process for the District where we will save $20 million 
and we have to continue to look for efficiencies along those lines.
    Before we decide on any final tax cut we have to really do 
some long-range numbers, run some long-range numbers to see 
what the effect is, how much, and if we will have to reduce the 
cost of government.
    Mr. Istook. Dr. Rivlin.

               get rid of inefficencies and redundancies

    Ms. Rivlin. I think you put the problem very well. There 
are just more things people would want to do, including tax 
cuts, than can be done within the resources available.
    The first thing to do, it seems to me, is to look very 
carefully at the base budget; and we are doing that in 
conjunction with the Mayor to make sure that we get out all of 
the inefficiencies and redundancies that can be gotten out and 
that we are really spending on things that have high priority.
    The taxes that I think I personally--not even speaking for 
the Board--most tax cuts that I am most attracted to are ones 
that can be packaged with other efforts on economic 
development, where we clearly can give tax breaks to small 
business in conjunction with other economic development 
measures, because we do need to grow the District economically, 
particularly in the neighborhoods.

                      cause for losing population

    Now, everybody would like an individual income tax cut--I 
suspect everybody in this room. That costs more money, and it 
has to be traded off against the question of better services. 
And it is basically the question, are we losing population in 
the District because our income taxes are too high or because 
our schools are not very good and our streets are not very safe 
or both? And that is what the budget question comes down to, 
and that is one of the things we will certainly be arguing.
    The other thing is some of this can be phased in over time 
because clearly a tax cut, if it is to be phased in over time, 
can be in some ways as good an incentive as if the whole thing 
came in the first year. That makes it somewhat more affordable.

                       inefficiency in government

    Mr. Istook. I appreciate that. It has certainly been my 
impression that many people believe there are still many areas 
of inefficiency within city government that are very 
entrenched, and it takes special efforts to tackle those. And 
certainly I am committed, and I think you will find plenty of 
allies in Congress, to make sure that you have the tools that 
are necessary to do that job.
    Thank you very much.
    Mr. Moran.
    Mr. Moran. Thank you very much, Mr. Chairman.
    I have three areas of inquiry, and the witnesses can choose 
which they wish to address.

               recognition of congressman dixon's efforts

    I do want to say one thing. The Mayor talked about a whole 
lot of factors converging to bring us to this point where we 
can stand tall and proud at the progress that D.C. has made, 
and I want to give some credit to the gentleman sitting 
immediately to my left who chaired this Subcommittee for a 
number of years. Mr. Dixon was one of the first to come out and 
say, ``I have had it, we want some audits, we want those audits 
and recommendations to be adhered to, and we have to get 
greater accountability and fiscal responsibility in the city 
government.'' So he deserves more credit than he gets 
oftentimes for that.

                 recognition of alice rivlin's efforts

    Mrs. Rivlin deserves a tremendous amount of credit because 
the Rivlin Commission laid out the road map. You told us what 
needed to be done in the District government. And you also 
deserve a lot of credit when you were properly given 
responsibility for chairing this board and your first action 
was to give as much management responsibility back to the 
District as possible.
    I think the board deserves great credit for the work they 
did as well. We don't want to start this new chapter out 
without giving credit to people who deserve it; and, obviously, 
the gentlelady to your left, Mrs. Rivlin, goes without saying. 
Let me emphasize something, and it is interesting that Mrs. 
Rivlin actually said it before I had a chance to. I am glad she 
did.

                 tax rate in virginia compared to d.c.

    When I was Mayor of Alexandria right across the river, it 
was too easy a sell to get businesses to locate in Northern 
Virginia versus the District. It was no secret to have a 9.5 
percent personal income tax versus a 4.5 percent, less than 
half in Virginia. That was just prohibitively expensive for 
people to locate in the District, so I think that has got to be 
changed.
    A lot of corporate taxes, this franchise tax, the workmen's 
comp situation, that affects businesses. You know they are just 
not comparable, and they work to the benefit of Northern 
Virginia and Maryland suburbs and to the disadvantage of the 
District. We need a level playing field.
    To some extent, it is a context of your competitors' tax 
situation that should drive what you are doing. You want to be 
competitive, and it is obvious that taxes are one area where 
you are not competitive. It is not fair, and it is why you lose 
a lot of business you ought to be getting.
    If we want to be in favor of good government then we in the 
suburbs particularly have to support levelling the playing 
field. But the way to do it is not to put the District back 
into fiscal insolvency, because too large a tax cut would do 
just that, as Mrs. Rivlin said.

                    spread tax reductions over time

    But I do think, since it takes a long time for a company 
board to decide to relocate and find a place, to get accustomed 
to the move and to actually move, you don't need to do it 
overnight. Even if you were to say, within 5 or 10 years, we 
are committed to bring this individual income tax rate down 
from 9.5 percent to 6.5 percent, that accomplishes it and 
doesn't cost a lot but achieves the same objective; and 
likewise with these other corporate taxes that don't yield a 
lot of money but lose a whole lot of business.
    So comment on that, if you would like.

                           safety net program

    And another topic I want to address, though, is the safety 
net program. And I really admire what you are trying to do, Mr. 
Mayor, particularly with children's health services.
    The abuse and neglect in this city has to stop. I know 
everyone here is determined that it is going to stop. It is 
just too high. Some of it is going unreported. It is probably 
worse than we realize.
    But I am not sure the best way is to cut out theMedicaid 
DSH program. Ms. Norton caught a mistake in the 1997 balanced budget 
agreement, $26 million. She got it restored, but I think there is a 
plan not to match that DSH money. If that is the case, I worry about 
it.

                       public benefit corporation

    I wonder if the Public Benefit Corporation--one of the new 
acronyms. I am not sure that the PBC should be competing with 
other private nonprofit entities. Howard University Hospital 
and Children's Hospital have got to be able to compete fairly 
with Public Benefits Corporation and not give a bias to PBC 
because they are supporting D.C. General. I don't want them to 
end up subsidizing D.C. General.
    I am out of time.

                               metrorail

    The third topic Metrorail, big problem. It is critical for 
D.C. Would you support a regional revenue raising program where 
we could raise it within the metropolitan region and fund 
Metrorail and some of our other regional transportation 
projects rather than relying on Richmond or Annapolis----
    Mayor Williams. Speaking for myself and not for Chairman 
Rivlin or Chairman Cropp, I personally believe and have spent 
some time now trying to foster better relationships in the 
region. I believe one of the first steps in building a regional 
partnership, and realizing once again the role of this city as 
the central region, is to begin a transportation program along 
those lines.

                              commuter tax

    Mr. Moran. Better idea than a commuter tax.
    Mr. Istook. Are you going to endorse the commuter tax?
    Ms. Rivlin. No, no.
    Mr. Moran. If so, I think the time is up.

                      metro-wide authority to tax

    Ms. Rivlin. No commuter tax, but just to say that in the 
1990 report that I chaired, which Mr. Moran graciously referred 
to, we came out with a metropolitan wide authority with tax 
power; and I think that is a good idea.

                     new workers' compensation law

    Ms. Cropp. If I may comment on a couple of questions, one, 
there is a new law in the District with regard to workmen's 
comp and the new law passed in December--with the wound still 
in my back--brings us closer to parity and really has changed. 
I would be more than happy to share that with you. And you see 
the District took a Herculean step with respect to workmen's 
comp.

                           health care issues

    Health care is an important issue in the District. We have 
about 125,000 citizens uninsured or underinsured. These are the 
people who work. Those who don't work usually have Medicare, 
Medicaid or something else. They are the working poor, and we 
need to look at our health care policy.
    The other problem we face in the District is we have a lot 
of our hospitals such as Howard that you mentioned, such as the 
Washington Hospital Center, Greater Southeast, who provide an 
awful lot of uncompensated care to our citizens. There is no 
doubt that we need to develop a different approach in dealing 
with health care to keep our hospitals open and provide health 
services.
    Actually, the Mayor started a process that was different; 
and I think it gives us a starting place for us to come in and 
try to look at different approaches to meet this very important 
need.
    Mr. Moran. Thank you very much. Thank you for your 
indulgence.
    Mr. Istook. Thank you, Mr. Moran.
    I am going to remind people, to be sure every member has 
the opportunity to participate, to pay a little more attention 
to the time. We are not doing that bad.
    Mr. Moran. I apologize. That was directed at me properly.
    Mr. Istook. That is all right.
    Mr. Sununu.
    Mr. Sununu. Thank you, Mr. Chairman. It is a pleasure to 
have the opportunity to ask a few questions at this point, 
given that I am the most junior member of the subcommittee.

      management reform, productivity, and information technology

    I would like to ask some questions, and you can answer 
generally or specifically, about a fairly narrow topic or set 
of topics having to do with management reform, productivity and 
information technology, just to get a sense of what progress 
has been made in those areas over the past couple of years. I 
know it is something near and dear to your heart, given your 
previous work. Maybe you could talk about what your priorities 
might be and the opportunity for further investment in those 
areas.

    $10 million productivity savings--use of management reform money

    In last year's budget, I believe in the final version, 
there remained an allowance for productivity savings of 
approximately $10 million. Perhaps you could begin by talking 
about whether those savings were realized, in what areas they 
were realized and what areas had the greatest promise for 
further savings and for other reform.
    Mayor Williams. I would be happy to get you the information 
of where we think savings were realized in the general 
management reform effort. Because we have been working on this 
with the Council and with the Board, and the management reform 
money invested in the District I think has brought near-term 
savings. But I think, more importantly, it is going to bring 
long-term savings because of the system investments.

    [The following was supplied for the record. In addition, a copy of 
a letter dated June 17, 1999 from the Committee to the control board 
requesting an analysis and status of the approximately $568 million 
allocated for `management reforms' follows on pages 52-54:]

                 Management Reform/Productivity Savings

    Management Reform was under the direction of the Chief Management 
Officer at the time of FY 1999 savings target was set. Although 
specific percentage shares were assigned to agencies to achieve the 
full $10,000,000 target, only three agencies reported savings totaling 
$1,500,000 all of which were one-time savings.
    While Management Reform savings targets from previous years may not 
have been realized, the Williams Administration is committed to making 
the District government more efficient. To that end, we have taken 
steps to ensure that savings targets projected for FY 2001 are both 
realized and recurring.
          --The Office of the City Administrator is developing a plan 
        to track and secure the $47,000,000 in productivity savings 
        projected for FY 2001 so savings will begin to be captured at 
        the outset of the fiscal year.
          --The largest source of these savings will be a workforce 
        reduction of up to 1,000 employees through the elimination of 
        long-standing funded vacancies and attrition through regular 
        and early retirement during FY 2000.
          --While there will be expenses associated with achieving 
        these workforce reductions during FY 2000, the projected FY 
        2001 savings are up to $37,000,000.
          --Additional areas targeted for savings include--
                  --better management of disability claims;
                  --additional Medicaid reimbursements the District has 
                historically failed to pursue;
                  --eliminating unused telephone lines and extra 
                service options on active lines; and;
                  --cell-phone account management.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

           control board--allowed city to acquire new systems

    Mayor Williams. One of the things that the control board 
environment allowed the District to do was to invest in new 
financial systems, procurement system and background systems 
that allow the government to achieve better productivity; and 
my goal in the government is to, on a central level, to think 
about it as a tool kit, to provide a tool kit for each of our 
agency managers to use to manage their agencies on a 
performance basis.

            reengineering processes and managed competition

    So one of the tools, for example, is reengineering 
processes and improving processes; and another is managed 
competition. Another is the whole labor strategy. These are all 
tools we want our managers to use as they bring their agencies 
to size.
    The best indicator of where our agencies ought to be in 
size is two different points, one, from the marketplace in 
managed competition, because you give real-life information on 
how your government compares to the real world; and, two, by 
comparing what our government does with agencies in other 
cities. If you have one FTE doing 20 units of work a year and 
another in a comparable city doing 200 units, you know you have 
some work to do with that manager to get yourself down to the 
proper level.
    Mr. Sununu. Is there an ongoing effort to conduct those 
comparable studies with other cities across the country?

                   performance measures due may 15th

    Mayor Williams. We are committed to submitting to 
theCongress--it may not be May 15th, maybe a little after, because we 
accelerated the budget--but we are committed to submitting to the 
Congress a plan stating an initial set of measures, a scorecard on what 
we want to achieve as a government. This is an important tool for 
everyone to use to keep us accountable.
    Mr. Sununu. Are there objectives within the criteria? And 
who developed the criteria for those comparisons?
    Mayor Williams. The criteria was originally developed a 
couple years ago with work done by Deloitte & Touche, a lot of 
work done by the Financial Authority. We are building on that 
work in the individual agencies, a lot of help from the Federal 
government. OMB has helped tremendously. And all of that is 
incorporated into the measures and the plan you are going to 
see.

    [CLERK'S NOTE.--The material supplied by the Mayor appears 
on pages 1237-1290, this volume.]

             quality of information systems and y2k status

    Mr. Sununu. Can you talk about information system quality? 
You mentioned a few areas where you have invested in new 
information technology. Could you talk about where it is 
strongest, where the weak areas are that remain, and in general 
terms how you feel about your Year 2000 compliance level?
    Mayor Williams. Congressman, I applaud you in asking 
questions about systems, because a lot of times they are 
ignored. And they are vitally important, and their breakdown 
can interrupt everything we are talking about. I will go down 
the list.

                         new procurement system

    Procurement, I think we will see--we are projecting real 
savings beginning next year because of a new procurement 
process that we think will cover 80 percent, that is $20 
million of goods and services in the District. So we are seeing 
real traction in the procurement area.

                          new personnel system

    We are seeing real traction in the personnel area. I 
inherited a CAPPS system, a term for our personnel system, that 
languished for some time. We put time and effort into it. It 
came on this year, and we are going to finally have for the 
first time real position control in the District, a fancy way 
of saying we will know the number of people who work in the 
place, what they are doing and what they are paid. We won't be 
paying people that died. That is important.

                          new financial system

    The new financial system is very, very important because 
the new system allows putting--people, instead of spending time 
sorting out personnel and nonpersonnel--and drudgery--can spend 
time on cost of service information, which is the real business 
analysis for our agencies. That is very, very important.

                             year 2k status

    Finally, Year 2K--Suzanne Peck, our Chief Technology 
Officer--we are very, very proud of her; she comes from the 
private sector--embarked on an effort to not only remediate our 
Y2K problems but at the same time we are doing that to 
congregate all of our data management in the District in the 
most productive way. It is an ambitious task, and to the extent 
we have not made it in certain areas we are making a major 
effort to do contingency planning to cover us in that bridge 
period between January 1 and when the relevant system is on-
line.
    Mr. Sununu. I think that is to your credit. A lot of people 
who are out and about investing in new technology or trying to 
become compliant forget about the contingency planning portion.

                   revenue collection system progress

    A final question. Revenue collection, is your system fairly 
modern and is it integrated with your budget system and also 
your payment system? Has that been modernized and is that 
integrated with the budget system at all?
    Mayor Williams. No.
    Mr. Sununu. Is that the weakest area, in collection and 
payments?
    Mayor Williams. Everyone who follows the District--the 
revenue situation is really a staged situation.
    Stage 1, we had manual processes with no system backup, 
millions of tax returns on the floor. That is what we are 
talking about.
    Stage 2, tax returns have been pulled up off the floor. We 
have a new customer service element. We are returning tax 
refunds as fast as anyone in the country and manually 
integrating financial information overall with the particular 
revenue information.
    The third stage on that, Natwar Gandhi, our Director of Tax 
and Revenue, with support of the Financial Authority, are 
incorporating an integrated tax system; and the goal is to 
enhance tax collection, integrate all the financial information 
with the revenue information. And very, very importantly for 
customer service, we are hoping that, beginning with business 
taxes, proceeding to sales and then going to property--I may 
have it a little off--someone will be able to call 24 hours a 
day and get their tax work done by the District.
    Just to imagine where we have gone in 4 or 5 years, you had 
to be there when we started.
    Mr. Sununu. Congratulations on the success so far, and good 
luck with the final phases of that revenue implementation.
    Thank you.
    Mr. Istook. I hope everyone's taxes are done by now.
    We are blessed to have a former Chairman of the 
Subcommittee. Mr. Dixon, it is your time.

               remarks of former chairman julian c. dixon

    Mr. Dixon. Thank you very much, Mr. Chairman.
    I don't have anything to add to what you or Mr. Moran have 
said except to thank him and say I look forward to working with 
this distinguished group of elected officials in the District 
of Columbia. Mr. Moran did trigger one thing, though, that the 
blame and the credit can be spread around to a lot of people.

      recognition of americo miconi, phil dearborn and david vise

    There are three people in particular I would like to thank 
for their work over the years. That is the gentlemen to my 
right and to your left, Mr. Americo Miconi, who has been a 
very, very objective person. He gets beat up on by Republicans 
and Democrats because he's faced with questions such as where 
did you get that crazy idea? Why did you tell the Chairman this 
or that?
    The second person that I have not had a lot of direct 
contact with but I was telling Mr. Mollohan that he is a 
particular resource, and that is Phil Dearborn sitting over to 
the right in the audience.
    At times, the press plays a negative role in society, but I 
think the press has played a very constructive role in 
identifying problems and shaping the new District of Columbia; 
and whereas I would be in trouble to single out any one person 
I would single out David Vise from The Washington Post who took 
a GAO report that Pete Stark and I commissioned, understood it 
and investigated it.
    That is all I want to do, is thank those people for their 
participation in it.
    Mr. Istook. Thank you. Maybe we should recognize The 
Washington Post.
    Mr. Moran. They just got recognized.
    Mr. Istook. I agree.
    Let me mention, with the vote on, my intention was--Mr. 
Cunningham should be back--was to have him take the chair while 
I go vote. He is not back at this point. I don't know if any 
other member wanted to take any time now as opposed to heading 
over to vote and coming right back.
    Mr. Mollohan. We only have a few minutes.
    Mr. Istook. I know. That is why I am checking on that.
    Let's do this. Mr. Cunningham will be back momentarily. 
Let's recess until his return, and he will reconvene the 
hearing and recognize people accordingly.
    We will stand at ease for a moment.
    Thank you.
    [Recess.]
    Mr. Cunningham [presiding]. We will reconvene. I am sorry, 
the elevator was slow in getting me back.
    Ms. Emerson was here before me, so I will have to yield to 
the gentlelady.

                Health Care Restructuring--DSH Payments

    Mrs. Emerson. Thanks, Mr. Chairman.
    The budget includes about $85.12 million for the health 
restructuring within the Department of Health and, according to 
CBO, the fund will be fully offset in fiscal year 2000 by 
reallocation of current spending on health care programs and 
services and subsidies.
    Do you know in order to achieve that balance what health 
care initiatives might have been adversely impacted by the 
reallocation? In other words, did you have to shift funds and 
do you know specifically what they might have been?
    Mayor Williams. I can get you the specifics, but it was a 
shift--generally, the shift was from DSH disproportionate share 
approach into increased Medicaid insurance. There was some 
shift from the traditional--I will put it that way--subsidy for 
the D.C. General Hospital into a new support mechanism for the 
Hospital that I believe gives our patients a choice. Those were 
two shifts. I know there were others, but they escape me.
    Mrs. Emerson. If you can get that information to me, I 
would be very grateful.
    [The information follows:]

  finance the costs of New Insurance Coverage--reallocating Existing 
                               resources

    In FY 2000, the costs of the proposal can be funded by 
pooling and reallocating a portion of existing health 
resources. This is justified by the reduced need for direct 
subsidies since service and reimbursement will be paid for 
under the insurance system. The specific reallocations in local 
funds included: DSH ($6.6 million), PBC Hospital and Clinic 
Subsidy ($46.8 million), Addiction Prevention and Recovery 
Administration ($4.1 million), the Medical Charities Program 
($.7 million), Medicaid ($1 million), and the Commission on 
Mental Health Services ($1.9 million). In addition all federal 
DSH funds ($23 million) would be used to fund the new insurance 
coverage. One million dollars in additional funds for program 
administration have been included in this proposal.

             new health proposal--federal/local allocation

    Mrs. Emerson. My next question is also health care related. 
The proposed sanction of Medicaid and the CHIP, Children's 
Health Insurance Program, is estimated to cost approximately 
$83 million by the time it is fully implemented in 2001. How 
much of this $83 million will the District government be 
responsible for and how much will the Federal government cover? 
We couldn't find an allocation for that?
    Mayor Williams. I could get you that. But, again, the 
general approach--one of the general principles in our health 
care strategy is that we are spending, I think, $80 or $90 
million now without a Federal match, and we can better leverage 
that by doing it in a different way.
    [The information follows:]

    Question. How much of this $83 million will the District 
government be responsible for and how much will the Federal 
Government Cover?
    Answer. In FY 2000, the actual number is $85.1 million. The 
District will be responsible for $61.1 million and the Federal 
government will be responsible for $24 million. Of this $24 
million, $23 million would be from reallocating 
Disproportionate Share Payments (DSH).

    Mrs. Emerson. Coming from a very rural District in which 21 
out of 26 of my counties have 20 percent or higher of its 
population in poverty we have some of the same challenges, even 
though we are rural. That is why I am really interested in how 
you are doing it; and if you have creative ways that will help 
give more people access to health care I would sure like to 
figure how to do it in rural America, too.
    So, thank you.
    Mayor Williams. I have yet to learn why people take a 
measured approach to health care strategy. It is not an easy 
thing to do. It is really complicated.
    Mrs. Emerson. Indeed.
    Thank you, Mr. Chairman. That is all I have right now.
    Mr. Cunningham. Mr. Tiahrt.

                          Southwest Waterfront

    Mr. Tiahrt. Thank you, Mr. Chairman.
    I want to put in a plug for the southwest side of the 
District of Columbia in behalf of our presiding member because 
he lives there and he is worried about the waterfront. I want 
you to know about that for background.
    I think in my limited time in Washington and on this 
Committee I haven't seen at any time more optimism about the 
District. We all think it should be a shining jewel for this 
Nation which is the leader of the free world.
    I want to welcome all of you--Chairman Cropp, Mayor 
Williams, Secretary Rivlin, Delegate Holmes Norton. I am 
personally very optimistic, and I want to thank you for the 
work you are doing and hope for the best and hope we can help 
rather than hinder. Sometimes we get in each other's way, so we 
want to be sure we work together.
    Mr. Mayor, I looked over your statement and the initiatives 
you are taking. I want to commend you. I think you are heading 
in the right direction.

                 Development Process of FY 2000 Budget

    I wanted to talk a little about how you develop the fiscal 
year 2000 budget. I don't know all the basis for your ground up 
approach.
    I have had a chance to meet with some people in your 
cabinet, and start looking at basic things. I met with Richard 
Fite, the procurement chief, to discuss the way your task force 
is procuring goods for the city. I think he is really on the 
right track, and I will try to stay out of his way when I 
should and help if I can.
    When you develop the budgets--and in talking with him it is 
difficult to start from the ground up--but at the agency level, 
are you using last year as the baseline or are you looking at 
current needs? Do the agencies have written charters? Do they 
know why they exist? Are they working to ward some milestones? 
When you develop this budget, are you taking fiscal 1999 and 
projecting or do you really go down and do a grass-roots look 
at what the true needs are for the District and its people, 
what purpose the agencies fulfill, what milestones they hope to 
achieve along the way and use that as a basisfor building the 
budget you are sending to us? What is the basis of your FY 2000 budget?

                      problems in building budget

    Mayor Williams. Well, we have a couple of problems in 
building our budget, and one problem is the timing. When we do 
revenue projection in the budget we have to make that 
projection over a long, long period just because of the way our 
budget is staged. We don't have an opportunity or advantage 
that other jurisdictions have to get really relevant 
information and factor that immediately into the budget. That 
is an issue.
    Another issue in any--of the beginning of an administration 
is you are only in your administration 2 or 3 months when you 
have the budget upon you so there isn't time to do the long-
term planning, ground-up assessment and build the budget in 
that way.

    [CLERK'S NOTE.--It should be noted that for three years 
before becoming mayor, Mayor Williams was the District's Chief 
Financial Officer in charge of all financial activities 
including ``building'' the budget and scrubbing the numbers.]

                  Agencies Use Prior Year As Baseline

    So what I relied on was our budget office which was acting 
on a set of instructions of the agencies to have the agencies 
establish, yes, a baseline for the Year 2000 budget based on 
previous years' experience and then making adjustments to that 
baseline based on certain requirements, inflation estimates, 
things like that in a consensus way. As a matter of fact, once 
the budget was submitted, we had a working group established 
between the Mayor's staff, Council staff and revised the 
assumptions again.
    Implicit in your question I think is, is this baseline a 
base baseline or is it a baseline? Are we looking at the ground 
or towards the ceiling in that baseline?
    I would argue and a lot of us believe there is still 
improvement that has to be made. As Dr. Rivlin was saying, 
there still are some efficiencies to be realized. And in that 
respect, and I know this is backwards, but timing is a large 
part of this, we are asking our agencies, as they begin 
strategic planning beginning this week, to go back into their 
agencies, reach into their tool kit and come back to me as part 
of their planning and show me where they can realize additional 
economies. And we will use that in the consensus process and, 
more importantly, use that information to build the long-term 
performance planning that I am talking about.

                Financial Cushions In Government Budgets

    Mr. Tiahrt. In a past life I used to build proposals for 
government work, and it is a budgeting process when you develop 
a proposal. As I went down to these grass-roots level 
organizations it is a lot like going to an agency. My 
experience was they would put in a little cushion and after you 
go through a couple layers of cushion you soon have twice as 
much as you need. Part of it is making sure that this extra 
padding doesn't go into the agencies, and I am not at that 
level, and I don't expect in this short amount of time you have 
been here that you have been able to go through all this 
process, but it is going to take a while.

                Layers of Management Padding In Budgets

    But my concern is that you don't have multi-layers of 
management padding worked into the budgeting process. I know 
you have past expenditures to gauge yourselves on, but they 
were based on inefficiencies that you are working out of the 
system. If you can go at the agency level--as long as they know 
why they exist and what the goals are--and get a realistic 
budget of what they need to perform that function, I think that 
can be granted with a little oversight and a little discipline.
    I would like to be able to pick out a certain section of 
the budget and go all the way down to the agency level and have 
confidence that they know why they exist and what it is they 
hope to accomplish and what resources they will need to 
accomplish that task. As part of our oversight function what we 
will try to do is take a snapshot or two and see how----
    Mayor Williams. Right now, you won't have that information 
with you, I am absolutely confident, because we are beginning 
this process now. We will have done it to the unit level, a 
sense of purpose, a sense of measures of performance and the 
costs. It is a lot of work, but the major measures of the 
performance and costs identified to them is our goal. 
Absolutely.
    Mr. Tiahrt. A last thing, I have a lot of confidence that 
you are headed in the right direction. I want you to know that.

                  City Has Ignored Laws And Guidelines

    Occasionally, it comes to light through The Washington Post 
or other places that there are parts of the District government 
that have operated outside the law or outside the guidelines 
that Congress has laid out, whether those laws or guidelines 
are in force for a long time or not.

                     Abortion Money Spent Illegally

    In the Department of Health they paid illegally for some 
800 plus abortions--it is against the wishes of the American 
people to use tax dollars for abortions. I think you are 
familiar with that. Almost a quarter million dollars was spent 
there.

                   Complying With Appropriations Law?

    Is there any plan to oversee that you are complying with 
the law? How do you know you are complying with the law? We 
assume you are. But this is something that existed for some 
period of time anyway, and a quarter million dollars was 
expended against the law. What is your oversight that you have 
for complying with the law as you go through this process?
    Mayor Williams. I think the major compliance review is the 
responsibility of the independent Inspector General who was set 
up as a permanent feature of the District government to look at 
these compliance issues.
    Mr. Tiahrt. You go through the IG office?
    Mayor Williams. The IG, as part of the IG auditor plan, 
should go out and do routine compliance to see that the rules 
and regulations are complied with.
    Ms. Rivlin. We have had a vigorous IG who found a lot of 
stuff.
    Mr. Tiahrt. I think he is doing a good job.
    Ms. Rivlin. He hasn't found everything.

              ANTI-DEFICIENCY REPORT ON ABORTION SPENDING

    [CLERK'S NOTE.--The following material concerning illegal 
spending for abortions includes a copy of a letter from 
Congressman Tiahrt and Congressman Aderholt to the U.S. 
Attorney for the District of Columbia bringing the violation to 
her attention and a copy of the District government's Anti-
Deficiency Report required by 31 U.S.C. 1351:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Tiahrt. I want to thank the Chairman for getting a 
little more space. I think it is not fair to all of us where we 
have half the people waiting outside the door but rather we can 
all get in and not see half the audience waiting outside.
    Mr. Istook. [Presiding.] And we will send you a bill for 
your share of the rent.
    Mr. Tiahrt. I yield back.
    Mr. Istook. I am not sure where we are since I was not 
here.
    Mr. Cunningham.
    Mr. Cunningham. Thank you. I did adhere to your policy. I 
didn't cheat and go first.

            Congressman Jim Walsh's Role In City's Recovery

    There may be some that try to rewrite history of who is 
responsible for the balanced budget, welfare reform, Medicare 
and those kinds of things. But I would like to remind my 
colleagues that you stated yourselves there was a disaster and 
now you are on the road to recovery.
    Jim Walsh was the Ranking Minority Member, and he 
absolutely demanded that the District's fiscal 1995 budget be 
reduced by $150 million, and my colleagues on the other side of 
the aisle opposed the cut, but they didn't have the votes to 
support not making that reduction. That was the start. If you 
look at your dates, the District's fiscal 1995 budget was 
signed by the President on September 30, 1994; the Financial 
oversight law was signed April 17, 1995. And so when you look 
at who said``stop, we are going to change this place, we are 
going to make improvements to its operations'', I don't want history to 
be rewritten. The Republican Congress and the people of the District 
have turned this city around.

                Business Background Important for Mayors

    First of all, Mayor Williams, we have had a couple 
meetings, and I want to tell you I am excited. I wouldn't say 
that about your predecessor. I think there ought to be a 
requirement for elected executive, to be from a background, 
whether they are a mayor or city official. You can't have some 
liberal lifelong politician that goes in and knows nothing 
about business or how to run a government in my opinion. I 
think that is why there is a breath of fresh air. You have a 
good mixture of both and know how to get along with people, but 
you have a good business background, too.

               Congressman Cunningham--Focus on Education

    Instead of asking questions, I want to tell you where I 
want to help you. I have a proposal and an invitation for you.
    I didn't have to stay on this Committee. It would have been 
much better for my district to get on Transportation or Energy, 
but I volunteered for this subcommittee. If I was going to take 
over a squadron, whether Top Gun or one of the worst in the 
Navy today, I would take one of the worst in the Navy because 
it is where you can really make positive change. I stayed on 
this Committee because I think I can make some changes in areas 
here and especially help children. I want you to know that. It 
doesn't do a bit of good. I don't even get a crawdad from the 
guys at the fish market. They make me pay for my french fries 
and seafood and everything. But it's right to improve America 
Capital City.
    You have made some dramatic changes, I think, in the number 
one area I focus on. It is education. My wife's a teacher, I 
was a teacher, my sister-in-law is a special ed teacher under 
San Diego Superintendent Alan Bersin. When my committee wanted 
to reduce the money for public education I dug in my heels, and 
I said no. I don't penalize my daughters when they do good. I 
reward them.

                          D.C. Charter Schools

    Charter schools are very, very good in California. I would 
like a report from the board on how the charter schools are 
doing. I think they are an important part of choice in 
education. But if they are doing bad we need to be able to help 
you with it. I say that sincerely.
    Or the education system, especially special education, you 
talk to Alan Bersin. I was Education Man of the Year. It's 
because I am trying to get the resources down to the classrooms 
and my colleagues, Gray Davis is our new Democratic Governor, 
Delaine Eastin Superintendent of Public Education in 
California--very liberal Democrats, but they know I am trying 
to help education. It is an area I want to work with you in and 
do a lot of things.

                   D.C. Waterfront Needs Improvement

    Another thing is the waterfront, which we have talked 
about. I worked with Bob Jones in the back there. We think we 
are moving forward--I need your oversight on that, Mr. Mayor. 
You can't give them a 1-year lease and expect them to make 
capital investment and recoup that investment in one year. You 
give them a 30-year lease, and they make the investment, and 
you make money for your treasury. I want for the city develop 
it like San Diego, like San Francisco and some of the nicer 
waterfronts instead of drawing bums and broken glass down 
there. I want to help that.
    The pier down there that I fell through, the electrical 
wires, creosote running in the water, jagged chips there, I 
want to take that out of there.

                     Anacostia River Needs Cleaning

    The other is the Anacostia River. I have a little jet boat. 
I went all the way up the river past RFK Stadium. You know, the 
parts per fecal are 500 times what the EPA allows. I don't care 
if it's the Navy Yard, residences, whatever, we have to clean 
up that river, and it should be a priority. You look at the 
recreation and revenue we could bring in and just improvements 
in public health--I said three, I got four, I am a cancer 
survivor.

            Congressman Cunningham--A Health Care Volunteer

    I also want NIH to help this city. I held town hall 
meetings on health in my district, and I am offering to you and 
to the gentlelady (Ms. Norton)--I had one such meeting in my 
district on diabetes. African Americans suffer higher diabetes 
rates than Caucasians. I am a prostate cancer survivor. African 
Americans have a much higher incidence.
    We had the diabetes test, and it was marvelous. People got 
information about health care. NCI Director Dr. Klausner will 
do one on cancer at the university for me. I would like to do 
that in D.C. Have the town hall meetings where the information 
can get out to your residents about health care and children 
and basic things. By fighting diabetes, we can save two-thirds 
of the blindness, kidney removals, amputations by letting 
children know early, because the families don't know it.
    I want to volunteer to help with that in the schools and to 
be part of your city.
    I yield back.
    Mayor Williams. Thank you, I appreciate that, Congressman. 
I know in the Anacostia River we have been allowed to work with 
you. We made a major commitment to restore the river using 
modern technology, and we would love to talk to you about it.

               Waterfront and Washington Marina Follow-Up

    Mr. Cunningham. If I could have you follow up on the 
waterfront with the Washington Marina and the different things 
we talked about before. I know bureaucracy and I know how 
things get hung up, but if you can stay on that, Bob Jones is 
trying to help on that, and I think we can get that done.
    Mr. Istook. Thank you, Mr. Cunningham.
    I have to confess, you hurt my feelings. You told us you 
wanted to stay on the District Subcommittee to help kids and 
the community, and that sounds noble. But you have got to 
understand Mr. Cunningham and I are on all three of the same 
subcommittees, and I thought you were here just because you 
wanted us to be together. I am hurt and distressed by learning 
the sad truth.
    Mr. Cunningham. Be tough.
    Mr. Istook. Mr. Aderholt.
    Mr. Aderholt. Thank you, Mr. Chairman.

                        Enhanced Police Services

    Thank you for being here today. I am going to be brief.
    Mayor Williams, thank you for being here. In your handout 
of your testimony there is a chart about achieving your goals. 
You mentioned that enhanced police service in each District, 
promised by April 15, was delivered on time.
    I would like for you to take a minute and talk about some 
specific things on what you are looking at doing, and how to 
improve on that. Enhanced law enforcement is an interest I have 
had while I have been here in Washington. I was looking at the 
ideas you have, and I want to see what has been implemented.
    Mayor Williams. In the comparable way we have made an 
investment in our police equipment and facilities to begin 
modernizing and to improve facilities across the city we 
havemade a commitment to work with the Chief this summer beginning a 
strategy where we take down the drug markets and come immediately in 
with a comprehensive set of services, not only from the government, and 
return abandoned property and underused property up to productive use. 
Experience has shown in other cities that can be an important tool in 
bringing neighborhoods back; and, obviously, community policing can be 
a big, major component.
    Another term is Weed and Seed. That is the inspiration 
behind it. We have an effort, working with what is called the 
Criminal Justice Coordinating Committee, memorandum of 
understanding partners, I think it is, when the Police 
Department was in acute distress--we like to see a real 
community planning process for police in the neighborhoods so 
all the different parts of the neighborhood are working on that 
policing exercise. It takes not only what we are doing in the 
Police Department and prosecution and corrections but what, for 
example, the faith community can do with children to help this 
effort, if you are talking about gangs, for example. General 
thoughts on the topics and what we are doing.
    Mr. Aderholt. Thank you very much. That is all I have.
             Questions for the Record--Congressman Aderholt

    [Clerk's note.--The following material consists of 
questions for the record submitted by Congressman Aderholt and 
responses supplied by District officials:]

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    Mr. Istook. Thank you, Mr. Aderholt.

                   Chairman Istook's Closing Remarks

    Let me mention, in closing the hearing now, I am extremely 
impressed by the spirit that seems to prevail among the 
elements here. I joked about legislative, executive, judiciary, 
but I am very impressed by the spirit of cooperation and 
teamwork that I have witnessed. And I think that is not only 
important I think it is absolutely necessary both in the 
election of Mayor Williams and in things involving the Council 
members. There is a very broad consensus that there is a need 
to do something that is difficult but important with the tax 
cuts that are proposed.
    I don't know what the ultimate form might be. I don't know 
what the ultimate scope might be. But people often think it is 
easy to do, but it is not, because you have entrenched 
interests that are also competing for that money.

                Challenging Times--Much Still To Be Done

    I agree with Dr. Rivlin. The difficult, challenging times 
are not all over because there is still much to be overcome. 
And one of the things that often is a barrier to success is 
when people quit too soon, if they think, we have already done 
the tough part, now it is downhill from here on out.
    Certainly as a person that has always enjoyed backpacking 
and done it in the mountains there is nothing like coming over 
a crest and you think you reached the crest of the mountain and 
when you get to the top you find another and another and 
another one. You have to keep going and push yourself.
    That is why I made the remarks I have, because I think 
there is some more biting of the bullets that is necessary to 
finish turning things around. That is the tough news.
    But the good news is the city seems to have people in place 
who recognize that and are willing to undertake tough 
decisions. That means the tools to do the job--maybe it's the 
Mayor's Services Improvement Act, maybe it's some other things 
as well. To give people tools to combat the accumulated 
management practices, waste, inefficiency, bloated agencies, 
whatever it may be and having the tools to be able to take 
those on is vital. I don't know to what extent the Council will 
be able to do those, to what extent you will need us to be a 
partner with you in that effort, but I know there seems to be a 
commitment to do it.
    I want to applaud each and every one of you and the other 
people that have engaged in this effort for that spirit, 
purpose and teamwork and cooperation. I very much appreciate 
that.

         President Theodore Roosevelt ``The Man in the Arena''

    Mr. Mayor, I told you when we talked yesterday this 
situation reminded me of a particular poem or saying. I found a 
copy of that and I want to leave it with you. This is from 
Theodore Roosevelt, called, ``The Man in the Arena''. It is 
not--of course this applies, ladies, to you as well, as we all 
know.
    ``The Man in the Arena. It is not the critic who counts, 
not the one who points out how the strong man stumbled or how 
the doer of deeds might have done them better. The credit 
belongs to the man who, actually in the arena, whose face is 
marked with sweat and dust and blood, who strives valiantly, 
who errs and comes short again and again, who knows the great 
enthusiasms, great devotions and spends himself in a worthy 
cause. Who, if he wins, knows the triumph of high achievement 
and who, if he fails, at least fails while daring greatly so 
that his place shall never be with those cold and timid souls 
who know neither victory nor defeat.''
    So I will leave a copy of that with each of you. I think it 
encapsulates a lot of things.
    Is there anything final that you wish to raise?

                    Mayor Williams' Closing Remarks

    Mayor Williams. Mr. Chairman, we appreciate the opportunity 
to testify before the Committee and look forward to a strong 
working relationship with you, and thank you for the quotation 
from Teddy Roosevelt. I am not sure he was good on 
consultation, but I know he achieved a lot.
    Mr. Istook. I know we have plenty of time for consultation. 
This was an overview for starters.
    Mrs. Emerson. I just want to make a comment, Mr. Chairman.
    Mr. Istook. Mrs. Emerson.

               Commending Mayor for Expedited Tax Refunds

    Mrs. Emerson. Mayor, my staff was very, very happy, as 
District residents to get their D.C. tax refunds back in 11 
days as opposed to the 6 months they have waited for them in 
the past. I just want to commend you for your efficiency of 
services. That means a lot.
    Mayor Williams. Thank you very much, Congresswoman.
    Mr. Istook. Teddy Roosevelt had an important thing to say 
about consultation. It was, speak softly and carry a big 
Rolodex.
    We are adjourned.
                  Committee's Questions for the Record

    [Clerk's note.--The following material consists of the 
Committee's questions for the record and responses supplied by 
District officials:]

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                                       Wednesday, April 28, 1999.  

    CORRECTIONS; COURT SYSTEMS AND OFFENDER SUPERVISION; AND PUBLIC 
                                DEFENDER

                               WITNESSES

JOHN L. CLARK, TRUSTEE, DISTRICT OF COLUMBIA CORRECTIONS
JOHN A. CARVER, TRUSTEE, COURT SERVICES AND OFFENDER SUPERVISION AGENCY 
    FOR THE DISTRICT OF COLUMBIA
JO-ANN WALLACE, DIRECTOR, PUBLIC DEFENDER SERVICE FOR THE DISTRICT OF 
    COLUMBIA
    Mr. Istook. The Committee will come to order. I appreciate 
everyone being here this afternoon. We are here, of course, to 
conduct a public hearing about corrections and related matters 
concerning parts of the criminal justice system.
    We have three witnesses on the panel. John Clark, the 
Trustee for District of Columbia Corrections; Jay Carver, 
Trustee for Court Services and Offender Supervision; and Jo-Ann 
Wallace, Director of the Public Defender Service.

                            witnesses sworn

    We welcome you all. I always tell people this so they don't 
take what we are about to do personal--we follow the standard 
procedure under the House Rules of swearing in all witnesses. 
So I would like each of you to stand and raise your right hand 
and I will administer the oath.
    [Witnesses sworn.]

                   chairman istook's opening remarks

    Mr. Istook. Thank you. I appreciate it. And if it's okay 
with all members of the subcommittee, I do want to hold 
questions until after each of the witnesses has presented their 
statement and then follow the 5-minute rule.
    My only opening comment, of course, is to note that we have 
kind of a curious circumstance here. As the Federal Government 
has assumed funding responsibility for some portions of local 
operations, appropriations in some cases are going up and in 
other cases are going down. For example, as responsibility for 
felons is transferred to the Bureau of Prisons, the 
Corrrections Trustee's budget will go down. And, of course, Mr. 
Clark, the Correction's Trustee, is in the position of working 
himself out of a job, while Mr. Carver and Ms. Wallace have a 
very different circumstance, because they have different 
responsibilities.
    Let me ask Mr. Moran, is there anything you want to say 
before we hear from the witnesses?

                 representative moran's opening remarks

    Mr. Moran. Thank you, Mr. Chairman. I appreciate your 
having the hearing today on this very important subject, and it 
is nice to see Mr. Clark and Mr. Carver and Ms. Wallace.

      in 20 district residents under criminal justice supervision

    This is one that has gained a great deal of public 
attention. There was a remark last year, I think that Mr. 
Carver made it before this subcommittee, that the District has 
been unable to supervise the 30,000 adult offenders, and the 
term that was used, theoretically under nonincarcerative 
supervision. I think that was an admission that there really 
has been a revolving door for career criminals. And too often 
they are getting back on the streets, committing crimes while 
awaiting prosecutions, sentencing or on parole.
    Now, that may mean that the public defender's office is 
doing just a bang-up job that--you know, but I don't know 
that's in anyone's interest that you consistently overpower the 
prosecutors, if that's what is happening.
    My suspicion is that it's a system that's in need of 
repair. And The Washington Post particularly, and I think the 
Washington Times as well, have done any number of articles 
about this very subject area. When 1 out of every 20 District 
residents is under some form of conditional criminal justice 
supervision, a very high percentage of the crimes that are 
being committed in the District of Columbia are being committed 
by criminals under court supervision, and improving the 
supervision of these offenders is in everyone's interest. And 
so I think that might need to be the focus of this hearing.
    And, again, let me go back to where I started, Mr. 
Chairman. Thank you for having the hearing on such an important 
subject for every resident not only of the District of 
Columbia, but the entire Washington region. Thank you.
    Mr. Istook. Thank you.
    In line with Mr. Moran's comments, of course, Ms. Wallace's 
job is to make sure that justice is being done as the justice 
is being done. And, gentlemen, you have responsibilities to 
make sure that once judgments are made, that they are actually 
enforced and the population is properly protected from the 
offenders and what they conceivably could do next.
    If we can proceed then, I would like to tell each of you, 
of course, your full statements will be put in to the record. 
As far as your comments, please don't feel that you are bound 
to cling to your written statements. In fact, sometimes it's 
best if you depart from them. We learn a lot more that way.
    So with that in mind, Mr. Clark, we will hear from you 
first.

                opening statement of corrections trustee

    Mr. Clark. Good afternoon. Thank you, Mr. Chairman, Mr. 
Moran, members of the Committee. It's a pleasure to appear 
before you today to discuss the fiscal year 2000 budget request 
for the Office of the Corrections Trustee and report on the 
progress that has occurred in carrying out the correctional 
portions of the mandates of the 1997 Revitalization Act.
    And I will take your instructions to heart and just comment 
on a few of the areas of my written testimony. For fiscal year 
2000, the Corrections Trustee requested 176 million dollars to 
meet the challenges that will face our office and the 
Department of Corrections. This 176 million dollars will fund 
the total adult felon population estimated to be under the care 
and custody of the Department of Corrections. Of this amount, 
an estimated 84 million dollars is requested to fund 3,800 
contract bed spaces.

              corrections costs and inmate count increase

    Although a significant savings will be achieved with the 
planned closure of the Youth Facility in the year 2000, there 
will also be some increased costs that partially offset these 
savings.
    As I will mention in a minute, over the past 15 months, the 
overall inmate count in the Department of Corrections has 
risen. And in particular, this increase has occurred in the 
last 8 months since August of '98. Currently the population is 
already about 500 inmates above the January 1999 levels, 
significantly exceeding predictions and showing at this point 
particularly no signs of leveling off. Therefore, an additional 
9.2 million dollars has been requested within our overall total 
to account for this increase in the population. And I should 
point out that a continuance of this pattern may put a severe 
strain on the ability of this office to provide adequate 
resources to the District government to manage the felony 
population.

                    status of lorton prison closure

    Let me mention a little bit about the progress on the 
Lorton closure plan, which I know Mr. Moran has an abiding 
interest in. Our office submitted, as was required in the 1999 
Appropriation Act, a transition plan in February to the 
Congress. This plan provides details for the closure of the 
Lorton facilities and the transfer of the inmates. If there may 
be any significant changes that occur in this plan or in any of 
the underlying assumptions, we will be sure to let you and the 
staff of the committee know.

  conditions outside trustee's control may impact lorton closure dates

    In that regard, I would note that in adhering to the 
schedule, the closure dates for the various facilities at 
Lorton can be impacted by certain conditions that are outside 
the control of our office or outside the control of the DOC, 
such as the growth of the population that I mentioned, or the 
ability of the Federal Bureau of Prisons to provide adequate 
bed space at the planned intervals and at the appropriate 
security levels, either through their own BOP-operated 
facilities or through contract facilities. We are also pursuing 
a variety of approaches to assure that the timely closure of 
the Lorton complex occurs.
    I might note that during FY '98 last year, the overall 
inmate count at Lorton was reduced from about 6,500 to 4,500. 
Likewise during the current year there has been progress, and 
the count is down to about 3,500. In fact, I think today it's 
actually about 3,400.
    In addition to those at Lorton, there are about 3,800 
inmates out on contract and another 1,000 that have been 
transferred to Federal facilities. So at this point, the 
majority of the D.C. felons are not housed at Lorton or in 
D.C.-run facilities. They are either in contract or Federal 
facilities.
    So we are generally on schedule with the closure plan and, 
in particular, with the closing of the Occoquan facility, which 
is currently in its final phase. It should close next week. 
It's down from about 1,700 to about, I think, 300 today, and 
hopefully they will all be moved next week.
    In furtherance of the closure plan, our office is also 
instrumental in helping the Department of Corrections secure 
new contract bed space in the State of Virginia to assist with 
transferring the inmates out. And this is also with the 
assistance of Mr. Moran, Mr. Davis and some of the other folks 
in Virginia. In August there was a contract that was signed 
with the State of Virginia for about 1,350 inmates, mostly of 
medium and higher security, and that transfer is almost 
complete at this point.

      upsurge in inmate count complicating efforts to close lorton

    Let me go back to this issue of--this problematic issue, 
really, on the upsurge of the D.C. Department of Corrections 
count, which is really complicating our efforts, as I have 
mentioned to you and the staff, to keep pace with the closure 
plan in an orderly fashion. Over the past 8 months, there has 
been a sharp and really rather unexpected rise in population, 
breaking what was an 8-year pattern of decline. Indeed I think 
in 1990, there were about 12,300 inmates. By 1997, that had 
fallen to about 9,300. It's up at this point to about 10,500, 
much of which was not anticipated.
    So I'm not saying we are not going to keep the schedule. 
I'm just saying this is complicating the difficulties in 
getting things closed at this point.
    Mr. Moran. Mr. Chairman, could I make sure I understand it? 
These are 10,500 at Lorton?
    Mr. Clark. No, this is the entire jurisdiction of the 
system that includes the 1,000 that are in the Federal systems.
    Mr. Moran. You are saying this is an increase. I'm sorry to 
interrupt, I just wanted to make sure.
    Mr. Istook. No problem.

         inmate increase due to sentenced inmates, not pretrial

    Mr. Clark. I might say this increase appears to be 
primarily among the sentenced inmates, not among the inmates 
that are the responsibility of the District, which would be the 
pretrial and misdemeanor cases. And our office is continuing to 
try to get to the bottom of what is occurring here, because as 
we've all seen, the crime rates and arrest rates in the 
District are down. So it does not appear that the increase is 
due to new arrests primarily, but due to other factors, such as 
a significant increase, it looks like, in parole violations, or 
at least those who have been brought back to prison on parole 
violations, and some other factorsin the release--in the 
processes of releasing felons, especially the parole process.

              revolving door phenomenon of released felons

    Kind of in relation to what had been mentioned previously, 
one related factor it seems to me is becoming more and more 
evident to me is this revolving door phenomenon in the 
District, which seems to be an extremely high number of 
released felons, who return to prison either directly or 
indirectly related to substance abuse or some form of drug 
abuse, coming back either on new criminal charges or on 
administrative technical parole violations.

              need better drug treatment in the community

    It's evident to me that the public safety and the size of 
the D.C. inmate population is being affected by this--well, I 
would say by the inability of the criminal justice system to 
break this cycle and to effectively deal with the drug abuse 
problems and the felons in the community. And I know this is an 
issue that is at the top of Mr. Carver's agenda. And until we 
have better drug treatment in the community and better methods 
for being able to intervene in this pattern of abuse, the count 
on the correctional side is going to continue to be high, and 
the use of resources for the correctional population is going 
to be more than it should be.

           three successful changes to corrections department

    Let me conclude by mentioning three other areas briefly. 
The first is I'm pleased to report that an initiative that I 
asked the committee to fund last year is working out very well, 
and that is an initiative to help the Department of Corrections 
implement a system of internal auditing and internal control, 
something that was never there in any form in the past.
    Secondly, we've been pleased with the response of the 
employees to our initiatives to help them cope with the 
downsizing of the agency and in many cases the loss of 
employment, although the true test of this program of this 
interagency task force as set up will come in the next week or 
two when about 200 employees are RIFed from the work force at 
Lorton.

                      classification of dc inmates

    And, finally, let me mention in regards to the 
classification, which is critical to good correctional 
management, in the past year, our office worked with the 
Department of Corrections to affect a major change so that the 
Department of Corrections has now adopted and fully implemented 
the Federal Bureau of Prisons classification model. They have 
reviewed all of the inmates, using the Federal Bureau of 
Prisons model, have graded them out, so to speak, using that 
model, and this will help not only in managing the population, 
but also will facilitate the long-term objectivity of the 
transfer of the felons to the Federal Bureau of Prisons.
    So, Mr. Chairman, this concludes my statement. I will be 
glad to take any questions.
    Mr. Istook. We will get to that after the other witnesses. 
Thank you, Mr. Clark.

               prepared statement of corrections trustee

    [The prepared statement referred to follows:]

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    Mr. Istook. Mr. Carver.

              prepared statement of court services trustee

    Mr. Carver. Thank you, Mr. Chairman. Mr. Moran, members of 
the Committee, it's a pleasure to be here, once again. You have 
my statement for the record.
    [The prepared statement referred to follows:]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

               opening remarks of court services trustee

    Mr. Carver. I will quickly recap the main points in the 
statement and get to the questions.
    As you know, my job as Trustee for the next year and a half 
is to transform an inadequate and fragmented system of offender 
supervision into one that meets full Federal standards and 
hopefully will serve as a model both for the District and the 
Nation. I think Mr. Moran's introductory remarks certainly 
indicate that this committee appreciates the dimensions of the 
challenge.

             offender supervision neglected for many years

    We have more than two-thirds of everyone coming into the 
criminal justice system testing positive for drugs or with 
substance abuse histories. When you've got a brand new report 
from the Drug Strategies organization pointing out that the 
high rate of alcohol abuse in the District of Columbia is twice 
the national average, I think that gives some sense of the 
dimensions of the problems we are facing. In addition the whole 
system of offender supervision has been pretty much neglected 
for quite a number of years.
    We really hope to change that neglect. It's our vision and 
our goal to be able to begin imposing real standards of 
accountability in the supervision of offenders. We are going to 
have to provide very careful monitoring, hopefully accessible 
public services, treatment services and immediate responses to 
violations. That is absolutely key.
    We will be moving our supervision officers out of their 
downtown offices and into the community so that we can partner 
better with the police department and because there's a 
recognition that by community engagement, we can leverage 
resources in the community to assist us in our public safety 
mission.

              improvements in offender supervision program

    As you know, the Revitalization Act in a number of areas 
speaks of the mandate for developing intermediate sanctions 
programs for offenders under supervision. We do have a number 
of programs operating in the District of Columbia which we feel 
will provide a base for expansion throughout the broader 
population of offenders. I'm specifically referring to the Drug 
Court treatment program that has been evaluated and has shown 
very remarkable success.
    We believe that with the kind of Federal investment we are 
requesting today, we will be able to produce real dividends for 
the city, both in terms of cutting crime and in the long term. 
This gets to a point that Mr. Clark made. In the longer term we 
will begin to be able to reduce our reliance on what is really 
the most expensive resource available to the criminal justice 
system, and that is prison beds.
    This requires the investment that we are here requesting. 
We can't do it with the kinds of systems we've had in place up 
to this point. It's been approximately a year since I was last 
here, and I think it's fair to ask what has been accomplished 
as this agency is coming into being, and as we have sought to 
build from the ground up a system of accountable offender 
supervision?
    I would like to very quickly tick off some of the 
accomplishments that we've been able to realize. I should say 
at the beginning, that the approach was really to attack what 
appeared to be the most obvious problems within the system. And 
it was pretty clear to me from the beginning that not every 
problem facing the criminal justice was resource-related. There 
were plenty of areas where just by streamlining procedures, 
significant public safety gains could be made.

          improved procedures to process and monitor parolees

    Within weeks of my appointment to this position, I decided 
to conduct a little review of a situation I was very familiar 
with. That situation was one in which parolees picked up on new 
criminal offenses were sometimes rereleased back to the 
community, not because anyone had made a decision that release 
to the community was appropriate, but simply because the 
procedures that the Parole Board was using were too lengthy. By 
the time the Parole Board acted, on many occasions the 
defendant in the new case was back out in the community.
    I took a quick review, and learned that although it didn't 
happen all the time, there were enough cases where parolees on 
very serious criminal charges--such as murder, and armed 
robbery--were picking up new felony charges, and being detained 
for 5 days, but then released because the Parole Board hadn't 
acted.
    It was one of those simple areas where that what was 
necessary was to enact a new procedure whereby the Parole Board 
would simply adopt the judicial finding of probable cause in 
the new case and on that basis issue a warrant to ensure that 
the defendant was not inadvertently released before the Parole 
Board had acted.
    This was a big controversy at the time. There were many 
legal challenges, some of them brought by Ms. Wallace's very 
excellent attorneys, but in the final analysis, the change in 
procedures was upheld, and that really didn't cost us anything. 
In fact, the change actually saved time. And since I was last 
before this committee, there have been over 800 individual 
cases of parolees picked up on new charges that were held until 
the Parole Board could review the case.

         parolees need to be transitioned back to the community

    Another procedure which we put in place last November 
wasn't quite as simple to enact, because it required the 
cooperation of Mr. Clark, the Department of Corrections and the 
U.S. Parole Commission. The procedure required individuals 
coming out of Lorton to transition through structured living 
arrangements, halfway houses, before being released to the 
community. This is a fairly common-sense approach. It happens 
in every jurisdiction in the country, but it had not happened 
here for 4 or 5 years. As a result, we had a situation where, 
in a sense, we were just setting parolees up for failure.
    You had folks that had been institutionalized for 5, 6, 7, 
years and then all of a sudden released to the community with 
no transition time, with no support, and, for that matter, 
without even coming into contact with the parole officer that 
was going to be responsible for the supervision for the next 
however many years.

         structured environment, certain consequences required

    It took quite a bit of teamwork on the part of the 
Corrections Trustee and Department of Corrections, but in the 
final analysis, we were able to change the practice, create a 
presumption that parolees coming out of institutions would go 
into a very structured environment where there would be very 
tight supervision, certain consequences and quick responses 
when people violated it.
    Since that time, we've transitioned almost 600 individuals 
out of Lorton through this program. I think about two-thirds of 
them have successfully transitioned into the community. Not 
everybody does, and with the tight supervision, about 100 of 
them have gone back to Lorton. I'm sure this is at least a 
contributing factor to the situation that Mr. Clark just 
mentioned. But I think it's a model for what we are trying to 
do on a systemwide scale, and it certainly incorporates the 
elements of an effective supervision program.

                      status of parolee recidivism

    I think it's very important that we measure what we were 
doing. Since we are basically here to ask for public investment 
in supervision, you have a right to ask us how we are doing 
with your investment. One of the things that we have been able 
to track--although this is still fairly rudimentary because we 
don't have our management information system fully deployed--
relates directly to the recidivism of parolees and specifically 
to the number of parolees picked up on new offenses. This is in 
the statement.
    I will just pass out these charts, which, again, are just 
one measure of the kind of progress that I think we've made so 
far, and you can see that there's been a fairly substantial 
reduction in the number of parolees picked up month by month on 
new offenses.
    I am satisfied with the trends. I'm not satisfied with the 
ultimate result. I think we can do a lot better, but we are not 
yet to the point where we are able to----
    Mr. Istook. Quick question.
    Mr. Carver. Yes, sir.
    Mr. Istook. Would this include those who are picked upon 
what would be considered a parole violation, or in your separation here 
do you distinguish that from new charges?

  recidivism statistics are for new crimes only, not parole violations

    Mr. Carver. No, these are individuals picked up on new 
criminal charges processed through the court.
    Mr. Istook. So something that might be a parole violation, 
or probation violation, but would not have a separate new 
offense filed, would not be reflected in these particular 
numbers?
    Mr. Carver. That is correct. This is really a measure of 
new crimes, and I'm sure that when you looked at parole 
revocations, you would probably see a very different trend, 
because you are trying to respond much more quickly based on 
the supervision history. Again, this gets to the kind of the 
infrastructure that we are trying to create.

                 new initiative to expand drug testing

    The fact of the matter is that for an awful long time, the 
system of offender supervision has not even had the ability to 
detect many violations, let alone respond in a timely manner. 
Specifically, you will see in the budget one of the initiatives 
that we have put forward is an initiative to expand our drug 
testing capability. Right now there are only a fairly small 
percentage of probationers and parolees in this city that are 
subject to regular drug testing coupled with immediate 
sanctions. So if you are only seeing an individual on, say, a 
monthly basis because the caseloads are so high, and you are 
only doing a once-a-month drug test, if that. There are plenty 
of missed opportunities for intervention just because you don't 
yet have the infrastructure in place to provide adequate 
monitoring for those under criminal justice supervision.

                must deal quickly with substance abusers

    And, again, I made this point last year, and we had quite a 
discussion about it, when you look at what is known in criminal 
justice with respect to the rates of criminal offenders 
associated with high rates of drug abuse, it just seems to me 
that probably the most effective crime control strategy that 
could be devised is one which deals very quickly and decisively 
with individuals with substance abuse problems as soon as they 
begin to relapse; in the system we've had for a number of 
years, the relapse goes unchecked, and eventually you get to 
the situation where crimes are being committed, you are looking 
at perhaps years of incarceration based on backup time for the 
charge the parolee was on release for.
    So what we are trying to accomplish here is both a common-
sense approach and one that is backed up with a very 
significant body of empirical knowledge with respect to what 
works. Criminal justice practitioners know what works. 
Treatment professionals knows what works. When you can combine 
criminal justice practitioners with treatment professionals, it 
is a combination that is much more effective than any of the 
interventions separately.

      requests for $80 million and $19 million for cops initiative

    Just to quickly wind up my summary, we are basically asking 
for $80 million in appropriated funding and an additional $19 
million in funding through the Department of Justice's 21st 
Century Cops Initiative, although that segment of the request 
is not before this committee.
    I would just like to tick off the initiatives that are 
incorporated in the overall request. They involve, first of 
all, the enhancement and the building of drug testing capacity.

                        sanctions center needed

    Secondly--and this was an item that we discussed 
extensively, Congressman Moran, at last year's hearing--and 
that is the need to bring on-line a Sanctions Center, a 
facility where when individuals first begin to relapse, they 
can be stabilized not in the community, but in a safe 
environment where they will not pose a threat to the community, 
but begin to receive the relapse prevention and detoxification 
services that may be warranted.

                    need mis connected to community

    The third initiative is a continuation of our efforts to 
develop a management information system with full connectivity 
throughout the community.

                    need more people to do the work

    And the final one, is really the most important one, Mr. 
Chairman, I indicated earlier that up to now we've been able to 
accomplish quite a bit by attacking what has been most obvious 
and to a certain extent what has been most easy to fix, but now 
we are getting to the very hard part, and the hard part is that 
we can't provide effective supervision of offenders if we don't 
have people to do it. We have very large caseloads right now, 
and even assuming we had a management information 
infrastructure and the drug testing infrastructure and a 
treatment infrastructure--all of which we don't have, but even 
assuming that we have that--you still need individuals that can 
provide the day-to-day case management for individuals in the 
community.
    Now, almost all of that request is incorporated in the $19 
million 21st Century Policing initiative, which, again, 
unfortunately, is not before this committee. But those are the 
four elements of which we are seeking support. I think we are 
to the point now, Mr. Chairman and Members, where we really do 
need the support to get us to where we need to be to establish 
the level of accountability that will yield very significant 
gains in safety in this city.
    Mr. Istook. Thank you, Mr. Carver.
    Ms. Wallace.

                 prepared statement of public defender

    Ms. Wallace. Thank you, Mr. Chairman, Mr. Moran, members of 
the subcommittee. We appreciate the opportunity to be present 
today and to provide some information on our FY 2000 budget 
request. I will follow suit with the other witnesses and just 
touch on some of the points that we have included in the 
statement that has been provided for the record.
    [The prepared statement referred to follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                   opening remarks of public defender

    Ms. Wallace. The Public Defender Service's $17.4 million 
budget request will allow us to further the goals of the 
Revitalization Act, the goals of remedying compromises to 
public safety, and the administration of justice caused, in 
effect, by years of neglect. I think that, Mr. Chairman, you 
said it very, very well. If you don't mind, I may quote you in 
the future: Our job is to make sure that justice is done, as 
justice is being done.
    The criminal justice system really is like an ecosystem. 
All of the elements are intertwined. When any action or 
inaction on one part of the system has a ripple effect, that 
impacts on all other portions of the system, including, of 
course, defense services. Not only are defense services not 
adequately funded, not only does it compromise efficiency in 
the administration of justice, but also, of course, innocent 
people can be convicted, and guilty people go free.

                 impact of offender supervision actions

    You've heard Mr. Carver talk about his initiatives and his 
progress in implementing what we think is a very sound criminal 
justice system in terms of having the system--having a system 
that is accountable and the very quick and rapid response that 
his staff will employ dealing with parole violators. But for 
every action he takes, it has a corresponding impact on our 
agency.
    Yes, he has been much more effective, and we are already 
seeing that effect in terms of dealing with allegedviolations, 
and, therefore, requiring a response on our part to be present to 
represent individuals in the hearings as he brings them into the 
system.

                  services provided by public defender

    The Public Defender Service was really established through 
the foundation of the indigent defense delivery system in the 
District, and we are responsible; what we do impacts the 
efficiency not only in the cases where we provide direct 
representation, but in the system as a whole.
    In addition to providing direct services by representing 
individuals largely in the most serious cases, we also provide 
training materials and other support services to the private 
bar and assist the court in the administration of the Assigned 
Counsel Program, as well as provide the system with the ability 
to address any gaps that arise in the delivery of indigent 
defense services as a result of new criminal justice 
initiatives.

                         fy 2000 budget request

    As has been the theme of many of the statements that you 
have, the underlying theme, of course, is that the 
Revitalization Act is designed to address many of the years of 
neglect and gaps that arose as a result of the District's past 
fiscal crisis. We believe that our 2000 request, if fully 
funded, will do that and provide us with the ability to 
maximize efficiencies so that we can maximize service delivery 
and the impact that we have on the justice system's 
administration.
    And we are looking to do that really in just several key 
ways. One is to achieve staffing levels that allow lawyers to 
lawyer, to provide legal services, instead of providing 
interpreting services, instead of acting as secretaries or 
transcribers, we will be able to maximize the time they spend 
on what they are really designated to do, to provide legal 
services.
    We have also increased efficiencies through technology. And 
we've already begun--e-mail has just recently come into my life 
and the lives of my staff, and it really does--it really has 
increased productivity and efficiency. It really is a marvelous 
thing. Instead of having to----
    Mr. Istook. Wait 'til you get to the saturation point.
    Ms. Wallace. I can imagine.
    Mr. Istook. I've been through that, yes.

                unfunded mandates--preventive detention

    Ms. Wallace. Secondly, our request will allow us to remedy 
staff shortages that were created in the past by initiatives in 
the criminal justice arena that actually for us have the effect 
of acting like an unfunded mandate.
    For example, to describe one example of what I mean by 
that, the Council passed a few years ago legislation, zero 
tolerance for guns. Legislation permitted for the first time 
individuals to be locked up pretrial, pending trial, without 
bond for weapons offenses; even if an individual is licensed in 
another jurisdiction like Virginia, but if there was no D.C. 
license, that person could be held for the entire time before 
trial.
    Now, The council recognized that, in fact, preventive 
detention cases really do impact defense services. We have to 
get ready for trial in a much more condensed period of time. We 
have to, therefore, do everything much more quickly than in 
cases where there isn't preventive detention and there are 
other ways in which those resources become drained.
    In response to that, we were given the Council's budget for 
that year's recommendation, including an additional two 
attorneys and one staff investigator. However, that is the only 
initiative that has been funded on the defense side in 
basically the last decade.
    That was just one example where preventive detention has 
grown. In D.C. and in most of the cases where we represent 
individuals, they are incarcerated pretrial without bond. So as 
an initiative, as a whole, that initiative has never really 
been addressed in terms of resources.

                               drug court

    Drug court is another example. The very successful D.C. 
Drug Court required a response on our part in order for the 
hearings to go forward. It was impossible for the system to 
work efficiently if it had to require notification of each 
private individual every time there was--a private attorney 
every time there was going to be a sanctions hearing. So Public 
Defender Service attorneys now provide an attorney daily, at 
least one attorney and sometimes more, to respond simply to 
drug court.

                     other mandates and initiatives

    Megan's law, domestic violence initiatives, the list goes 
on and on. And in addition, our request will allow us to 
respond efficiently to the new initiatives that are being 
proposed that will require both more rapid response in certain 
matters like parole and a community-based response.

                       training for cja attorneys

    Finally, our use of--we will use the real technology that 
we have for the first time to be able to more efficiently 
provide training and resources to the attorneys appointed under 
the Criminal Justice Act, who we must by statute provide 
support services for. For example, we will be able to have an 
electronic brief bank or a motions bank.

                        social services database

    Our social services database, which will ultimately--which 
we were able to put together with grant funding, is in phase 
2--will be available not only to attorneys appointed under the 
Criminal Justice Act, but to the court and judges so they will 
be able to plug in a query about appropriate sentencing 
alternatives and through our database that we will maintain 
will be able to come up with appropriate facilities for 
treatment or confinement.

                           use of technology

    In addition, our new technology will enhance our ability to 
be able to clearly, accurately capture and fully capture the 
work that is performed and the services that are performed in 
these areas.

                 conclusion--public defender's remarks

    In conclusion, I would just say that I think it was one of 
the goals of the Revitalization Act to help D.C. become the 
model city that the capital of this Nation should be, and if 
fully funded, we are confident that we will be able to 
strengthen our ability to positively impact the delivery of 
justice services and to perform as an important partner in the 
District's public safety cluster.
    I thank you. That concludes my remarks, and we will be 
happy, of course, to answer questions.
    Mr. Istook. Thank you, Ms. Wallace.

               questions for the record--public defender

    Before posing some questions that I have, let me mention I 
do have some for the record, and especially Ms. Wallace, since 
we haven't had a chance to visit, probably more of that will be 
coming your way. And you've not met John Albaugh and Steve 
Monteiro behind me, as well as Migo Miconi, the committee's 
chief clerk, who will probably be in touch with you and helping 
you develop some further information.
    [The questions referred to and the Public Defender's 
response follow:]
    Question 1. Please provide for the record a summary of the Public 
Defender Service operations including funding and staffing levels for 
FY 1997 through FY 2000 and disposition of cases by category.
    Answer. Mission overview. The Public Defender Service is governed 
by an 11-member Board of Trustees appointed by a panel consisting of 
the Chief Judge of the United States District Court and the Mayor. The 
Board of Trustees appoints the Director and Deputy Director of the 
Service.
    The Agency's mission is accomplished through the Legal Services 
program and the Criminal Justice Act (``CJA'') office. Legal 
representation serves as the nucleus of all operating programs (except 
the CJA program, discussed below). Consistent with Congressional 
design, PBS attorneys handle a significant number of the cases charging 
the most serious offenses. PBS attorneys are trained to be criminal law 
``experts,'' who are forbidden by statute from practicing outside of 
the agency. As required by statute, PBS provides support in the form of 
training, consultation and legal reference services to members of the 
local bar appointed as counsel in criminal, juveniles, and mental 
health cases involving indigent individuals. See D.C. Code Sec. 2702-
05.
    PDS Professional (non-legal) staff and administrative functions 
support the court and legal work of both PBS attorneys and attorneys 
appointed pursuant to the Criminal Justice Act.
    Criminal Justice Act Office.--The Public Defender Service Criminal 
Justice Act (``CJA'') Office assists the Superior Court in appointing 
counsel in Superior Court in criminal and delinquency matters. The 
number of persons locked up in the District of Columbia averages 
between 100 and 150 persons per day. CJA staff must interview every 
arrestee to determine financial eligibility for appointed counsel, 
compile daily lists of attorneys available for appointment and submit 
other documents for the court's consideration. Cases cannot go forward 
until the work of the CJA office is completed.
    Investigations Division.--Proper investigation is a required part 
of the Constitutional guarantee of effective assistance of counsel. 
Strickland v. Washington, 466 U.S. 668 (1984); Smith v. United States, 
608 A. 2d (D.C. 1992). It is also essential to a lawyer's compliance 
with the D.C. Rules of Professional Conduct. For cost efficiency, staff 
investigator services are supplemented by volunteer college student 
interns.
    Offender Rehabilitation Division.--A lawyer's function in a 
criminal case includes providing information to the court to assist in 
sentencing determinations. Staff of the Offender Rehabilitation 
Division (ORD) work with agency and CJA lawyers to find placements, and 
provide other information upon which judges rely to structure 
appropriate sentences.

                             Budget Overview
------------------------------------------------------------------------
                                       Appropriated
            Fiscal Year                  Funding              FTEs
------------------------------------------------------------------------
1997..............................          7,797,000                142
1998..............................          9,000,000                142
1999..............................         14,486,000                154
2000..............................         17,400,000                193
------------------------------------------------------------------------


             FY 1998 Legal Services Statistical Overview \1\
------------------------------------------------------------------------
                                                           Number of
                Types of Dispositions                     Dispositions
------------------------------------------------------------------------
Superior Court Felonies..............................              1,890
Superior Court Misdemeanors..........................                812
Family Division--Juvenile Brash......................                357
Family Division--Mental Health Branch................                510
Appellate Division...................................                125
Miscellaneous Hearings and Proceedings (e.g.,                      2,872
 probation and parole revocations; contempt
 citations; habeas corpus; conditional and
 unconditional release petitions, special education
 diversion hearings; drug court, Megan's law
 proceedings)........................................
Special Services Program.............................              3,084
Juvenile Service Program.............................                791
                                                      ------------------
    Total Legal Service Dispositions.................             10,441
------------------------------------------------------------------------
\1\ These figures do not include statistics for the Offender
  Rehabilitation and Investigations Divisions or the Criminal Justice
  Act Office.

    Mr. Istook. The last public hearing we had, of course, was 
with the Mayor, control board and Council, and we emphasized 
economic development, growth in the city, discussion of tax 
cuts and so forth, as well as general efforts to help the city 
to make itself function better.

           need to make d.c. safe before it ever gets better

    I think it's worth noting that in the efforts to help 
Washington, D.C., to become a better place for those who live 
here, who visit here, who work here, all the economic 
development efforts in the world will be meaningless if people 
don't feel safe when they are here. And all of you are involved 
in that.
    So all of the economic development's successes in the world 
would be meaningless if there's failure in making this a safer 
city. So I just think that needs to be kept in mind as we look 
at our priorities as a subcommittee and what we want to help 
Washington to accomplish.

                 understand spikes in crime statistics

    I also think it's worth noting, and several of you made 
references to it, that this is a dynamic process, especially 
because you have an accumulation of offenders in the city. 
First you said you thought there about 10,000 people--I guess 
that's OMB's estimate or somebody's--that were on some sort of 
probationary status.
    Now, Mr. Carver, of course, you've counted 30,000, which 
means there's an impact on spending. But also it's been my 
experience when you have efforts to increase accountabilityand 
enforcement, you often create spikes that sometimes people will look at 
and say, ``oh, you are going in the wrong direction.'' Well, actually 
you just started enforcing things more; you are measuring things that 
were not measured previously. So you show an increase, but it's not an 
increase in occurrences, it's an increase in the measurement of how 
many are being measured, rather than being ignored.
    And I suspect, especially with what you are trying to do 
with making drug testing universal for those on probation and 
being more intimately involved with those, we will probably see 
some spikes, which doesn't mean there is more criminal or 
probationary status-violating behavior. It means now we are 
measuring things that have been ignored previously. And I want 
you to know I understand that process, and I hope that neither 
I nor anyone else will jump to false conclusions about what's 
going on.

      increased costs for increased inmates in corrections budget

    But getting to the questions, I better start the clock 
running on myself or it won't be fair to everyone else. I 
wanted to ask especially--let me start first with Mr. Clark. 
When you have more persons incarcerated than you originally 
were anticipating, as you do in your phaseout, and if I 
understand correctly, your budget preparation process began 
before you knew of some of these, is your requested budget 
fully adequate to cover all the expenses that you expect you 
will have with the number of people that you now can anticipate 
having?
    Mr. Clark. Well, the upsurge had begun before we submitted 
our request, so we accounted for some of it in there and, 
indeed, requested an additional $9 million, which is included 
in our proposal.
    Mr. Istook. I caught that word, you accounted for some of 
it.
    Mr. Clark. Exactly. Things have continued to go up, so it's 
going to be more difficult, and we're going to search for 
economies in the system.

              increased costs will fall on d.c. government

    Mr. Istook. And your budget has a shortfall in that area. 
Upon whom does the expense fall? Does it fall on the Bureau of 
Prisons, does it fall back on D.C.?
    Mr. Clark. No, it would fall back on the District 
government.
    Mr. Istook. It would fall back on the District government. 
Can you elaborate for everyone's benefit how that would work?
    Mr. Clark. Essentially my budget request is for about $176 
million, most of which goes to reimburse the Department of 
Corrections for their cost of either directly housing felons or 
contracting out. The total budget of the Department of 
Corrections is about $250 million, so if they had to do 
additional contracting out or could not close facilities at 
quite the pace we had planned and had to hold onto staff, then 
their corresponding expenditures would probably exceed $250 
million. But at that point I only have what I have, which would 
have been what's transmitted through the Treasury, about $175 
million.
    Mr. Istook. Okay. I would appreciate in written form, so we 
can review it closely, you know, an update for those figures.
    Mr. Clark. Okay.
    Mr. Istook. And maybe report--in maybe matrix form or 
whatever is best. We really need to look at that closely.
    Mr. Clark. Okay. We were hoping that it levels off, but 
we've been hoping that for some months.
    Mr. Istook. Maybe this ought to go, you know, contingency-
based; if this happens, if that happens.
    Mr. Clark. Exactly. We thought it might be kind of a spike 
you were speaking of a few minutes ago. Maybe the spike has 
just continued to surge.
    Mr. Istook. Yes.
    [The information requested follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

            employment opportunities for offenders if sober

    Mr. Istook. Let me ask Mr. Carver. It's hard to know how 
you measure success in what you're doing. Obviously what you're 
doing kind of relates to the police department. You can't just 
say, well, changes in the incidence of crimes is just 
attributable to your efforts, or just attributable to theirs, 
since there's so much recidivism that is involved.
    But I wanted to ask a couple of things on that. One is how 
does--and this falls back into some of the economic development 
patterns, too. What are the employment opportunities for those 
that are under your supervision, and how does that fit into the 
overall equation?
    Mr. Carver. I would answer that question, Mr. Chairman, by 
citing the experience in the Drug Court. Basically, the biggest 
impediment in my experience to employment for many offenders is 
the fact that they're often so strung out, they can't get 
themselves together to even apply for a job. In our experience 
with the Drug Court, once they're involved in a regimen of 
treatment, coupled with the criminal justice pressure over a 
period of sometimes 3 or 4 months, sometimes longer, once the 
recovery really starts to kick in, and then all of a sudden 
you've got, a number of things you did not have but for that 
intervention----
    Mr. Istook. Are you saying the job opportunities are there 
if they're sober?
    Mr. Carver. My experience has been there are job 
opportunities there, and the first step to realizing those 
opportunities is to make sure that individuals are in a 
condition to take advantage of it.
    Mr. Clark. Mr. Chairman, if I could just pick up on that 
and use a minute of your time.
    Mr. Istook. Sure, that's fine.

               offender employment--a big success factor

    Mr. Clark. It's my experience--previously I worked in the 
Federal Bureau of Prisons for years and had a major role in 
returning felons to the community--that being employed is one 
of the biggest factors in the successful return to the 
community. One of the things that we did in the program that 
Mr. Carver mentioned earlier, which we've initiated in the last 
year for the returning felons from Lorton, where they have to 
go through a halfway house before they make parole. While 
they're there, they cannot be released from the halfway house 
until they're successfully employed for a period of time. 
Previously they were being paroled with no employment.
    I've spoken to many of them, and continually they are 
pleased with themselves that they've been able to find 
employment beyond the type of job and pay scale that they 
thought they were capable of. Many of them hadn't even been 
employed for years. But when they were under the gun, when it 
was required to gain their freedom to be employed for a while, 
they have done it. And I think this is a program that's going 
to be helpful and maybe cut into some of this recidivism.
    Mr. Istook. Okay. I have to call time on myself for now.
    Mr. Moran.

        count and cap on prison population confusing and complex

    Mr. Moran. Thank you very much, Mr. Chairman.
    I would like to get back to the comments that were made 
about the increase in the prison population. One point at the 
beginning of this decade, it was 12,300. Then you have gone all 
the way down by 3,000 inmates; it's a 25 percent reduction 
approximately, but now it's back up to 10,500. And you made the 
point that's not because of increased arrests or crime, it's 
because of changes in the parole system.
    This is obviously what we wanted. It's because it directly 
addresses the revolving door phenomenon. Are those people going 
to D.C.--are they going to the Virginia State prison, are they 
going to Youngstown? They're not going to--I asked, and you 
said they're not going to Lorton. There's no increase in the 
population at Lorton.
    I know we're closing down the facilities, but apparently 
not only are we closing down minimum security at Occoquan and 
eventually each facility, but we're not accepting new 
prisoners. Is there basically a cap on the prison population 
there?
    Mr. Clark. Well, there's a cap. There's a court-ordered cap 
on most of the D.C. facilities. What's happening with these 
parole violators who come back, most of them are on 
administrative technical charges, is that they are being--their 
cases are being heard here locally, and if there is a 
determination made that their parole is revoked, and they're 
going to be in the system for a while, frequently they are 
being transferred out to Ohio or Virginia.
    Mr. Moran. So they're going out. If they go out to Ohio--at 
Ohio, we have a congressionally-ordered reduction, I think. You 
are going to follow the recommendation of the GAO to cut it 
from, what, 1,700 approximately. I think you were supposed to 
send 1,600, but the recommendation was to cut it from 1,700 
down to 1,000 so you can reclassify, and then you could build 
back up again somewhat.
    But if you're going to cut from 1,700 to 1,000, it seems to 
me you've got a constraint there. And Virginia, I thought, was 
pretty well full, unless that's where these parole violators 
are going.
    Mr. Clark. Some of them are going there. The report on Ohio 
was a report that our office prepared, and it was my 
recommendation that the count be cut from 1,700 to 1,000 and 
that the serious inmates be removed. All of that has been done. 
There have been a number of other changes made, and we are 
starting to gradually raise the count. I think it was around 
1,300. Now I don't think for the foreseeable future it needs to 
get up to 1,700, but there has been a lot of redistribution of 
the inmates around the system to try to get people in the right 
classification of institution.

                distribution of 1200 additional inmates

    Mr. Moran. I'm just trying to figure out where this 
additional 1,200 have gone.
    Mr. Clark. Some have gone to the Federal Bureau of Prisons. 
That count has gone up by about 500 in the last year. The new 
1,300 in Virginia has helped us. The minimal security facility, 
we had hoped to be closed by this time, but because of the 
increase in count, even though our official plan calls for it 
to close in September, we had hoped to close it earlier. We're 
not able to do that. There are still, I think, 450 out there. 
And we are at the point where we're going to have to. We're 
going back to the court to hopefully be able to do some double 
bunking at the central facility.
    Mr. Moran. We had legislative language to say that you had 
to transfer a certain number of prisoners to privately-run 
corrections facilities. Would we have been better off just 
saying other correctional facilities, rather than requiring 
that they be privately operated?
    Mr. Clark. Well, that requirement is a requirement of the 
Bureau of Prisons, not of the District. That's quite a 
discussion to get into that whole comparison.
    Mr. Moran. Then I won't get into it, but it seems to me it 
is affecting this situation somewhat.

             virginia prison system beneficial to district

    Mr. Clark. I will say we're very happy to have the Virginia 
contract and have an experienced system there be able to take 
these high-level security prisoners into it. It's calmed 
everything down.

                  payment for public defender lawyers

    Mr. Moran. Well, I'm running out of time here. I wanted to 
ask the Public Defender--we had a lot of problems in terms of 
pay for the public defender lawyers. We wanted them paid, 
obviously. I've got more macrotype problems in terms of the 
number of people who are getting back on the street and so on, 
but I understand that's your responsibility.
    Mr. Istook. Mr. Moran, why don't you take extra time while 
I run upstairs and vote, and I will be right back.
    Mr. Moran. Okay.
    Mr. Istook. Go ahead. You go until I get back, and then we 
will let Mrs. Emerson question the witnesses.
    Mr. Moran. [Presiding.] Okay. Thank you, Mr. Chairman.
    But there were problems in terms of making sure that the 
attorneys were paid, and there was obviously an issue within 
the supervision of the court system. Were those the people 
under your office?

                   cja attorneys are court appointed

    Ms. Wallace. No. Actually those are the attorneys that I 
referred to who are appointed under the Criminal Justice Act.
    Mr. Moran. They're appointed by the judges?
    Ms. Wallace. Yes, appointed by the judges.
    Mr. Moran. They're private lawyers?
    Ms. Wallace. Appointed by the court.
    Mr. Moran. Your public defenders are always getting paid?
    Ms. Wallace. Yes.

                 requirements imposed on cja attorneys

    Mr. Moran. Was there any decision--so you give a preference 
to people who are working within the organization who are full-
time public defenders over the private lawyers who are given a 
certain number of cases. What requirement does D.C. impose on 
lawyers that agree to take public defender cases?
    Ms. Wallace. In terms of qualifications for service?
    Mr. Moran. Do they have to take a certain number? Is there 
an agreement that they take a certain number of public defender 
cases?
    Ms. Wallace. No, there is no set number that they have to 
take.
    Mr. Moran. Just basically some are new lawyers, and others 
have just decided to do this----
    Ms. Wallace. Yes.
    Mr. Moran [continuing]. As a career?
    Ms. Wallace. That's right.

                  courts responsible for cja payments

    Mr. Moran. Do you happen to know if they've all been 
compensated right now? It seems to me if not, then more 
pressure falls in your office, doesn't it?
    Ms. Wallace. That's true. The system does work that way. 
There could be corresponding impacts. But the issue of payment 
for the CJA attorneys is really one that the court would have 
to address.
    Mr. Moran. All right. I won't get into that. It just seems 
there are ramifications----
    Ms. Wallace. Yes.
    Mr. Moran [continuing]. Because if they are not getting 
paid, I would think most people would decide to do something 
else. And if they didn't get paid for many months, some years, 
then I would think that would be a disincentive to continue 
public defense practice, and then you would have to pick that 
slack up. Is that a phenomena that has occurred?
    Ms. Wallace. That is exactly right. We haven't seen that 
happen yet. I think the period was a short enough time that, 
you know, people have hung in there.
    Mr. Moran. I see. So there hasn't been any profound change 
in that----
    Ms. Wallace. In that, no.
    Mr. Moran [continuing]. The number or the ability of 
private lawyers who are performing public defender services?
    Ms. Wallace. That's correct. Certainly if that continued 
for any prolonged--if it had continued for any prolonged period 
of time, the impact would be exactly as you said.
    Mr. Moran. Yes.
    I did want to get questions specifically in.

                50 halfway house escapees not recaptured

    For the record, out of the 1,125 inmates that were sent to 
D.C. halfway houses between last October and this January, when 
The Washington Post looked into it, 1 out of 3 escaped, 250 
were still on the loose, and 60 of those were charged with 
violent crimes.
    Now, have those folks been caught? I mean, is it 
dramatically a different situation now? Can anybody tell us 
that? Mr. Clark or Mr. Carver? Is the scandalous situation that 
we read about in The Washington Post significantly improved?
    Mr. Clark. There are about 50 of those the last information 
that I had. And I know Mr. Carver's office has kept real close 
track of that group of 300 and some absconders, about 50 were 
still in the community. Of the 80 who were said to have been 
charged with new crimes, once we got looking into it, the 
crimes for which 60 of them had been charged was the escapers 
or absconders. There were only about 20 who had been charged 
with new crimes, and most of those were not violent.
    That is not to say that there aren't some significant 
issues here, especially with this whole pattern of----
    Mr. Moran. Let me just ask one final question. It was 1 out 
of 3 were escaping from halfway houses. What is it now, do we 
know? Do we have any updated figures?
    Mr. Clark. It's not much better right now.
    Mr. Moran. Not much better.
    Do we know how many people are still out there who had been 
assigned to a halfway house and have escaped and have still not 
been arrested again?
    Mr. Clark. Well, as I say, out of that sample there, as of 
about a week ago there were 50 out of the 380 escapees who were 
still out. And one of the first things that we did was to form 
an interagency task force aimed at apprehension. We didn't want 
to just aim at long-term fixes, we want to get people off the 
street, and so a greater number than in the past are being 
apprehended. But I'm not going to tell you that there's been a 
significant overall improvement at this point.
    Mr. Istook [presiding]. Yes. And if you want to go further, 
we will probably have a second round.
    Mr. Moran. I understand. I better go up and vote
    myself.
    Mr. Istook. Mrs. Emerson.

           no drug testing line item in fy 2000 budget--why?

    Mrs. Emerson. Mr. Carver, my questions are addressed to 
you. In your budget you've requested about $20 million more 
than you did last year, I believe, not including the grants 
which are mostly concentrated on drug testing, the need for 
more supervisory staff, sanction centers, et cetera. And yet 
throughout your testimony and throughout everything I read, you 
talked about the importance of drug treatment. I didn't see a 
line item for any kind of drug treatment programs. Can you 
explain why, please?
    Mr. Carver. There's a short answer and a longer answer, and 
the short answer is that the Administration did not support 
funding for drug treatment.
    Mrs. Emerson. You mean the OMB?
    Mr. Carver. Yes.
    Mrs. Emerson. Can you tell me why?
    Mr. Carver. This gets to a longer answer. The longer answer 
is that we are a criminal justice agency, and in an ideal 
world, we would be working hand in hand with the treatment 
community and the treatment agency to provide the framework of 
accountability for treatment services to be delivered more 
effectively than on a voluntary and referral basis.

               corrections not in drug treatment business

    We have never been in the treatment business. To a very 
large extent, we have relied on city-funded treatment capacity 
for years, and it has been a major shortcoming. And we have 
been able to scrape together some money over the years to enter 
into our own contracts, because when you have people coming out 
of prison, and you have assessments that indicate that they 
need, residential care, and they can't be released unless they 
have it, that puts us in a very difficult situation.
    It has become worse and worse over the last 4 or 5 years. 
You may be familiar with the trends in funding for the 
Addiction Prevention and Recovery Administration, where I think 
it has gone from something like $23 million a year down to $19 
million a year.

       increasing drug treatment capacity a priority in the city

    I know that the Mayor and the Drug Strategies report which 
was released last week indicated that beefing up the drug 
treatment capacity in the city would be a major priority of the 
city. And I think he even pledged to do a couple of things; 
one, increase the budget up to something like $26 million; and, 
secondly, to reconfigure delivery of the treatment services to 
be able to take advantage of Medicaid eligibility, which I know 
is a mechanism for funding treatment to many jurisdictions, 
andfor some reason we haven't.
    Mrs. Emerson. Except that the type of waiver he's asking 
for in order to make that happen is something that's a little 
bit out of the ordinary. But, I mean, given the fact that you 
say here currently 4,600 offenders have been assessed, only 17 
percent actually received treatment, that somehow you might 
have been able to carve a little bit of money other than that 
which you might have pieced together, I would think, put 
perhaps a little bit more money into treatment if, in fact, it 
is such a problem.

      approximately $800,000 allocated to drug treatment last year

    Mr. Carver. We did last year and to a certain extent this 
year, but it was really a drop in the bucket. It was 
approximately $700,000 to $800,000 for each fiscal year. But, 
as I say, that satisfies certain needs, but it is far, far 
short of what is really needed if we're going to be effective.

                   omb turned down $5 million request

    Mrs. Emerson. Can you tell me what the original request was 
that you made that was turned down by the OMB, please?
    Mr. Carver. Yes. I believe the original suggestion was in 
the area of $5 million for treatment services.

             drug testing no substitute for drug treatment

    Mrs. Emerson. Okay. So it's your idea to try to use as much 
drug testing in the sanctions program to try to make up for the 
fact that you don't have the money to do treatment?
    Mr. Carver. I would not characterize drug testing as a 
substitute for treatment by any stretch of the imagination. We 
are really relying on the city to come through with the 
treatment capacity that we need at this point. And you have put 
your finger on a very big dilemma that we're facing.
    Mrs. Emerson. Do you think the amount that the city has 
asked for is adequate, because I'm looking at their budget--and 
it's kind of hard to figure this out, but if you really look 
at, for example, inpatient services, they've improved--they've 
proposed an increase, but in outpatient services they proposed 
a gigantic decrease.
    But I think the way they've got it has to do with them 
crossing their fingers hoping that the section 1115 waivers on 
Medicaid will come through so that they can fund them, in fact, 
privately. Is that your perception? I guess that's your hope.
    Mr. Carver. That's what it appears to me. But I will 
confess I haven't really analyzed what the city's plans are, 
although I'm aware of the commitment that the Mayor has made to 
make this a priority.
    Mrs. Emerson. And I know how important it is, because you 
can't have a three-legged stool and only have two of the legs 
and forget probably the thing that's most important for the 
long term.
    I guess I better go vote. I would like to pursue this with 
you at another time, maybe outside the committee structure.

                  invitation to drug court graduation

    Mr. Carver. Before you go, I wanted to throw out an 
invitation to the Members and staff. Every 2 weeks we have a 
Drug Court graduation, and we have one tomorrow in the 
Courthouse. For those of you who can make it, it's always quite 
an interesting process. Be at the Court at 11:15. The procedure 
starts at about 11:30. And I think there you will be able to 
really see firsthand all of the elements on which we were 
trying to base our model of prevention.
    Mrs. Emerson. Hopefully I can come next time.
    One last question: In your professional opinion, if you can 
have any amount of money that you needed for the drug treatment 
program, what would be adequate to put in the budget to resolve 
the problems that exist with recidivism--the regression back to 
drug habits and/or alcohol abuse?
    Mr. Carver. I suspect that it will be substantially higher.
    Mrs. Emerson. Five million.
    Mr. Carver. It will definitely be higher than the $5 
million but, we're not a drug treatment agency.
    Mrs. Emerson. The $5 million will help you?
    Mr. Carver. Yes.
    Mrs. Emerson. Thank you very much.
    Mr. Istook. Let me just interpose this on the questions 
here, because I know drug treatments are a combination of 
public programs and private programs, and there's a multitude. 
I'm sure you have a long referral list, whether your agency is 
offering drug treatment programs or not.

           list of different drug treatment programs in d.c.

    Do you know how many different drug treatment programs are 
available within D.C. to which you referred?
    Mr. Carver. I don't offhand, but I can get you that 
information by the end of the day.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Istook. Sure. I know there's a multitude of them and a 
lot of money that is spent, whether it comes directly out of 
District funds or out of other funds for the multitude of 
programs, so I just want to keep that in mind.
    Thank you, Mrs. Emerson.
    Mr. Mollohan.
    Mr. Mollohan. Thank you, Mr. Chairman.

                        model offenders program

    Mr. Carver, in the court services and offender supervision 
category, you, as I understand it, are proposing a model 
program. You would like to increase drug testing capacity, open 
a sanction center to deal with the recidivism, develop an 
information system, and increase case managers. That really 
does sound like a model program. I would certainly be inclined 
to support it.
    Is this an ongoing program, or is it a new initiative?
    Mr. Carver. Well, the agency is new as a Federal agency, 
but it is made up of three formerly D.C. government agencies, 
Pretrial Services, supervising individuals between the point of 
arrest and the point of sentence; Probation, which had been 
part of the Superior Court, and came out of the court and as 
part of the agency; and then D.C. Board of Parole.

     changing parole system contributing to lorton inmate increase

    Now, the whole parole system is in a state of change. In 
fact, this may be one of the factors that perhaps is 
contributing to the upsurge in the count at Lorton. 
Thedecisionmakers with respect to parole changed last August. Now the 
United States Parole Commission exercises parole decisionmaking 
authority, rather than the D.C. Board of Parole. So we're very much in 
a situation of change and the D.C. Board of Parole will cease to exist 
on August 5th of 2000. The U.S. Parole Commission will take over all 
decisionmaking functions, and the parole supervision staff will be part 
of the new agency we are building from the three formerly D.C. 
government-funded agencies.
    Does that answer your question?
    Mr. Mollohan. I don't think so, but maybe I didn't ask it 
correctly. My question is, pertaining to what sounded like at 
least a broader initiative to go out there and deal with what I 
understood was probably part of the recidivism problem. The 
initiative also sounded like it would include drug users being 
judged by the parole officers in different ways. For example, 
drug users being sent back to jail rather than back to the 
street.

          $19 million being requested from justice department

    It sounded to me like you were proposing a program which 
you were seeking $19 million dollars from the Justice 
Department to fund. My question was, addressing that request. 
Is that a new initiative?
    Mr. Carver. I guess the best way I can respond is that the 
approach is new to the extent that it is much broader than 
anything we've ever been able to do before. But by the same 
token, it is based on what is happening now at a very small 
level. I mentioned the drug court, for example. That's very 
effective, but it only reaches several hundred individuals at 
any given time. So basically what we're trying to do is take 
what works on a small scale and make that the norm across the 
board.

                  drug use problem driving recidivism

    And since two-thirds of the individuals under our 
supervision have histories of substance abuse, that does tend 
to be the focus of our efforts.
    Mr. Mollohan. So you're testifying that you're dealing with 
that part of the issue? The way you're dealing with the drug 
use part of the problem, relates to part of the problem that's 
not being adequately dealt with. The drug use problem is at 
least in part or maybe it is a significant part of what is 
driving this recidivism problem. Is that correct?
    Mr. Carver. That is absolutely correct.
    Mr. Mollohan. You are proposing this. I call it an 
initiative. I'm trying to find out, to what extent is it new. 
Is it different either in terms of qualitatively or 
quantitatively? Is it different from your approach in the past. 
If so, then you can call it a new initiative, and that is what 
you're requesting the $19 million for.
    Mr. Carver. It is, because in the past we've had caseloads 
that are extremely high; parole caseloads have been 185, almost 
200 to 1. There has not been regular drug testing for known 
substance abusers, and there has been no mechanism for 
responding quickly when people violate conditions.
    Mr. Mollohan. Okay. I can look forward to understanding a 
little bit more about that, the substantive part of this 
initiative.

              earmark requested in justice appropriations

    Are you asking the Commerce, Justice Appropriations 
Subcommittee for an earmark to fund this program, or are you 
applying for a Justice grant?
    Mr. Carver. We're asking for an earmark.
    Mr. Mollohan. In Commerce, Justice, and have you testified 
before that subcommittee?
    Mr. Carver. No, we have not, we've met with staff only. But 
we're in a bit of a unique situation in that we are becoming a 
Federal agency, but providing what would be State functions if 
this were a State. The initiatives are consistent with the 
program objectives within the Department of Justice programs. 
If we were a State, we would qualify under grant guidelines to 
receive the funds.
    Mr. Mollohan. You don't qualify as a grantee because you're 
not a State. Is that what you're saying?
    Mr. Carver. We're going into Federal agency status, and 
those programs were set up for State and local governments. 
That, coupled with the fact that there are spending caps and 
allocations among the committees made this the best strategy 
for seeking funding, although this was a strategy that went 
forward last year.
    The President submitted a budget amendment in the amount of 
$38 million, again, using earmarks from a variety of Justice 
Department programs, but only $5 million of the $38 million was 
approved. So this was, in effect, a renewal of a request that 
came up here last summer.
    Mr. Mollohan. Thank you, Mr. Chairman.
    Mr. Istook. Thank you, Mr. Mollohan.

                         universal drug testing

    Let me ask Mr. Carver. Mr. Mollohan was asking about 
qualitative and so forth. You have 30,000 people in the system. 
If we go by the number of tests per year, if you have 30,000 
people that on average would be tested, I don't know how many 
times compared to how many tests. What I'm trying to get to is 
how many drug tests per year, drug screening tests per year, 
are you doing now compared to how many you expect to be doing 
when it becomes universal?
    Mr. Carver. I will turn to my colleague Susan Shaffer, who 
is director of Pretrial Services.

                    150,000 drug tests per year now

    Ms. Shaffer. We do about 150,000 samples per year right 
now.
    Mr. Istook. That's current? And that's of how many 
different people that are covered in the 150,000 samples?
    Ms. Shaffer. The bulk of those are pretrial. Probably 
between 30,000 and 40,000 are probation samples. Literally only 
about 200 to 300 are parole samples. The rest are juvenile 
samples and adults charged with abuse and neglect.
    Mr. Istook. Okay. And under the new regime of making this 
universal for those that are on a probationary or parole 
status, how many drug tests per year do you expect to 
administer?
    Mr. Carver. The last time we calculated this out, we 
projected a fivefold or a sixfold increase.

             900,000 drug tests per year to be administered

    Mr. Istook. Which would mean in the neighborhood of 750,000 
to 900,000 tests per year, in that range?
    Mr. Carver. You're quicker on the math than I am, yes.
    Mr. Istook. Right. So I wanted to get that in perspective. 
That you are now supervising 30,000 people. That includes your 
juveniles, too. How many people currently are not receiving 
drugscreening tests that will receive drug screening tests 
under the new regime?

               20,000 persons not being tested for drugs

    Mr. Carver. Under the new regime, we laid out in our budget 
request that virtually everyone would at a minimum get randomly 
tested. Those with known substance abuse problems, which we 
estimate to be approximately two-thirds of the population, 
would be tested on a twice-weekly basis.
    Mr. Istook. So you're talking about 20,000 people, or what 
number is it approximately?
    Mr. Carver. It's approximately 20,000.
    Mr. Istook. Okay. So you have approximately 20,000 people 
that were offenders who currently are not being screened for 
drugs that you intend to begin screening for drugs.

              failed drug tests may result in more inmates

    Now, here's what I'm trying to lead up to. You know you 
will have people who will fall out of compliance with their 
probation because of this. And I'm not going to get into, you 
know, one bad screen, two bad screens, exactly what those 
standards are. But there will be some number of these people, 
who will, therefore, be subjected to a revocation hearing. That 
means calling on the resources of Ms. Wallace, that means 
calling upon the resources of Mr. Clark, if these people are 
indeed reincarcerated. I'm trying to get a handle on what kind 
of demand might this generate upon their resources, and you've 
given some raw numbers. Maybe can you extrapolate a little bit 
further, and I would like to ask them what they foresee.

          plan to bring people into compliance with drug laws

    Mr. Carver. There's another part of this model that I would 
like to describe, and I think this goes to Congressman 
Mollohan's questions about what is different about this regime. 
One of the things that is different is that we're not going to 
rely as a first resort on revocation, which is the ultimate 
penalty for these kinds of violations. The system we're trying 
to move toward is a system of quick, graduated and measured 
responses. A system that we see every day in the Drug Court.
    Mr. Istook. You want to bring these people into compliance 
with the drug laws, which will minimize not only the 
impediments to their employment, but also reduce their 
recidivism and their tendency to go out and commit more crimes?

                            sanctions center

    Mr. Carver. Right. But to make that work, we have to have 
real sanctions, not just pieces of paper, not just scoldings, 
not just warnings. And this is where the Sanctions Center comes 
in. The idea of the Sanctions Center would be that when people 
begin to relapse, they are moved quickly in for maybe a short 
period of time, 3 days, 5 days, in which the detoxification 
services can be provided, relapse interventions can be 
provided, and then they can be rereleased.

         process to bring people into compliance with drug laws

    Mr. Istook. Can you project how many of those would 
potentially go to revocation hearing, which would then bring 
demand upon Ms. Wallace or Mr. Clark potentially for their 
services?
    Mr. Carver. Yes, I can. And, again, I'm basing this on 
experience in the Drug Court.
    Mr. Istook. Sure.
    Mr. Carver. I can describe a process, and I can work out 
the numbers, but let me describe the process first.
    Our experience in the Drug Court has been that most people 
violate the drug testing conviction at the first instance and 
have to be sanctioned. But at each subsequent sanction level, 
the number violating those conditions of release is pretty much 
cut in half, so that by the time you get to third- and fourth- 
and fifth-level sanctions, you're dealing with a much smaller 
number of individuals. In fact, we've got some fairly 
sophisticated data on that precise question.
    I would be happy to run out some of these projections, but 
it's probably in the area of from 15 to 20 percent who might 
ultimately need to be revoked.
    Mr. Istook. So that would be 15 to 20 percent of this base 
number of I believe it was approximately 20,000?
    Mr. Carver. Perhaps.

         potentially 4,000 people, subject to parole revocation

    Mr. Istook. Okay. So we're talking about potentially 
revocation hearings of 3,000 to 4,000 people, and that's a 1-
year figure? Is that approximately right? I mean, it's not a 
trick question. I want to talk about round figures. I just want 
to make sure they have a basis from which to try to work on 
doing their rough calculations.
    Mr. Carver. Right.
    Mr. Istook. So that would be the approximate number?
    Mr. Carver. Yes. The goal would be to avoid the need for 
revocations.
    Mr. Istook. Of course. I understand that perfectly. That's 
the goal. And hopefully, once you have an enforcement mechanism 
in place and people realize what they're facing year by year, 
you would hope that would diminish?
    Mr. Carver. Right.
    Mr. Istook. But I'm trying to locate a potential first-year 
impact, which, if I understand you correctly, you're talking 
about 3,000 to 4,000 revocation hearings on top of the number 
that are currently conducted. That's why I wanted to ask the 
public defender and Corrections what is the potential impact, 
therefore, upon their workload.
    Ms. Wallace. That would mean----
    Mr. Istook. By the way, let's not underestimate the impact, 
hopefully, on public safety, which we think will be positive, 
but----
    Mr. Carver. Let me say I don't think we're really talking 
about a process that would be superimposed on top of what is 
going on now.
    Mr. Istook. Okay.
    Mr. Carver. I think if this process can be put into place, 
these would be preliminary steps prior to revocation hearings 
and revocation hearings going on right now.
    Mr. Istook. That's why I wanted to ask the number of those 
that would be progressed to a point of revocation, which is the 
3,000 to 4,000 projection.

      additional revocation will be a strain on present resources

    Mr. Clark. I'm told there were about 2,400 revocation 
hearings in the District last year.
    Mr. Istook. So it doubled, more than doubled?
    Mr. Clark. Well, I mean--again, I would assume that the 
3,000 to 4,000----
    Mr. Carver. That's just in parole?
    Mr. Clark. That's just in parole.
    Mr. Carver. And those 3,000 we're talking about is the 
entire universe of parolees and probationers.
    Mr. Istook. Yes. But like I said, do you have responses on 
what that produces as far as the resources that each of you 
would need?
    Mr. Clark. Well, if that happened, if that kind of ashort-
term spike, that would definitely be a problem for the Department of 
Corrections and for the resources that we would have to assist them 
with. In the short term, again, what's happening now is, you know, I 
mentioned a 2,400, 2,500 figure that were sent back on revocation of 
parole last year. These guys are coming back after they've had 10 or 20 
dirty urines because there was no intervention earlier.
    I think here that many of them wouldn't come back if there 
was an earlier intervention, but they get so strung out after 
this long pattern that they finally wind up back on our 
doorstep and a real mess at that point. So I'm hopeful in the 
long run this would cut into this whole problem.
    The issue you raise is a valid one in the short run, what 
is this going to do to our resources. If it were another couple 
of thousand, then we would have to go back to the drawing board 
to find a whole lot more prison beds.
    Mr. Istook. Ms. Wallace.

             other innovative mechanisms by public defender

    Ms. Wallace. I think that at least initially Mr. Carver's 
initiatives are having an impact or will have an impact on the 
numbers. It may not be that total amount, which is over what we 
currently do, but I believe their attentiveness is raising the 
numbers so there is some number over. And those kinds of 
numbers would certainly impact our operations, but we are 
looking to increase our ability to respond quickly through 
other innovative mechanisms.
    For instance, in fact, just today, I got a phone call from 
one of the professors at the University of the District of 
Columbia, and they're interested in starting a clinical program 
whereby their students would be supervised by one of our 
lawyers so that we can have--and we've talked with Mr. Carver 
about this--ways to fully address the increases that might be 
caused by his initiatives without using simply lawyers. So 
that's one thing that we're looking at.

                  objective: to improve public safety

    Mr. Istook. Very good. I appreciate that. And as we all 
know, what we're trying to do here is dramatically improve 
public safety and the safety of people that live in the 
District. But I think your testimony just points out that going 
through that process means going through some significant 
adjustments, but the end result of greater public safety is 
something that people in Washington have been wanting for a 
long, long time.
    Mr. Mollohan.

          cost difference between treatment and incarceration

    Mr. Mollohan. Thank you, Mr. Chairman.
    Mr. Carver, if I might, I have to follow up just a little 
bit. I am interested in the differential between the costs of 
treating one of your cases through this new proposal versus an 
incarceration. What is the cost difference between the methods? 
Have you projected the figures, and have you found any kind of 
a cost savings in treating the overall population?
    Mr. Carver. I can give you some general national figures 
with respect to the way correctional budgets are being used in 
this country. Right now those individuals that our agency is 
responsible for are three-fourths of all individuals under some 
form of correctional supervision, with one-fourth being in in 
institutions.
    But when you look at the expenditure nationally, the 
institutions are using 90 percent of the money with 25 percent 
of the population. So this is kind of the macrolevel mix 
between the institutional side and the community side. I do not 
have a good analysis, projecting the ultimate savings in 
correctional costs in this jurisdiction.
    And it's very difficult to do that kind of analysis, 
because I think as a number of Members mentioned, it's a very 
dynamic system. We have many factors changing simultaneously. 
One has been the decisionmaking authority with respect to 
parole. We are also in a transition to a different kind of a 
sentencing structure, which would be much more analogous to 
what is going on in many States that have adopted--as we have 
adopted--a truth in sentencing structure where parole will be 
abolished, and 85 percent of the sentence will be required to 
be served in institutions.
    Right now we do not have guidelines, although there is a 
Sentencing Advisory Commission that's addressing this question. 
It's very hard to make very valid projections given changes in 
decisionmaking and changes in sentencing structure. It's really 
for that reason that, I just don't have a good statistically-
based way to respond to your question.

           cost/benefit--drug treatment versus incarceration

    Ms. Wallace. Might I jump in there for a minute just in 
response to your question? Nationally the best study and the 
most comprehensive study that I have seen so far estimates that 
for every $1 spent on the drug treatment that Mr. Carver is 
talking about, taxpayers save $7 in less incarceration costs, 
in health costs, in public safety administration costs. That 
study was done by the Rand Corporation. And while it has to be 
tailored, I think, for jurisdictional differences, it provides 
a good model, and I would recommend it.
    Mr. Mollohan. I don't know how mandatory sentencing might 
factor into this, but I can imagine if you can generate those 
numbers and they were real as relating to the District's 
situation, you could help yourself on both sides. Those of us 
who may be inclined to a more intervention treatment approach, 
the approach would appeal to us, and those of us in the body 
who were more inclined to be responsive to a reduction in 
costs, might be equally attracted. If you can generate those 
numbers and it showed savings in costs, it might be a good 
argument.
    Mr. Carver. I can throw out one number that came out of an 
Urban Institute evaluation of the Drug Court, and part of that 
evaluation consisted of a very careful cost-benefit analysis of 
the costs of the sanctions track of the Drug Court, the model 
that we're trying to implement systemwide.

      $8.60 per day spent on drug sanctions versus $62 per day on 
                             incarceration

    Those figures showed that the costs per day for defendants 
in the sanctions track was $8.60. And I think the figure the 
Department of Corrections uses as the cost per day for locking 
someone up, and correct me if I'm wrong, John, is $62. At least 
in terms of the magnitude, I think it's probably a pretty good 
basis for comparing the day-to-day costs of the two approaches.

                  funds requested for sanctions center

    Mr. Mollohan. I asked you what you were doing with the 
Commerce, Justice Appropriations Committee. Are you asking this 
subcommittee for any money for this initiative that you 
testified you were going to seek in 1999?
    Mr. Carver. Yes. For FY 2000, we are requesting $5.9 
million from the D.C. subcommittee for the Sanctions Center 
initiative, and an additional $2.7 million from the Commerce, 
Justice Subcommittee. We requested funding for the Sanctions 
Center as part of the FY 1999 Budget Amendment from a 
Department of Justice grant.
    Mr. Istook. You have part of your staff behind you, Mr. 
Carver, trying to nod yes, saying, please do.
    Mr. Mollohan. Am I out of time?
    Mr. Istook. Go ahead, take some more, that's fine, if you 
wish.

      incarceration costs--bureau of prisons versus privatization

    Mr. Mollohan. I would like to ask Mr.Clark. The D.C. 
Revitalization Act requires that 2,000 D.C. sentenced felons be placed 
in private facilities by December of 1999. I understand we have two 
contracts out on that. One contract has already been awarded; the other 
is pending. The contract for the 1,000 inmates will cost $353 million 
over 10 years.
    I just want to get a relative cost between private and 
public incarceration. If you do the math, that works out to 
about $34,000 per inmate annually. My understanding, from the 
Bureau of Prisons, is that their cost is $22,000 per year per 
inmate.
    While I understand that this contract is between the Bureau 
of Prisons and the private corrections firm, I'm asking, in 
your opinion and based on your corrections background, what 
accounts for the per inmate cost differential between the 
Bureau of Prisons and the costs of housing these inmates in a 
privately-run facility? It's a significant difference.
    Mr. Clark. First of all, let me go back and mention that 
the cost in the District is not $62 a day, it's actually closer 
to $80 a day. Sir, as you indicated, this is not something that 
is in my direct line of responsibility, but I do have some 
knowledge of it. I think that the differential here--first of 
all, one thing is they are including the capital building costs 
in that $340 million, whereas the Bureau of Prisons' cost is 
amortizing in a different fashion. It's budgeted in a totally 
different fashion.
    Mr. Mollohan. Is it included in there, even if it's 
amortized differently?
    Mr. Clark. No.
    Mr. Mollohan. The capital costs are not included in the 
Bureau of Prisons cost?
    Mr. Clark. To my understanding, it is not.
    Mr. Mollohan. You're saying that it is just operational 
costs?
    Mr. Clark. Yes.
    Mr. Mollohan. If you were right, I think that would make 
the Bureau of Prisons costs substantially higher than the 
private sector.
    Mr. Clark. You're talking--the difference between $22,000 
and $34,000 a year is a big gap. Some of the other factors 
there--I think that's a relatively specialized contract where 
there are three separate institutions on one site, one for 
youth, one for minimum-security males and one for females, so 
that you don't get the economy of scale that you get with one 
larger facility. But that is a fairly expensive contract.
    Mr. Mollohan. Okay. Thank you, Mr. Chairman.
    Mr. Istook. Thank you, Mr. Mollohan.
    Let me just finish up a couple of things on this, because I 
know the goal is not to put any further strain on other 
resources. The goal is safer streets, safer schools, safer 
neighborhoods, because we know how dramatically drug use is 
linked to crime, especially involving repeat offenders, and 
that's, of course, what we're dealing with.

            other jurisdictions with universal drug testing

    But is there any other jurisdiction in the country that has 
successfully sought to and gone to a policy of universal drug 
testing for those on a probationary status who have some 
history of drug use; is that being done anyplace else?
    Mr. Carver. I think most jurisdictions are attempting to 
move to that model. I think some are farther along than others. 
But the simple answer to your question is no, it's not. Again, 
all States are doing some drug testing of probation and parole 
populations, but in terms of a comprehensive approach, there is 
no jurisdiction.
    Mr. Istook. This would mean that Washington would be taking 
the lead----
    Mr. Carver. Yes.
    Mr. Istook [continuing]. In combating drug use among known 
offenders, trying to reduce repeat offenses that way?

                     maryland drug testing program

    Mr. Carver. Maryland is probably as close as any State. 
They have a Breaking-the-Cycle initiative, which I understand 
is not completely universal across the State, but involves 
exactly the same elements of regular drug testing, coupled with 
immediate sanctions for drug use.
    Mr. Istook. Do you know how pervasive Maryland is, how, you 
know--what percentage of the----
    Mr. Carver. I could certainly find out, because I'm in 
regular touch with my Maryland counterparts.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

              300-500 crimes per year by substance abusers

    Mr. Istook. With this in place, when you increase 
enforcement, you have the temporary spike and demand upon 
resources, we've talked about that, with prison space and 
public defenders. But what are the benefits? Do you have any 
way of correlating this to the crime rate? How many crimes a 
year might be prevented by this?
    Again, let's link this up with that goal of safer streets, 
safer schools and safer neighborhoods. How many crimes a year 
against the citizens might be prevented?
    Mr. Carver. There are some excellent studies that have been 
done over the years, one in Miami, one in Baltimore. These are 
long-term follow-up studies of high-rate substance abusers in 
those jurisdictions. And the findings have been that high-rate 
substance abusers and the populations they've studied are 
committing from 300 to 500 crimes per year while engaged in 
this higher rate of substance abuse.
    Mr. Istook. That's per person?
    Mr. Carver. Per person.
    Mr. Istook. Are we talking about that category of persons 
that is committing 300 to 500 crimes per year, or are you 
talking about potentially having revocation hearings of3,000 to 
4,000 such persons? You do the math and see how many crimes are 
committed.
    Mr. Carver. I'm not certain.
    Mr. Istook. I know that's a high end. Okay.
    Mr. Carver. Right, that's the high end. I would point out 
that these are crimes beyond the crime of purchasing drugs. And 
I would be happy to provide references to those studies, if you 
would like. But it's pretty accepted within academic circles 
that these studies have been very well conducted. And the other 
part of the studies----
    Mr. Istook. Do those tend to be violent crimes, crimes 
against property, crimes of theft, petty thefts----
    Mr. Carver. It's a lot.
    Mr. Istook [continuing]. Rapes, muggings, robberies?
    Mr. Carver. A lot of property crimes, certainly violent as 
well. That's the bad news. The good news is that criminal 
justice coercion can be effective in lowering substance abuse 
rates. And then when substance abuse goes down, the crime rate 
of these individuals goes down very, very substantially. These 
are like 20- and 30-year follow-up studies. California is 
another State where some very well-known researchers have 
followed the addiction careers of a number of individuals for 
literally decades.
    Mr. Istook. Okay. I just did the math, and I realize just 
because they are a drug offender doesn't mean they're a high-
end drug offender.
    Mr. Carver. Right.
    Mr. Istook. But if you have 3,000 to 4,000 of these a year, 
even if they did only 100 crimes per year, only, per average, 
that's a lot of crime. But there are those who do crime that 
don't lead to arrests, I presume?
    Mr. Carver. Oh, yes.
    Mr. Istook. Petty larcenies and so forth.
    Mr. Carver. For any crime. You just see in the literature 
in criminology how it funnels down between the crimes that are 
committed and those that actually result in arrest and a 
conviction and incarceration. It really narrows down quite 
dramatically.
    The other point is that if you don't have the basic 
measurements in place, namely drug testing, you don't know 
what's going on.
    Mr. Istook. Yes. I just want to distinguish that, because 
if someone compares the number of possibly preventable crimes 
here and the number of reported crimes, that's not using the 
same basis of comparison.
    Mr. Carver. Right.
    Mr. Istook. It's the total incidents of crimes, even if 
they're not reported ones, which obviously is a projection.
    Well, I appreciate very much your testimony.

         studies relating substance abuse to criminal activity

    [The following material was supplied for the record:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Istook. Mr. Mollohan, did you have anything else you 
wanted to ask?
    Mr. Mollohan. I've got a couple of questions, but I would 
submit them for the record. I would though like to ask Mr. 
Clark one more question?
    Mr. Istook. Yes.

                    private prison for southwest DC

    Mr. Mollohan. I understand the Corrections Corporation of 
America is bidding to place approximately 1,280 D.C. inmates in 
a low-security male prison in Southwest D.C. Is that correct? 
Can you also tell me the status of that bidding process?
    Mr. Clark. Well, again, that's a Federal Bureau of Prisons 
RFP. I'm not directly involved in that at all. I do understand 
from the news media and actually from what I've heard directly 
from the company that they are--I'm assuming that there are 
several other companies that are probably also bidding on that 
same contract, including the company that got the first 
contract that you mentioned up in Pennsylvania. But beyond 
that, I had no conversations with the Bureau of Prisons on that 
issue.
    Mr. Mollohan. I understand there's a lot of angst over the 
Corrections Corporation of America because of their performance 
in Ohio. I am just wondering if you've picked up on any of that 
from the citizens in that area.
    Mr. Clark. Well, certainly it is very controversial in the 
District. And there are a number of people who have, for 
instance, read the report that I wrote, that I was complimented 
to see that the Chairman was carrying into the meeting today, 
who are concerned about that company.
    The only thing I can comment on was what I found in that 
particular report. I wouldn't want to generalize on the company 
or privatization beyond that.
    Mr. Mollohan. Well, I don't have time to explore that with 
you, but if I had time, I would.

         50 percent of dc felons in private facilities by 2003

    But just quickly, under the Revitalization Act following up 
on my last line of questioning, the Act requires 50 percent of 
D.C.-sentenced felons to be housed in private facilities by 
2003.
    Mr. Clark. Correct.
    Mr. Mollohan. Do you or are you proposing privatization of 
any medium- to high-security prisoners? Or would you oppose 
such a proposal?
    Mr. Clark. Well, it's not an issue that I've come to any 
conclusion on in my official role.

                      classification of dc inmates

    I mentioned that we had helped the Department of 
Corrections adopt the Federal Bureau of Prisons classification 
model. We had Federal Bureau of Prisons staff come in and train 
them and help them classify the entire population. The finding 
was that about 65 percent of the D.C. population was medium or 
high, on the Bureau of Prisons' scale, and only about 35 
percent were minimum or low.

                  problems with privatized facilities

    Mr. Mollohan. Would you recommend any medium- to high-
security prisoners to be included in a privatized facility?
    Mr. Clark. At this time I wouldn't want to get engaged in 
that.
    Mr. Mollohan. I'm sorry. I'm asking you a question in this 
hearing. We're engaged in this, and we're funding this. You're 
the expert on the floor.
    Mr. Clark. Yes, there have been some significant problems 
found with the ability of some of the private companies to deal 
with the higher-end inmate, so I'm very cautious about that. 
There's not a track record----
    Mr. Mollohan. You're very cautious about what?
    Mr. Clark. I'm very cautious about putting higher-security 
inmates into private facilities until there's more of a track 
record of success.
    Mr. Mollohan. Would it be possible to meet this 50 percent 
requirement by the year 2003 if you did not house medium- to 
high-security prisoners in a private facility.
    Mr. Clark. Not with the District of Columbia population.
    Mr. Mollohan. You would not be able to do that. We're 
talking about the District of Columbia population?
    Mr. Clark. That's correct.
    Mr. Mollohan. Would it be possible to house 50 percent of 
the D.C. prisoners in private facilities if you could not 
include medium-to high-security prisoners?
    Mr. Clark. Not--no, it wouldn't be, at least according to 
the work that we did to classify the whole population, which 
again showed that only about 35 percent were below medium.
    Mr. Mollohan. Thank you, Mr. Clark.
    Thank you, Mr. Chairman.
    Mr. Istook. Thank you, Mr. Mollohan.

                questions for the record--court services

    As I said, I will submit some questions for the record, and 
those questions will include, Mr. Clark and Ms. Wallace, what 
would be the impact on your offices of a larger number of 
revocation hearings, getting some people off the streets? 
Hopefully it would enhance tremendously the public safety and 
reduce the crime rate. Those questions will come with the 
record, and we appreciate your responses.
    [The Committee's questions and the agency's response 
follow:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                              adjournment

    Mr. Istook. Thank you so much for your attention, your 
efforts, your candor and your work. We will be in touch with 
you. If there's nothing further, we will stand adjourned.
                                             Tuesday, May 18, 1999.

                      DISTRICT OF COLUMBIA COURTS

                      FINANCIAL PROBLEMS OF COURTS

                                  AND

                             FY 2000 BUDGET

                               WITNESSES

GLORIA L. JARMON, DIRECTOR, HEALTH, EDUCATION AND HUMAN SERVICES 
    ACCOUNTING AND FINANCIAL MANAGEMENT ISSUES, ACCOUNTING AND 
    MANAGEMENT INFORMATION DIVISION, GENERAL ACCOUNTING OFFICE
ANNICE M. WAGNER, CHIEF JUDGE, D.C. COURT OF APPEALS, AND CHAIR, JOINT 
    COMMITTEE ON JUDICIAL ADMINISTRATION
EUGENE N. HAMILTON, CHIEF JUDGE, SUPERIOR COURT OF THE DISTRICT OF 
    COLUMBIA AND MEMBER, JOINT COMMITTEE ON JUDICIAL ADMINISTRATION
ULYSSES B. HAMMOND, EXECUTIVE OFFICER, D.C. COURTS
MICHAEL W. FARRELL, ASSOCIATE JUDGE, D.C. COURT OF APPEALS AND MEMBER, 
    JOINT COMMITTEE ON JUDICIAL ADMINISTRATION
GEOFFREY M. ALPRIN, ASSOCIATE JUDGE, SUPERIOR COURT OF THE DISTRICT OF 
    COLUMBIA AND MEMBER, JOINT COMMITTEE ON JUDICIAL ADMINISTRATION

                   chairman istook's opening remarks

    Mr. Istook. The Committee will come to order. This hearing, 
of course, was originally scheduled to happen a couple of weeks 
ago. Because of the tornadoes in Oklahoma, I was not back at 
that time, and I appreciate the forbearance of everyone in 
waiting until today to conduct this particular hearing.
    We are meeting this afternoon to receive testimony 
concerning the court system in the District of Columbia. First 
we are going to be hearing from the General Accounting Office 
on the status of their review of certain court operations as 
requested by the Committee on a bipartisan basis last 
September. After that, we will be hearing from court officials 
about their fiscal year 2000 budget request.
    I think to make sure that everyone has an opportunity for 
an exchange, we would like to make sure that the GAO and the 
court personnel are part of the same panel, so if one has a 
comment that dictates that there ought to be a response from 
the other, we can make sure that that occurs. I appreciate 
everyone coming together today.
    I don't have any further comments myself, but, Mr. Moran, I 
am happy to yield to you as the Ranking Member for any comments 
you would like to make.

                  congressman moran's opening remarks

    Mr. Moran. Thank you very much, Mr. Chairman. Thank you for 
holding this hearing. I know that we all could sympathize with 
the plight of your constituents in Oklahoma, and certainly 
understand why the hearing had to be postponed.
    I want to welcome Judge Hamilton and Judge Wagner and 
Executive Officer Ulysses Hammond, and our greetings to Gloria 
Jarmon and the other officers of GAO who are with us as well.

                court-appointed attorneys not being paid

    Last year while we were working on the fiscal year 1999 
budget, we came across a matter that really affected the fiscal 
1998 budget, and that was that the court's court-appointed 
attorneys were not being paid. Some of them had not been paid 
for months.
    One thing led to another. We pursued it because these were 
not your K Street lawyers, not that we don't fully respect our 
K Street lawyers, but sometimes they have more disposable 
income available than our court-appointed attorneys. Some of 
these court-appointed attorneys handled cases like child abuse 
and domestic abuse that need to be prosecuted, but oftentimes 
the people involved do not have the resources to pay a lot of 
money, and these court appointed attorneys are people who have 
decided to pursue this profession, and so we particularly 
respect that decision. But when they are not paid, their 
families suffer.
    So we pursued it And, of course, we got into a disagreement 
over the amount of money that had been transferred in light of 
the restructuring and who should pay for parts of the court 
operations. Certain portions were taken out of the part of the 
court system that D.C. had paid for in the past.
    But that led to other allegations of financial 
mismanagement and some personnel management abuses that were 
brought to light by certain whistle blowers. Judge Hamilton, I 
think, acted very properly and made sure that no one felt 
intimidated. Whether there was any real reason to be 
intimidated or not, he made it so no one would feel intimidated 
coming forward.

        gao audit of courts requested by committee (see p. 538)

    We got a better understanding, however, when last year's 
Chairman, Charles Taylor, and I sent a letter to have the 
General Accounting Office audit the courts. We appreciate the 
work that they have done and their willingness to provide us at 
least with their preliminary findings. I think that will bring 
some light on a process that really has escaped public scrutiny 
for some time, because it came within the regular budget of the 
District of Columbia and apparently was not necessarily a high 
priority in terms of the accountability process.
    We certainly respect the independence of the judicial 
system and have no intention of treading in areas where we 
should not, but we are responsible for the amount of money that 
is expended, particularly when it is a direct Federal 
appropriation. We want to make sure that not only is there not 
the suggestion of arrogance or partiality, but we don't even 
want the perception of that in our court system. We want to 
make sure that people are aware that we have an impartial and a 
proper system of justice in the District of Columbia, that is 
free of these kinds of allegations.
    So that is really the intent of this hearing and this kind 
of scrutiny, which I think is appropriate for the District of 
Columbia Court of Appeals and the Superior Court.
    I appreciate your taking this responsibility as chairman as 
seriously as you do, Mr. Chairman. You are doing an excellent 
job, particularly in suggesting that the Members get very much 
involved in understanding the system. So this oversight hearing 
will give us that better understanding, and I appreciate your 
having it.
    Thank you.
    Mr. Istook. Thank you, Mr. Moran.
    I also wanted to acknowledge, although she is not a member 
of the Committee, we have the Delegate from the District, Ms. 
Eleanor Holmes Norton, with us. Is there anything you wanted to 
say as a preliminary matter?
    Ms. Norton. Thank you. No, Mr. Chairman. Thank you very 
much.
    Mr. Istook. If there is anything that occurs during the 
hearings, I have invited Ms. Norton, if she feels there is some 
input that may be useful from her, to let us know about that.
    Ms. Norton. I appreciate that, Mr. Chairman.
    Mr. Istook. Thank you, Ms. Norton.

                            witnesses sworn

    I always point out to witnesses that we have a standard 
practice of swearing in all witnesses that are going to appear 
before the committee. What I would like to do, because we have 
some matters that will, of course, pertain to the GAO report 
and then some matters that do not pertain, I know, to the GAO 
report directly, I would like to proceed first with the 
presentation from the GAO, and then have--let me pose an open 
question here. We could then have the opening statements from 
the panelists from the court system before we get into general 
questioning, or we could get into discussion about the GAO 
report with the other panelists and then have their 
presentations later. Is there any preference that you have, Mr. 
Moran?
    Mr. Moran. I don't have any preference. Whatever you choose 
to do, Mr. Chairman.
    Mr. Istook. Perhaps since everyone is expected to begin 
with their prepared statement, why don't we go through all of 
those before we have any questions. So if we could have the 
witnesses that are present, Ms. Jarmon from GAO, Chief Judge 
Wagner, Chief Judge Hamilton and Mr. Hammond. I don't know if 
there is anyone else that will be testifying. If there is 
anyone else that you have with you who intends to testify, if 
all of you could join us at the table and let me swear you in.
    Judge Wagner. There are two other members of the Joint 
Committee on Judicial Administration present. Whether they will 
want to make a response to anything that occurs here, I don't 
know. As you know, we are here for our fiscal year 2000 budget. 
At least that is what we came prepared to do. We are prepared 
to adjust to any change that the Committee wishes to make.
    Mr. Istook. Thank you, Judge Wagner.
    [Witnesses sworn.]
    Mr. Istook. We will proceed in this order: Ms. Jarmon, 
Judge Wagner, Judge Hamilton. Those of you who presented 
written testimony to us, we have the entirety of that. There is 
no need to read through the entire statement. It will be placed 
in the record. Feel free to communicate in whatever fashion you 
think will be most informative to us.
    Ms. Jarmon.

                prepared statement of gloria jarmon, gao

    Ms. Jarmon. Mr. Chairman and members of the subcommittee, I 
am pleased to be here today to respond to your questions 
related to the District of Columbia Courts' financial 
operations for fiscal year 1998, its first year of operations 
with direct Federal funding. I would like to summarize my 
statement, but I ask that my entire statement be made part of 
the record.
    [The prepared statement referred to follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                 opening remarks of gloria jarmon, gao

    Ms. Jarmon. With me today is Steven Haughton from our 
Accounting and Information Management Division and Richard 
Cambosos from our Office of the General Counsel.
    Consistent with your request, we focused on four questions: 
One, what were D.C. Courts' obligations for fiscal years 1996 
through 1998; two, did D.C. Courts have a spending plan for 
fiscal year 1998 and obligate funds consistent with available 
resources; three, why were payments to court-appointed 
attorneys deferred between July and September 1998; and, four, 
did D.C. Courts process payments to court-appointed attorneys 
in accordance with policies and procedures?

                  courts violated anti-deficiency act

    In summary, we found that D.C. Courts experienced 
difficulties in planning and budgeting during this transition 
year and that its adjusted records showed that it potentially 
overobligated its resources by more than $5 million, which 
would violate the Anti-Deficiency Act. D.C. Courts officials 
told us that they do not believe that a violation of the act 
occurred. I will explain our respective positions in a moment.
    Related to the first question of the Courts' obligations, 
we found that the Courts' records showed total obligations of 
about $115 million in fiscal year 1996, $119 million in 1997 
and $126 million in 1998. Fiscal year 1998 obligations reflect 
our adjustments and are not comparable to the prior years' 
obligations primarily due to the changes resulting from the 
Revitalization Act of 1997, including the receipt of Federal 
benefits by nonjudicial employees and the transfer of the adult 
probation function from D.C. Courts to a new entity.

                          7 percent pay raise

    D.C. Courts also provided its nonjudicial employees a 7 
percent pay raise and assumed responsibility for the judges' 
pension costs in fiscal year 1998.

                            no spending plan

    Related to your second question as to the spending plan, 
D.C. Courts did not develop a spending plan early in fiscal 
year 1998 to match the appropriated funds received of $108 
million. It obligated throughout the year based on its 
expectation of receiving additional funds. While some 
additional funds were received, the Courts did not receive all 
the funds it anticipated. Letters between D.C. Courts and OMB 
during fiscal year 1998 reflect D.C. Court officials' 
expectations of receiving additional resources and OMB's 
concern with the Courts' rate of spending.

    [CLERK'S NOTE.--The Committee was not provided with copies 
of the letters referred to from D.C. Courts to the President's 
Office of Management and Budget; however, the Committee did 
receive a copy of (1) an internal Court memorandum dated 
November 14, 1997 from Ulysses B. Hammond announcing a 7 
percent salary increase effective December 7, 1997 and (2) a 
copy of a letter dated January 29, 1998 from the President's 
Office of Management and Budget to Mr. Hammond stating that ``* 
* * As we discussed, the District of Columbia Courts cannot 
continue to incur obligations for the remainder of FY 1998 for 
the adult probation function. Currently the Courts are 
incurring obligations at a rate that could exceed the FY 1998 
appropriation of $108 million,'' See pages 494 and 495 for a 
copy of each of the letters.]

                $5 million anti-deficiency act violation

    By the end of the fiscal year, the Courts' records showed 
that obligations exceeded available resources and, after 
adjustments made by us for obligations related to the deferred 
attorneys' fees and interest that D.C. Courts did not have the 
authority to spend, D.C. Courts potentially overobligated 
available funds by more than $5 million, which would violate 
the Anti-Deficiency Act.
    D.C. Courts officials told us that they do not believe that 
a violation of this Act occurred primarily because in regard to 
the deferred attorneys' fees, they asserted that the authority 
Congress provided in the fiscal year 1999 Appropriations Act to 
use 1999 appropriations for deferred attorney payments 
constitutes an exception to the Anti-Deficiency Act.
    We do not believe that this authority authorizes 
obligations in excess of available budgetary resources. We 
believe that the important issue here is whether the 
overobligations were entirely attributable to the mandatory 
obligations for court-appointed attorneys. We conclude that 
they were not.

         courts illegal use of interest earned on appropriation

    Next, in regard to the interest, it is the Courts' view 
that no statute prohibits retaining interest on apportionments 
and using such interest for court operations. However, we noted 
that the Revitalization Act requires that all money received by 
the Courts be deposited in the U.S. Treasury or the Crime 
Victims Fund.

    [CLERK'S NOTE--Regarding the use of interest for court 
operations, the General Accounting Office states that ``We are 
unaware of any statute that authorizes DC Courts to retain and 
spend interest earned on appropriations for court operations. 
Further, it undermines the Home Rule Act provisions * * * 
Accordingly, DC Courts was not authorized to retain or use this 
interest income and should have remitted it to the U.S. 
Treasury.''. (See page 10 (page 551, this volume) of GAO report 
B-283119 transmitted to Congress September 16, 1999.)]

               deobligation of $1 milllion--gao reviewing

    Recently, D.C. Courts officials advised us that there were 
fiscal year 1998 obligations of over $1 million that needed to 
be deobligated. We are currently reviewing these proposed 
deobligations. It will be important that D.C. Courts continue 
reviewing its records and do all required investigating and 
reporting under the Anti-Deficiency Act.

                   court appointed attorneys not paid

    Related to your third question as to the reason for the 
deferred payments to court-appointed attorneys, this occurred 
because of the shortfall that the Courts faced in fiscal year 
1998, as previously mentioned.

         courts' flawed procedures for processing cja payments

    Related to your fourth question as to the Courts' policies 
and procedures for processing payments to court-appointed 
attorneys, we found that D.C. Courts processed such vouchers in 
accordance with its policies and procedures. However, 
procedures did not include time frames for making payments to 
court-appointed attorneys or tracking vouchers reported as 
missing.
    Mr. Chairman, this concludes my statement. I would be happy 
to answer questions from you or other members of the 
subcommittee.
    Mr. Istook. Thank you, Ms. Jarmon.
    I am not quite sure of the protocol. I have listed for 
Judge Wagner to be next. If I violate any internal protocols 
among yourselves, please forgive me.

                  chief judge wagner's opening remarks

[See pp. 496-537, for prepared statement of Joint Committee on Judicial 
                            Administration]

    Judge Wagner. Ordinarily I would have started with my 
statement regarding the fiscal year 2000 budget, which, as you 
know, this hearing was originally scheduled to be. However, it 
seems appropriate to say something about what has just been 
said; therefore, I will start there, if you don't mind.

    [CLERK'S NOTE.--For the record, this hearing was first 
scheduled to take place on Tuesday, May 4, 1999. The Committee 
Clerk notified Ulysses Hammond, Executive Officer of the Court 
by telephone, as is ordinarily done, of the date and subject of 
the hearing and that the General Accounting Office would be 
providing the Committee with an interim report on GAO's review 
of the Courts' planning and budgeting difficulties. The 
Committee subsequently received information that a DC law firm 
was contacting Committee members in an effort to have the 
hearing canceled or, if that was not successful, to not have 
GAO testify (see p. 487 ``Pro Bono Lobbying''). Early on May 4, 
1999, the day of the scheduled hearing, Chairman Istook 
returned to Oklahoma to assess the damages caused by tornadoes 
that struck parts of his congressional district the night 
before. As a result of his unscheduled travel, the hearing was 
postponed. Court officials were fully aware weeks in advance of 
the hearing that GAO officials would be providing an interim 
report of their findings at the hearing.]

    Mr. Istook. Sure.
    Judge Wagner. Okay. Although the timing of the hearing on 
GAO's preliminary report has not permitted the Courts to 
formulate a full response, we must point out that the issues 
raised turn upon interpretations of statutes in light of the 
facts involved in the case.
    Now, as lawyers, you realize the statement that you have 
just heard presents legal conclusions without any statutory 
references or legal references.
    Have you had an opportunity to review the Courts' legal 
position on these issues? Are you permitted to answer that?
    Mr. Istook. Well, I think we are here to hear what you wish 
to say in that regard.
    Judge Wagner. If you have not, let me suggest we are 
certain you will want to examine the legal authorities which 
support the positions of the Court before reaching any legal 
conclusions about these important issues.
    I cannot overemphasize the importance of public trust and 
confidence in the courts. You may know, we have just completed 
a 3-day conference involving people from all over the United 
States interested in preserving the American system of justice 
and inspiring confidence in the justice system. Therefore, it 
gives me some concern that we are proceeding in a piecemeal and 
preliminary fashion, when we know that, given the process that 
GAO ordinarily follows, these findings that they report today 
could possibly change.
    For example, the deobligations which were obligations that 
the District took out when we were with the District, but it 
turns out will have to be put back because they are not things 
for which we are obligated, that is but one example.
    But briefly, for the record, I do want to say a few things 
about what has occurred, and I think you should be aware of 
them.
    As you already know, the Courts were faced with a funding 
shortfall of over $11 million in fiscal year 1998, resulting 
from two unanticipated obligations imposed upon the Courts by 
the Revitalization Act. This was an aberrant year. It was 
unusual. Nobody knew what was going to happen because the 
Courts had always been a part of the District of Columbia pie.

    [CLERK'S NOTE.--The House Committee on Appropriations was 
not involved in the National Capital Revitalization and Self-
Government Improvement Act of 1997 (Title XI of the Balanced 
budget Act of 1997, Public Law 105-33, approved August 5, 1997; 
111 STAT. 712-787). That Act, on the House side, was a product 
of the House Committee on Government Reform and Oversight 
(Subcommittee on the District of Columbia, chaired by 
Congressman Thomas M. Davis of Virginia). See ``clerk's note'' 
on page 435.]

    First there was $3 million in unanticipated costs resulting 
primarily from the increased costs of benefits to court 
employees by reason of their becoming Federal employees under 
the Revitalization Act for the purpose of those benefits. When 
we submitted our budget, we did not know that our employees 
were going to be receiving Federal benefits and that this would 
involve additional costs; therefore we submitted something that 
did not take that into account. And there were other items, 
such as the costs of the General Services Administration 
processing our payments through their GSA system. We had to pay 
for that. Thus, there were unanticipated costs of about $3 
million.

    [CLERK'S NOTE.--Regarding unanticipated costs referred to 
by Judge Wagner, the General Accounting Office states ``Anti-
Deficiency Act provisions constitute some of the fundamental 
financial management requirements for federal and District 
government activities subject to the congressional budget 
process. The act's purpose is to ensure that agencies or 
activities funded by annual appropriations manage their affairs 
so as not to exhaust their appropriations before the end of the 
fiscal year and require additional funding for their annual 
operations. OMB and we have stated that officers or employees 
of the federal government subject to the Anti-Deficiency Act 
may not incur obligations against anticipated receipts, 
including supplemental appropriations requested but not yet 
enacted, because such receipts may not be realized. For 
example, the Congress may not enact a supplemental 
appropriation in the amount requested by an agency. The 
official having administrative control of the appropriation is 
required to establish regulations to ensure compliance with the 
Anti-Deficiency Act and to identify the reasons for any 
obligation or expenditure exceeding an apportionment.''. (See 
page 11 (p. 552, this volume) of GAO report B-283119 
transmitted to Congress September 16, 1999 reprinted at the end 
of this hearing.)]

    Second, as you know, adult probation was transferred from 
the Courts to the Offender Supervision Trustee, and the 
adjustment was made removing $20 million from the Courts' 
budget to the Trustee's budget to fund the new agency, even 
though our experience, that is, the experience of the Courts, 
which had operated that function, and budgeted costs, indicated 
that adult probation had been operated for only $12 million.

    [CLERK'S NOTE.--See ``Clerk's Note'' on page 435, this 
volume.]

    Congressman Moran, you had expressed an interest in 
ascertaining whether or not and how that could happen, that to 
take one function and fund it, it would cost you $8 million 
more. It is our understanding, however, that is no longer a 
part of the audit.
    OMB, the Trustee and the Department of Justice have all 
agreed that too much money was transferred from the Courts to 
the Trustee in fiscal year 1998, although each came up with a 
different figure. And no one can be faulted for that, I guess, 
because there was no way to know. When you have a new agency, 
the costs are different than those for the former agency.
    The problem is that by taking away this money, it left us 
with functions for case processing which were not funded. 
Indeed, the Congress by its subsequent action, authorizing the 
transfer of funds to the Courts from the Trustee, also agreed 
that there was some overfunding. As you know, this occurred in 
August. We received the first part, without coming for 
congressional action, and the last part came late because the 
Congress recessed without enacting the transfer authorization. 
That is understandable as well. Other business goes on, and you 
can't always take action.

    [CLERK'S NOTE.--$1,700,000 for FY 1998 was transferred to 
the District of Columbia Courts for court operations by section 
507 of Public Law 105-245, approved October 7, 1998 (112 STAT. 
1857). The funds were transferred from Pretrial Services, 
Defense Services, Parole, Adult Probation and Offender 
Supervision Trustee at the request of the President's office of 
Management and Budget.]

    The Courts continue to believe that they can demonstrate 
that the new agency was given $8 million too much, stripping 
the Courts of funds needed for other essential case-processing 
functions. Thus, the appropriation for fiscal year 1998 
unintentionally created a built-in shortfall of over $11 
million. It was our understanding that the Congress sought, by 
bringing in the GAO, to verify the genesis of this shortfall. 
And indeed, everyone tried to help, including the Congress, the 
Trustee, the Justice Department. Everyone tried to make the 
adjustment, but unusual circumstances prevented this from 
occurring in a timely manner.

    [CLERK'S NOTE.--Committee staff repeatedly requested the 
Executive Officer of the Court to show where in budget 
justification material or hearing records or budget hearing 
statements for current or past years the Court discussed or 
showed a cost or budget of $12 million ($8 million below the 
$20 million transferred) for its `adult supervision' function. 
The Executive Officer, to this day, has not responded.]

    effort to circumvent anti-deficiency act by not reporting valid 
                              obligations

    What then about the pertinent considerations of statutes? 
In order to comply with the fiscal year 1998 appropriations and 
the Anti-Deficiency Act, the Courts were forced to consider a 
number of severe cost-cutting and budget-preserving measures. 
In addition to a $3 million reduction in discretionary spending 
and a request for a supplemental appropriation, the Courts 
included in their adjusted spending plan the possibility of 
utilizing a statutory exception to the Anti-Deficiency Act. 
That is what we thought we were doing.
    This exception has existed in every D.C. appropriation 
since 1976. It allowed the Courts to defer payments of certain 
court-appointed attorneys at the end of a fiscal year and then 
use the funds made available in the following fiscal year.

    [CLERK'S NOTE.--``See Clerk's Note'' at bottom of this 
page.]

    The reason this existed is simple. By Constitution, we have 
to provide attorneys for individuals, indigent individuals, in 
criminal cases. We have to appoint those attorneys, no matter 
what we have projected the cost to be. And there is no way of 
knowing what those costs will be precisely when a budget 
submission is made. So Congress, in its wisdom, saw fit, since 
1976, to allow items that were incurred in one year for these 
things to be paid in a subsequent year. Indeed, in this fiscal 
year, in 1999, the use of the statutory exception was plainly 
authorized and expressly accepted by Congress in the fiscal 
year 1999 appropriation.

    [CLERK'S NOTE.--See ``Clerk's Note'' at bottom of this 
page.]

    I would like to explain the reason for the exception as we 
see it.
    Operating under such a constitutional requirement to 
appoint counsel without the ability to predict when and how 
many claims will be submitted for services is a major handicap 
each year. Because of this, you have in your wisdom seen fit to 
allow us some flexibility. We have provided GAO with the 
statutory authority for the Courts' position. The statutory 
authority, we believe, provided a legitimate way for the Courts 
to deal with a difficult situation without violating the law. 
That was our goal.

    [CLERK'S NOTE.--Chief Judge Wagner's preceding statement is 
not supported by the hearing record, and in fact, appears to be 
in direct contravention to the specific purpose for which the 
language was requested by the Courts in their FY 1976 budget. 
Language in the FY 1976 DC Appropriations Act (PL 94-333; 90 
STAT. 787) states ``* * * That $2,895,000 of this appropriation 
(to remain available until expended) shall be available for 
obligations incurred in fiscal year 1975 and fiscal year 1976 
for the compensation and reimbursement of attorneys appointed 
under the District of Columbia Criminal Justice Act of 1974 * * 
*''. Judge Harold H. Greene, Chief Judge of the DC Superior 
Court, testified on December 9, 1975, that ``We have so far 
paid out $1,758,132 to attorneys and others in fiscal year 1975 
obligations. We expect 2,000 to 3,000 more vouchers to come in, 
Generally those vouchers may be requests that relate to the 
more complex and long, drawn-out cases * * *''. ``* * * we 
would be able to use part of the additional $1 million * * * to 
pay off some of the 1975 obligations * * *''. ``We believe 
that, because of the peculiarities of the system, where the 
obligation is incurred when the lawyer is appointed, but his 
bill doesn't come in until the case is over, it takes many 
months sometimes after the fiscal year is over until we know 
exactly how much actually needs to be paid.'' In addition, the 
Courts' printed justifications stated ``The proposed language 
will allow for the payment of fiscal year 1975 obligations 
which may exceed the amount already appropriated for fiscal 
year 1975 ($1,995,000) out of the amount requested in the 
fiscal year 1976 budget.'' (see pages 187, 188, 195, 199, 207 
and 222, part 2, FY 1976 hearings before House DC 
Appropriations Subcommittee.) There is absolutely nothing in 
the printed justifications or in the Courts' testimony to 
support the notion that the language was intended to allow the 
Courts to defer payments to certain court-appointed attorneys, 
or to allow the Courts to apply the unused funds derived from 
the deferred payments to pay for other Court functions. Clearly 
the language that was justified by the Courts and approved by 
the Congress was intended to allow the Courts to use current 
year appropriations to pay prior year obligations received in 
the current year; not to defer current year obligations and use 
the funds gained from the deferral for other Court functions. 
It appears the Courts have taken language requested for a 
particular situation and used it for situations contrary to the 
justified purpose.]

    Unfortunately, we were left, because of an unusual set of 
circumstances, with having to defer, not for months and months, 
but rather from towards the end of July until we could get 
enough money to pay the attorneys, first by the transfer of the 
Trustee of the first $1.1 million through a grant process, and 
then by congressional action authorizing the Trustee to 
transfer an additional $1.7 million, all of which the Trustee 
agreed was an overpayment.
    I think if you look at, and if you examine the facts as 
they unfolded during that year, you will find, first, that no 
one is to blame for this and no one is pointing the finger. 
There was no way to predict, having submitted a budget under 
one set of circumstances and having received it under another, 
what was going to happen, number one. Number two, I think you 
will find that the Court acted responsibly and within the 
existing statutory authority in using the only vehicle 
available to it until the situation could be remedied by 
congressional act. It was remedied by congressional act, even 
though some of those acts came a little bit too late to avoid 
the unfortunate situation with our lawyers.
    I realize you are reading that now, but we have and would 
like to have an opportunity to submit a detailed memorandum of 
law addressing this important issue. We think it is important 
from the standpoint of, number one, explaining to you what 
happened and for you to examine in connection with your 
responsibility. Number two, and perhaps foremost, in 
recognizing what is more important than justice. It is 
important for us to assure that the public maintains confidence 
in the court system. Unless these reviews are conducted in a 
manner that affords a full and complete picture so that the 
integrity of the process can be preserved, I think that we may 
undermine what we are trying to achieve. I think we have a 
common goal here.
    I appreciate this opportunity to address it, and I 
apologize for not being able to address it more fully, but 
given the time constraints of just finding out what was going 
to be said, it became somewhat difficult to do that, 
particularly since I had to prepare my testimony for the 
budget.
    Mr. Istook. I appreciate that, Judge Wagner.
    Judge Hamilton.

                 chief judge hamilton's opening remarks

    Judge Hamilton. Yes. If I might say, Mr. Chairman, we were 
in a very, very difficult situation. In 1998, on the one hand, 
the Superior Court is charged with processing approximately 
160,000 cases, and in order to process those cases, it takes an 
awful lot of work. It takes an awful lot of staff.
    The fact of the matter is, we were underfunded for fiscal 
year 1998. Trying to deal with the processing of 160,000 cases 
on the one hand, and meet all of our obligations on the other 
hand was an almost impossible task. The fact of the matter is 
we were able to manage through those difficulties in such a way 
that the case processing, the administration of justice, was 
not impaired one iota. We processed the lockups that came to 
our court every day, we processed the wills that came there for 
probate, we processed the children who came there for child 
support. The one thing we were unable to do was to pay the 
lawyers as timely as we would have liked to have paid them. The 
fact of the matter is, however, no matter what you say, no 
matter how you cut it, the bottom line is we did not have the 
money with which to pay them.
    Now, people have harkened back to the pay raise that our 
employees were given. The fact of the matter is that was 
included in the budget. The budget, the overall budget that was 
approved, I believe, for some $123 million included the pay 
raise that was given to the employees. It was understood all 
along that the employees would be given a pay raise.
    In addition to that, it was understood that our budget had 
been cut too much. Everybody understood that. The only question 
was by how much? And everyone, as Chief Judge Wagner said, was 
busy trying to ascertain precisely how much too much our budget 
had been cut. The GAO, even today, has not proffered an amount 
by which, based upon their audit as an independent agency, as 
to exactly how much our budget was excessively cut. But 
everyone knew that it had been cut too much. Everyone knew 
that; the Trustee, OMB, the Congress and everyone else knew 
that the budget had been cut too much, and everyone was working 
to rectify that situation.

    [CLERK'S NOTE.--Chief Judge Hamilton's statement ``Everyone 
knew that; the Trustee; OMB; the Congress and everyone else 
knew that the budget had been cut too much * * *'', IS NOT 
ACCURATE as it relates to Congress. Committee staff repeatedly 
requested the Executive Officer of the Court to show where, in 
budget justification material, or in hearing records, or in 
budget hearing statements for current or past years, the Court 
discussed or showed a cost or budget of $12 million ($8 million 
below the $20 million transferred) for its `adult supervision' 
function. The Executive Officer, to this day, has not 
responded. Chief Judge Hamilton's inclusion of Congress in his 
statement that ``everyone else knew that the budget had been 
cut too much'' is inaccurate, is misleading and is not factual 
as it relates to the Committee. The Committee did not ``cut'' 
the Courts budget; the Committee approved the amounts 
recommended by the President's Office of Management and Budget 
(OMB) which were based on the Revitalization Act (title XI of 
PL 105-33). The Committee on Appropriations was not involved in 
the Revitalization Act which was a product, on the House side, 
of the House Committee on Government Reform and Oversight 
Committee (Subcommittee on the District of Columbia, chaired by 
Congressman Thomas M. Davis of Virginia). If the Committee on 
Appropriations ``knew that the budget had been cut too much'', 
the Committee's recommendations would have reflected an 
appropriate adjustment to the amounts recommended by OMB.]

    The problem is the relief that we finally obtained in that 
regard came after the end of the fiscal year, but having come 
when it did, it came with the recognition of the fact that the 
budget had been cut too much in evaluating the cost of the 
operation of adult probation.
    Now, we are not saying that that was an easy determination 
to make. It was a very difficult determination to make, and 
that is why it was not done accurately, and no one is at fault 
for not having accurately determined that value. But the fact 
of the matter is it was not accurately determined, and it still 
today has not been determined byindependent agencies such as 
the GAO.
    The Court has always maintained it is one figure, the OMB 
has maintained it was another figure, and other people have 
other figures, but we have yet to have an independent agency 
determine the exact amount by which that budget was overcut, 
and that would be of a great benefit to everyone who has been 
involved in this controversy.
    Thank you, Mr. Chairman.
    Mr. Istook. Thank you, Judge.

          prepared statement of chief judge eugene n. hamilton

    [The prepared statement of Chief Judge Hamilton follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

           recognition of ulysses hammond, executive officer

    Mr. Istook. Mr. Hammond, I believe you had the oath, and we 
were expecting to hear from you. Do you wish to take a place at 
the table?
    Mr. Hammond. No, Mr. Chairman, I will defer to the Joint 
Committee.
    Mr. Istook. All right. You did receive the oath because we 
may get back to you.

                       pay raise approved in 1997

    Judge Wagner. May I just say, as far as the pay raise was 
concerned, that was approved by the Joint Committee in '97, I 
believe, and at that time we thought that there would be 
sufficient funds to cover it. We also thought that a transfer--
that an adjustment could be made between the agencies without 
the need for congressional action. So did some other people in 
the administration. That turned out not to be the case, but it 
was too late for us to do anything about it, and we had given 
the pay raise.
    But you need to recognize that when we gave that pay raise, 
our employees, I believe, were about 18 percent behind everyone 
else. And we didn't give 18 percent, we only gave like 7 
percent. So they are still way behind everyone else.
    At the same time, we had other employees who were doing a 
transition and getting reports that they were going to get the 
full raise. We had to address a morale problem, and we continue 
to address that morale problem. There is really no reason why 
employees in the courts should receive a sum so much less than 
other employees doing comparable jobs in the Federal courts. 
The employees in the D.C. courts are very professional, and we 
need to keep them if we want to do a professional job. It is a 
big job. I think that it is kind of unfair how we have kept 
them so far behind in pay.
    But in any event, that is not to say anything except we 
thought we had enough funds covered both by the budget and 
certainly by what was going to come later. Maybe in hindsight 
we shouldn't have done that. Maybe they shouldn't have received 
it, but they would have been 18 percent behind everybody else.
    Also in hindsight, maybe we should have closed the courts, 
which was the option, with a $11 million hole in the budget. 
Maybe we should have. We considered it, but other people 
persuaded us that we really shouldn't do that. It is too 
important to keep the courts functioning. You can't understand 
the devastating impact it has when you close the courts down 
and you have cases that were scheduled to go that can't go, and 
you have to go back in to fit in the queue with other cases. It 
is just an unreasonable option.

           chairman istook--courts need to be above reproach

    Mr. Istook. I appreciate your testimony, and hopefully with 
some of the exchanges that we are about to enter into, we can 
help develop an understanding of things a bit better.
    Judge Wagner, I certainly agree with what you mentioned 
about the significance of the issue and the necessity for faith 
and confidence in the court system. The courts, which are 
charged with enforcing the law, if they are not viewed by the 
public as following the law themselves, then we terribly 
undercut the faith and confidence in our entire system of 
justice.
    Judge Wagner. Yes, we do.
    Mr. Istook. So I think the common term of phrase is being 
like Caesar's wife, is the old historical adage, to be above 
reproach in everything that is done.
    Judge Wagner. I agree.
    Mr. Istook. Certainly when you indicate that, as you said, 
we considered closing the courts, that certainly indicates to 
me that there was a recognition of how severe the legal issue 
was as to whether you had the authority to continue obligating 
funds or not, because otherwise you wouldn't have considered a 
measure such as closing the courts if you didn't know that 
there was a severe question.
    I must note when people say, well, we expected Congress to 
do this, Congress is an institution. No one person can speak 
for the Congress of the United States. Congress can only act 
collectively by the will of the majority of its Members. Any 
expectation that Congress would do this or Congress would do 
that cannot be relying upon any one person or for that matter 
any one committee's representation of what may be occurring.
    Judge Wagner. We really didn't look to the Congress until 
we realized--see, we hadn't dealt with the Federal Government 
before. We thought they could make the adjustment themselves, 
and it turned out that could not be done.

                       courts ignored omb advice

    Mr. Istook. I understand there is some uncertainty in the 
situation. I notice the GAO report mentions there was an 
exchange of correspondence dating back to at least April of 
1998 with OMB, halfway within the fiscal year, advising the 
Courts that obligations were being incurred at the rate that 
would create a deficiency.

    [CLERK'S NOTE.--See p. 495 for copy of OMB letter.]
    So certainly I think that everyone is sensitive to the 
needs of the Courts to take care of the personnel in the 
courts, but also we understand that we must insist that the 
Courts, like every other agency of government, follow the same 
law and the accountants.

                          time line of events

    One thing that I think would be helpful to receive both 
from the Courts and the GAO would frankly be a time line saying 
at this date, this was recognized, and this was communicated. 
There is some reference to a couple of items in that in the GAO 
report, and it is not fully fleshed out to establish those 
things. I think that would be useful for us.

    [CLERK'S NOTE.--See pages 590-596 for time line report 
referred to.]

   identifying court officlal(s) responsible for anti-deficiency act 
                               violation

    I also would like to know, and I think we need as clear an 
answer as possible, since the Courts are bound by the Anti-
Deficiency Act like any other government agency, who bears the 
responsibility for making sure that the Courts comply with the 
Anti-Deficiency Act? I would appreciate the answer from each of 
you so we can understand how you see that. Judge Wagner, Judge 
Hamilton, Mr. Hammond, who bears that responsibility?
    Judge Wagner. If you have a copy of Title 11, it might be 
helpful. I think you need to understand we are structured with 
a fiscal officer who by statute is bonded and responsible for 
taking care of the fiscal accounts of the Court, who reports to 
the Executive Officer. The Executive Officer is like the CEO of 
a corporation in a sense in that he has responsibilities that 
are spelled out in the statute related to accounts and 
budgeting and personnel and day-to-day administrative 
operations.
    The joint committee is a policy-making body for the 
District of Columbia Courts, but because these people act 
subject to us, then, of course, we would be responsible.
    Mr. Istook. I am trying to get a simple answer to the 
question, and maybe you are telling me there is not a simple 
answer, but I want a simple answer to the question of who--
where does the buck stop? Who has the responsibility to make 
sure the Courts of the District of Columbia do not overspend 
their budget?
    Judge Wagner. I think it is a shared responsibility.
    Mr. Istook. And among whom?
    Judge Wagner. I think the shared responsibility by statute 
would have to be in the joint committee, the Fiscal Officer and 
the Executive Officer of the courts.
    Mr. Istook. Who are those persons?
    Judge Wagner. The joint committee, four members are 
present. One member is not present.
    Mr. Istook. Name them for the record. I would appreciate 
that.
    Judge Wagner. The Chair of the joint committee, I chair the 
joint committee. Chief Judge Hamilton is a member by statue. 
Two members--and it is in the budget testimony, by the way--two 
members are appointed, are voted on by their respective courts, 
and the Executive Officer is selected by the joint committee by 
statute.
    Mr. Istook. So I am still trying to get to understand that, 
I know the names of the persons you are describing by office.
    Judge Wagner. Mr. Ulysses Hammond is the Executive Officer 
and has been since 1990.
    Mr. Hammond. 1990.
    Mr. Istook. When you named the joint commission----
    Judge Wagner. The Fiscal Officer is Mr. John Schulteis.
    Mr. Istook. The other two members you did not name?
    Judge Wagner. Judge Geoffrey Alprin, Judge Michael Farrell, 
and Judge Nan Shuker, who is not present, who is trying a case 
and could not be here today.
    Mr. Istook. Sure. Judge Hamilton, I want to pose the same 
question to you. Do you concur with Judge Wagner's assessment 
of who bears the responsibility, the legal responsibilities, 
for assuring that the District of Columbia Courts operate 
within their budget?
    Judge Hamilton. Well, I think it is a shared responsibility 
among the individuals that Chief Judge Wagner has mentioned, 
but when it comes down to obligating the Court with respect to 
funds for representation, that is a situation which arises out 
of the individual appointments by each individual judge as that 
situation arises. Of course, as has been pointed out by Chief 
Judge Wagner, that is a constitutional obligation which 
everybody bears a responsibility to fulfill.
    Mr. Istook. Getting the verses right. Would you agree, 
though, that if, for example, you have, as you see, a 
constitutional requirement that you must fund the defenders for 
the indigents, you must have the court-appointed attorneys, and 
you must fund them, would not that create an obligation on the 
part of the people in charge of the budget to make adjustments 
elsewhere in the budget, rather than let a constitutionally-
mandated funding not occur?
    Judge Hamilton. Well, that is true, but that sometimes is a 
whole lot easier said than actually done, as Chief Judge Wagner 
has pointed out, perhaps in some situations the choice is 
between appointing counsel and incurring an obligation for the 
appointment of counsel on the one hand and shutting down the 
court on the other hand.
    Mr. Istook. There were no other options? There was nothing 
else in capital budgeting, there was nothing else in any 
expenditure, there was nothing in utilities, in overhead?
    Judge Hamilton. No.
    Mr. Istook. You are saying there was no other option 
whatsoever?
    Judge Hamilton. No, there wasn't. The gap was so large, the 
gap was so large that it turned out to be in the vicinity of 
approximately $4 to $5 million, between the funds we had and 
the funds that were obligated. The largest ticket item in the 
Court is CJA, indigent representation. By far that is the 
largest ticket item. Now, in order to make up that kind of 
shortfall somewhere else, we would have had to shut the Court 
down for weeks.
    Mr. Istook. Doesn't that all depend upon when you became 
aware there was an impending shortfall and when you became 
dedicated to taking action? For example, if you wait until 2 
months are left in the fiscal year, your options are very 
limited. If you take action with 6 months or 8 months 
remaining, you have a lot more options.
    Judge Hamilton. Well, it would only affect the period of 
time over which the reduction in operation would occur. It 
would not affect the total reduction in the operation.
    In other words, we were given a total number of days that 
we would have to cut back our obligation. The only difference 
it would make is whether you took all of those days in August, 
whether you took them all in July, or whether you spread them 
out over a longer period of time. The fact of the matter is in 
processing cases, the impact is virtually the same. If you shut 
down for 1 day a week for a long period of time, those cases 
begin to back up on you.
    Mr. Istook. Let me finish this----
    Judge Wagner. May I say something?
    Mr. Istook. I need to finish this line.
    Judge Wagner. It is related to that line.
    Mr. Istook. Let me come back to that in a moment, because I 
want to make sure we have established--Mr. Hammond, do you 
agree with what Judge Wagner testified as to where the 
responsibility lies for assuring the District Courts operate 
within their budget?
    Mr. Hammond. Yes.
    Judge Wagner. Incidentally, I wanted to cite the code 
provision, 11 D.C. Code 1701, et sequitur. You need to look at 
that. It is asking for a legal conclusion as a fact is a 
dangerous thing. If you look there, you will see specifically 
itemized what each person is supposed to do. But it sounds like 
you think we did not do anything else. In fact, we had to save 
some money by cutting back in many areas, having hiring freezes 
and freezes on travel and other types of measures just to make 
up the amount we did make up.
    Mr. Istook. When did those measures begin?
    Judge Wagner. Excuse me?
    Mr. Istook. When did those measures begin?
    Mr. Hammond. Those began in November.
    Judge Wagner. November 1997, according to Mr. Hammond, they 
began, so that there were savings effected.
    Judge Hamilton. That is small in relationship to the 
shortfall. The only way we could make up that type of shortfall 
is a substantial reduction in operation, and thereby 
substantially reduce the payroll to the employees or defer the 
payment of fees to counsel.
    Mr. Istook. Sure. And the pay raises were effective when?
    Judge Wagner. We approved them in November, and I believe 
they were effective the beginning of December.
    Mr. Hammond. December 7th.
    Mr. Istook. I need to make sure that other Members have a 
chance for questioning. I have taken too much time here. I 
yield to Mr. Moran.
    Mr. Moran. Thank you, Mr. Chairman. I will just follow up 
on that.

             courts used funds for discretionary pay raise

    We have the facts on the table here, but one fact is that 
you were under a legal obligation to compensate the court-
appointed attorneys. Another fact is that you made a decision 
to provide a pay raise which was volitional on your part. It 
was not a legal obligation. You have stated that pay raises had 
been deferred for a number of years.
    I have no objection to your granting a pay raise to the 
employees. It seems to me that is appropriate. The problem is 
that you did not have a legal obligation to do that, while you 
had a legal obligation to reimburse the court-appointed 
attorneys. You chose to do the one which was at your discretion 
at the expense of the obligation to pay the court-appointed 
attorneys, it would appear. That is what I want you to clarify 
for the record, because had you not granted the pay raise, it 
seems to me you would have been able to meet your legal 
obligation to compensate the court-appointed attorneys in a 
timely manner.
    Judge Wagner. First of all, the pay raise cost, I will have 
to get somebody----
    Mr. Hammond. 2.8.
    Judge Wagner. According to Mr. Hammond, $2.8 million. $2.8 
million will not cover $5 million, as you can see. So there was 
no way that was going to do the deal. Of course, hindsight is a 
beast you can ride anywhere. I think the Joint Committee acted 
in good faith in November upon the recommendation of our fiscal 
people that there was sufficient money available to implement a 
pay raise that would cost what this one did; that we would 
still be able to operate within budget, as we have in all the 
years past; that we acted on that and took that step.
    Well, of course, after December, it became obvious that 
maybe we were going to have a problem if we did not get an 
adjustment there, if we did not get the money back. No one was 
preferring one over the other. It is the last thing in the 
world we wanted to do was to defer the attorneys. We appreciate 
fully what they do for the Court at a very low cost. Indeed, we 
had asked for an increase in the budget to increase their pay 
because we feel that they are very much underpaid. But, as I 
said, it was one of those situations where very late it looked 
like an adjustment could not be made in time to save the day.
    You know, but for circumstances, all of that money would 
have come into the budget that came into the budget in August 
and again in October before the end of the fiscal year, and we 
would have been fine. But never was there a preference, would 
you agree, that we were preferring employees to lawyers. No, we 
acted in good faith, thinking we had sufficient funds to cover 
it. That may be a mistake.
    Mr. Moran. I appreciate your response on the record.

                     anti-deficiency act violation

    If I might, Mr. Chairman, I would like to ask a question 
about this Anti-Deficiency Act because it is a serious charge. 
It is an understandable situation, but the explanation that 
since Congress authorized the Courts to use fiscal '99 
appropriations to cover the $5 million shortfall in fiscal 1998 
expenditures, the Courts did not violate the Anti-Deficiency 
Act, I think by that logic what would prohibit you or any 
Federal agency from overspending its fiscal '99 budget on the 
argument that Congress could or will provide funds in future 
years to cover any shortfall in the current year?
    We need a brake on the ability to do that, and there are 
any number of situations where one could say, well, I have got 
to pay this, no matter what. I am under a legal obligation. So 
the appropriation cap is really not an impediment to meeting 
those financial obligations. The obligation is to control the 
budget so that you have adequate resources to meet your 
obligations within a time line as well as expenditure level.
    I think we should give GAO an opportunity to respond to the 
response that Chief Judge Wagner has given to the GAO response.
    Judge Wagner. What you just gave is not my complete 
response.
    Mr. Moran. I know you don't agree with what I just said.
    Judge Wagner. I agree with what you said, as far as it 
goes, except you didn't go far enough in explaining what our 
position is. So to the extent they are going to be responding 
to something that is not our position, that is fine, but I 
would like to state what our position is.
    Mr. Moran. They took very clear notes on what your position 
was, Chief Judge, and I think it is your position they will be 
responding to, rather than my observations.
    So if I may, Mr. Chairman, I would like to ask Ms. Jarmon 
perhaps and her colleagues if they would respond to the 
explanation offered by the Court as to the suggestion that this 
is, in fact, a violation of the Anti-Deficiency Act.
    Judge Wagner. I don't know if it is potential or a fact. I 
thought they said potential.
    Mr. Moran. As to the suggestion this might be a violation 
of the Anti-Deficiency Act.

               gao response to anti-deficiency violation

    Ms. Jarmon. In our report we mentioned that if the entire 
overobligation had been related to the deferred attorney fees, 
that then it would be something we would look at differently. 
But we believe from looking at the records that the entire 
obligation was a potential overobligation of $5 million, wasn't 
solely because of the deferred attorney fees.
    There were three reasons we noted related to that. One was 
that the amounts paid, according to the Courts' records, for 
deferred attorneys' fees in fiscal year 1998 was similar to 
what was paid in 1997 and similar to the amount estimated for 
1998, about $31 million. The second, we would like to note the 
spending throughout this year, 1998, was more than what the 
appropriation was. We felt like the shortfall was obvious early 
in the fiscal year, in October of 1997. Then, like Chief Judge 
Wagner has mentioned, the discretionary pay raise which became 
effective in December 1997 for fiscal year 1998, about $2.8 
million, at that time the shortfall was known. For those three 
reasons, we feel like there is still a potential overobligation 
of $5 million. That would be a violation of the Anti-Deficiency 
Act.
    Mr. Moran. Given the way you explain it, the context, it 
appears to be a different situation than what was addressed by 
Chief Judge Wagner in that your explanation, as I understand 
it, Chief Judge----
    Judge Wagner. What do you mean by that?
    Mr. Moran. I am going to explain what I mean. As I 
understand it, you are saying that because you had an 
obligation to, for example, pay the court-appointed attorneys' 
fees, to process whatever cases came before the court, that you 
would have to spend that money. But what we are understanding 
is that early on, at the very beginning of the fiscal year, 
there was a realization that there was a shortfall. You then 
made a conscious decision within yourdiscretion to exacerbate 
that shortfall by granting the pay raise and to continue on a spending 
level that was clearly in excess of the amount that was available 
through appropriations.
    That is my understanding, my interpretation, of what Ms. 
Jarmon just said more articulately, but that seems to be a 
different situation than what you described.
    I don't want to be argumentative. You disagree?
    Judge Wagner. I don't want to be argumentative either, but 
I think one thing is we are trying to interpret a statute and a 
factual background without all of the facts and without all of 
the legal positions. Those kinds of things are probably best 
left to lawyers putting this together.

          courts failed to acknowledge that funds were limited

    But just from the standpoint of the raise factually, we 
received a recommendation for the pay raise from our staff, 
which we were assured we could cover. We believed that, and we 
voted on that, and it was passed by the Joint Committee. That 
can't change.
    But the reality is we did not realize that we were in a 
dangerous posture at that time. We just did not realize it was 
a dangerous posture for a number of reasons. It never occurred 
to us that, contrary to all assurances that we received, that 
there could not be an adjustment between the two agencies. And 
we didn't even rely on that for the pay raise. As far as I 
know, the pay raise had nothing to do with the adjustment. The 
pay raise had to do with your looking at your budget, somebody 
recommending to you that these numbers will support these 
numbers, and we approved the pay raise. That was a long way 
before anything occurred with the lawyers.
    I do think--I wanted to respond to one thing you had said 
regarding this obligation business. As you know, we delayed 
payments because we did not want to spend out money that would 
violate the Anti-Deficiency Act, and it wasn't just the 1999 
Act upon which we relied. We also relied upon assurances by--
well, I don't want to say by whom, but we relied upon our 
assurances that since 1976, this statute had been set up in a 
certain way, and it was good common sense that the statute is 
set up in a certain way, so that that was the only account that 
we could defer. And we deferred the attorney's fees to avoid 
violating the Anti-Deficiency Act.

    [CLERK'S NOTE.--Regarding the deferral of attorney fees, 
the ``deferral'' of any obligation does not eliminate or void 
the obligation; the obligation has already been incurred and is 
not dependent on whether payment of the obligation occurs or is 
deferred. A violation of the Anti-Deficiency Act (31 U.S.C. 
1341) occurs at the time of the overobligation; not at the time 
of payment. Chief Judge Wagner's preceding statement regarding 
``* * * assurances * * * since 1976 * * *'' is not supported by 
the hearing record, and in fact, appears to be in direct 
contravention to the specific purpose for which the language 
was requested by the Courts in their FY 1976 budget. Language 
in the FY 1976 DC Appropriations Act (PL 94-333; 90 STAT. 787) 
states ``* * * That $2,895,000 of this appropriation (to remain 
available until expended) shall be available for obligations 
incurred in fiscal year 1975 and fiscal year 1976 for the 
compensation and reimbursement of attorneys appointed under the 
District of Columbia Criminal Justice Act of 1974 * * *''. 
Judge Harold Greene, Chief Judge of the DC Superior Court, 
testified on December 9, 1975, that ``We have so far paid out 
$1,758,132 to attorneys and others in fiscal year 1975 
obligations. We expect 2,000 to 3,000 more vouchers to come in. 
Generally those vouchers may be requests that relate to the 
more complex and long, drawn-out cases * * *''. ``* * * we 
would be able to use part of the additional $1 million * * * to 
pay off some of the 1975 obligations * * *''. ``We believe 
that, because of the peculiarities of the system, where the 
obligation is incurred when the lawyer is appointed, but his 
bill doesn't come in until the case is over, it takes many 
months, sometimes after the fiscal year is over until we know 
exactly how must actually needs to be paid.'' In addition, the 
Courts' printed justifications state ``The proposed language 
will allow for the payment of fiscal year 1975 obligations 
which may exceed the amount already appropriated for fiscal 
year 1975 ($1,995,000) out of the amount requested in the 
fiscal year 1976 budget.'' (see pages 187, 188, 195, 199, 207 
and 222, part 2, FY 1976 hearings before House DC 
Appropriations Subcommittee.) There is absolutely nothing in 
the printed justifications or in the Courts' testimony to 
support the notion that the language carried in the FY 1976 and 
subsequent DC appropriations Acts was intended to allow the 
Courts to defer payments to court-appointed attorney's or to 
allow the Courts to apply the unused funds derived from the 
deferred payments to pay for other Court functions. Clearly the 
language that was justified by the Courts and approved by the 
Congress was intended to allow the Courts to use current-year 
appropriations to pay prior year obligations for which the 
vouchers were received by the Court in the current year; not to 
defer current year obligations and use the funds gained from 
the deferral for other Court functions. It appears the Courts 
have taken language requested for a particular situation and 
used it for situations contrary to the justified purpose.]

    Judge Wagner. I don't know how the Federal courts do this, 
but I think we probably should look and see, because I am sure 
they run into the same problem with this kind of situation.
    Mr. Moran. I have other questions on the fiscal year 2000 
budget, but I will wait for another round.
    Mr. Istook. Right. We obviously have been a little liberal 
on the 5-minute rule.
    Judge Wagner. I wanted to know if my colleagues wanted to 
say anything.
    Mr. Istook. Let's make sure the Committee Members have a 
chance to explore things. If you want to defer to them, you can 
do that.
    Mr. Aderholt.
    Mr. Aderholt. I have no questions.
    Mr. Istook. All right, back in my lap. That is fine.

           judges must accept consequences of their mistakes

    You know, I think as we look at this, judges make mistakes, 
too, just like the rest of us. Judges have to accept the 
consequences of those mistakes.
    Judge Wagner. Oh, absolutely.

        courts spending plan raises questions (see pp. 460-461)

    Mr. Istook. The concern here is not just looking back, but 
also there is a question of where are we now? Is there any 
reason to anticipate, and perhaps, Ms. Jarmon, I don't know to 
what extent you may have looked at this issue. But looking at 
the current situations and projecting forward, let me ask you, 
and if you have not looked at this, we may need to ask you to 
do so. Is there any reason to anticipate that there will be 
further problems during the current fiscal year regarding the 
court system coming in within budget?
    Ms. Jarmon. We did receive a draft spending plan from the 
Courts for fiscal year 1999, which does show that there is a 
spending plan that matches the appropriation received in '99 of 
$121 million. We were a little concerned when the spending plan 
does show that several months toward the end of the fiscal 
year, the amounts for the court-appointed attorneys are 
expected to come from refunds andreimbursements. I am not sure 
if the Chief Judge would elaborate on what that is. On the plan it 
shows it is supposed to come from refunds and reimbursements to be 
received in the fiscal year.
    Mr. Istook. Can you tell us during which months of the 
fiscal year you are speaking and how much those refunds and 
reimbursements are?
    Ms. Jarmon. I will let Steve Haughton elaborate on that.
    Mr. Haughton. Based on the spending plan, which includes 
actual costs through February of 1999 and projections for the 
remainder of the year, the spending plan identifies 121 
million, based upon $31 million being budgeted for the CCAN and 
CJA attorneys.
    However, it has raised a couple of red flags for us, 
because in the conference report for the '99 appropriation, it 
specifically identified that $31 million, $31.9 million, was 
supposed to be roped off for CJA and CCAN. In addition to that, 
other funds from that appropriation were supposed to be used 
for the deferred '98 amounts that would carry forward to '99. 
So based upon that, we were expecting to see a budgeted amount 
of either $36 million for CJA and CCAN, or having the $4 
million that was deferred and used to pay for '98 obligations 
removed from the total budget to show $117 million available 
for '99. We didn't see that.
    What we did see were asterisks explaining that basically 
from June through September CCAN payments and for the middle of 
August the CJA payments would need to be funded through either 
reimbursements, refunds or reprogramming. We had basically just 
spoken with the Fiscal Officer to try to get additional 
information. We didn't know exactly what refunds or 
reimbursements were expected to cover or to provide the 
additional funds necessary to pay those indigent services for 
the remainder of the year.
    Ms. Jarmon. So the answer to your question, it starts in 
July or August, according to the courts spending plan.
    Mr. Istook. Let me make sure I understand correctly. First 
let me ask, and give me the different figures, which was it 
that was June to September, and which was August to September?
    Mr. Haughton. The CCAN program, which is Counsel for Child 
Abuse and Neglect program.
    Mr. Istook. That was June.
    Ms. Jarmon. That is correct. And CJA, midway through August 
and September, the Criminal Justice Act program.
    Mr. Istook. And the total amount of those funds that they 
project will be going to legal defense costs but coming from 
reimbursements, refunds and reprogramming?
    Mr. Haughton. Expected.
    Mr. Istook. Yes, anticipated to come from those 
reimbursements and so forth, what is the dollar amount of 
those?
    Mr. Haughton. It is estimated in the spending plan $4.1 
million to $5.1 million.
    Mr. Istook. Okay. So I want to make sure I understand 
correctly what you are saying. Of their plan to pay current-
year indigent defense costs, which is approximately $31 million 
overall, during the latter part of the year, they project that 
$4 to $5 million of it must come from the cash flow that will 
come from reimbursements, refunds and reprogramming as opposed 
to being already guaranteed from appropriated funds?
    Mr. Haughton. Correct.

               fy 1998 spending plan showed overspending

    Mr. Istook. Okay. And do you know if that is consistent 
with how they have mapped out their spending plans in prior 
years?
    Mr. Haughton. This is a little different from the spending 
plans which we had seen in the prior years. Last year, in 
fiscal year '98 up through April, their spending plan cost 
projections were at a level that was in excess of the funds 
that were actually available, as Ms. Jarmon had mentioned, and 
it wasn't until that time when the Courts had made a 
determination that they would consider deferral of CJA and CCAN 
payments for the last 3 months of the year that they went back 
to the spending plan and reduced the amounts that they had 
originally estimated for the CJA and CCAN programs for 1998.

                  amount of prior year reimbursements

    Mr. Istook. Do you know what is the total amount of 
projected reimbursements, refunds and reprogrammings for the 
entirety of FY '99 and do you know whether, if you take a 
comparable period, whether it be June to September of last year 
or of any prior year, there has typically been a flow of $4 to 
5 million available from those categories? Do you have that 
information?
    Mr. Haughton. We don't have any information for fiscal year 
1999, but in '98 and the prior years, refunds were in the ball 
park of $300,000 to $500,000.
    Mr. Istook. That is a full year?
    Mr. Haughton. That is correct.
    Mr. Istook. Refunds, $300,000 to $500,000.
    Mr. Haughton. Last year, '98, was the first year they had 
reimbursements, which came from the Court Services Trustee for 
the adult probation program. That was a 1-year item. So we are 
not--I don't expect that there will be any reimbursement for 
'99 from that. In '98 it was approximately $7.8 million.
    Mr. Istook. It would sound like most of that would depend 
upon reprogramming. Do you have any idea what reprogramming 
that would be?
    Mr. Haughton. We are not aware of that.
    Mr. Istook. Thank you very much.

 courts relying on reimbursements to pay for indigent defense programs

    Let me ask, can you flesh out what the gentleman was 
testifying to regarding whether, in order to meet the legal 
defense system needs during the current fiscal year, you are 
relying upon reimbursements, refunds and reprogrammings?
    Judge Wagner. I have to defer to the Executive Officer on 
that. Unfortunately our Fiscal Officer couldn't be here. I 
don't know if our Executive Officer is prepared to respond to 
that or not.
    Mr. Hammond. We are depending upon a combination of both 
reimbursements as well as the appropriation. That is part of 
the entire spending revenue for the Courts. We usually project 
very conservatively with respect to those reimbursements. We 
have had very, very good results in past years in those.
    Mr. Istook. First, is it correct for the current fiscal 
year, in order to be able to pay the incurred legal defense 
costs out of FY '99 dollars, that in order to do so, you are 
relying in the latter part of the year on approximately $4 to 
$5 million from reimbursements, refunds and reprogramming?
    Mr. Hammond. Yes, but not just in the latter part of the 
year. We will be relying on that level of revenue coming in 
throughout the year to cover those costs.
    Mr. Istook. Can you tell us how much of that comes from 
reimbursements, how much from refunds and how much from 
reprogramming?
    Mr. Hammond. Most all from reimbursements.
    Mr. Istook. So reimbursements----
    Mr. Hammond. No reprogrammings. Those reimbursements are 
primarily the reimbursements from our Title IV(E), Title IV(D) 
programs. Those are the primary reimbursements that we receive.
    Mr. Istook. So you are saying you are expecting $4 to $5 
million worth of reimbursements. Flesh out for me what programs 
you are describing from which you expect to receive 
reimbursements.
    Mr. Hammond. These are reimbursements primarily from the 
child support program, of which only costs the District roughly 
about--I am sorry, the Federal government picks up 66 percent 
of the cost of running the child support program. We are 
responsible for the collections area for that program, as well 
as what we call the IV(E) program, which is the foster care 
payments as well. Foster care processing, I am sorry; foster 
care, the processing of those cases.

             reimbursements--child support and foster care

    Mr. Istook. How much of that is from the child support and 
how much from the foster care?
    Mr. Hammond. I will have to provide you with that, Mr. 
Chairman.
    Mr. Istook. Sure.
    [The information follows:]

                             REIMBURSEMENTS
------------------------------------------------------------------------
                                                             Estimated
                                          Actual  FY1998      FY1999
------------------------------------------------------------------------
Child Support Enforcement IV-D..........      $1,995,332      $2,250,000
Foster Care/Child Abuse/Neglect IV-E....         532,965         550,000
                                         -------------------------------
        Total...........................       2,528,297       2,800,000
------------------------------------------------------------------------

             comparison of reimbursements with prior years

    Mr. Istook. Let me check something here. Let me see if I 
can find this. I know in some of the material you provided to 
us, there is some information about child support 
reimbursements. I am not sure I saw that. This is a greater 
amount than past years, correct? Is this a significantly 
greater amount for this reimbursement than the child support 
and the other program compared to prior years?
    Mr. Hammond. This is basically consistent with what we have 
had in past years.
    Mr. Istook. You are saying this is not an anomaly, as he 
suggested, but this has been consistent with how it has been in 
past years?
    Mr. Hammond. Yes. We also have a reimbursement from the 
offender supervision agency as well. We are still taking some 
of the costs for the operation of that particular agency as 
well. So there will be a portion of this that will come in from 
the offender's supervision agency as well.
    Mr. Istook. You can appreciate, I am sure, that we want to 
make sure there are no surprises----
    Mr. Hammond. That is right.
    Mr. Istook [continuing]. Lurking here, and trying to 
distinguish, is this something that is distinct from past years 
and maybe a predictor of a surprise to come, or is this 
something that is consistent with those years. That is what I 
want to know.

            court assurance of adequate funding for fy 1999

    Mr. Hammond. As Chief Judge Wagner indicated, Mr. Chairman, 
1998 was an aberrant year. We have never seen one like it. I 
hope we never see another one like 1998. 1999 is not like 1998. 
We will have adequate funding in order to cover the costs of 
the program as outlined in the statute for this fiscal year.
    Mr. Istook. Okay. Mr. Moran, I yield to you.

     congressional intent ignored by courts--FY 1999 Spending Plan

    Mr. Moran. Well, thank you very much, Mr. Chairman.
    If what you just said, Mr. Hammond, is the case, that 
fiscal year 1999, is the normal year and last year was an 
abnormal year, it seems to me that zeroing out the Counsel for 
Child Abuse and Neglect program in June, July, August and 
September, is a decision that is contrary to congressional 
intent and direction and is consistent, in fact, with the 
decision made in fiscal year 1998 to shortchange the court-
appointed attorneys program, because you have done the same 
thing with the Criminal Justice Act program, cutting it in 
August and zeroing it out in September, and then relying upon a 
hope that there will be adequate refunds and reimbursements 
that will meet these expenditure requirements.
    You don't have the $36 million that you were directed to 
have budgeted for court-appointed attorneys in your spending 
plan. You have not budgeted for that. You have assumed that 
additional money is going to come in at the end of the year. In 
other words, that program expenditure is at greater risk than 
any other component part of your budget.
    I have the spending plan here in front of me. Is it all 
right to share this with the witnesses? This is your 
information, so I don't see why it would be wrong to share it 
with you. We got it from you. But--I was hoping you would see 
it, too, Judge.

    [CLERK'S NOTE.--See pages 460-461 for copy of spending plan 
referred to.]

    Judge Wagner. We are going to look at it, but I don't 
recall seeing this.
    Mr. Moran. I know Mr. Hammond is familiar with it. I have 
the conference report on the FY 1999 D.C. appropriations bill 
that talks about the fact that ``* * * it appeared that the 
Courts had a balance of $4 million, or twice as much as was 
needed, for the remaining month of September 1998'' for 
attorneys for indigents. This is the paragraph that we put in 
because of our concern and priority. ``However, additional 
information supplied at the request of certain subcommittee 
members showed that''--I think that is probably myself and Mr. 
Taylor--``showed that the Courts had reduced payments in July 
1998 by two-thirds and had made no payments in August 1998. As 
a result, the Courts owe more than $5.7 million to attorneys 
for indigents as of September 30, 1998.
    ``Accordingly, to avoid a similar situation this year, the 
Courts are directed to use the FY 1999 allocation of 
$31,936,000 for court-appointed attorneys for that purpose and 
for that purpose only. The Courts are further directed to pay 
immediately all obligations carried over from FY 1998 and prior 
years using other funds from their FY 1999 appropriation.''
    We directed $31.9 million to be spent for court-appointed 
attorneys out of this appropriation, and yet the budget we are 
shown shows that you have--there is a shortfall budgeted of, 
what, I guess about $5 million? You are budgeted to be about $5 
million short, which seems to be in direct contrast to what we 
directed you to do.
    I don't understand why this is happening.
    Mr. Hammond. Let me see if I can muddy this up a little 
more.
    Mr. Moran. Oh, good. I just want you to see what I was 
talking about.
    Mr. Hammond. The spending plan is just that. It is a 
spending plan. We adjust that monthly as additional revenue 
comes in, because you also don't know exactly how fast the 
revenue is going to come in a given year. So that is why we 
adjust this on a monthly basis.
    The spending plan that you have right now, yes, does not 
reflect an amount in those categories for September. But as you 
go through the fiscal year, the revenue comes in at a clip that 
also allows us to put in the plan not money that is projected, 
but money that we have on hand and can show exactly how it is 
being spent.
    Mr. Moran. I understand what you are saying, Mr.Hammond, 
but you didn't do that to any other line item of the budget. That is 
the only line item in the budget, the two of them together; those are 
the two categories for paying court-appointed attorneys, and those are 
the only line items in the budget that are deliberately zeroed out. In 
other words, you are putting them at greater risk than any other 
component part of the budget, making them dependent upon additional 
reimbursements and fees that may or may not come in during the course 
of the year.
    We had a specific directive: ``Spend $31.9 million out of 
the money we budgeted for 1999 obligation as discussed, we 
granted you, in this fiscal year '99 appropriation.'' Yet we 
look at the budget, and it is not there. You budgeted what? 
What does it say, Judge Hamilton, is actually budgeted? It is 
not $31.9. It must be about 26----
    Judge Hamilton. $26.6 million.

                     Courts' FY 1999 Spending Plan

    [CLERK'S NOTE.--The Courts FY 1999 Spending Plan referred 
to by Congressman Moran follows:]

                          DISTRICT OF COLUMBIA COURTS FISCAL YEAR 1999 SPENDING PLAN--REVISED--THROUGH 3/31/99 FISCAL YEAR 1999
                                                                [In thousands of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       Oct. 1999
                                                         to Feb.    March      April       May        June       July       Aug.      Sept.      Totals
                                                          1999
--------------------------------------------------------------------------------------------------------------------------------------------------------
Court of Appeals:
    Personnel Comp...................................      1,721        407        370        365        400        400        440        445      4,548
    Personnel Benefits...............................        275         59         57         56         70         70         70         69        726
    Travel & Trans. of Persons.......................          2          2          3          3         11          2          1          1         25
    Transportation of Things.........................  .........  .........          1          1  .........          1  .........  .........          3
    Rent, Comm. & Utilities..........................         25         29  .........  .........  .........          7          3          4         68
    Printing & Reproduction..........................         15          1          3          4          4          4          3          3         36
    Consulting & Other Serv..........................        262         20        368        252        194        368         60         60      1,584
    Supplies & Materials.............................        107          9          5          3          2          6          5          5        142
    Acquis of Capital Assets.........................         69          7        200        200        122         40         40         29        707
                                                      --------------------------------------------------------------------------------------------------
      Total..........................................      2,476        534      1,007        884        803        898        622        615      7,839
                                                      ==================================================================================================
Superior Court:
    Personnel Comp...................................     18,768      4,291      3,870      3,870      3,870      3,870      3,870      3,891     46,300
    Personnel Benefits...............................      3,506        792        719        719        719        720        720        720      8,615
    Travel & Trans of Persons........................         46         13          7          7          7          7          7          6        100
    Transportation of things.........................          6  .........          1  .........  .........          1  .........  .........          8
    Rent, Comm. & Utilities..........................      1,494        707      (385)        200         82         50        100         90      2,338
    Printing & Reproduction..........................        200          2        100  .........  .........         88  .........  .........        390
    Counsel for Child Abuse & Neglect Program........      3,294        627        565        565      (\1\)      (\1\)      (\1\)      (\1\)  \2\ 5,051
    Consulting & Other Serv. (other than CCAN).......      5,955      1,002        580        580    \1\ 200      (\1\)      (\1\)      (\1\)      8,317
    Supplies & Materials.............................        431        175         50         25         25         50         25         19        800
    Acquis of Capital Assets.........................        204         30        100         20         20        100         20          6        500
                                                      --------------------------------------------------------------------------------------------------
      Total..........................................     33,904      7,639      5,607      5,986      4,923      4,886      4,742      4,732     72,419
                                                      ==================================================================================================
Court System
    Personnel Comp...................................      2,114        459        440        420        440        440        440        459      5,212
    Personnel Benefits...............................        392         89         77         77         77         77         78         78        945
    Travel & Trans of Persons........................          4  .........          3          2          2          2          2  .........         15
    Transportation of Things.........................  .........  .........          1  .........  .........  .........  .........  .........          1
    Rent, Comm. & Utilities..........................  .........        750        615  .........  .........        538  .........  .........      1,903
    Printing & Reproduction..........................         15  .........         15         20         10          7          5          5         77
    Criminal Justice Act Program.....................      4,497      3,128      1,924      1,924      1,924      1,924   \1\1,302      (\1\)  \2\26,623
    Consulting & Other Serv., (other than CJA).......      1,415         14      2,060  .........  .........      2,060  .........  .........      5,549
    Supplies & Materials.............................        894      (500)          2          2          2          2          2          3        407
    Acquis of Capital Assets.........................          5          1          2  .........  .........          2  .........  .........         10
                                                      --------------------------------------------------------------------------------------------------
      Total..........................................     19,336      3,941      5,139      2,445      2,455      5,052      1,829        545     40,742
                                                      ==================================================================================================
      Operating budget grand totals..................     55,716     12,114     11,753      9,315      8,181     10,836      7,191      5,892    121,000
                                                      ==================================================================================================
Capital budget.......................................        227        925      2,000      2,000      1,000        848  .........  .........      7,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Funding requirements will be provided either through reprogrammings or the use of refunds and reimbursements. Refunds and reimbursements are
  expected to amount to between $4.1 million and $5.1 million.
\2\ $26,623 plus $5,051, total $31,674

     Reliability of ``Congressional Appropriation'' Compared With 
                           ``Reimbursements''

    Mr. Istook. Let me mention this: When you have an 
appropriation from the Congress of the United States, you know 
that money will materialize. It will be available. When you 
have cash, you have to budget your cash flow, we realize that. 
Different streams of revenue will arrive at different times. 
When you have a stream of revenue from any other source, it is 
not as certain as knowing that you have an appropriation from 
the Congress.
    Mr. Moran has noted that Congress said we want to make sure 
that this money is going to be used for this purpose. Instead 
you said, well, it is contingent upon the other revenue 
arriving.
    You expressed that you have perfect confidence that the 
other revenue will be here. But, as Judge Hamilton noted, he 
feels there is a constitutional obligation to make sure that 
legal counsel is provided, and that it has to have a priority 
accordingly. The budget doesn't seem to reflect those same 
priorities. Sometimes priorities are said one way at one time 
and another way at another time.
    If a shortfall materialized, if not all your reimbursements 
came in, if not all of your other revenue streams not coming 
from Congress came in, where and how would you make 
adjustments? According to your budget, you would be forced to 
make that adjustment in the legal defense program.

                         Reimbursement Letters

    I think it would be very useful to us, and I would ask that 
you get to us immediately, when you say you are relying upon 
certain reimbursements, Federal reimbursements, and I am sorry, 
I did not memorize the different titles you recited, I would 
like to have in writing to this Committee written confirmation 
from the appropriate officials in those programs to show to 
this Committee saying, yes, we are going to be reimbursing the 
District X amount at X time, so that we can be assured that 
there is a reliability, that these funds are going to be 
materializing in a timely fashion to make sure these needs are 
met.
    Mr. Hammond. That is no problem.
    [The following was supplied for the record:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Moran. Thank you, Mr. Chairman.

Chief Judge Wagner Not Familiar With Courts Spending Plan (see pp. 460-
                                  461)

    Judge Wagner. I wasn't familiar with your document. I 
hesitate to comment on what I am not familiar with.
    Mr. Moran. I understand.
    Judge Wagner. I can see the logic of what you are saying. 
On the other hand, I see the logic of the cash flow you are 
talking about. If you would like to see a revised spending plan 
with that $31 million in it, regardless of whether we get this 
reimbursement----

    indigent defense payments specifically appropriated--Court Made 
                          Payments Contingent

    Mr. Istook. Make the payments for indigent defense the 
priority and let other things be contingent.
    Mr. Moran. That is right.
    Judge Wagner. Well, other things may be something that 
nobody wants to see.
    Mr. Moran. We understand that. But as the Chairman said----
    Judge Wagner. As long as you understand that.
    Mr. Moran [continuing]. The Congress of the United States, 
which does appropriate the money, is responsible for the 
accountability for that money, stated very clearly----
    Judge Wagner. Basically it is an earmarked fund is what you 
are saying. You want the earmarked fund put in an earmarked 
category.
    Mr. Moran. We don't want it contingent upon other fees 
coming in. We made this money available for child abuse and 
neglect.
    Judge Wagner. I am troubled by that contingent basis.
    Mr. Moran. It is based upon fees and reimbursements. That 
is not a direct appropriation. We made a direct instruction, 
spend $31.9 million for the Counsel for Child Abuse and Neglect 
and Criminal Justice Act programs. It was a priority. Now we 
see the budget, and it is a dependent on nonappropriated 
revenue. It is more at risk than any other component.
    Judge Wagner. If it is at all possible, we will get you the 
kind of spending plan you wanted to see.
    Mr. Moran. Thank you, Judge.
    Now, I have a welcome relief. I did have a question about 
the fiscal year 2000 budget. You are great people.
    Mr. Istook. Let the record show it has taken an hour and a 
half to get to this point.
    Mr. Moran. I think we finally got the answer we were sort 
of hoping we would get. You are terrific judges, all of you. I 
hear great things about Mr. Hammond from Judge Lee in Fairfax 
County and so on, so I don't want to be a bad guy, but this is 
something that we had to be insistent upon.

          courts budget increasing while crime rate decreasing

    Now, let me ask about the budget. $108 million in '98, $128 
million in '99. Now you are asking for $131 million for fiscal 
year 2000. Going up, but the crime rate is going down. From 
what we understand, you have been relieved of several financial 
responsibilities, adult probation, domestic violence, judges' 
pensions, and we have a declining crime rate, so it would seem 
that the caseload has declined in recent years.
    I think it would be helpful to supply for us what, in fact, 
is the caseload for the past 3 years, because while your budget 
is going up, it would seem that the caseload, in fact, has been 
going down. I know the Superior Court's Family Division 
caseload has diminished, but we want to know what part of that 
is part of this court's workload. That would be helpful for the 
2000 submission.
    Judge Hamilton. Overall, the Superior Court from '97 
through '98 , we had an increase in our inventory of cases from 
53,766 cases to 54,513 cases, a 1 percent overall increase in 
the inventory.
    It is true, fortunately, that crime is declining very, very 
substantially in the District of Columbia, and did so in FY 
'98. In calendar '98, there was approximately a 10 percent 
reduction in crime. However, there are other areas in which the 
court has had to take on some additional obligations. For 
example, in the civil division, from '97 to '98, we had a 3 
percent increase in our caseload. In our Domestic Violence Unit 
we had a 3 percent increase in our overall caseload. In the 
Probate Division, we had a 3 percent increase in our caseload. 
So fortunately crime isgoing down, but other areas are going up 
overall. Domestic violence is one of the areas which has shown one of 
the greatest increases.
    We also have some difficulty in adjusting to our child 
support enforcement area, which has been stretched to the limit 
as a result of trying to keep up with 10 of the requirements 
that have been placed on child support enforcement by switching 
over from child welfare to temporary assistance to needy 
families. The whole system is turning over. That has imposed a 
tremendous strain on us in trying to keep up in that very, very 
important area.
    So in addition to that, in the Superior Court, our 
infrastructure has gone lacking, particularly as far as 
automation is concerned, for so many years. In order to 
continue to keep up what we have to do in a timely manner, we 
have to become more automated. That has placed a tremendous 
strain on us.
    So we are still behind. As Judge Wagner has indicated, in 
terms of our employees' compensation, we are still behind the 
curve as far as what their compensation is, and a great deal of 
the increase which has been requested in this budget is for the 
purpose of trying to bring our employees up to par insofar as 
where their compensation is concerned.
    Mr. Moran. Thank you, Judge.

                 appeals court budget lower for fy 2000

    Judge Wagner. Our caseload in the Court of Appeals has been 
relatively constant. There has not been a large fluctuation. We 
are actually having a reduction in our budget request this 
year.
    Mr. Moran. You are?
    Judge Wagner. Yes.

        reconciling crime rate reduction with caseload increase

    Mr. Moran. It just seems the crime rate is actually going 
down, whereas the caseload, you are telling us, is going up. 
Does that mean our police are doing a better job? There is some 
other factor. There is an X factor missing in the equation to 
explain it.
    Judge Hamilton. While the crime is coming down, the crimes 
that are traditionally thought of as the part 1 crimes, for 
example, and the part 2 crimes--for example, felony indictments 
were down 3 percent. Felony preindictments were down 8 percent. 
Quality of life crimes were down 32 percent. However, as I 
said, domestic violence was up 3 percent.
    Now, that grows out of the fact that there has been an 
enhanced awareness of the importance of domestic violence 
enforcement and the police department has beefed up its 
domestic violence enforcement. So we have had to react to that 
situation.
    Mr. Moran. Thank you, Mr. Chairman.
    Mr. Istook. Thank you.
    I recognize, Judge, just like domestic violence, sometimes 
you will get matters that spill over to the criminal court, and 
sometimes it is a victim protective order that is reflected in 
the civil proceedings. I realize there is an interplay there.
    Let me delve into some the things related to the 2000 
budget. Several of these things and some others maybe need to 
be done for the record.

             civil filings per capita very high in district

    I notice the material that you have supplied to me 
indicates, if you look on a per capita basis, per citizen 
basis, that the Superior Court in the District of Columbia has 
more suits filed per capita than any other State or similar 
jurisdiction, the technical difference. The next highest 
State--whereas the District had 31,724 filings per capita, the 
next highest was Massachusetts, and it was only 16,419. D.C. 
was about double.
    If you looked at purely civil filings per capita, you show 
23,363 filings per capita, again almost double the next highest 
State, which was New Jersey with 12,035.
    Obviously there is a lot of litigiousness in the District. 
It may stem from different factors.
    What I wanted to ask you is what is it about either the 
populace or the legal structure in the District which could be 
the underlying cause that creates this disparity between the 
District of Columbia and any State in the country regarding 
filing of civil lawsuits? I know it is not because of the 
Federal ones, because we are talking about the District court.
    Judge Hamilton. We dispose of approximately 90 percent of 
our civil cases in less than 24 months.
    Mr. Istook. These are filings I am describing.
    Judge Hamilton. We are the venue of choice. In other words, 
in a multijurisdictional incident where a person can file in 
the surrounding jurisdictions as well as in the Federal court, 
people choose to file in the Superior Court because they are 
assured in most cases of a disposition of their case in less 
than 24 months.
    Now, what is the reason----
    Mr. Istook. You think you are getting some cases that in 
other jurisdictions would be filed in Federal court?

           successful alternative dispute resolution program

    Judge Hamilton. Or some other available jurisdiction. The 
reason for that is because we have an extremely successful 
alternative dispute resolution program, which is world-
renowned. People come from all over the world, Africa, South 
America, Europe and other places----
    Judge Wagner. Japan.
    Judge Hamilton [continuing]. Japan--to study our 
alternative dispute resolution. As a result of the operation of 
that division, we have to try only a very small number of 
cases. So consequently, notwithstanding those very high filings 
that you have just ticked off, we dispose of most of our cases 
in less than 24 months.
    Mr. Istook. Do any other witnesses have any other beliefs 
as to what may underlie that?
    Judge Wagner. It is the inherent nature of a tristate 
jurisdiction. Basically we are contiguous to Maryland and 
Virginia, and we have a large influx of people into the city to 
work, so you have events that occur here.
    Mr. Istook. An auto accident, personal injury case.
    Judge Wagner. Or something that occurs in a department 
store or whatever. But we do have--I don't know how many people 
they say come into the District every day to work, but it does 
explode our population and the opportunity for creating 
lawsuits.

               district has second largest bar in country

    Then, of course, you know, we have a very large bar here, 
and many people doing business in the District of Columbia and 
the surrounding jurisdictions. We have the second largest bar 
in the country. Where there are lawyers, there are lawsuits.
    Mr. Istook. Yes, we all know the adage about if there is 
one lawyer in a town, they starve; however, if there are two, 
they do very well.

          district government creates situations for lawsuits

    Judge Farrell. If I can add, too, we have a local 
government in the District which has never been shy in creating 
causes of action. For example, we have a jurisdiction which I 
think rightly has been something in the forefront in creating 
consumer protection statutes and human rights protection 
statutes, and these create statutoryrights, and people avail 
themselves of them and come to court.
    Mr. Istook. Has anyone done some sort of report, Law Review 
article, trying to quantify this particular factor or these 
other factors? Is anyone aware of any? That would be very 
useful to know.
    I do know, as you mentioned, within the Federal court's 
jurisdiction, many people denounce the litigation explosion. 
They will jump on lawyers and so forth. But actually it is part 
of the Federal court jurisdiction that is exploding because of 
government-created causes of action resulting from changes in 
the underlying law. That is what has produced an explosion 
there. You are saying there is a similar factor that is part of 
your civil filings.
    Judge Farrell. I think to a certain extent. I think our 
legislature has been very receptive over the years to keeping 
the courts open and perhaps expanding the availability of the 
judicial system to citizens who feel they have been aggrieved. 
They have done that by statute. We have no control over those 
actions and those causes of action being brought.

      alternative dispute resolution program and child abuse cases

    Mr. Istook. I wanted to ask Judge Hamilton, you mentioned 
the alternative dispute resolutions. I was not aware until 
looking through some of the material on the budget submissions 
that matters relating to child abuse and neglect are being 
handled through the ADR procedures. How long has that been 
occurring, and how many such cases are being handled in that 
system?
    Judge Hamilton. It is a new program which is grant-funded, 
and I believe it is about 18 months, is it?
    Mr. Hammond. Less than that; about 12 months.
    Judge Hamilton. And we are trying to expand it to include 
all of our cases involving either abuse or neglect. We are just 
now handling either neglect or abuse, I don't know, but not all 
of the cases. We find that is a very, very effective and 
efficient way to dispose of those cases without subjecting 
those families to the litigation process.
    Mr. Istook. I have got to tell you, I have a certain level 
of discomfort in thinking of child abuse and neglect cases 
being handled that way, although I do understand also, of 
course, sometimes things are reported that really don't rise to 
the level. I would appreciate getting further information on 
how many cases that relate to child abuse and neglect are going 
through alternative dispute resolution and what are the 
criteria for when such an instance qualifies for that process 
and for when it may be kicked out of that process and back into 
court, obviously for the protection of the children. I would 
certainly like to have a lot more information on that.
    Judge Alprin. Mr. Chairman, one of the reasons, I think, 
for the program is that the number of child abuse and neglect 
cases has gone from about 500 in the mid-'80s to about 1,800 
last year and the year before. It is to handle that explosion 
in child neglect and abuse cases, mostly neglect, about 80 
percent, that I think a program like that was developed.
    Mr. Istook. All right. I just realize that is a very tricky 
area. Dispute resolution, you are talking about a dispute over 
whose property line is on which side of the fence or where the 
fence is located, things like that. Neighborhood disputes are 
one thing with alternative dispute resolution. When you are 
talking about the safety and well-being of a child, it gets 
very tricky. That is why I would be interested in knowing what 
the guidelines are.

alternative dispute resolution--guidelines for child abuse and neglect 
                                 cases

    Judge Hamilton. I agree, Mr. Chairman. I can assure you we 
do have a very carefully crafted protocol with respect to which 
cases are processed in that. I just don't have it at my 
fingertips.
    Mr. Istook. Right. I recognize that. I would appreciate 
receiving that.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                 integrated justice information system

    Mr. Istook. I am also interested in the $2.5 million in 
your budget request for the integrated justice information 
system where your bringing together some different computer 
systems to try to track all aspects of caseload-case 
management. I realize this has been greatly needed in a lot of 
areas within the District generally, to bring computer systems 
up to date, but I also know how tricky it can be.
    I will tell you a bit of background. When I was on the 
library board that covers all the public libraries in Oklahoma 
City and Oklahoma County, I had to make a bunch of decisions 
about going to an on-line, on-time computer system in the 
library system. From experience, I learned about a lot of the 
decisions you had to make to make sure something like this goes 
right.
    Can you tell me from the standpoint of an integrated 
justice system such as you have, and this may be for the 
record, I would like to have some more information on who you 
believe actually has the model system that you can look to? 
There is a great difference between taking someone who has 
experience and working a system and using it to develop your 
own, or trying to create your own system. I would like that 
information for the record detailing a lot more about this 
expenditure.
    Judge Hamilton. All right, I will be happy to get that to 
you.
    I went over this just yesterday, and we have looked at the 
system in Colorado, and Colorado has done an awful lot in 
developing an integrated justice information system. In 
addition to that, we feel that the two vendors, the two 
prominent vendors, most prominent vendors, are Microsoft and 
Oracle. Between these two companies, we feel that they have the 
best database technology available in order to permit us to do 
that.
    In addition to that, Mr. Chairman, we recognize--we have 
had a study done already, and this study--and I have quoted 
extensively from this study in my statement--and this study 
recognizes the absolute necessity for an on-board, full-time 
project manager in order to manage this, because, as you say, 
you can waste an awful lot of money trying to develop this 
awfully quickly. I have gone over it just yesterday, and 
everybody understands that before we do anything, take any 
major steps, that an on-board project manager will be there, so 
he is there to guide this thing from the ground right up.
    Mr. Istook. Okay. I would appreciate getting that. I am 
certain from experience having someone on the inside that is 
the key person, there is no substitute for it. It is an 
absolute necessity. If you don't have such a person, you might 
as well not spend the money.
    Judge Hamilton. That is right.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Istook. Let me ask first Mr. Aderholt, do you have any 
questions?
    Mr. Aderholt. I just walked back in. I will let you know.
    Mr. Istook. If you do, speak up. I think we are winding 
down.

                   crime victims compensation program

    For the Crime Victims Reimbursement Program, you are 
currently asking for a couple of FTE's to be paid out of that 
particular fund. Are those existing FTE's that currently are 
being paid from other funds?
    Judge Hamilton. I am not certain about that.
    Mr. Hammond. No, Mr. Chairman.
    Mr. Istook. These are new personnel?
    Mr. Hammond. New authorized.
    Mr. Istook. Who currently manages the fund then? Who 
intakes the requests for reimbursement from the crime victims 
and so forth?
    Judge Hamilton. We manage the whole thing in the court. We 
are one of two or three jurisdictions in the whole country 
where the Crime Victims Compensation Fund is managed by the 
court. We did that several years ago because the fund at that 
time was managed by the Department of Human Services and was in 
such great disrepair----
    Mr. Istook. When you say managed by the court--excuse me 
for interrupting, Judge, when you say managed by the court, do 
you mean there are some court personnel that are doing that, or 
just----
    Judge Hamilton. Yes, sir. It is a division within the 
court, a department in the court.
    Mr. Istook. How many people?
    Judge Hamilton. I'm not sure.
    Mr. Hammond. Five.
    Mr. Istook. Then I don't understand the distinction between 
what those five people are doing and what these other two 
people would be doing, unless they are add-ons to the same 
thing.
    Judge Hamilton. They are add-ons.
    Mr. Istook. That would be seven people doing that then.
    Judge Hamilton. Yes. We brought the time between filing and 
adjudication down quite substantially. What is it now?
    Mr. Hammond. It is now 1 month. We brought it down, yes.
    Judge Hamilton. We want to be able to bring it down 
somewhat less than that and reach more people who might be 
eligible for compensation under the Crime Victims Act.

           requirement for Interpreters for court spectators

    Mr. Istook. I believe you indicated you have a letter from 
the Department of Justice requiring that the District provide 
interpreters not only for litigants or for accused persons, but 
also for spectators in the courtroom. There is a reference in 
your material, of course, to Gallaudet University and doing 
things for hearing-impaired.
    Is the Department of Justice letter, if you can get that to 
me, limited only to hearing impaired persons, or is that to any 
person who has a need for an interpreter? You are saying if 
they are sitting in the courtroom, you must provide an 
interpreter for every spectator in the courtroom so they can 
understand what is going on, no matter what language it may be?
    Judge Hamilton. I am not certain about that. I do know it 
is the case with respect to, say, the hearing-impaired person 
under the Americans with Disabilities Act. That came as 
somewhat of a surprise to me, but the Civil Rights Division, I 
believe, of the Justice Department, some office within there, 
has made it very clear that that is a requirement under the 
ADA.

              department of justice Letter on Interpreters

    Mr. Istook. I would appreciate the Court providing to us a 
copy of their letter and, of course, whatever you exchanged 
with them, because I wonder how far this will go.
    [The information follows:]

       Requirements for Sign Language Interpreters for Spectators

    The Courts have been informed that, under the provisions of 
the Rehabilitation Act of 1973 and the Americans with 
Disabilities Act, the Courts are required to provide sign 
language interpreters or other accommodations to all hearing 
impaired participants, including spectators, in court 
proceedings. The Department of Justice letter regarding the 
complaint which brought this requirement to our attention 
follows:

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                extent of language translation services

    Mr. Istook. It is one thing if you have John that is a 
litigant or an accused to provide translation services, but it 
sounds to me like they are saying if you have someone that is a 
spectator in the courtroom, maybe they are related to one of 
the parties, maybe they aren't, but no matter what their 
language, you have got to stop the trial, and you can't proceed 
with the trial until you go round up an interpreter, not for 
someone involved in the case, but just because someone is 
sitting in the courtroom. Do I understand correctly what that 
letter seems to say from the Department of Justice?
    Judge Hamilton. It is the hearing-impaired individual, that 
is true.
    Mr. Istook. About--go ahead.
    Judge Hamilton. As to the language problem, I am not 
certain about that.
    Mr. Istook. Okay.
    Mr. Aderholt. Who is the letter from?
    Mr. Istook. The Department of Justice, Civil Rights 
Division.
    Mr. Aderholt. I would be interested in that letter, too.
    Judge Wagner. It is a matter of concern in other States as 
well. It is a national issue.
    Judge Alprin. You will be interested to know that I had a 
trial last week or the week before, and when the panel--the 
]overall jury panel from which the jury panel would be selected, there 
were two hearing-impaired persons. I have never had one before. So I 
got two on this panel, and for one there was the need for a sign 
language interpreter, but the person did not understand American Sign 
Language. We had to give her a reporter who took real-time testimony, 
like this gentleman I think is doing now, and have her sit next to him 
and see what was being said. As it turned out, one of them didn't make 
the panel, but one did. It was the one who understood ASL, American 
Sign Language. He sat, and the case went forward, a civil case, to 
decision. That is what happened in Superior Court last week.

                    Language ``signer'' in jury room

    Mr. Istook. Did you have a signer in the jury room?
    Judge Alprin. Yes. The first time it ever happened to me. 
It happened to other judges before, under very strict 
instructions not to say a word except to interpret what was 
being said to the juror and what the juror was saying back to 
other jurors, under an agreement of confidentiality, with the 
consent of all sides. That is how we did it. We thought we had 
to do it under the ADA.
    Mr. Istook. I am glad that it was with the consent of both 
sides. If either side objected, I don't know how you would have 
handled that.
    Judge Alprin. I would call up here for guidance.
    Judge Wagner. The Court of Appeals.
    Mr. Istook. That will be useful information to find out 
more about.

                        questions for the record

    I don't have any further questions other than those I am 
going to submit for the record.

    [CLERK'S NOTE.--See pages 597-667, this volume, for 
Committee's questions for the record and the Courts' responses, 
and pages 668-715, this volume, for Congressman Moran's 
questions for the record and the Courts' responses.]

                            courts receiving

    Mr. Istook. Mr. Moran or Mr. Aderholt.

           pro bono lobbying assistance--conflict of interest

    Mr. Moran. I think that we ought to be able to wind this 
up. I am just going to quickly mention a couple of areas where 
I have gotten letters. You don't have to respond unless you 
want to, but I have been told that the Courts are receiving pro 
bono lobbying assistance from members of the D.C. bar on its 
budget request and the D.C. Court Employees Whistle-Blower 
Protection Act. If that is the case, one would wonder whether 
any of the attorneys have cases before the court, whether there 
is any conflict, et cetera.

                  courts retaliating against employees

    The other thing is the alleged retaliation of some 
employees for whistle-blowing, if you would, on the charges 
that were made by court employees. It would be useful perhaps 
to state for the record whether any employees may be facing 
possible disciplinary action or dismissal since the letter was 
issued by Judge Hamilton saying that there will be no 
retaliation for any employees of the court giving information 
to anyone else that might be detrimental to the court 
administration.

             court employees whistle-blower protection act

    I am assuming that--I guess it would be useful to know 
whether you support the D.C. Court Employees Whistle-Blower 
Protection Act that was prompted by these allegations. I don't 
want to have a long explanation, but I thought I should offer 
it up since we have gotten some questions about this.
    Do you have any comments?

             courts claim no retaliation against employees

    Judge Wagner. A long time ago we sent you a copy, and I 
think we sent to you as well, a copy of a memorandum issued by 
the Joint Committee very early on that we would not tolerate 
any retaliation against anyone for cooperating in the audit.
    Mr. Moran. There has been no retaliation against anyone?
    Judge Wagner. I am not aware of anything like that. We do 
have a personnel policy and grievance process that I would hope 
our employees feel free to use.
    Mr. Moran. Okay. So there hasn't been any retaliation.
    Judge Wagner. I have no way of answering that kind of 
statement. I am not aware of any. I don't know about you, Judge 
Hamilton.
    Judge Hamilton. Well, I am certainly not aware of any 
retaliation. I am sensitive to whether or not there is any 
retaliation. I do not intend to countenance any type of 
retaliation. I have made it known that that is a policy of the 
Superior Court, and there are some actions, I believe, which 
are pending, some adverse personnel actions that are pending, 
and there are people who have said that those actions are 
retaliatory, and I intend to pursue that and find out whether 
or not that is the case and take whatever action is necessary 
to assure that they are not.

              courts support whistle-blower protection act

    Now, I believe that the Whistle-Blower is good legislation. 
I don't have any problem with it at all. It is an additional 
assurance and protection to the employees of the court who do a 
very difficult job and in a very dedicated manner, and anything 
we can do to give them a feeling of protection and perception 
of protection and fairness I think is good for the overall 
court system.

         whistle-blower--court administrative orders and memos

    [The following Superior Court ``Administrative orders'' and 
Joint Committee on Judicial Administration memorandum were 
supplied for the record:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Moran. Very good, Judge.

                   confrontational nature of hearing

    Judges and Mr. Hammond and everyone involved with the court 
system, I would hope that we would not have another somewhat 
confrontational hearing on this. We have gotten a number of 
letters and calls and so on. There have been articles written. 
We try to pursue those, but we don't particularly have an ax to 
grind. I feel as though the court system does a good job under 
very stressful and demanding circumstances, and I don't want to 
be confrontational.
    I think you have answered these questions. You were also 
aware of our concerns, the child abuse and neglect counsel 
particularly.

                    GAO findings on court operations

    The GAO under Ms. Jarmon and Mr. Haughton and their 
colleagues have given us a very good report that I am confident 
you will want to read carefully in its entirety, but many of 
the allegations have been shown to be somewhat unfounded, if 
you will, although they have identified some serious situations 
that I think we are all----
    Mr. Istook. Such as allegations by the whistle-blowers, 
right?
    Mr. Moran. Right.
    The GAO report, as I see it, is not a time bomb about to go 
off. It is a very moderate and responsible investigation as to 
the Court. There are no dramatic findings as I see them, 
although there are some concerns--the Anti-Deficiency Act being 
one. There are some others that I think when you get the final 
report you will want to address in their entirety. There will 
probably be questions next year about that, but I hope they are 
not of a confrontational manner.
    This has been a transition period when there was a 
restructuring of the court system because of the D.C. 
Revitalization Act, I guess ultimately that was the source, 
when we broke up parts of the court system in D.C. for funding 
purposes and administration reasons.

                 committee's appreciation of gao's work

    But I know GAO has done a very good job. I appreciate the 
fact that GAO has been here and their professionalism. I also 
appreciate the professionalism of the court system. I trust 
that in future years our questions will be somewhat less 
confrontational, if they have been close to that this year, and 
we respect all the hard work that you do day in and day out.
    Thank you, Mr. Chairman.
    Mr. Istook. Thank you, Mr. Moran. Let me make a couple of 
closing comments as we conclude the hearing. I do very much 
appreciate, Ms. Jarmon, the work of the GAO in going into 
difficult matters. I appreciate the work of the courts and the 
response you have made.

           committee expects everyone to be held accountable

    I think everyone should recognize that when there are 
funding decisions to be made, staying within the budget, 
especially in the context of what has been going on with the 
District of Columbia for a number of years, the efforts of the 
city government, the control board and the Congress have 
certainly been trying to make it clear to all concerned that we 
are going to have a handle on the budget situation and make 
sure that everything runs properly, because that is one thing 
necessary not only for the fiscal health of the District, but, 
frankly, it spills over into public safety, it spills over into 
infrastructure and quality of life for everyone to know that it 
is an orderly, good, safe place for everyone.
    So I think it is very important that everyone recognizes 
that we want everyone to be held accountable. Even though there 
are some concerns about, well, would something be done at one 
time but approved later, we all know the difference between 
having something approved at the time you do it and seeking 
approval after the fact.
    I am not going to try to decide what the merits are. I know 
that further things are coming to us on a time line (see p. 
590) and so forth, but I do think it is important that everyone 
within all levels of the District government recognize that we 
are serious about accountability. I think especially in the 
criminal justice system that is necessary so that the people 
with whom you must work are aware that you are seeking equal, 
fair and impartial enforcement of the laws. It is unfortunate 
that there has been some difficulty on it, but although others 
may have to dig deeper into whether anything happened that 
warrants any further action, for us on this particular 
subcommittee, our main duty is to look towards the future and 
make sure we don't have any sort of repetition; that we work 
with you in monitoring things, and if there is any difficulty 
that is surfacing now, we want to work with you and make sure 
that we prevent something from happening, rather than sitting 
around afterwards and talking about why did it happen, whose 
fault was it and so forth. We would rather be involved at the 
preventive level. I appreciate the information that has been 
developed today that hopefully will help us to do that.
    Thank you all for taking your time this afternoon. As I 
mentioned earlier, I will have some other things to submit for 
the record to you. (see pp. 597-667)

                              adjournment

    Thank you very much. We are adjourned.

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                                          Wednesday, June 16, 1999.

                    HEALTH CARE INITIATIVES FOR D.C.

                               WITNESSES

GREGORY M. McCARTHY, DIRECTOR, OFFICE OF POLICY AND EVALUATION, OFFICE 
    OF THE MAYOR
MARLENE N. KELLEY, M.D., INTERIM DIRECTOR, D.C. DEPARTMENT OF HEALTH
PAUL OFFNER, D.C. MEDICAID DIRECTOR
JOHN A. FAIRMAN, CHIEF EXECUTIVE OFFICER, D.C. HEALTH AND HOSPITALS 
    PUBLIC BENEFIT CORPORATION

                   chairman istook's opening remarks

    Mr. Istook. Good morning. The Committee will come to order. 
Excuse me for not banging the gavel. I think it is in the other 
room. So, if you are okay with not being traditional and not 
having the gavel to start, we will begin.
    I am Chairman Istook. I am happy to have everyone here this 
morning.
    Before we proceed with the hearing, my colleague, Mr. 
Cunningham, has an announcement about something going on today, 
he wanted to be sure to note.

           congressman cunningham's remarks--cancer survivor

    Mr. Cunningham. Something very exciting. I am a cancer 
survivor, and have worked with Dr. Varmus and Dr. Klausner of 
NIH. I did a cancer town hall meeting in my district, and found 
for example, that African Americans have a much higher 
incidence in prostate cancer.
    We have been working with the Mayor's office and the 
chairman, and also Chairman Porter of the House Labor-HHS 
Appropriations Subcommittee, and we are going to have a large 
medical town hall meeting in Washington, D.C., something that 
has been remiss for a long time. It is going to take place 
sometime in September, and we will let every office know. The 
Mayor will let people know. We are also planning on doing one 
later, a series of these, one for women's issues like breast 
cancer, ovarian cancer, those kinds of things, just to get the 
information out.
    Thank you, Mr. Chairman.
    Mr. Istook. Thank you, Mr. Cunningham.

                        health care initiatives

    We are meeting this morning to receive testimony on health 
programs in the District of Columbia. The FY 2000 budget 
compiled by the Mayor and the Council and approved by the 
control board contains a number of new initiatives and 
increased funding for parts of the health care program in the 
District.
    Of course, we want to be assured that recipients of these 
services are getting the full benefit of all dollars being 
spent, and we are always concerned and want to make sure that 
taxpayers' money is not being mismanaged and is being used in 
the best way. So we want to be sure we know what is being done 
to ensure compliance with all applicable laws and regulations 
and to provide the best possible health services to those that 
are entitled to them.
    The order in which we expect to hear from witnesses is, 
first from Mr. McCarthy, the Director of Policy and Evaluation 
in the Mayor's office; second from Dr. Kelley, the Interim 
Director of the Department of Health; then Mr. Offner, Director 
of the District's Medicaid Program; and then Mr. Fairman, Chief 
Executive Officer of the D.C. Health and Hospitals Public 
Benefit Corporation.
    Mr. Moran, the ranking member, has been delayed. So I will 
allow him, if he wishes, to make any opening statement later on 
in the process of the hearing.

                            witnesses sworn

    Before we begin to receive testimony, we do have the 
practice of swearing all witnesses to testify, so, I would, ask 
each of the witnesses to stand and raise your right hand.
    Do you solemnly swear or affirm that the testimony and 
information you present to this subcommittee today shall be the 
truth, the whole truth, and nothing but the truth, so help you 
God?
    Mr. McCarthy. I do.
    Dr. Kelley. I do.
    Mr. Offner. I do.
    Mr. Fairman. I do.
    Mr. Istook. Thank you. I appreciate it.
    First, we will begin before any questions with the opening 
statements from the witnesses in the order that I mentioned 
before.

                prepared statement of gregory mc carthy

    I always invite the witnesses--since we do have your 
prepared statements and the full text of those will be put in 
the record, frankly I invite you to deviate from your prepared 
statement to be able to flesh things out in whatever you think 
are the best terms or even to expand further because the full 
written statement will automatically be put in the record.
    [The prepared statement of Gregory McCarthy follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Istook. Mr. McCarthy, we will be happy to hear from you 
at this time.

                  opening remarks of gregory mc carthy

    Mr. McCarthy. Thank you very much, Mr. Chairman. I read you 
loud and clear, and I will accept your invitation to summarize 
my remarks.
    Chairman Istook, members of the Committee, thank you very 
much for the opportunity today to speak about Mayor Williams' 
vision for health care in the District of Columbia.
    His initial budget submission to the City Council earlier 
this year launched a spirited city-wide debate on the future of 
health care in the District. I will briefly outline the Mayor's 
vision, summarize some critical events since the original 
submission, and relay to you plans to forge a city-wide 
consensus on how to proceed.

                           three broad goals

    The administration has three broad goals: dramatically 
reduce the number of uninsured residents in the District, build 
primary care capacity in currently underserved areas, and 
strengthen the health care delivery system.
    The Mayor is committed to a strong safety-net system and to 
refocussing the systems on patients rather than institutions, 
while ensuring equitable access to health care for all 
geographic and economic sectors of the city. Of course, this 
will allow institutions to maneuver in a market that is 
increasingly becoming more competitive. It also means having 
health care institutions that are strong and viable, 
particularly those that serve underinsured and lower-income 
populations.

                  80,000 uninsured people in district

    Despite the fact that we spend one-fifth of the District's 
budget on health care, there are still 80,000 uninsured people 
in our city, and ample resources exist in our public health 
care system to cover more people and we must not lose sight of 
this reality.

       expansion of health insurance and substance abuse programs

    The Mayor's original budget proposal was bold and far-
reaching. He proposed a significant expansion of health 
insurance coverage for as many as 35,000 people, as well as 
reform how the city manages some substance abuse and prevention 
programs. The latter, we will contract out more substance abuse 
programs, transforming the Government's role from that of a 
primary service provider to a regulator, monitor, policy-maker, 
and evaluator.
    The health insurance expansion proposal provoked a vigorous 
dialogue in the city among government officials, health care 
providers, patient advocates, and health experts. Almost all 
agree that the goal of broader coverage was laudable, but there 
were divergent opinions about how we should reach that goal, 
and the likely impact of that proposal on health care 
institutions.

              pilot program--reallocation of dsh payments

    What emerged from the process was a much smaller pilot 
program for 2,400 people funded by reallocation of $6 million 
in DSH payments. In FY 2000, the administration will focus on 
implementing the smaller program, while not losing sight of the 
humane goal of coverage for considerably more residents.
    Ultimately, this debate should not be about institutions. 
At issue is the best way to use our resources to increase the 
efficiency of the delivery system, especially for the most 
vulnerable populations.

                commission to review health care system

    At the same time, the Mayor recognizes that very 
reasonable, informed people can have differing views on how to 
achieve this. To this end, the Mayor is pleased to have joined 
with the City Council and the Financial Authority in 
establishing a high-level commission that will examine the 
current system with a view towards making practical action-
oriented recommendations on the following subjects: inpatient 
bed overcapacity, distribution of health care services and 
providers, roles and needs of the Public Benefit Corporation, 
maintenance of safety-net providers, impediments to accessing 
health care beyond the lack of health care insurance, the 
fiscal impact of expanding health care insurance coverage, and 
implementation of the schedule for redeveloping the whole 
health care system.
    This 11-member commission will consist of mayoral and 
council employees. During its work, it will engage the full 
spectrum of health care parties to develop recommendations with 
broad support.
    After the recommendations are relayed by the Mayor, the 
City Council will have 45 days to disapprove them or approve 
them without amendment.
    The Mayor is eager to discuss fiscally prudent options that 
address the systemic problems in our system. He has, however, 
eliminated one option, the status quo. There is no going back 
to a system that is fragmented, unfocussed on primary care, and 
ultimately resulting in troubled health care status indicators, 
all while consuming considerable public funds.
    It is incumbent on all parties to prepare for an implement 
change in a way that makes institutions viable, focusses on 
primary care, protects the vulnerable, and causes minimal 
disruptions to individuals and institutions.

                 greater southeast Hospital--Bankruptcy

    The Commission's work could not be more timely. As you 
know, under an agreement with the city, Greater Southeast 
Hospital sought and received last month Chapter 11 
reorganization protection. The city is committed to loans, loan 
guarantees, and/or payment advances to allow the hospital to 
meet immediate payrolls and provide vital services for up to 90 
days, during which time it should develop a plan for financial 
health and competitiveness.
    Mr. Chairman, members of the Committee, quality health care 
is an absolute essential element of the Mayor's vision to 
improve overall city services and the quality of life for our 
residents. Economic development plans, hopes for our young 
people, and neighborhood stabilization efforts cannot succeed 
if larger health issues remain unaddressed.
    Thank you for your time and for your attention to the issue 
of health care in the District.
    Mr. Istook. Thank you very much, Mr. McCarthy.
    Mr. Moran, I understand you did not have an opening 
statement that you wished to make.

                      Remarks of Congressman Moran

    Mr. Moran. I really do want to learn what is going on, Mr. 
Chairman. I understand that there are two issues that the panel 
intends to focus on. Primarily, one is the potential misuse of 
Federal money for abortions, contrary to the legislation that 
was enacted.
    My principal interest in requesting this hearing was to 
look at the indigent health care in the District, particularly 
the very high level of child abuse and neglect.
    I do actually think that both issues are related because if 
you want prospective mothers to have their children, then the 
least likelihood of being born into an environment which is 
abusive or potentially neglectful for the children is going to 
substantially increase the likelihood of giving birth.
    So I do think that these issues are tied, and my principal 
concern obviously is going to be how we can improve the quality 
and the quantity of health care delivery, particularly to the 
indigent population, particularly to mothers and children, 
which I think has been generally neglected as a result of the 
lack of both health insurance coverage, but also institutional 
delivery of care in the areas that are the most disadvantaged 
in the District of Columbia.
    So I am glad to get the professionals that you called 
appearing before us, and I look forward to learning from them 
and asking some pointed questions at the appropriate time.
    Thank you, Mr. Chairman.
    Mr. Istook. Very good. Thank you, Mr. Moran.

           Prepared Statement of Dr. Marlene N. Kelley, M.D.

    Dr. Kelley, we will place your statement in the record at 
this point.
    [Dr. Kelley's prepared statement follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Istook. Dr. Kelley, we would be pleased to hear from 
you.

             Opening Remarks of Dr. Marlene N. Kelley M.D.

    Dr. Kelley. Good morning, Chairman Istook. Thank you for 
the opportunity for being able to appear before this committee. 
I am Dr. Marlene Kelley. I am the Interim Director for the 
Department of Health in the District.
    The Department of Health's initiatives as they relate to 
our fiscal year 2000 budget request will be the topic that I 
will discuss.
    I come before you at a time when our city is challenged to 
devise programs that target resources to address a number of 
far-reaching public health issues. The health of a community is 
not solely the domain of a government, nor a public health 
department. Improving a community's health requires multi-
sector participation and creative cooperation.
    In keeping with the Mayor's goals, the mission of the 
Department is to assure a safe and healthy community by 
developing strategic alliances. So, with this in mind, the 
Department plans to use these strategic alliances to design 
public health systems based on community involvement and 
customer needs. We will conduct ongoing monitoring of the 
health status of the city to include investigations of 
potential threats and intervention when needed. We will provide 
leadership and public health policy development and assure 
access to high-quality health services. We plan to foster and 
promote health education and disease prevention and maximize 
the effectiveness of all of our resources.

                 Restructuring of Health Care Services

    The Mayor has identified the restructuring of health care 
services in the District of Columbia as one of his top 
priorities. His vision is to dramatically reduce the number of 
uninsured District residents. He wants to build primary care 
capacity in currently underserved areas and strengthen the 
health care delivery system, as you have heard from Mr. 
McCarthy.

                        Health Insurance Access

    The first steps in implementation of the Mayor's goals are 
already underway. You have already heard about how we plan to 
increase access to health insurance, and Mr. Offner will 
elaborate further on that.

                       Substance Abuse Treatment

    We have already begun to increase our beds and slots for 
substance abuse treatment. We are providing medications for a 
greater number of persons living with HIV and AIDS. As we move 
into the next fiscal year, we will improve the quality of care 
by improving the oversight of managed care plans.

                            Three Priorities

    We have identified in the Department three priorities that 
are in keeping with this vision. One, we plan to improve the 
health status of children. We plan to reduce the size of the 
District's population that is drug-addicted through treatment 
services and by increasing alcohol, tobacco, and other drug 
awareness to prevent addiction, and to develop policies and 
programs that proactively protect andpromote the health status 
of District residents. And we plan to achieve these priorities by 
implementing the following initiatives.
    As I have said, you will hear more about the access to 
health insurance from Mr. Offner.
    In order to advance the health of a community, it is 
important to target efforts toward young people, and as part of 
the overall children's health initiative, the Department of 
Health will provide immunizations to an estimated 14,000 
children directly through our own Department walk-in health 
clinic.

                         Infant Mortality Rate

    We will reduce the infant mortality rate which is currently 
at the District's all-time low of 13.1, but which is still 
higher than any other State in the United States.
    We plan to ensure accessibility to WIC, the Women, Infants, 
and Children food program and our commodity food program for 
eligible families.

                            Substance Abuse

    As we are all too much aware, the problems surrounding 
substance abuse are of critical concern in the District. 
Substance abuse fuels our rates of crime and violence. It 
escalates our medical and social costs, and it is too often a 
factor in traffic accidents and is often at the root of 
families in crisis. So we plan to determine our levels of 
treatment services based on a recently completed comprehensive 
needs assessment. We plan to outsource our detox center and 
residential short-stay program, which are located on the campus 
of D.C. General Hospital.
    We want to reduce the sale and accessibility of tobacco 
products to District youth in compliance with the Synar 
amendment and FDA requirements in collaboration with Federal 
and District agencies, and we plan to improve access to 
treatment services for special populations, including seniors, 
those that are dually diagnosed, pregnant and postpartum women, 
injection drug users, HIV patients, and Latinos, with emphasis 
on mobile outreach and day treatment.

                                HIV/AIDS

    Another health challenge facing our city is the growing 
number of new HIV/AIDS infections, particularly among black 
women. HIV/AIDS is a threat to the vitality of all sectors of 
our community, and, thus, it is a high priority for the 
Department. We are providing preventive information, education, 
housing, and medical services to those at risk. We will be 
increasing our testing at HIV testing sites for residents, and 
we will increase accessibility to medications for persons 
living with AIDS.

                    Prevention of Chronic Illnesses

    In the area of prevention, we plan to increase our efforts 
in the prevention of chronic illnesses. We will be increasing 
health education, health promotion, and encouraging preventive 
health activities. We will renovate the tuberculosis clinic, 
and we will renovate our women's services clinic, both of which 
are on the grounds of D.C. General. The women's services clinic 
provides outpatient services inclusive of drug rehabilitation, 
medication, and therapy to adult women.

                              Food Safety

    The health of a community is more than the sum total of the 
health of its individuals. We must address the community as a 
whole by ensuring the quality of the environment. Therefore, we 
plan to increase our inspections for food establishments 
throughout the District to monitor food safety.

                        Anacostia River Cleanup

    We will implement seven new projects designed to clean up 
the Anacostia River in partnership with Federal and State 
agencies.

                             Lead Abatement

    And we will mount a massive effort to reduce exposure of 
our youth to lead through collaborations with other Federal and 
District agencies.

                                Summary

    The District's health status presents many challenges, and, 
thus, an aggressive, ambitious plan of action must be pursued. 
We expect our Department initiatives to give a substantial 
boost to meeting our objective of healthy people in a healthy 
community.
    Thank you.
    Mr. Istook. Thank you very much, Dr. Kelley.

                   Prepared Statement of Paul Offner

    Mr. Offner, we will place your statement in the record at 
this point.
    [Mr. Offner's prepared statement follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                     Opening Remarks of Paul Offner

    Mr. Istook. Mr. Offner.
    Mr. Offner. Chairman Istook, Mr. Moran, and members of the 
committee, I have----
    Mr. Istook. I'm sorry. In addition to the members of the 
subcommittee, we have the Delegate from the District of 
Columbia present, Eleanor Holmes Norton. Ms. Norton, always 
happy to have you here. Thank you.
    Excuse me, Mr. Offner. Please go ahead.
    Mr. Offner. I have submitted my testimony, and I will just 
paraphrase it.

                      Medicaid Program Overhauled

    The Medicaid program in the last 4 years in the District 
has gone through a total overhaul. Obviously, we have one of 
the most expensive Medicaid programs in the country. Over the 
last 4 years, we have taken a whole slew of steps to bring 
expenditures under control.

                20,000 ineligibles Removed from Medicaid

    Over 20,000 people who are ineligible were removed from the 
rolls some 2 years ago. Hospital rates have been reduced 
significantly. All of the TANF, formerly AFDC, recipients are 
now enrolled in managed care. Our HMO rates were cut over the 
last several years by an average of 20 percent. We have made 
deductions in what we pay our nursing homes, and we have 
included in all of our reimbursement systems cost containment 
incentives so that we have an incentive to run efficiently.

                         Medicaid Costs Reduced

    The result is that the cost situation has completely turned 
around. Between 1990 and 1995, the cost of Medicaid in the 
District doubled, went up an annual average--average annual 
rate of about 15 percent. This year, we will spend less than 
last year. Last year, we spent less than the year before.

               All Children To Be Covered Under Medicaid

    Starting in October of this year, the District--and this 
gets to Mr. Moran's point--the District started covering all 
children and all adults in families with children up to under 
200 percent of the poverty level. We have now one of the more 
expansive coverage policies in the Nation, and notwithstanding 
that, we will spend less. We project we will spend less this 
year than we spent last year. We funded this expansion 
completely out of savings in the Medicaid program.

                  Mayor's Proposal to Cover Uninsured

    The Mayor's proposal, very quickly, builds on that base. 
The Mayor basically said, all right, we have covered the 
children and the parents. Let's now provide some coverage for 
the people who do not have children, which is a group that 
traditionally has not been covered by Medicaid. And he proposed 
to do this, I might add, at no additional cost to the taxpayer 
or to the Federal government because the concept was that we 
are going to redirect money that we are already spending.
    The District already spends over $100 million, money that 
goes to health care providers or to District agencies, to cover 
the uninsured. The Mayor's basic proposal was to say let's take 
some of that money and use it to provide insurance.

              High Comparative Cost of DC Medicaid Program

    Why is that so important? It is so important because what 
is so missing in the District of Columbia is thepreventive in 
the primary care. We spend more on hospital care than just about any 
jurisdiction in the Nation. Medicaid recipients in the District spend 
two and a half times as much time in the hospital as the national 
average.
    Our Medicaid program is completely distorted towards 
institutional care instead of preventive care.

                        managed care initiative

    We are trying to address that through the managed care 
initiative, but the Mayor's concept was that by providing 
insurance to folks, we can begin to get that primary care and 
help people stay out of the hospital and the other 
institutional settings.
    Obviously, as I think Mr. McCarthy said earlier, a small 
pilot was approved, but I believe that the Mayor is still 
committed to this notion, to this concept, and we will be back 
to efforts to revisit this as funding becomes available.
    Thank you.
    Mr. Istook. Thank you very much, Mr. Offner.

                 prepared statement of john a. fairman

    Mr. Fairman, we will place your statement in the record.
    [Mr. Fairman's prepared statement and a copy of a health 
care reference plan follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Istook. Mr. Fairman, we will be pleased to hear from 
you.

                   opening remarks of john a. fairman

    Mr. Fairman. Thank you, Mr. Chairman, members of this 
committee, and the Honorable Delegate, Eleanor Holmes Norton.
    I am John Fairman, the Chief Executive Officer of the 
Health and Hospitals Public Benefit Corporation.

                background of public benefit corporation

    First, I would like to make a brief statement, both 
describing how the PBC serves the District of Columbia and 
endorsing needed reform for the District's health care system, 
especially improved services to the poor, uninsured, and 
underinsured.
    First, the PBC was formed in 1996 to meet the needs of a 
coherent and cohesive approach to delivering quality and 
accessible health services to the District. The idea for a PBC 
came out of numerous task forces, 33 to be specific, spanning 
over the course of 15 years and in excess of 200 different 
citizens, none of whom or few of whom were public employees.
    In 1997--and I might add, Mr. Chairman, over the course of 
those 15 years, consistently there was a recommendation for a 
coherent and organized approach for providing and/or overseeing 
the health care in the District.
    In 1997, the District consolidated some of its direct 
medical functions under the PBC, including D.C. General, eight 
community health centers, a pediatric special needs clinic, 
and, one year later, a school health program comprising nurses 
in 147 public schools. Mental health, substance abuse, and 
services to correctional facilities, including Oak Hill, were 
not included.
    However, we believe this approach, along with expanded 
coverage, will finally address the needs of people we all 
purport to serve. The PBC operates as an instrumentality of the 
D.C. Government under the direction of a board of directors, 
appointed jointly by the Council and the Mayor, all of whom are 
recognized professionals with professional and community 
credentials.

                          ``balanced'' budgets

    In spite of the challenge of aged and inadequately 
maintained facilities and information systems, the D.C. 
Government turned over to us, we are successfully meeting our 
fiscal and operational goals such as we completed fiscal years 
'95, '96, '97, and '98 with excess revenues over expenses.

    [CLERK'S NOTE.--Mr. Fairman's statement concerning ``excess 
revenues over expenses'' does not reflect the fact that (1) the 
District government ``loaned'' DC General Hospital $58 million 
(see FY 1995 DC hearings, volume 2, pages 1746-1752); (2) $29 
million of the $58 million was ``written off'' during the 
period FY 1996 through FY 1999; (3) the District government 
``forgave'' the balance of $29 million in section 1602(c) of 
the Service Improvement Act and FY 2000 Budget Support Act (DC 
Bill 13-161 enrolled June 11, 1999); and (4) DC General 
borrowed $36 million from the city ``in the last two years to 
avert a shutdown'' (Washington Post, March 9, 2000, page A9). 
In essence, DC General Hospital and its successor, the Public 
Benefit Corporation, DID NOT REPAY THE $58 MILLION borrowed 
from the District's general fund as reported in the FY 1995 
hearings AND HAS BORROWED ANOTHER $36 MILLION from the city as 
of March 9, 2000 to avert a shutdown.]

    We are in the process of upgrading our computers, as are 
other medical facilities, to be Y2K-compliant.
    We have continued to upgrade our patient care facilities. 
We have integrated primary care, prevention, and acute care 
services, and now offer the city's only fully integrated 
delivery system.

                             accreditation

    We are a full participant in the Medicaid managed care 
programs offered by the District. D.C. General Hospital is 
fully accredited by the Joint Commission on Accreditation of 
Health Care Organizations, and in fact, scored in the ninetieth 
percentile in our last review. Our laboratory, by comparison, 
was scored by JCAHCO in the ninety-fifth percentile.
    Under the leadership of the PBC, D.C. became one of 13 
cities awarded a Community Voices Grant by the prestigious W.K. 
Kellogg Foundation. Through this initiative, we are 
collaborating with some 50 different community-based 
organizations and other agencies in bridging the gaps that now 
exist between safety-net providers.
    We also received a grant from the Robert Wood Johnson 
Foundation to improve the quality of life for patients that are 
at the end stage of life.

                 reforming health care in the district

    Mr. Eugene Kinlow, a member of the presidentially appointed 
Control Board, asked me to articulate my thoughts on health 
care reform in the District. My comments and those of my board 
are captured in the paper before you entitled ``Reforming 
Health Care in the District of Columbia: Tailoring Change to 
Real-Life Citizen Needs.'' Those copies, as I stated, are 
available here.

    [CLERK'S NOTE.--A copy of the report referred to appears 
earlier in this hearing on pages 756-769 immediately following 
Mr. Fairman's prepared statement.]

    In the paper, we point out essential health indicators for 
the D.C. citizens that need to be improved, which heretofore 
appeared to be stubbornly resistant. They have been touched on 
by Dr. Marlene Kelley, and I will not reiterate those in the 
interest of time.

                     81,368 uninsured dc residents

    There are 81,368 D.C. residents who are uninsured, in spite 
of the District's Medicaid expansion program implemented by the 
city this past fall. D.C. is plagued with persistent barriers 
to health care, particularly plaguing the poor. Those would 
include lack of money, transportation and child care, 
linguistic barriers, inconvenient provider hours and locations, 
inadequate health education promoting healthy behavior, and 
insufficient education about managed care procedures, such as 
prior authorization.
    Yet, the District of Columbia, as is well known, is rich in 
health care resources. The District is the home of three 
academic medical centers, five community hospitals, four 
specialty hospitals, two non-academic tertiary care facilities, 
an abundance of health care primary centers, and six level-one 
trauma centers. These abundant resources are shamefully 
maldistributed.
    For example, wards west of the Anacostia River house the 
vast majority of the hospitals and not-for-profit clinics. 
Wards east of the river, homes to the highest number of low 
income and vulnerable citizens, offer few resources. The PBC 
provides over 37 percent of the total uncompensated care 
provided by D.C. hospitals, making D.C. General, the single 
largest provider of uncompensated care in the city.
    Contrary to the perception that D.C. General spends an 
inordinate amount of money, we are in fact a very small part of 
the dollars spent on health care by the D.C. Government. 
Appropriations from the District covered only one-third of the 
cost of the care in D.C. General, with the remaining two-thirds 
absorbed by the facility to the detriment of program 
improvements, employee compensation, and capital investments.

                      reform needed in health care

    Reform is indeed needed, but reform must be directed at 
improving the overall health status of the citizens. We believe 
the principal ingredients of a successful reform are establish 
objectives to improve health outcomes, align key indicators 
with the national average, improve continuity, coordination of 
care, especially among safety-net providers, strengthen 
promotion and prevention, maintain a strong safety net, ensure 
that insurance cards get used rather than just patting 
ourselves on the back about expanded coverage, make evaluation 
and measurements data public, mandate HMO reimbursement to 
safety-net facilities, utilizing the facilities two or more 
times a year, and those are just some. The others are listed 
there.
    We also believe that the city should incentivize hospitals 
to convert uninsured acute care beds to fill unmet needs in 
substance abuse, intermediate care, rehabilitation, and long-
term care, and designate only one level-one trauma center per 
quadrant to receive Medicaid reimbursement.
    A nationwide report by the Urban Institute entitled 
``Public Policy Market Forces and the Viability of Safety-Net 
Providers,'' issued September 1998, suggests that certain 
circumstances like those existing in the District of Columbia 
are recipes for eventual failure.
    We are encouraging the District to consider the experience 
of other States and cities and institute successful practices 
that assure a strong and effective safety net. First, recognize 
the critical role and designate the PBC system as a managed 
care organization. Assign, as Council has legislated, the 
default enrollees to the PBC and/or acknowledge the 
recommendations of HCFA in terms of how one should go about 
doing that. Require this system's participation in commercial 
insurance programs, and allow the safety-net providers to build 
the managed care organizations, as I mentioned.

                               conclusion

    I conclude by saying that the District's Public Benefit 
Corporation is the largest single safety-net provider between 
New York and Atlanta. We support the District's current efforts 
to encourage collaboration, especially between safety-net 
providers and the PBC, and we stand ready to support policy-
makers in articulating our shared vision for a healthy city 
served by a new unified health system whose performance is 
evaluated according to measurable improvements in key health 
indicators.
    I might mention, Mr. Chairman, I read this after having 
broken my glasses before coming here.
    Mr. Istook. I think we can all sympathize with you, Mr. 
Fairman. Thank you for your testimony.
    Let me mention, we will be having questions under the 5-
minute rule. Since there really was not that much difference in 
the time of arrival when we got started, I am going to go with 
Committee members in, so to speak, seniority order, rather than 
arrival order, at least to those that are already here.
    Mr. Moran certainly outlined some areas of focus. I want to 
ask my first questions about a particular area that is of great 
concern to me.

                  crime and substance abuse treatment

    We have a proposal before us from the Office of Offender 
Supervision to try to help reduce the crime rate in D.C. by 
having a more aggressive effort to make sure that persons that 
are on some sort of probationary status, who have history of 
drug abuse, are in compliance with requirements totally to 
abstain from that while they are on that status.
    With 20,000 to 30,000 offenders, most of whom have that 
history, this mechanism of either getting them, one, to comply 
or, two, be taken back off the streets for violating the 
conditions of their probation, I think, holds great promise for 
not only improving the climate, but frankly improving the crime 
rate in D.C., since it is estimated that each of these 
offenders is committing crimes to finance their drug habits, 
sometimes hundreds of crimes per offender, per year.
    I think it would be a great thing for the District. 
However, it is certainly true that, at the same time, we need 
to make sure that we have sufficient drug treatment programs in 
place because our goal is not to have people locked back up. 
Our goal is to have them abstain from using any substance that 
is prohibited.

         overview of current substance abuse treatment programs

    With that in mind, I want to ask questions about the level 
of the treatment programs that exist, and I would like an 
overview of the current treatment programs and how many are in 
them, and of those persons, how many of them are in some type 
of probationary status with the courts as opposed to those that 
are in for some other purpose, what is the capacity of these 
programs. I want to work with you and get some information for 
the record, so if you would outline this in more detail, and, 
frankly, tell us which programs have the best track records and 
which are lacking and where do we need to put resources to make 
this happen.
    So I suppose, Dr. Kelley and Mr. McCarthy, that probably 
falls in your bailiwick more than anything else. Can you begin 
to address that with me? And I do want to do some follow-up 
outside of the hearing, of course.
    Dr. Kelley. I think that some of the information, wewill 
need to get back to you on----
    Mr. Istook. Of course.
    Dr. Kelley [continuing]. Some of the specific, but, in 
general, the substance abuse program within the Department is 
currently working with the courts in terms of trying to address 
some of those needs and to make a priority in several areas for 
putting those folks into substance abuse programs.

                           large waiting list

    Yes, we do have a large waiting list, but we have been able 
even thus far this year to make some inroads in that. So, where 
we had 1,200 people on a waiting list before, it is now down to 
approximately 600, and we anticipate before this calendar year 
is out, decreasing the waiting list, but increasing the access 
to services.

             capacity of substance abuse treatment program

    Mr. Istook. How many slots do you have to give some 
proportion to that waiting list?
    Dr. Kelley. What we have done is within our existing 
program is to expand, and I did not bring that list with me, 
the numbers. So that, for instance, we have a number of 
contracted services, and we have been able to work with the 
contractors. They have increased their slots so that they are 
accommodating more than they had before.
    We anticipate a new 360-bed methadone treatment program, 
slots not beds, but slots, to come into being before the end of 
this year.
    Most of our people on the waiting list that I just 
described are awaiting methadone treatment slots. So there is 
an anticipation that we will be able to accommodate those.
    The other programs, abstinence, alcohol, there is no 
waiting list for that. So there should be an ability to 
accommodate.
    Mr. Istook. Just for the illegal drugs that you have a 
waiting list?
    Dr. Kelley. Yes.
    Mr. Istook. You do not know the information without 
checking on how many persons are currently participating in 
these programs?
    Dr. Kelley. No. I do not know. As of how many are court--
involved with the court system----
    Mr. Istook. Right.
    Dr. Kelley [continuing]. No, I do not have those figures, 
but I will try to get those figures, and then how many are in 
need of these services and are not able to get them. I will get 
that for you.
    Mr. Istook. I appreciate that.
    Mr. McCarthy, did you have some----
    Mr. McCarthy. Yes, Mr. Chairman.

           increase in funding for substance abuse treatment

    I would just like to add that the budget that was relayed 
to you a couple weeks ago by the City Council does include 
significant increases in funding for substance abuse and 
prevention. It is a priority for the Mayor and the Council, 
especially the prevention part.
    Mr. Istook. Was there a reason--the part that I saw was 
under the HIV/AIDS segment of that. Is that because that 
department is under that segment or because those were actually 
treatments related to that?
    Mr. McCarthy. The prevention and recovery administration--
--
    Dr. Kelley. Did get increases.
    Mr. McCarthy [continuing]. Got increases in funding.
    Mr. Istook. Right. I am just talking about the budget item 
for the increase appeared to be within that category, and I was 
not sure what that meant as far as how the organization chart 
runs or how the flows--is there a relationship between those 
two programs, the difference?
    Dr. Kelley. They work together, but the budgets are not 
intermingled as such, no. So there are increases in the APRA, 
which is the substance abuse program, specifically targeted to 
prevention and to treatment services.
    Mr. Istook. The documents that I have received from the 
Department of Health show that the drug assistance program is 
under the agency for HIV/AIDS.
    Dr. Kelley. Oh.
    Mr. Istook. You were proposing, but I am not sure if this 
is----
    Dr. Kelley. No, no, no. That drug assistance program is 
the--what is the word I want to use?
    Mr. Istook. That is a different program.
    Dr. Kelley. Yes. That is for the medications for HIV/AIDS 
persons.
    Mr. Istook. Okay. I thought perhaps that was it.
    So the increase that is actually budgeted for the actual 
substance abuse programs is the $3-million increase.
    Dr. Kelley. Yes.
    Mr. Istook. Okay. That was it.
    Dr. Kelley. Yes, exactly.
    Mr. Istook. I wanted to make sure I got straight on that.
    We may need to have that for the record.

    Mr. Istook. We are not prepared to go into that this 
morning because, to me, this is an interrelated thing. It 
involves several agencies. It involves the Office of Offender 
Supervision----
    Dr. Kelley. Yes.
    Mr. Istook [continuing]. And it involves the courts and it 
involves the corrections system and it involves the health 
department and the substance abuse treatments.
    Dr. Kelley. Yes.
    Mr. Istook. But I think it could go a long way toward 
changing a number of the problems within the city, and I am 
interested in bringing everyone together and finding all the 
elements that have to be coordinated to make this aggressive 
program happen so offenders know they will be tested. They 
cannot get away from being tested, so, thereby, to be held 
accountable, they have more incentive than ever to get their 
life and their behavior in order. I want to make sure we are 
giving them the resources for that, not just telling them that 
they are to be locked back up.
    Thank you. I think my own time has expired. So, Mr. Moran?

                       dsh medicaid pilot program

    Mr. Moran. Thank you, Mr. Chairman.
    Mr. Chairman, I would like to inquire as to the use of the 
DSH program to fund the new initiative that the Mayor has 
proposed for childless adults.
    As I understand it, most of the DSH program, the 
Disproportionate Share Program, would be used in the Mayor's 
program to provide health care for childless adults under 200 
percent of poverty. Is that true?
    Mr. Offner. That is right.
    Mr. Moran. Is that basically the case?
    The first thing I want to ask is what impact will that have 
on Children's National Medical Center, which currently receives 
DSH payments. Howard also receives DSH money, I understand. 
Providence has maternal and geriatric health care service. 
Children's has pediatric health care, one of the best in the 
Nation.
    What I would like to get at is to what extent the quality 
of that care is going to be compromised by the diversion of DSH 
payments to fund the Mayor's program for childless adults.
    Mr. Offner. Mr. Moran, we had the Llewyn Group, which is a 
reputable national consulting group, working with our staff to 
make projections over the next 5 years of the impacts on each 
of these hospitals. What the result of that analysis was, that 
each of the hospitals you named would be better off because of 
this proposal.
    Why would they be better off? Because while they would 
lose, as you said, some or all of their DSH funding, they would 
not get a large infusion of uninsured business, particularly in 
the case of a place like Howard which has a very, very large 
uninsured group that has a relatively small number of children.
    We estimated that Howard over the next 5 years would have 
received over $50 million over that period in additional net 
revenue.

          dsh medicaid program--impact on children's hospital

    Children's Hospital, it was about a break-even because 
Children's Hospital we are already covering in the District 
every child under 200 percent of poverty, or at least insurance 
is available. Obviously, not everybody has come in and 
enrolled, and that is a process that is continuing, but the 
point is that when enrollment is finished, every child under 
200 percent of poverty will have access to health insurance. So 
Children's Hospital is, it seems to me, in a fairly good 
situation under our regular program, and they would have 
abruptly broken even..
    Mr. Moran. Not according to them, but I would like to see 
those numbers.
    The fact is that Children's does not care for childless 
adults because it is a children's hospital, obviously, and so 
the expansion for childless adults, it would seem, would come 
at the expense of the hospital that did not provide that care. 
The money that was being paid for the expansion is coming out 
of a very essential source of funding for a hospital like 
Children's. That is one of the things I want to get at because 
the quality of care at Children's is as high as there is 
anywhere in the Nation. I want to see that quality of care 
continue.
    It looks as though this initiative would compromise that 
quality of care. I think we need to see why the Llewyn report 
suggested that they would break even. They say they do not, and 
I find it difficult to understand how they would.
    Mr. Offner. If I may just add--let me ask Mr. Moran this 
question. If the District--I mean, we have, I think, fairly 
reliable data that only 3 percent of the District's population 
is represented by uninsured people above 200 percent of 
poverty, and 97 percent of the population would have been 
covered under this Mayor's proposal.
    If we are covering every child or we are making insurance 
coverage available to every child up to 200 percent of poverty, 
so that there are only a handful of children in the District 
who do not have insurance, what is the need for a large 
additional payment to a hospital like Children's to cover 
uninsured people? That is the question, but we would be glad to 
share those figures with you.
    Mr. Moran. Well, okay. I thought that the original estimate 
was of the $6-million waiver being requested, about $4 million 
was going to come out of Children's hide, but, apparently, that 
has been modified.
    My time is up, but we can have another round, I trust, to 
get into this in greater depth.
    Thank you.
    Mr. Istook. Absolutely.
    Mr. Cunningham.
    Mr. Cunningham. Thank you, Mr. Chairman.
    First of all, Dr. Kelly, I want you to know my boat is 
named Kelly and my Jack Russell terrier's name is Kelly.
    Dr. Kelley. Very good.
    Mr. Cunningham. So we have an affinity for----
    Mr. Istook. Dr. Kelley, do you have a dog named Duke?
    [Laughter.]
    Mr. Cunningham. No, but J.C. Watts named his dog D.C., and 
he mistreats it, I am going to tell you.
    We get a little levity in these meetings, anyway.

                         prostate cancer exams

    Some of my colleagues just came in, and I would like to 
announce also that in room B-344 today, there is a prostate 
cancer check for Members of Congress between now and 1330. For 
those on non-military times, that is 1:30 this afternoon. A 
year can make a difference between your life or death. It is 
down in room B-344.

                     anacostia river health hazard

    Also, I would like to mention that one of my stated goals 
is--I live down on the waterfront, and I have taken my little 
boat up the Anacostia River, all the way past RFK stadium. I do 
not care if it is the Navy, if it is industrial pollution, if 
it is the amount of chemical and fecal content parts per 
million, it is the worst anywhere in the United States on the 
Anacostia River. You talk about a health hazard. That is 
something that I will fight, and I will be the tip of your 
spear to help clean up the Anacostia River. I have told the 
chairman I want to work with the Mayor and the city and the 
health department.

                       health town hall meetings

    Secondly, Chairman Istook, Chairman Porter, and the Mayor--
I also sit along with Mr. Istook on Labor HHS. Dr. Varmus, who 
is head of NIH, Dr. Klausner, head of cancer research, and 
others have agreed to put on a series of town hall meetings. It 
is not going to be a big show for Members of Congress. I would 
like their support, and, Ms. Holmes-Norton, we need a place to 
hold these meetings. But they are going to put on a series of 
town hall meetings.
    The first one is going to be on cancer, since I am a cancer 
survivor. We are going to have another on children's diabetes. 
It is focused on information like where does someone get 
information on medical health, all the way from HMOs to medical 
savings accounts, to where they can call a doctor, if someone, 
for example, has prostate cancer.
    I have had over a hundred calls from friends that wanted to 
know, that they came up positive for cancer. What do you do? 
Where do you go? The meeting is going to focus on, as the 
gentleman mentioned, prevention with diabetes, children's 
diabetes, to diet, to everything else.
    We are going to do a series of these. The first one is on 
cancer, then juvenile diabetes, and then the other medical 
research which gives hope. For example, there has been no 
marker for women's ovarian cancer----
    Dr. Kelley. Right.
    Mr. Cunningham. Like there is for prostate cancer.

               health information--available on internet

    We heard testimony that up to 25 markers for ovarian cancer 
are possible now because of medical research. Those kinds of 
things all available on the internet. A lot of your 
constituents here in D.C. do not have access to computers, but 
I want to tell you something. My wife is the district 
administrator in a school district, and I was at a board of 
education meeting. There was a little 6-year-old girl there. I 
walked up to her, and it is one of those, Eleanor, that you 
want to walk up and pat on the head and say, ``What is your 
name?''
    I said, ``Well, little girl, what is your name?,'' and she 
looked at me and she threw her chest back and she said, ``My 
name is www.mary.com.'' So, if you do not think the children do 
not have access to these in their schools and stuff, that is 
important to get out that kind of information.

                       health prevention programs

    I would rather prevent my children from getting the measles 
than have to treat them afterwards. I know there is a fine line 
between prevention and then also the care. Unfortunately, I 
think we spend too much on the care after you get the disease 
instead of prevention.

                              drug dealers

    I think it is the lowest thing on earth to be a drug dealer 
or drug user. It does not mean we cannot help them once, but 
after that, I am sorry, they are on their own, and it has got 
to be a quality effort in the first place, but after that, they 
are gone.

                        medicaid costs--illegals

    I would also like you to take a look at other contributors 
to public health costs. In California, Texas, and the Western 
States, over half the children born in our public hospitals in 
California are illegals. Can you imagine how that hurts the 
Medicaid problem with the poor and the indigent? That takes the 
dollars away.
    We have 400,000 children that are illegal, K through 12 
education. That is $2 billion a year for their schooling. That 
does not even include the school lunch program, which is over a 
million and a half dollars a day.
    You may want to include these in your report to focus on 
things that are costing us excess money and taking money away 
from our poor in not only the jobs, but everything else.

               congressman cunningham's outreach to city

    I would like to work with the Mayor, which we are doing not 
only in Anacostia, but these medical town hall meetings. I 
think it is something proactive we can do to get out the 
information.
    I have had some in my own district, and I want to tell you, 
across the spectrum, people got information just, for example, 
where they could get the information, and it is very important. 
I think it is something we can do positively that does not cost 
anything, but I am going to need Ms. Holmes-Norton and the 
Mayor and the hospitals to find a place large enough that we 
can do this.
    I am going to announce it. I am going to give it out, and I 
am going to turn it over to NIH, and that is the only role I am 
going to play. It is something I think we can do proactively.
    Thank you, Mr. Chairman.
    Mr. Istook. Thank you, Mr. Cunningham.
    Mr. Fairman. May I----
    Mr. Istook. Go ahead, Mr. Fairman.

                      radio program ``PBC Pulse''

    Mr. Fairman. Congressman Cunningham, I would just say that 
the PBC in partnership with the Department of Health operates a 
radio program every Sunday we call the ``PBC Pulse.'' We are 
disseminating information to the community.
    We would be delighted to have you, if your schedule 
permits, and if not, a member of your staff----
    Mr. Cunningham. My schedule will permit.
    Mr. Fairman [continuing]. This Sunday, this Sunday from 2 
to 6 at the Waterside Mall. We are having a broadcast, and the 
focus is male health issues and prostate cancer, et cetera.
    Mr. Cunningham. From a person who thought they only had a 
year to 5 years to live up to, 2 weeks ago, I will be happy to 
because it came the other way and it is very positive now, and 
it is because of the health care system.
    Mr. Fairman. You might remember the show airs every Sunday. 
So there are numerous issues that we are trying to put out to 
the community and to broadcast.
    We also have a program called ``What is the Deal, Yo?,'' 
which kids operate a soap operate skit, letting each other know 
that unsafe sex practices and drug activities are not good. It 
is done by the kids. It has a 98-percent identification factor 
among teens.

                      computers for school nurses

    The last thing I would like to say is that we have secured 
a grant, again, in partnership with the Department of Health, 
to put computers in the school nurses' offices. We believe--I 
certainly believe that the school nurses are the most motivated 
group we have, and they have enormous knowledge and it is all 
on pieces of paper.

                 21st century classroom act--computers

    Mr. Cunningham. Look into the 21st Century Classrooms Act. 
The President signed it. It was my bill. It allows schools to 
receive computers from industry.
    We have a non-profit that receives the computers. We use 
prison labor to upgrade the computers. So there is a win there 
that teaches them a skill. That computer then goes into the 
school where it plugs in, ready to use with the software, so 
that you do not waste them.
    Ways and Means Chairman Bill Archer told me that the 
provision expires in the year 2000. We are now in 37 different 
States. D.C. ought to look into that because we can provide 
computers that are upgraded. They may not be brand-new ones, 
but they are like brand-new ones, and they are for the schools. 
My next phase is to get them into our libraries.
    Thank you.
    Mr. Istook. Thank you, Mr. Cunningham.
    Mr. McCarthy. May I add something, sir?
    Mr. Istook. Yes.

                anacostia river--regional compact signed

    Mr. McCarthy. Mr. Cunningham, you may know the Mayor is an 
avid outdoorsman, and in fact many times has taken his canoe 
out on the Anacostia River.
    Mr. Istook. Does it have a name?
    Mr. McCarthy. Kelley. [Laughter.]
    No. Duke. Excuse me. Duke.
    Mr. Cunningham. I like power.
    Mr. McCarthy. Last month, with the county executives from 
Montgomery and Prince George's, he signed a compact for 
committing over the next 5 years to clean the river up. I do 
not have more detail than that, but I would be very happy to 
get that for you.
    Mr. Cunningham. I wrote him a letter saying I told him I 
wanted to help, and I never got an invitation for that.

                         preventive health care

    Mr. McCarthy. Your focus on prevention is exactly where the 
Mayor is headed. His whole program is premised on the fact that 
if people get preventive care and are educated there, we can 
minimize the number of costly emergency room visits when people 
are very, very sick.
    One of the programs we are most proud of is our school 
nurse program where we do educate kids at a very, very early 
age in that field.
    Mr. Istook. Thank you.
    Mr. Mollohan.
    Mr. Mollohan. Thank you, Mr. Chairman.

       drug use, prevention and rehabilitation--policy interface

    This line of questioning might be best directed to Mr. 
McCarthy, but maybe others as well, if you would let me know.
    I would like for you to talk about the policy position of 
the District of Columbia with regard to the interface between 
the judiciary and the public health system in the area of drug 
use, prevention, and rehabilitation. How do you all see that? 
Where you are?
    Mr. McCarthy. I do not feel well versed in that.
    Dr. Kelley. As I was trying to say to Mr. Moran, we are 
currently working with the court system, with Judge Hamilton 
and others, in terms of trying to address the concerns and 
issues that exist with respect to getting that community 
involved in treatment programs quickly, so that it will help 
the system along.
    Mr. Mollohan. You mean the addicted community?
    Dr. Kelley. Yes, those who are addicted and involved in the 
court system in some way, whether they are on probation, coming 
out of jail, or what have you, and need rehabilitation 
programs.

             court system role in substance abuse treatment

    Mr. Mollohan. What do you see as a successful strategy in 
dealing with addiction? What part can the court system play in 
that process?
    Dr. Kelley. Communication is the bottom line, and aside 
from that part, first of all, those who are within the jails 
and the correctional system, we want to ensure that there is 
appropriate treatment within the system and then a bridge for 
when they come out so they can continue in rehabilitative 
programs that will address those substance abuse issues.
    Right now, I do not think it exists the way it should.
    Mr. Mollohan. Let me ask you this. If you have an addicted 
person, one who has been arrested and is subject to a 
misdemeanor or a felony count, and another that has not been 
arrested, do you have any sense of the treatment success 
between those two groups?
    Dr. Kelley. No, I do not have enough information really to 
comment well on that, and I do not know whether, John, you all 
have any.
    Mr. Mollohan. Let me just say, that seems to be a starting 
point for understanding or developing a strategic plan for 
dealing with addictions and being successful in getting people 
off addiction.
    The information that I am getting suggests that if the 
court system has an arm on or a hammer over the head of 
addicted people and then the addicts have a choice between 
staying in a treatment program or going to jail, that would be 
a successful combination.
    Do you have such a system? Are the courts sensitive to what 
their role could be in providing an incentive for a really 
effective treatment program?
    Dr. Kelley. I am not sure to what extent that kind of 
system is totally in place. It is my sense that it is being 
worked on as we speak. There are groups that are meeting to 
address that issue.

         groups involved in substance abuse treatment programs

    Mr. Mollohan. Who are they in the District of Columbia?
    Dr. Kelley. On our side, it would be APRA, our Addiction 
Prevention Recovery Administration. The administrator is Dr. 
Deidra Roach, and her staff--she has it divided up, and there 
are a number of them that are involved in that aspect of it, 
but she would be the contact person to find out.
    I can try to find out something specific about that and get 
some information.
    Mr. Mollohan. I would like to know if the District is going 
in this direction----
    Dr. Kelley. Oh, yes.
    Mr. Mollohan [continuing]. Or if they are studying this 
issue.
    Dr. Kelley. Yes.
    Mr. Mollohan. Okay. Thank you, Mr. Chairman.
    Mr. Cunningham [Presiding]. Mr Tiahrt.
    Mr. Tiahrt. Thank you, Mr. Chairman.
    Mr. Cunningham. I have to leave, and you can be the 
chairman in a minute.

           medicaid program--adding 48,000 additional persons

    Mr. Tiahrt. First of all, I want to say that I think the 
Mayor is doing a good job, and I agree with most of the 
programs he has put in. I wish him all the success, and I think 
you are doing a lot to make a good team effort.
    I think the District of Columbia today is much better than 
it was 5 years ago. I have seen the growth in population as a 
very positive thing, but I am a little concerned about the new 
health plan.
    Right now, I guess you are going to take an additional 
48,000 residents and put them into Medicaid. How many people 
are in Medicaid today in the District?
    Mr. Offner. 125,000.
    Mr. Tiahrt. 125,000.
    It appears that you are going to take $70 million and set 
it aside for these 48,000 people, which would work out to about 
$120 a month per person.
    Just looking at your numbers, I think that probably you are 
currently spending somewhere around four times--about $6,000 a 
year, instead of the $1,500 a year that this would allow for 
these 48,000.
    So, if you are going to spend $6,000 a year per Medicaid 
person today, which I think is pretty accurate--I think $844 
million is what is currently being spent, according to the 
article that you submitted through your testimony?
    Mr. Offner. That is right.
    Mr. Tiahrt. You do read the paper, right? I assume you read 
the paper?
    Mr. Offner. I do read the paper.
    Mr. Tiahrt. Okay. $844 million in Medicaid costs, and that 
covers about 125,000. So the cost comes close to about $6,000 
per year per recipient, and now we are going to add 48,000 for 
only $70 million, which is about $1,500 a year per recipient, 
or about one-fourth of what it is currently costing.
    So I would guess that your cost is going to be well over 
$70 million. It is probably going to be more like four times$70 
million. Where would that additional money come from?
    Mr. Offner. The problem is that the roughly $6,000 limit 
that you have used--70 percent of the cost of Medicaid is the 
elderly and disabled, and most of that cost is associated with 
people who are in nursing homes.
    Mr. Tiahrt. Right. If I listened to Director McCarthy, he 
said that these people probably use health care more than 
others. Is that not correct? Director McCarthy, was that your 
testimony?
    Mr. McCarthy. This is Mr. Fairman.
    Mr. Tiahrt. I am sorry. Mr. Fairman, without name tags, I 
am lost.
    Mr. Fairman said something about the people that will 
continue to pick up on this program are those that use the 
health care system more than usual, more than most. So we are 
alleviating the other agencies that are providing for these 
people by putting them in a Medicare program. In other words, 
we are diverting them from programs that provide reimbursement 
to agencies that are providing their health care now to a new 
system, putting them in Medicaid, but I do not think you put 
enough money in Medicaid and I am wondering where that 
additional money is going to come from.
    Mr. Offner. I understand your question.

            analyses of additional 48,000 people on medicaid

    Two things. First of all, the numbers--there are some 
problems with the numbers. We assumed an average cost of 
something like $200 per member per month, and the problem is 
that this is basing--$70 million is, I think, a first-year or 
second-year cost. By the time this thing is fully phased in, it 
will cost more than that.
    The other point is that this single population that we are 
talking about, there is a statistically, relatively small 
number of people who are drug addicted, who are mentally ill, 
who generate significant cost, but the great majority of this 
population is the young, actually relatively healthy people.
    We have looked at other States that have done these 
expansions to this group, and we have looked at New York and 
other States like that, that have done these expansions, and we 
are simply using numbers that are based on experience in those 
States.

             abortion spending violated anti-deficiency act

    Mr. Tiahrt. In the paper, at least nine times between 
October of '95 and November of '98, there were articles that 
were related to health care in Washington, D.C., and the fact 
that we are no longer going to be using the tax dollars within 
the District of Columbia to provide abortions. Yet, during that 
time period, there were 844 abortions at a cost of nearly 
$250,000, which is directly in violation of the laws that were 
passed.
    Is this practice still going on?
    Mr. Offner. We stopped funding abortions a year and a half 
ago, in January a year and a half ago.
    Mr. Tiahrt. Is there any attempt to seek repayment from 
these people who provided abortions, to reimburse this 
$250,000, approximately $250,000?
    Mr. Offner. No, there is not. I do not know how we could go 
back and--I suppose that is not an option that has been 
considered.
    At the time, these providers were under the misimpression 
because of the mistake that our department, our agency made, 
that this was a proper, legal thing that they were doing, and--
--
    Mr. Tiahrt. Well, it was against the law, and according to 
the Mayor's letter that he sent to me on February 25th, he says 
there is some confusion down there in the Department of Health. 
The confusion undoubtedly resulted from changes in the laws 
regarding Federally-funded abortions.
    You are telling me the confusion is gone?
    Mr. Offner. There is no confusion, and a series of 
mistakes----
    Mr. Tiahrt. The Mayor told me that there was some confusion 
down there. I just wanted to know what was going on.
    Mr. Offner. He is right, but----
    Mr. Cunningham. If the gentleman would yield, maybe we can 
provide questions for the record, so not to take away from any 
Member's time.
    Mr. Tiahrt. Thank you, Mr. Chairman.
    Mr. Cunningham. Mrs. Emerson.
    After Mrs. Emerson, we will recognize members of the 
Committee, and I will ask unanimous consent to allow the 
Delegate, Eleanor Holmes Norton, to ask questions if she 
desires. But I have to leave and I would like to relinquish the 
chair, now that I have taken your time away.
    Mrs. Emerson. Let me continue on.
    Mr. Cunningham. Mrs. Emerson.

                     medicaid--section 115 waivers

    Mrs. Emerson. Let me continue on with the Section 115 
waivers from HCFA that you all would have to request to ensure 
single-adult males in the Medicaid system. You started to talk 
about--I think Congressman Tiahrt asked you what other States 
have done this. Can you expand on that a little and tell us 
precisely how many other States have asked for these types of 
waivers?
    Mr. Offner. Well, the most--Tennessee has the broadest 
waiver. Wisconsin, Ohio, and I can get the full list.
    There are 11-15 waivers involving eligibility that are 
almost in every State, as you probably know. Specifically 
targeted at this population, it is those, I think, three States 
and a handful of others, and I can get you the list.
    Mrs. Emerson. Precisely what do you give as a justification 
for seeking that waiver so that you can in fact expand Medicaid 
coverage to single adults with no children? I am just curious, 
given the fact that there are so many families who are eligible 
for coverage who are not taking advantage of it.

               large population of single men in district

    Mr. Offner. In the District of Columbia, a big part of the 
public health problem is that we have a large population of 
single people, frankly particularly single men who have 
substance abuse problems, who have mental health difficulties, 
and who are without insurance. We basically have no insurance.
    Some States like New York, progressively northern States 
have traditionally had State-funded, local-funded as you 
probably know--State-funded programs to accommodate this 
population.
    The District essentially has nothing right now. So these 
people end up in our public system. We end up paying for it, 
anyway. If you can insure them, there is a greater chance to be 
able to get them some primary preventive care so that they do 
not end up being institutionalized.

                       medical charities program

    Mrs. Emerson. Has the District ever had an insurance pool 
for low-income people similar to some of the other States?
    Mr. Offner. We had a tiny little program called Medical 
Charities, which is now $700,000 a year. So the answer is a 
very, very small program.
    Mrs. Emerson. Is there any desire to either increasethat or 
to actually set up a pool for people who might not be able to get 
traditional-type insurance, but might fall just a little bit above the 
poverty line or the income level to be eligible for Medicaid?
    Mr. Offner. Right. Well, that is really what this would 
have done. This would have allowed the District to provide 
insurance to people who do not have it, who are up to 200 
percent of poverty. Again, the Mayor's proposal did this 
without costing the District additional money because the 
proposal at least was to divert money that we are already 
spending, but it has exactly the objective that you outlined.

              pilot program for 500 undocumented children

    Mrs. Emerson. I am also curious why the Council included in 
its proposal a program or perhaps the expansion of a pilot 
program is a better way of putting it, for 500 undocumented 
children, given the number of legal children who are still not 
getting care.
    Mr. Offner. It is worth emphasizing that we do right now in 
the District cover--we make available----
    Mrs. Emerson. Make available.
    Mr. Offner [continuing]. Coverage to any child who is under 
200 percent of poverty. As has been noted before, not every 
child has signed up yet.
    Mrs. Emerson. Right.

   requirement for providers to establish community outreach programs

    Let me ask Mr. Fairman a question because I noticed in your 
remarks, you have suggested that we require providers to 
establish and implement community outreach, enhance enrollment 
outreach, incentivize hospitals. Those are great, and I applaud 
you for wanting to do that, but how precisely are you going to 
do that?

                         pbc position on issue

    Mr. Fairman. First off, let me make clear the Public 
Benefit Corporation's position. I think some of that is 
reflected in the actions that were legislated by the Council.
    The expansion of the proposal is a very good and noble 
idea. The method of funding, we thought, was speculative, and 
we suggested to the Mayor some alternatives.
    We also suggested that perhaps he was not getting the best 
advice on how to go about implementing the very good idea.
    I, for one, just briefly, was a CEO of the system in 
Denver, 14 years in Houston, studied 16 cities around the 
country in terms of this, and there is an abundance of 
information out there as to how to do this.
    A lot of things that were undergirding this proposal were 
recipes for failure, particularly because they were based on 
projected enrollments that had not been borne out in actual 
experiences to date.
    Yet, again, I emphasize that it was a good idea. So what we 
tried to lay out in this proposal is that rather than enrolling 
people, making them eligible--we already know that a vast 
majority of persons do not select a provider, the gatekeeper, 
and so there is a massive random assignment to the seven HMOs.

               hmo clients still use safety net providers

    Many of those providers all around the country--many of 
those clients still end up going to their traditional safety-
net providers. That is why Boston, that is why Illinois, 
Denver, and other places have put in their plans at least 
either a carve-out or something that says if you go to the 
safety net, the HMO must pay. They are going to mandate it.
    The objective is not to declare victory on the dollars or 
to declare victory that coverage is available. The objective is 
so that people can actually receive care and stop the rampant, 
out-of-control health status or health indices that we see.
    We feel that there are already excellent programs within 
the District of Columbia. There are case management programs 
that are already out there. We simply suggest that those be 
expanded to the Medicaid piece.
    We suggest that the data, the experiences, the actual 
utilization data is made available publicly, so that the 
District does not end up paying twice. We put the funds in the 
HMOs, and as we are experiencing at the PBC, folks are still 
coming to D.C. General. They are still going to the non-profit 
clinics and so on. That is where we suggest consideration of 
these options that we have outlined in here.
    Then, and only then, do you back away from the--reduce the 
funding to the safety-net facilities because you have hard 
data. People are in HMOs and getting care and are not backed up 
with long waiting times and all of the problems that are 
experienced even in commercial HMOs.
    Mrs. Emerson. So you have had a pretty good success rate in 
both Denver and Houston for educating the public about 
alternatives to their safety-net hospitals, if you will?
    Mr. Fairman. Absolutely, and Cambridge. I think that, 
again, what we are saying is go slow in this noble idea. Do not 
assume success, cut the funding, and then declare victory. 
Implement the program, but we suggest to the Mayor and Council 
other alternative funding mechanisms.

     additional information on alternatives to safety net hospitals

    Mrs. Emerson. I apparently have run out of time, Mr. 
Chairman, but I would like to just ask for some more 
information about precisely what mechanism you used in previous 
experiences and would like to use today to get people educated 
because, as you say, the ideas are great, but the bottom line 
is you have got to get more people using these services that 
they are going to be provided so that they do not in fact flood 
the safety-net hospitals.
    I appreciate it. Thanks.
    Mr. Tiahrt [presiding]. Do you care to submit questions in 
writing? We are going to go through another round.
    Mrs. Emerson. Unfortunately, I cannot stay, but I think 
most of my questions have already been asked. Thank you.
    Mr. Tiahrt. As you know, we have Delegate Eleanor Holmes 
Norton with us today, and she dedicates most of her energy to 
representing the District and does a very fine job.
    I was wondering if you would like to ask some questions or 
offer some encouragement to our distinguished panel.

                abortion spending violated existing law

    Ms. Norton. I appreciate it.
    I would like to ask one question just to elucidate a 
concern of the Committee that is not brought out here. May I 
simply indicate to Mr. Tiahrt, who it seems to me raised an 
issue about the expenditure of funds for abortions in the 
District of Columbia. You indicated that the Mayor had written 
a letter indicating there had been some confusion.
    I just wanted you to know, Mr. Tiahrt, that since I have 
been in Congress, that prohibition has been on our 
appropriation. It has never been violated, and it appears to 
have been violated at a point when, to use the word 
``confusion'' is to use a tame word, when the District of 
Columbia was in a state of disarray.
    I find it hard to believe that it would have been a 
deliberate attempt to countermand a command from the Congress, 
and I did want you to know that I do believe that there was 
some confusion and that you have a new Mayor, andthat with a 
clean start with a new administration, I would hope that you would 
accept his apology and his explanation that that is not anything that 
his administration would have done deliberately, although it clearly 
did happen.
    I do not know of a single instance where any requirement of 
the Congress has ever been deliberately disobeyed, although the 
District government has not always been the most efficient.

           dsh pilot medicaid program--planned implementation

    We have been talking about the Mayor's program--to expand 
medical care as if somehow it was a full-fledged program when 
in fact, as I understand it, in negotiations with the Council 
and the Control Board, this has become a pilot program.
    I would like you to explain to the Committee how the pilot 
program will be carried out so that some data or information 
from which to know the effect this would have on Children's 
Hospital or any other hospital will be derived before we go to 
assuming the effects on our institutions.
    I think it was probably prudent to begin on a pilot basis, 
so that one would have some experience, so that one could keep 
from harming vital institutions to the District of Columbia.
    On the other hand, the Mayor's concern that there are 
thousands of people who are costing the District of Columbia 
money and costing themselves health care cannot be ignored, but 
I did not hear you offer any information as to how you intend 
to carry out the pilot program, what it consists of, and how 
you intend to use that information so as to know whether the 
program should be expanded citywide.
    Mr. Tiahrt. Care to respond?
    Mr. Offner. May I respond? Just very quickly, we are 
coordinating both the new people who came on--the expansion 
started last October--and the people who will come onto 
Medicaid because of this expansion. We are computer-coding them 
so we can track the expenditures associated with those 
individuals, and we will be able to tell how much revenue each 
of the hospitals got from each of these stages of the 
expansion, and after a year or so, we can come back and say 
here is the experience, here is how much this expansion meant 
in terms of revenue to Children's Hospital, for instance.
    I assume that will happen before the City Council and 
others will----
    Ms. Norton. Before the next budget period, you will----
    Mr. Offner. Yes. We will clearly have some of that data 
before the next budget period.
    Ms. Norton. Thank you very much.

         concern over abortion spending in violation of statute

    Mr. Tiahrt. You are welcome. I share your optimism about 
the Mayor and the job that he is doing. I did want to make a 
point, and I think I made the point.

       vehicles--concern over violations of take-home prohibition

    There are others who do have a concern over the use of city 
vehicles for travel between their homes and workplace. I think 
we should also look into that.
    Ms. Norton. I share that concern, Mr. Tiahrt. The notion 
that people come into the District of Columbia--most of them do 
not live here--and go home to Mr. Moran's district on my dime 
and my car is something I would like to see prohibited.
    Mr. Tiahrt. All right. We will pull together.
    At this time, I think we should afford the opportunity for 
others to continue questioning.
    Mr. Moran would be next in order.
    Mr. Moran. Thank you very much, Mr. Tiahrt. I would have no 
problem supporting any initiative you wanted in that area, Ms. 
Norton.
    I think we have more than enough traffic in our suburbs. If 
you wanted to keep the D.C. cars in the District, that would be 
just fine. We can work on that together.

         children's hospital and abused and neglected children

    That was not what I wanted to focus on in this hearing. Let 
me tell you where I am coming from. At the Children's National 
Medical Center in D.C., they come across an awful lot of abused 
and neglected children, and my experience when my daughter was 
there for an extended period of time supports that observation.
    Invariably, they would be children who just had not been 
identified by the system such as it is that exists in the 
District. They were falling through the cracks or there was not 
any floor to begin with to catch them.
    Even after they were identified, there would be very little 
follow-up, and I think that a lot of these kids, we invariably 
see in the criminal justice system, you know, they are not 
going to go away, and the worse the experience during the 
childhood, the more likely we are all to suffer as a result.
    One of the reasons, I am sure, is lack of resources. I 
cannot imagine it is a lack of compassion on the part of 
employees involved in the system. I suspect most probably that 
those who are involved in abuse and neglect have just too large 
a caseload that they can handle, and 200 is too large if that 
is what it is. We may have too many people, as we do with 
public safety, still behind the desk, but I suspect that those 
who are out in the field are doing a good job and it is just 
overwhelming.
    So that gets me to how we can expand the high quality of 
care that I know Children's offers. So I have confidence in 
Children's. They do offer high-quality care, and families that 
use Children's will support that.

      expansion of quality care for abused and neglected children

    So I would like to see that kind of quality of care 
expanded out into the neighborhoods. I would like to see them 
really take on an initiative particularly to address the abuse 
and neglect situation.
    I have a very high impression of Mr. Fairman, that he has 
good credentials. Dr. Dougherty tells me you are a great guy, 
he has a lot of confidence in you, and, naturally, everyone up 
here--I have every reason to believe you are the right people 
in the right place.

            concern over medicaid initiative and dsh payment

    I have got concern with this new initiative. For one thing, 
you say that you are going to cover about 18,000 as the 
population you plan to enroll in this expanded Medicaid 
initiative, yet, there are only 3,600 who are actually 
enrolled. Is that correct?
    In October, the District Government implemented the local 
CHIPS program with approximately 18,000 individuals potentially 
eligible to enroll. Through March of this year, only 3,600 have 
enrolled. Your proposal assumes about 34,000 people total, many 
of whom are difficult to reach. Are those the right numbers? 
Are those bad numbers?
    Mr. Offner. The October expansion, the universe is about 
15,000 people, and there are about just under 6,000 that are 
now----
    Mr. Moran. Okay. So it is 15,000 and 6,000.
    I do know that even when people who were eligible for 
Medicaid families, there was a large share of parents who just 
were not bringing their kids into the system, even though the 
kids were actually eligible for Medicaid, but it just did not 
get to them.
    So what this means is that while on paper, the answer that 
I am getting as far as Children's, for example, and eliminating 
the DSH payment, is do not worry about it because you have more 
people who are now covered by insurance. So they will go there, 
and they will get their health insurance and that will pay for 
it.
    Well, not if we are only going to get enrolled maybe a 
quarter of the population or maybe if we put on a push we get 
half of it. The fact is that it is very difficult to enroll 
anywhere near the universe of the eligible population for the 
program. We would probably be lucky if we could get half.
    Meanwhile, the DSH payment is gone. The DSH payment is 
being used for childless adults. I am sympathetic toward 
childless adults, many of whom are homeless. They are victims 
primarily of self-abuse. Whereas, the kids have no control over 
their lives. Both are populations that should elicit sympathy, 
but the kids elicit the greatest sympathy, at least as far as I 
am concerned, and I think need to be the highest priority.
    I really am concerned about the fact that the DSH payments 
are being used for this other population because I do not think 
that the balance sheet is going to work out for a hospital like 
Children's which only takes care of kids.
    As a result, not only are we not going to be able to expand 
that kind of care out into neighborhoods, which is what I would 
like to see, but I think that we are compromising even the 
quality of care at the institution itself.
    Mr. Offner. I guess three things. The good news, I guess, 
is that the City Council clearly shared your concerns, and we 
now have a pilot program and we will find out. Before anything 
drastic is done in this area, we will presume we know better.
    Secondly, you need to understand, though, if a kid goes to 
Children's and they are covered by this program but they have 
not signed up, the hospital can sign them up right there while 
they are in the hospital. It is a two-page form. They stick it 
in the mail, and within 14 days--they are averaging 14 days--
that kid is on the program.
    We are pretty confident we are going to do a lot better 
than half, but----

                    Reimbursement Rate to Hospitals

    Mr. Moran. Let me just interject. What percentage of cost 
does that mean is going to be reimbursed?
    Mr. Offner. The Medicaid program, what percentage of cost?
    Mr. Moran. Of Children's cost of care, what percentage is 
going to be reimbursed as a result of this signing-up?
    Mr. Offner. What I have in my head is the percent of 
hospital cost that we reimburse, which is close to 90 percent.
    Mr. Moran. You will reimburse 90 percent of hospital cost?
    Mr. Offner. Of cost. That does not necessarily mean their 
charges.
    Mr. Moran. What percentage of charge?
    Mr. Offner. In the average, it is probably like 50 percent 
of the charges.
    Mr. Moran. It is 50 percent of the charges.
    Mr. Offner. The charge is way above cost.
    Mr. Moran. Do you think that they are getting a 50-percent 
markup above cost?
    Mr. Offner. I think most hospitals in the United States, 
the charges are well above cost. Certainly, the Medicare 
studies have all shown that.
    I do not know specifically what Children's is. I can get 
that.
    Mr. Moran. I interrupted you. You were going to complete 
your answer.

          Emphasis on Preventive Care and Neighborhood Clinics

    Mr. Offner. I was only going to repeat the point that at 
the end of the day, we have to find some way to redirect some 
of these resources in preventive care. That is not to take a 
thing away from Children's Hospital, but if we wait until these 
children go to Children's Hospital, we have lost part of the 
battle.

      Children's Hospital--Appropriations for Neighborhood Clinics

    Mr. Moran. I totally agree, and that is why I wanted to 
expand it out into the neighborhood. I would like to get a 
clinic out in Anacostia. I would like to get one up in Shaw. 
Perhaps Shaw is a little closer to Children's. Anacostia would 
probably be the first location, but I would really like to get 
some clinics out into the neighborhoods. I do not think we are 
going in that direction, and that troubles me. That is why I 
asked that the additional money should be put into the D.C. 
appropriations bill this year for such clinics, but it is only 
going to work if the administration wants it to work. It is not 
going to work otherwise--we cannot mandate it. We cannot impose 
it. It is going to have to be an idea that you own and want to 
work.

               ``Low Ball'' Bid By PBC-Type Health Groups

    The other thing I have concern about, and I do not want to 
push the indulgence of the chairman on this, but there was a 
bid process recently, and there was a sense by some people--I 
am not sure how accurate it is--that an organization like the 
Public Benefit Corporation can bid at a relatively small 
percentage of actual cost, basically low bid, get the proposal, 
but then farm out the care. Then, the actual people who deliver 
the care may be getting an even smaller percentage of the money 
paid out.
    I do not know the extent to which that is true, but it is a 
concern, certainly, if it is. If you wanted to address that, 
that would be fine.
    Mr. Istook [presiding]. Please go ahead.
    Mr. Fairman. Thank you.
    I am not aware of any particular bid at which the PBC has 
participated and/or received and then in return would farm out 
care at a lesser cost.
    I think the good news is that the PBC was created to 
provide for the care, meaning we would not duplicate services 
already available in the private sector, if the care was--the 
quality was acceptable and the cost was acceptable.
    We did participate in a bid for the La Shaun receiver kids 
for the cost of care. We were the selected vendor to manage the 
care for the receiver. I think that is good news because you 
were speaking of abuse and neglect earlier, and the system that 
they had in place was not appropriate.
    The reason they selected us is that we are the only 
comprehensive integrated delivery system that goes from the 
schools to the acute care level-one trauma and community-based 
centers, and we have a dedicated medical director.
    It was the feeling, not the sole provider, that then we 
were in a better position to pull in all the data from the 
other providers so that more rational decisions could be made.
    I think it was Mr. Tiahrt that was mentioning about the 
computers and so on, and that is all a part of building 
adatabase system, along with the private provider, to do that.
    If I might just comment with respect to the proposal, we 
have to acknowledge what Ms. Norton said that what is on the 
table now is a pilot program. It is a small one, and Mr. Offner 
is right that the results will be there.
    The other parts of it, though, relative to the funding 
mechanism, with the DSH hospitals and the PBC, a very good idea 
could be a recipe for disaster if in fact it does what you are 
talking about. You move the dollars and the care, and 
reimbursement does not follow.
    Mr. Moran. Okay, good. A good answer. Thank you.
    Mr. Istook. Thank you, Mr. Moran.
    Mr. Mollohan.
    Mr. Mollohan. Thank you, Mr. Chairman.

              report on substance abuse treatment services

    Dr. Kelley, in your testimony, you say in order to address 
the issues of substance abuse, the Department of Health will 
determine levels of drug treatment services based on a recently 
completed comprehensive needs assessment. Who conducted that 
assessment?
    Dr. Kelley. It was done through our Substance Abuse 
Administration.
    Mr. Mollohan. Did it develop a report?
    Dr. Kelley. Yes. We would be happy to send you a copy.
    Mr. Mollohan. Did it have comprehensive recommendations?
    Dr. Kelley. As I recall, yes, it did, with also specific 
recommendations.
    Mr. Mollohan. Does this budget that you are up here 
testifying about today reflect those comprehensive 
recommendations?
    Dr. Kelley. Some are included in our expansion of services, 
and the way that we plan to do that, yes, that is included 
because it was certainly recommended through that assessment.
    Mr. Mollohan. Were you involved with that study?
    Dr. Kelley. Was I personally? No.
    Mr. Mollohan. What I am trying to get at, is this an 
impressive study that really comes forth with a reworking of 
the way we deliver services for substance abuse? Does this 
budget reflect it?
    Dr. Kelley. I think the fact that both the Council and the 
Mayor have felt that we needed additional resources and that 
was included in an additional allotment of funds for the 
substance abuse administration indicates that we all felt that 
based on information and what we all know to be true that 
substance abuse is a serious problem in our community, and so, 
therefore, it needs the resources.
    I might also add that there are a number of areas where we 
are working collaboratively with other agencies within the 
Government and outside of the Government, and the Federal 
Government also through many of its agencies are working with 
us. So we have gotten additional funding from that area, too, 
from some of the grants. So there is a lot of collaboration 
going on to address this very serious problem. So I think that 
needs assessment report and others that have been done 
regarding the problem of substance abuse in the city have been 
taken to heart.
    Mr. Mollohan. I was just impressed with the title of it or 
how you reference it here, ``Comprehensive Needs Assessment.'' 
I think everybody agrees this is the way you have to approach 
this problem.
    Dr. Kelley. We will send you a copy of it.
    Mr. Mollohan. I am sorry?
    Dr. Kelley. We will send you a copy of it.

              substance abuse--uniform gate-keeping system

    Mr. Mollohan. I understand that the Addiction Prevention 
and Recovery Administration would like to implement a uniform 
gate-keeping system. Is that an idea that has come out of the 
comprehensive study?
    Dr. Kelley. I am not sure. I am not sure about that.
    Mr. Mollohan. Are you familiar enough with that system? I 
think it provides for a comprehensive assessment of individual 
needs based on the severity of their addiction. That implies to 
me that there will be a variety of treatment and levels, and 
different levels of treatment available, depending upon the 
severity of the addiction.
    Dr. Kelley. Yes. I think that there is an attempt also 
within certain communities.
    For instance, the pregnant and postpartum women that there 
is a specific special emphasis on that community and the dually 
diagnosed to have a more managed care kind of a system in place 
for targeted groups because of the high-risk situations 
involved.

              outsourcing detox and residential facilities

    Mr. Mollohan. Also, as a part of this testimony, you would 
like to outsource the detoxification center and the residential 
short-term facility that is located at D.C. General Hospital.
    Dr. Kelley. Yes.
    Mr. Mollohan. Why are you making that recommendation?
    Dr. Kelley. I believe that it was a conclusion of a number 
of folks, including the Council and the administration, that 
perhaps the community could be best served if it was 
outsourced.
    Mr. Mollohan. Does that mean privatized?
    Dr. Kelley. Privatized, contracted out, yes, and, of 
course, the employees will have an opportunity if they so 
choose to band together and present a proposal where they feel 
they could do it. So that is an opportunity.
    Mr. Mollohan. Do you anticipate that that would happen 
during the next fiscal year?
    Dr. Kelley. We are working on that, yes, the next fiscal 
year. Yes. We are starting in October, yes.
    Mr. Mollohan. This budget?
    Dr. Kelley. This budget.

  budget increase for inpatient services and decrease for outpatients

    Mr. Mollohan. You increase in this budget the inpatient 
services by about $2.3 million and decrease the outpatient 
request or budget proposal by about $1.4 million. Can you 
explain that adjustment?
    Dr. Kelley. Are you referring to the substance abuse 
administration?
    Mr. Mollohan. Yes, I am, and I am referring to the request, 
the decreased inpatient and increased outpatient. I am on the 
red light.
    Mr. Istook. Go right ahead, Mr. Mollohan.
    Mr. Mollohan. If you would feel more comfortable answering 
that in writing, then that would be perfectly fine with me, but 
I am interested.
    Dr. Kelley. I will get back to you.
    Mr. Mollohan. Let me let you do that because we are on the 
red light.
    [The information has been retained in the Committee files.]
    Mr. Mollohan. I would like to understand the strategy 
associated with that, and I will follow up with you on some of 
this.
    Dr. Kelley. Very good.
    Mr. Mollohan. Thank you, Mr. Chairman.
    Mr. Istook. Thank you, Mr. Mollohan.
    Ms. Kelley, is that something that you can elaborate on 
some now in addition to what you have brought to the record?
    Dr. Kelley. Well, in order to be specific and to address 
all of the issues, it is a little complicated because numbers 
are moving around. I would rather put it in writing.
    Mr. Mollohan. I would be pleased to follow up with her, Mr. 
Chairman.
    Dr. Kelley. Okay.
    Mr. Istook. Thank you.
    Mr. Fairman?

             facilities on campus of d.c. general hospital

    Mr. Fairman. Mr. Chairman, I just wanted to--several 
references have been made with regard to what was located at 
D.C. General, and this is a burden that we have. Correct 
reference is located on the campus of D.C. General, and we get 
a lot of references like that with the morgue, at D.C. General, 
the independent medical examiner, the jail at D.C. General and 
so on.
    Dr. Kelley. Right, right.
    Mr. Mollohan. And the facilities I referenced are on that 
campus.
    Dr. Kelley. On the campus of D.C. General.
    Mr. Fairman. On the campus of.
    Dr. Kelley. Right.

                  clinic in anacostia open til 11 p.m.

    Mr. Fairman. To Mr. Moran, we already have the map in the 
book that refers you to a center in Anacostia and Congress 
Heights that we have extended hours up to 11 at night.
    Mr. Istook. Appreciate that.
    Let me ask a final few questions, and then we will ask 
others for the record. Was there anything pressing, Mr. 
Mollohan and Mr. Moran, that you wanted to pursue?
    Mr. Moran. This is fine, and I think we can follow up. At 
some point, for example, I would like to get out and see some 
of those centers.

                d.c. programs requiring federal waivers

    Mr. Istook. Let me ask, first, Mr. Offner. I want to make 
sure I understand everything correctly. So I would appreciate 
some elaboration from you. To what extent do aspects of the 
District's budget depend upon some sort of ruling or waiver or 
accommodation from HCFA or anyplace else in the Federal health 
care hierarchy?
    Mr. Offner. The proposal that the Mayor made in terms of 
this Medicaid-expansion proposal--the District back in October 
submitted a waiver proposal. So that is now under review, and 
it has been under review for several months at HCFA. In light 
of this latest action with the City Council and everybody, we 
will have to amend that waiver to limit it to this pilot 
proposal. So we are still working with the Health Care 
Financing Administration to get that waiver.
    The Mayor's proposal went well beyond that waiver because 
it would have covered people up to 200 percent, which is much, 
much further.
    Mr. Istook. 150 percent, is it?
    Mr. Offner. The waiver only takes us to 50 percent.
    Mr. Istook. Okay. Go ahead, please.
    Mr. Offner. And the Mayor's proposal would have gone to 200 
percent, but the difference was really funded out of local 
monies, although at some point, I think the District will go in 
and try to get a waiver. They have not done that yet.
    So the short answer is we have a waiver proposal that is 
under review now. We are in the process of amending it so that 
it will incorporate this pilot program that everybody has 
talked about.

                        timing of federal waiver

    Mr. Istook. My concern is whether we can have any realistic 
expectation that we will know the answers to this so that we 
can rely upon it and what we have to do to improve the budget. 
Do we just leave a hole in the plan and leave it hanging and 
also leave other aspects of local funding hanging if we do not 
have some action from HCFA before then?
    I am just wondering if we can make the different time 
frames that are involved. If HCFA approves something, but we 
have already had to complete our work on this, is it in time 
that you can do it the next fiscal year?
    Mr. Offner. We expect HCFA--this has been complicated 
because we have had to amend the waiver in the middle of the 
process, but I am hopeful--I guess all I can do is give you the 
information as soon as we can get it.
    Mr. Istook. When can you reasonably expect that, one, the 
application will be formally amended and accepted as such and, 
two, that we will have a final disposition of it?
    Mr. Offner. We have actually informally sent them our 
suggestions, and we will formally do it, I would think, in the 
next couple of weeks.
    I would hope that we can get some response within 2 months. 
Dealing with HCFA on 11-15 waivers is not always----
    Mr. Istook. Yes. And how much is at issue? How much of the 
Federal funds are tied up in the grant of that waiver? How much 
of the District funds are involved?
    Mr. Offner. This is this little pilot program. $6 million 
is the total amount which is essentially 70 percent Federal.
    Mr. Istook. I was thinking there was a larger figure that 
was also involved in HCFA waiver right now.
    Mr. Offner. No, because all we are doing right now is this 
small pilot program.
    Mr. Istook. Let me ask on the whole issue of the hospital 
capacity, and I am not talking just about D.C. General, but 
within the area, the over-capacity, the decline, the occupancy 
rates, the desire to change from inpatient emergency room 
treatment to clinic-setting treatment.

                     decline in hospital bed usage

    First, let me ask what is driving the decline in the 
hospital bed usage.
    Mr. Fairman. I will attempt to speak to it, Mr. Chairman.
    I think across the country, the same factors that are 
driving the reduction in D.C. are affecting bed utilization 
throughout the country.
    Changing the payment emphasis by third-party payers to pay 
for things on an outpatient basis that they did not pay for 
before, I think Mr. Moran talked about getting ahead of the 
curve, and insurers who were late to realize that, including 
various Medicaid programs, are now at that state.
    So the emphasis is on the gatekeeper concept, and less 
emphasis on--and that unto itself requires prior approval for 
hospitalization.
    Mr. Istook. You say it is part of the national trend as 
opposed to anything that is distinct to the District?
    Mr. Fairman. Absolutely. And the District does have a lot 
of good programs that the four of us have talked about,that are 
initiatives that are driving that as well----
    Mr. Istook. Certainly.
    Mr. Fairman [continuing]. Hopefully toward wellness.
    Mr. Istook. Right. We have seen it with hospital closures. 
We have had that situation, and I think every State has.
    You are not only wanting to take care of that, but you are 
looking at a change in the nature of health care that is made 
available. I just wanted to know if there was any distinct 
factors that you saw that were specific to the District.

                    Hospital Consolidations Expected

    Do you expect all the hospitals that are operating now, 
absent any change in the underlying compensation and payment 
rates from the District and Federal Government--do you expect 
all of those that are operating now to still be operating in 
the next year and 2 years from now?
    Mr. Fairman. I think that the Urban Institute and others 
have clearly projected that there would, at minimum, be further 
consolidations.
    We see that right now going on between MedStar, Washington 
Hospital Center, Georgetown, and a lot of the others. In fact, 
there are discussions going on with the Council, the Mayor, the 
Control Board, and the various administrations looking at 
consolidation between the three largest safety-net facilities 
as possibilities that are being discussed.

                    Operating Beds vs. Licensed Beds

    I think also we need on the record that most of the time, 
including the Washington Post's recent article that focusses on 
declining occupancy versus licensed beds--in the trade, in the 
business, we look at operating beds versus occupancy, and that 
is the true test of what is going on, but clearly----
    Mr. Istook. The term licensed beds, you are saying is 
misleading, as opposed to operating beds?
    Mr. Fairman. Absolutely.
    For example, at D.C. General right now, we have 250 beds. 
We were licensed up until a year ago for 410. So you look at 
occupancy from 250 versus how many----
    Mr. Istook. They closed off certain wings?
    Mr. Fairman. That is right, and we are in the process of 
trying to consolidate the various buildings on the campus into 
the main core building.

                 Excess Hospital Beds--Alternative Uses

    What happens to those beds, at least in our paper, we are 
suggesting that there are some incentives to encourage all of 
us to meet these needs for increased substance abuse beds and 
intermediate care and some of the other things.
    Mr. Istook. I think this may go back to part of the 
question that Mr. Mollohan was posing. That may be a concern 
that there may be a desire to make some substance abuse 
programs be programs that use the bed space that is available 
and is not being utilized because certainly I would not want to 
see substance abuse dollars being soaked up for residency 
programs that require a bed when they can be better used in 
some sort of outpatient program.
    I do not want to see the substance abuse dollars utilized 
to try to solve the hospital over-bed problem.
    Mr. Fairman. Right.
    If I might, I do not think any of us, even in the private 
hospitals, would attempt to do that, and in fact, the payers, 
like Medicaid, Paul Offner and others, would not allow it even 
if it were to try to do it because there are different 
regulations that speak to it.

                   20-Bed Detox Unit at D.C. General

    We have a 20-bed detox unit at D.C. General, and quite 
frankly, it is the hottest item around because there are so 
many people that cannot get in. They are short-term treatment 
programs when people are in crises. Those are the kinds of 
things I am talking about. You are correct. Simply putting 
somebody in an acute care bed and move them forward, that would 
not be in the best interest of anyone.
    Mr. Istook. I think that is one of the things that we want 
to be looking at.

           Suggestions for Dealing with Excess Hospital Beds

    A final question. What can the District government or the 
Congress do, in your opinion--it is an open question, any of 
you--what we can do or should do to address the over-bed 
situation and how it contributes to higher health care costs in 
the District?
    Mr. Offner. I will just start. I want to emphasize that to 
some extent, this is a problem that is--I do not want to say 
taking care of itself, but just the managed care initiative in 
Medicaid, we have the data. We have cut inpatient hospital 
utilization in half, and so far, we have just addressed the so-
called AFDC population, which is about a third of Medicaid. The 
aged and disabled just have to come, and we have, as I said 
before, among the highest hospitalization rates in the free 
world, and as we begin to manage that, it is going to come 
down. So I just leave you with the point that over the next 3 
years, there are going to be major, major reductions in 
hospital use in my opinion, at least from that 25 percent of 
the District that is under Medicaid.
    Mr. Istook. Anyone else?
    Mr. McCarthy. I just might add, I mentioned earlier on 
about the Health Care Commission that the Mayor and the Council 
have formed. That is one of the top issues they are going to be 
looking at, so much so that a consolidation is not going to 
create economic or geographic disparities when it happens.
    The composition of the commission is such that they are 
going to engage the PBC, of course, and hospitals like 
Children's. I would be very much hoping that when the next 
budget cycle comes around to have a city-wide consensus on how 
to address that issue.
    Mr. Istook. Good.
    Mr. Fairman.
    Mr. Fairman. My statement would be, first, that there has 
been a dramatic reduction in the actual beds, and I refer you 
to the District Hospital Association book that does depict the 
decline.
    Mr. Istook. Is that licensed beds?
    Mr. Fairman. These are operating beds.
    Mr. Istook. Operating.
    Mr. Fairman. What you see, for example, at facilities like 
Children's National Medical Center, Howard, Providence, and so 
on, they are all opening community health centers to keep in 
vogue, keep in step with what is before us now, the emphasis on 
prevention and primary care.
    We outline in page 7 of our report some things that we 
think would help accelerate the so-called over-bedding issue 
that exists in the District, and they go to encouraging 
collaboration and doing some of the things that the Federal 
Government has led in States like New York when they were 
overtraining doctors and some of the other things. I would just 
leave it there, though, but the market forces, the payment 
mechanisms and all of that, are in fact pushing them. I think 
collaboration is the other, to stop some of the intense 
competition that is left for a smaller market.
    Mr. Istook. Did you want to say something, Mr. Moran?
    Mr. Moran. There is one other area that I had wanted to ask 
a question about, Mr. Chairman, since we are winding this up 
and we have got a vote on--I would like to just throw this in.

                       Medical Malpractice Impact

    I have talked about children's health care, and one of the 
things that was particularly troublesome is the dearth of 
pediatricians and OB-GYN practitioners in the areas of the city 
that need them the most. I could list the parts of the city. 
There is an inverse correlation with the number of 
pediatricians and OB-GYNs.
    I am told--and this is a problem that particularly affects 
D.C. General and other hospitals in those areas--that a major 
part of the problem is the cost of medical malpractice 
insurance and the fact that we have people in the city, the 
trial lawyers, and even people that have been around the D.C. 
City Council who made this a cash cow, to sue the city's 
institutions and the city's doctors.
    I am wondering if you--I would guess you cannot even 
respond, but if you were willing to, I would love to hear you. 
Do you think it would make a difference if we had some caps on 
medical malpractice insurance in the city? Would it make a 
positive difference in terms of the delivery of quality health 
care? The first question is: Can you say anything?
    Mr. Fairman. I would say that while we are not elected 
officials, we have been around here long enough to know not to 
touch that, except to say that the issue of malpractice does 
drive the equation and has to be a part of the debate.
    Mr. Moran. That was a good answer.
    Anybody else?
    [No response.]
    Mr. Moran. So the answer is basically yes, it is a major 
problem.
    Mr. Offner. We will talk about it.
    Mr. Moran. Right, got you.
    Mr. Istook. Thank you, Mr. Moran.
    If there is nothing further--is there anything further that 
you were wanting to say to my last question in there?
    [No response.]
    Mr. Istook. If not, very good.

                              Adjournment

    We appreciate very much your coming forward and sharing 
with us today. We may have some further things for the record. 
We thank you very much.
    We stand adjourned.
                                            Tuesday, June 22, 1999.

            D.C. PUBLIC SCHOOLS (INCLUDING CHARTER SCHOOLS)

                               WITNESSES

                       PANEL 1: PUBLIC WITNESSES

JEANEE SNIPES, STUDENT, WASHINGTON MATH, SCIENCE AND TECHNOLOGY PUBLIC 
    CHARTER SCHOOL
SIDIDKI PAUL LANCASTER, PRESIDENT, PARENT ASSOCIATION FOR EDISON-
    FRIENDSHIP PUBLIC CHARTER SCHOOL
DELORES L. SCOTT, ESQ., EDUCATION ADVOCATE, SASHA BRUCE YOUTH WORK, 
    INC./CONSORTIUM FOR YOUTH ALTERNATIVES

             PANEL 2: PUBLIC CHARTER SCHOOL REPRESENTATIVES

JOSEPHINE BAKER, CHAIR, D.C. PUBLIC CHARTER SCHOOL BOARD
MALCOLM PEABODY, CHAIR, D.C. PUBLIC CHARTER SCHOOL COALITION
JACK McCARTHY, MANAGING DIRECTOR, APPLE TREE INSTITUTE

              PANEL 3: D.C. PUBLIC SCHOOLS REPRESENTATIVES

ARLENE ACKERMAN, SUPERINTENDENT OF D.C. PUBLIC SCHOOLS
MAUDINE R. COOPER, CHAIR, D.C. EMERGENCY TRANSITIONAL EDUCATION BOARD 
    OF TRUSTEES
CONSTANCE NEWMAN, VICE CHAIR, D.C. FINANCIAL RESPONSIBILITY AND 
    MANAGEMENT ASSISTANCE AUTHORITY

                   Chairman Istook's Opening Remarks

    Mr. Istook. The committee will come to order. We are 
meeting today to receive testimony concerning the budget for 
the District of Columbia's public schools and the charter 
schools. The fiscal year 2000 budget is at a crucial stage in 
the development of charter schools within the District of 
Columbia and in improving the educational quality within the 
District of Columbia's schools. Certainly it is not always easy 
to get things back on track with some of the things that have 
been experienced in the past, but there is a very significant 
charter school movement within the District, and we wanted this 
hearing to focus on that particular transition, trying to fill 
a niche between what has been the development of private 
schools and the development of the traditional public schools.
    I think the District is very fortunate that it has in place 
a strong framework and mechanism for the benefit of the 
students, so that no matter where they may be attending school 
there is the possibility to extend the best educational future 
for them.

              concerns over assistance to charter schools

    Now, one of the concerns I want to make sure we cover 
within this hearing is the problems with whether the District 
schools are assisting, through sale, lease, transfer or use 
agreements, with making property available to the charter 
school system. Information indicates that there are about 3 
million square feet of unused space within the public schools 
in the District of Columbia. That is vacant space, of course, 
that could be used by charter schools or could be transferred 
or sold to other entities, perhaps gaining revenue for the 
benefit of the District schools and the students.
    I think, to bring it home, I understand that 3 million 
square feet is about half the space of the Pentagon. So if you 
realize that half the Pentagon is available within the public 
school system, we see that the excess classroom space is a very 
significant issue.
    We also want to make sure that we know what steps are being 
taken to protect this property of the taxpayer and to help 
achieve the highest and best use and utilization of that 
property.

                        three panels testifying

    We have three panels that are going to be testifying today. 
In order to make an orderly process, we want to hear first from 
the first panel, then have any questions--that I hope will be 
fairly brief--with members of the first panel; call the second 
panel and hold until after the third panel before we have 
questions of the second and third panels, because I think there 
is going to be some interaction that will help us to develop 
the information that we are needing.
    I don't have anything further in the way of my remarks. I 
do want to recognize that we have the Delegate from the 
District of Columbia, Eleanor Holmes-Norton. We are always 
pleased that she is here, although not a member of the 
Committee. I would like to yield to Mr. Moran as the Ranking 
Member for any remarks you may have.

                  Congressman Moran's Opening Remarks

    Mr. Moran. Thanks very much, Mr. Chairman, and thanks for 
having this hearing, and we want to express our appreciation to 
the witnesses today for giving us some greater insight into the 
conduct of the school system.
    Just 2 years ago as Ranking Member of this committee, I 
could not have been more pessimistic about the State of D.C.'s 
public schools and their potential for reform, and I was a fan 
of Dr. Becton and I like Franklin Smith, too. I just felt that 
the problems they were dealing with were simply insurmountable, 
but the leadership that Ms. Ackerman has shown in tackling 
those problems has been tremendous, and I am very much 
impressed, Dr. Ackerman.
    Last year the schools opened on time, which you would think 
would not be an exception but an expectation, and yet it was 
the first time in 4 years, and it happened twice in a row. Test 
scores for Stanford 9 tests have improved over the last 2 
years. The D.C. public school system is preparing for 30,000 
students in the summer STARS program, your summer school 
program, and I am sure that is going to continue to improve 
test scores.
    I understand that there are a lot of problems in terms of 
the physical facilities in our school system. The bathrooms, 
for example, have been described as unhealthy and unsafe, but 
there has been a lot of improvement, particularly in the last 2 
years in the capital improvements program. We have a long way 
to go to provide quality special education to truly disabled 
students, but we have improved the assessment process 
substantially.
    We have a long way to go, but I think we have come a long 
way in a relatively short period of time, and I am very pleased 
to see that progress.

                            charter schools

    As far as charter schools are concerned, I think it is 
useful in the District of Columbia to have an alternative to 
the public school system, but the oversight, particularly of 
those charter schools, has to be at least adequate, if not 
extraordinary, and I think we do have some problems there.
    We have created a compromise to ensure the charter school 
funding is not in competition with the needs of the D.C. public 
school system. We were able to do that, and I am glad because 
if we had not done that, there would have been substantial 
infighting and it probably would have been destructive to both 
the traditional public school system and the charter school 
system if we had not provided the additional money we did last 
year.
    So this hearing is part of a process in our objective of 
having the Congress play a constructive supportive role to the 
D.C. public school system, and our objective is mutual: To 
create a safe and a strong educational environment for all the 
children of the District of Columbia.
    And so with that, I thank you, Mr. Chairman, and look 
forward to asking questions after the--particularly after the 
second and third panels have testified.
    Mr. Istook. Thank you very much, Mr. Moran. And I want to 
echo what Mr. Moran has said, although we recognize there is an 
accumulated backlog of many problems that the District's 
schools have, nevertheless I think it is good to focus on the 
progress that has been made and is being made and to applaud 
and to encourage that progress at the same time as we help to 
try to solve the problems that do remain.
    I think it is very significant that the charter school 
legislation in the District enables the money to follow the 
child whether they are in a regular public school or a public 
charter school. I have had some concerns as to whether the 
city's budget was doing so adequately, but I think those 
concerns are being worked out. We are going to make sure that 
in the final bill it does have adequate money following the 
child wherever the child may be attending school.

                            witnesses sworn

    At this time, we want to continue the standard practice of 
the subcommittee of swearing in all witnesses pursuant to the 
rules of House and of the Committee. So I would like to ask all 
the witnesses, regardless of which panel you are on, if you 
would stand at this time for that oath. We will try to do it 
all at once.
    [Witnesses sworn.]
    Mr. Istook. Thank you. You may be seated, and if the record 
could show that the witnesses answered in the affirmative.

                            Public Witnesses

    The first panel is public witnesses, and forgive me if I 
mispronounce someone's name, please. Is it Jeanee Snipes?
    Ms. Snipes. Jeanee.
    Mr. Istook. Okay. Jeanee Snipes, who is a student currently 
attending the Washington Math, Science and Technology Public 
Charter School; then Sidiki Paul Lancaster, who is President of 
the Parent Association at Edison Friendship Public Charter 
school; and our third witness is Delores L. Scott, who is from 
the Sasha Bruce Youth Work, who has extensive experience with 
at-risk youth.
    We will have the entirety of your statements placed in the 
record. So there is certainly no need to read--in fact, we 
encourage you to depart from or summarize your statements, so 
that then we can have the benefit of any extra comments you 
have there. We appreciate your being here, and Ms. Snipes, you 
have the privilege of being first. Thank you for being here.
    Ms. Snipes. Thank you.
    Mr. Istook. And why don't you pull the microphone closer to 
you, if you would?

                    Opening Remarks of Jeanee Snipes

    Ms. Snipes. Good afternoon, Chairman Istook, and 
subcommittee board members. Again, my name is Jeanee Snipes, I 
am a student at the Washington Math Science Technology Public 
Charter High School. I currently have just finished the 11th 
grade, and I must say this has definitely been one of the most 
memorable school years I have ever had.
    Before coming to the Washington Math Science Technology 
Public Charter High School, known as WMST, I was enrolled for 2 
years at the School Without Walls in Washington, D.C. I chose 
to attend WMST because I thought the charter school would give 
me more opportunities in internships as far as job 
opportunities to meet different types of people. I also believe 
that charter schools have the flexibility to do more things for 
the students, and the students have the opportunity to 
implement their ideas into everyday school life.
    I find WMST to be an excellent school. While at WMST, I 
have attended a conference on physiology which American 
physiologists from all over America attended, and we had the 
chance to talk to them. Currently I have an internship with the 
Apple Tree Institute for Education Innovation, and I also had 
the chance to be part of the Higher Aspirations Academy which 
is a volunteer organization that comes into the school once a 
week and helps us with college applications and getting 
prepared for college life.
    At WMST I believe I have had a better opportunity than I 
would have had at a regular public school. By saying this, I 
have had the opportunity to be involved in choices that I made 
for myself, academically and socially, things that--
extracurricular activities that I wanted implemented into the 
school day, I have had the chance to say this is what I wanted 
and it has been fulfilled.
    Academically, we have had a voice as far as getting a type 
of work schedule that we thought would be suitable for us as 
students.
    I have definitely succeeded at WMST. I have received 
several awards for academic excellence in humanities, U.S. 
History, mathematics. I was the second-place recipient of an 
award for the Stanford 9 testing, for which I had the second 
highest score in the 11th grade. Not only have I succeeded at 
WMST, but currently this year 94 percent of the seniors that 
were enrolled in the school graduated, and 100 percent of the 
seniors that enrolled in college were accepted.
    The staff at WMST is definitely the best staff and teachers 
that I've ever had. The teachers are dedicated. They offer 
after-school tutoring as well as tutoring on weekends which 
they don't have to offer. They offer SAT training for students 
who are lacking, and this is all out of the goodness of their 
heart.
    The principal has stepped up and helped the students as a 
mentor, a friend and a parent in some cases. Parental 
involvement at WMST is very important for the fact that if you 
have a parent that's involved, usually the student's going to 
be more involved in the school, and if the student's more 
involved, they are going to want to be there to learn, and if 
they want to be there to learn, it's just going to help the 
whole productivity of the school.
    My mother is in the military, but she still finds time when 
she's between TDYs and between bases to be involved in the 
school and she's very supportive of me. And that's really all I 
have to say, and thank you for listening.
    Mr. Istook. Thank you very much.

                  prepared statement of jeanee snipes

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    Mr. Istook. Mr. Lancaster.

                  Opening Remarks of Sidiki Lancaster

    Mr. Lancaster. Yes. Good afternoon, Chairman Istook, fellow 
members of the D.C. Subcommittee. My name is Sidiki Paul 
Lancaster. Not only am I president of the Home School 
Association, but my daughter attends the Edison Friendship 
Public Charter School at Chamberlain campus. Because I am a 
parent and I have that unique position, I think my perspective 
is a little bit broader and, I think I can offer some insights 
on that.
    We chose Edison Friendship School mainly because of the 
strong academic background and the technological support that 
we saw that our daughter would get by attending. We wanted her 
to have a much more broader experience in that she would be 
exposed to foreign languages as well as to the computer in the 
home program that Edison provided to us. We felt that with that 
Ki-aura would have a better opportunity to develop and meet 
future challenges that are unique to her age group.
    We found also that the curriculum was one that was very 
acceptable to us, the math and reading programs particularly. 
Our daughter is very proficient in reading anyway and thanks to 
the public school system that--she went to Gibbs Elementary 
first, and we had very good teachers there, and we weren't 
disappointed with Gibbs, but we were looking for a broader 
opportunity, that's all, and the District at that time just 
didn't afford that. So Edison provided that for us.
    The math program is very good because it challenges her and 
it challenges her to use her creativity to solve problems, and 
we feel that problem solving is important not only in the 
classroom but outside the classroom, and developing that is a 
part of life so that when she gets older she could also deal 
with solving problems or meeting confrontations in her own life 
and then solving them. Edison provided us with that.
    The classroom environment was bright, relaxed, and the room 
itself was creatively adorned, which we thought would encourage 
an enthusiasm for learning. And we feel that a positive 
atmosphere like this is necessary for our child, and of course, 
everybody's child, and because I was--being president of the 
Home School Association, I encouraged that, and working with 
the staff at Edison, particularly at the Chamberlain campus, I 
found that when I opened the doors so other parents can see how 
easy it is for them to take part in their children's education, 
the educational curriculum itself got easier, and the children 
became more confident because they knew they had support, not 
only at the school, but when they went home as well, and this 
is important I think in any educational system.
    Most of the time our children go to school, then come home 
and everybody forgets about them; send them outside and let 
them play. Well, at Edison, we try to encourage the parents 
that once your child comes home, start--give them a break and 
then sit down with them and say, what do you have to do and 
let's see can we get it done together; and then if there are 
any problems, the parents are free to come to the classroom, 
sit in, observe, volunteer, and then help their child to 
succeed, not only educationally but socially, and because of 
that open-door policy at Edison, we feel that this has 
strengthened the educational curriculum in that regard.
    As president of the Home School Association, I have 
encouraged all the parents to come to me and deliver to me any 
concerns they may have, and I, working as a liaison between 
them and the principal, Dr. John Pannell, and the rest of the 
staff at Chamberlain, see if we can solve the problems, see if 
we can have conferences with those parents, sit down and see 
whatever their special needs are and see if we can meet them, 
just so their child can succeed; because it's not just the 
child succeeding, it's the family succeeding, because education 
is a family experience, not just a child's experience, and 
that's how we see it.
    So Chamberlain for us has proven that they can be very 
caring, very supportive. We think that it's a broad experience, 
and we are looking forward to the coming year. The start-up 
year for Chamberlain, as for any start-up situation, can have a 
lot of bugs in it, but if the parents--with the parents' 
support, we were able to work the bugs out very quickly and get 
the educational curriculum into a continuum so the children 
would not lose anything for the school year. And we thought 
that was important, and the parents made sure that occurred 
because they volunteered their time and support, not only to 
the staff but to their own children as well.
    So thank you very much for allowing me to make those 
remarks and----
    Mr. Istook. Thank you, Mr. Lancaster.

               prepared statement of mr. sidiki lancaster

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    Mr. Istook. Ms. Scott.

                    Opening Remarks of Delores Scott

    Ms. Scott. Good afternoon. My name is Delores Scott. I am 
the legal educational advocate at Sasha Bruce Youth Work.
    Sasha Bruce is a 25-year-old private, nonprofit youth and 
family services agency, and one of the principal providers of 
youth and family services in Washington, D.C. Sasha Bruce has 
many programs designed to provide children and their families 
with an array of comprehensive services such as emergency 
shelter, individual and family counselling, substance abuse and 
AIDS prevention education, job training and placement, and 
educational advocacy, to name a few.
    Today I will be brief in my remarks discussing one of Sasha 
Bruce's programs called the Consortium for Youth Alternatives, 
CYA. CYA is a juvenile diversion program for D.C. Superior 
Court.
    Prior to 1995 CYA's clients consisted mostly of young 
people who had been charged with an offense or crime. In an 
effort to avoid stigmatizing the young people by entering them 
into the juvenile justice system, CYA provided them with an 
opportunity to address their truant or out-of-control behavior 
by participating in individual, group, and family counselling 
sessions, as well as participating in recreational and 
community service activities.
    However, in 1996, in response to the alarming number of 
truancy cases reported to the court by DCPS, it was determined 
that students who were truant, performing poorly or out of 
control, required educational advocacy, in addition to the 
services provided by CYA.
    The District of Columbia has a compulsory school attendance 
law whereby all residents must attend school to the age of 18. 
As the educational advocate, I make an assessment of the 
students' educational needs in order to come up with a plan of 
action to address their truancy, poor grades or out of control 
behavior.
    As we are all aware, a student does not attend school for 
many reasons. For example, many of our clients are truant 
because they are simply bored with their neighborhood school. 
These clients are placed in a neighborhood school without 
regard to their career and educational interests or performance 
level. Many of our clients are frustrated with their 
neighborhood school because they are not performing at grade 
level and have not been provided with a program or educational 
setting to remedy the situation. Moreover, in some cases, a 
residential school is the only appropriate alternative 
educational placement.
    For students who are truant, performing poorly or out of 
control, I have found the public charter schools to be a 
wonderful, alternative educational placement. In fact, many of 
our clients are requesting applications for charter school 
placements.
    To date, approximately 20 percent of our clients are 
attending charter schools. Those schools include Associates for 
Renewal in Education, Maya Angelou's See Forever School, 
Integrated Design Electronics Academy and Edison Friendship, to 
name a few. Many of our parents with children attending charter 
schools have reported to me that their children are doing well 
and are no longer truant.
    It is my experience that most at risk students require a 
school that provides an intensive remedial program, with a 
strong behavioral management component that addresses the 
students' career and educational interests. In cases where the 
student may be borderline in terms of specific learning 
disabilities or emotional behavior disorders, a small 
structured school that focuses on students' individual 
strengths and weaknesses is able to provide those students with 
an appropriate education.
    In addition, it is important for our borderline academic 
functioning students to have schools that allow them to obtain 
a high school diploma or GED; not a certificate of individual 
education plan which seems to be the standard for some DCPS 
students with special needs.
    Lastly, having more public charter schools that focus on at 
risk students could help to reduce the costly and time 
consuming process of special education litigation.
    In closing, as the legal educational advocate working with 
court-referred students, it is imperative that the District of 
Columbia provides its at-risk students with alternative 
educational placements designed to meet their emotional, 
behavioral, and academic needs in both a day school and a 
residential school environment.
    Thank you.
    Mr. Istook. Thank you very much, Ms. Scott.

                  prepared statement of delores scott

    [The prepared statement referred to follows:]

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               ``common denominator'' for charter schools

    Mr. Istook. I'm struck by the fact that the common 
denominator of what all of you say seems to be the difference 
that it makes when people want to be where they are, and I 
think that, of course, is the common element, the freedom to 
choose the school that you attend, and what a difference it 
makes.
    I notice, Ms. Snipes, or Jeanee, you mention the difference 
in being in a classroom setting where the other students want 
to be in that particular school. I'm not sure if you were in 
public school at some prior point and so forth. Would you just 
elaborate what difference you experience as a student when you 
know that the other people around want to be there and how it 
makes a difference?
    Ms. Snipes. Okay. Before attending WMST, I did attend 
School Without Walls, so the students there were there because 
they chose to go there. But prior to that, I attended Hart 
Junior High School, and at that school I noticed behavioral 
problems were the biggest factor in disruptions in the 
classrooms where the students didn't want to be there. They 
were there because they were forced to be there, and you know, 
they were told, you're not 18 years old, you're still a child, 
you need to attend this school.
    And once you have behavior problems inside classrooms and 
they're not being alleviated and those children who are acting 
up in the classroom are not being placed outside the classroom 
and are disrupting other students, the learning process stops 
and comes to a halt because the teacher is trying to alleviate 
this behavior problem while teaching. So the class lesson never 
gets taught because they don't have the choice to suspend or to 
expel the child, to kick the child out of school because that 
is their neighborhood school.
    So when you have children who aren't there to learn, 
everybody else is being affected by it; but if you have a 
school where everybody is there to learn, they want to be 
there, and if they don't want to be, they can be placed 
outside, are a different--or they can go to a different 
learning institution.
    So when you have a school where everybody is there to learn 
and everybody has the same goal, to come out, to succeed, to be 
something in life, then the learning process is a hundred 
percent quicker, and everybody gets that much more out of it.
    Mr. Istook. Of course, there's still--they are not 18 so 
they are still required to be at school.
    Ms. Snipes. Right, but they want to be there.

                          parent participation

    Mr. Istook. They want to be at this particular one. As a 
parent, Mr. Lancaster, do you see any difference in the charter 
school parents' attitudes toward participating and those who 
are not charter school parents, in your own experience?
    Mr. Lancaster. What I find is the access makes the 
difference and what's accessible to the parent. Unfortunately, 
in prior years in D.C. public schools, there weren't always an 
access to certain things; for example, a computer in the home. 
Many parents can't afford to go out and purchase a computer to 
give their child that experience.
    Edison allows for each student from the third grade up, and 
now they are up to eighth grade, to have a computer in the home 
as part of their learning curriculum. So we are linked to the 
school. Homework is e-mailed to the teacher. There are 
assignments that are specifically designed so that the child 
has to go into his computer system, pull the assignment off, 
complete it and then of course, put their work back in so it 
can be checked.
    So the technological support makes a big difference, 
especially if it's accessible to those families who do not have 
the economics to do it on their own. That's a big help.
    The other thing is, piggy-backing on what Jeanee has said, 
when there's a problem in the classroom, rather than say, all 
right, you're out of here--as I said before, education is a 
family experience. So if a child is disruptive, we bring that 
family back, that parent in or those parents in with that child 
and sit down and say, hey, look, we are here for not just your 
child but for you. Is there a way you can support us and get 
your child in order so----
    Mr. Istook. You find that charter schools are able to 
enforce that involvement and discipline?
    Mr. Lancaster. I found that particularly at Chamberlain and 
with my being there as--partly as the president of the Home 
School Association, encouraging this, that that helped minimize 
the disruptive influences in the classroom because I was on the 
parents to say, let's go and help your child, are there any 
special needs, and we made referrals to those families who 
needed help with their children, in other regards, especially 
those who had single parent situations.
    Mr. Istook. I appreciate very much your comments. In the 
interest of time, with three panels, I'm going to forgo any 
other questions, but thank you very much. I notice that common 
element from all three of you.
    Mr. Moran.

             washington math, science and technology school

    Mr. Moran. Thank you, Mr. Chairman. It's been helpful 
testimony. Most of my questions are going to be directed to 
other members of the panel, but I wanted to ask the young lady 
that goes to Washington Math, Science and Technology School--
there was an editorial in the Washington Times on June 14th 
that caused me some concern because it was contrary to my 
assumptions; but they really, for whatever reason, the 
Washington Times really took on the Apple Tree Institute and 
somebody took the initiative to send it to us, and they didn't 
say who it was, but it says what can and what will the D.C. 
Council and Congress do about this.
    I am more impressed when they put down their name and, you 
know, why they are asking us than just these kinds of anonymous 
missives, but it talks about the school being in a facility 
that has very little in the way of windows. It says it has no 
windows for light or fresh air, that it's a sick building--
that's why EPA got out of there--the parents and students 
complain of headaches, constant coughing, other illnesses. It 
talks about one student who thought it was everything they 
wanted but then it--apparently they suggested Apple Tree as 
another bureaucracy, just like the public school system. They 
fired a chemistry teacher after she questioned Apple Tree about 
fiscal matters. There was no chemistry lab, only one or two 
computers. We had an art class, no supplies, no windows, 
everybody was scared, et cetera, et cetera.
    You know, I don't want to read the whole thing here, but 
it's troubling, and I think hearing directly from a student 
would be enlightening so maybe you can tell us what the real 
situation is there.

      response to complaints about washington math charter school

    Ms. Snipes. I think I'll just have to start with--the start 
up of the school was difficult. For approximately a month and a 
half we were placed in the basement because the facilities 
upstairs in the old EPA building were not up to par for 
students. After that 6-week period, we were moved upstairs. 
Correction, there are windows everywhere. The windows are 
probably larger than the ones in this room. They don't open but 
the ventilation in the classrooms is adequate.
    As far as firing the chemistry teacher or whatever, if 
teachers or administrators and anybody else are not serving the 
school and the school's goals as they should be serving, if 
they aren't serving the student, then they should be released 
from their duties. If the teacher is not teaching the material 
that needs to be taught or if the teacher is not serving the 
students' learning abilities, then they do need to be 
dismissed, and a more adequate teacher that can deal with these 
students can be in place. That's exactly what happened. The 
current teachers at the school, all of them I have found to be 
very dedicated. They are very enthusiastic about being there.
    As far as people getting sick, at first there was a little 
lunch problem. Nobody was actually getting sick, but with 
students, if the food is not exactly what the student wants, if 
you don't have pizza every day, if you don't have this every 
day, the students aren't going to be happy. They are going to 
complain. Now, the meals are all up to FDA standards. So I 
mean, if you have green beans one day, students are going to 
complain, you are going to hear it. You're going to hear the 
negative side of the story, but you're never going to hear the 
positive side about, you know, them getting catered every 
single day, about air-conditioning. I mean, you can't complain 
when you have central air in a school building coming from a 
school district that most of the time you are burning up.
    So I found myself--yes, there were start-up problems, but I 
would say 99 percent of them have been alleviated, and the 1 
percent that hasn't, it's being worked on.

                 accolades for jeanee snipes' response

    Mr. Moran. How old are you? No. I am thinking of Eleanor. I 
mean Eleanor's safe, but boy, oh boy, with this talent, some 
day--we love to have--I am just impressed by the articulate way 
in which you answer. Really, I'm serious, how old are you?
    Ms. Snipes. I just turned 18.
    Mr. Moran. Eighteen, and you're a senior in high school?
    Ms. Snipes. Yes.
    Mr. Moran. Where are you going to college?
    Ms. Snipes. I'm looking at the Air Force Academy or Agnes 
Scott in Decatur, Georgia.
    Mr. Cunningham. How about the Naval Academy?
    Mr. Moran. Good for you. That was terrific, and 4 years 
from now----
    Mr. Istook. I think she could be a Marine.
    Mr. Moran. She could also get a PR job with any charter 
school organization in the country, but no doubt that was 
terrific, and it's enlightening, and you know, as again, as 
always, there's always another side, and I'm glad that you have 
refuted this article because it obviously was misleading and 
didn't tell the whole story. Nice job.
    There's one other question I wanted to ask and probably of 
the lady who represents the Sasha Bruce organization----
    Ms. Scott. Delores Scott.

                    summer recess impact on students

    Mr. Moran. Yes, I want to focus on this fact because you 
represent Sasha Bruce. There was an article in the Outlook 
section in last Sunday's Post, by a T.C. Williams teacher who 
is actually a good friend. He talks about what happens when 
kids leave for the summer. I mean, is summer recess a pretty 
outdated practice that dates back to when we were an 
agricultural society; the problem is that today many children 
don't get the kind of supervision, they don't get the 
structure. Even at T.C. Williams in Alexandria, the majority of 
kids come from single parent households, and whereas conflicts 
that erupt can oftentimes be mediated when they are in school, 
they don't get mediated oftentimes when they're out of school. 
They, don't have as much excuse to avoid the kinds of things 
that get you in trouble during school with your peers, et 
cetera, et cetera.
    I am so impressed that we've got so many kids going to the 
summer school program here in the District. I am wondering if 
it shouldn't be virtually all the kids that don't have some 
other kind of constructive, alternative activity during the 
summer because their parents aren't with them, there's very 
little to do in D.C. on the streets other than get in trouble. 
They don't have a lot of alternative activities for kids and 
teenagers. So I'm just wondering if you think it would help if 
we tried to keep the kids at least in some kind of structured 
activity throughout the summer?
    Ms. Scott. Well, I am focusing on a targeted population. 
For our clients, students that are likely to regress 
academically and/or behaviorally, then by Federal law, the 
Individuals With Disabilities Education Act, they are required 
to have extended school year, and what that means is that their 
plan during the normal school year is also extended throughout 
the summer. Also, with these children, we have parent family 
counselling as a part of their educational plan where the 
parent is also taught how to work with the student at the home. 
So there's a smooth transition there.
    Mr. Moran. Thank you.
    Mr. Istook. Thank you, Mr. Moran. I just need to remind 
members that we do need to be attentive of the time because we 
do have the two additional panels, also.
    Mr. Cunningham.
    Mr. Cunningham. Sure. You always say that when it's my turn 
to speak.
    Mr. Moran. It's because I'm always so lengthy, Duke, I'm 
sorry.

                        praise of jeanee snipes

    Mr. Cunningham. I will be succinct, but it's funny the 
observation that I had just written down; if Jeanee came to 
work for me, I'd be afraid that I'd end up working for her. I 
want to tell you, you're very articulate. My daughter, I am 
very proud of, my youngest daughter, scored 1550 on her SATs. 
She's a junior in school and she is very articulate, just like 
yourself. It's exciting to see someone not only that comes with 
a prepared text but can handle questions so well, to analyze 
what the question is and then give us back the feedback as you 
see it. Never change that, because we get a feeling that you're 
speaking from your heart, and it makes it a hundred times more 
effective.

                     flexibility in charter schools

    One of the things you mentioned was the flexibility in your 
school system. My daughter goes to public schools, both my 
daughters do and my wife is a public school administrator. 
There are very good teachers in public schools and good 
education programs. I am very fortunate, I live in Del Mar, 
California. So you can imagine that the level of school is very 
high. But somewhere places in San Diego are much like D.C., the 
same schools not performing, and children want out of that.

                parent participation in charter schools

    Another area in which I saw that the Chairman talked about 
was children wanting to be in school which was evident, is 
parent participation. In the schools where they very seldom 
produce students of high quality, at least across the board, 
there's very little parent involvement. Is there a requirement 
at the charter schools for parents to participate or just a 
strong emphasis.
    Ms. Snipes. I don't think you can make a requirement for 
the parents to participate, but going into the school, there is 
a sheet of paper saying, you know, going into this charter 
school, we ask that you as a parent support your child, and if 
the child--usually if the child has the parent support, then 
they are going to do better. So that's why the school does 
encourage the parents to be involved in the everyday life of 
the student.
    Furthermore, with the start-up of a new charter school, if 
you have parent involvement, extracurricular activities are 
going to be starting more, because you're not putting all the 
emphasis on the teachers to try to get extracurricular 
activities implemented. So you do have teachers and parents 
taking over the role of maybe the administrators who would 
usually implement those extracurricular activities. You have 
the parents instead having different clubs after school, trying 
to start soccer teams, trying to start a student government 
association. You still do have your teachers, for instance, 
starting journalism clubs, things like that, but with the 
parent involvement, you just have that much more. You have that 
much more push to have even school dances, which is an 
important thing in high school, social events.
    Mr. Cunningham. Well, I would think that parents that want 
better for their children would work to establishing a public 
charter school, if they are dissatisfied with the public school 
system. You look at most members of Congress, including the 
President, their children don't go to D.C. schools. They go to 
private schools or to charter schools, and I think that a 
challenge to traditional public schools is good in light of our 
schools, and I am excited about what the D.C. school system, 
the direction that they are going.
    I would challenge my colleagues--in San Diego I found out 
that summer school, there's very few programs actually offered 
for credit. It's mostly just remedial education that doesn't 
count toward the main school year. I would challenge my 
friends--of 30,000 children, the good thing is that most 
children are going because they want to, not because they have 
to. That's the equation of wanting to be there, and I think 
that's exciting with D.C. We got a long way to go.
    I would ask, Ms. Scott.
    Ms. Scott. Ms. Scott.

               alternative schools and special education

    Mr. Cunningham. Ms. Scott, do you handle--in the 
alternative schools, do you have any of special education 
children within that? We have a monumental problem in San Diego 
and across the Nation with special education. Our San Diego 
public schools superintendent is Alan Bersin, who was a Clinton 
appointee. He came to me and said, Duke, we need help. We have 
children that are acting up. They are affecting, like Laura 
said, they're affecting the other children in the education 
system. In your program, though, are you handling any of the 
special needs children?
    Ms. Scott. Most of my children are special education. 
Charter schools are public schools. They're open to all 
students. So I don't make a distinction with special education. 
What I find is that most of the students require a different 
educational setting, smaller, more structured, providing 
intensive remedial education. Primarily we are talking about 
children with specific learning disabilities, and as was 
mentioned earlier, behavioral issues. So, yes, I deal with a 
lot of special ed students, but when they apply to charter 
schools, special education is not an issue because it is an 
open school, and the charter schools provide what is 
appropriate for that child, according to their IAP, and 
assisting in the development of that IAP along with the 
parents.
    Mr. Cunningham. Good. I'm glad to hear that that's open. 
And my last little comment is that, Jeanee, I was a Navy 
fighter pilot, and I would ask you to look at the Naval 
Academy, which is just a hoot and a holler down the road here. 
And I would ask the young lady, do you know what you put on the 
bottom of a Coke bottle at an Air Force base?
    Ms. Snipes. No.
    Mr. Cunningham. Open other end.

             parent involvement--quality learning contract

    Mr. Lancaster. If I may make a final comment concerning 
parent involvement, since I am a president of the Home School 
Association, as in particular we have what we call a QLC. It's 
a quarterly learning contract which the student and the parent 
signs, and that--what that means is that the parent and the 
student have agreed with the teacher that there would be 
cooperative effort to make sure that that child succeeds. And 
if there's a problem that comes up and the parent, for whatever 
reason, cannot honor or live up to that QLC, then that parent 
conference is immediately called; the parent is called in, we 
try to find some other ways to make sure that child succeeds. 
Maybe that parent is ill, maybe there are some other problems 
in the home. We make referrals to that. But at Edison 
Friendship, especially the Chamberlain campus, it is 
important--we don't require it, but we encourage that the 
parents be----
    Mr. Cunningham. That's what I was getting at.
    Mr. Lancaster. And we do it on a daily basis.
    Mr. Cunningham. I would also say, Jeanee, that I had lunch 
with General Ryan, who is chief of the Air Force, and I 
admitted to him that when I was coming down in a parachute over 
North Vietnam, I had Air Force pilots protecting me from the 
VC.
    Mr. Istook. There's some good even in the worst of us, is 
that what you're saying? Thank you, Mr. Cunningham, and I am 
sure, Ms. Snipes, if you achieve your ambition at the Air Force 
Academy, I am sure you will come back and tell us what they say 
about the people in the Navy.
    Mr. Sununu.

                      Congressman Sununu's Remarks

    Mr. Sununu. Thank you, Mr. Chairman. Thank you very much to 
all of the panelists. Great to hear from you. Great to hear any 
panel speak of firsthand, personal, or direct experience with 
the programs and policies that we have some responsibility for 
funding and dealing with. It's very encouraging to hear 
discussion about an atmosphere where the students want to be, 
where the teachers want to be, and where there's the best 
possible atmosphere for education to take place. I find that 
very encouraging.
    But the charter school program is still a new one and there 
are quite a significant number of schools that received their 
charter last year for the first time. I think it is a learning 
process.

                     unmet needs of charter schools

    And my question would be for each of the panelists to 
address now, that at least in some cases, this start-up process 
is complete. What limits do you see or what needs are there 
that you see that haven't been met and what opportunities might 
there be to provide additions or changes to the curriculum and 
the facilities and the faculty? Where would you like to see the 
charter school program go to make it even better?

                sports and academic competitions needed

    Ms. Snipes. From a student's view, I was raised in a 
military family so I was always raised, you know, to aim high. 
And first of all, I think the limit for the charter schools is 
the sky. They really don't have a limit, and they can do 
anything any other public school. As far as the sports program, 
I would definitely like to see some type of intramural sports 
between the high schools because I think that is really 
important in high school life. Getting college counselors, 
extracurricular activities just for the charter schools, maybe 
model U.N. Programs just within the charter schools. I would 
just basically like to see more extracurricular activities and 
academic competitions within the charter schools, similar to 
what the public schools have.
    Other things as far as structural problems can be worked on 
from the inside out. A big thing again goes back to sports, 
having equipment, having the facilities.
    Mr. Sununu. Does your school have their own athletic 
program?
    Ms. Snipes. We have a gym teacher but we have no athletic 
equipment whatsoever.
    Mr. Sununu. Thank you.

             more community involvement in charter schools

    Mr. Lancaster. In terms of limits, I didn't see any except 
in what you normally have in any start-up situation. You have 
to kind of like let paperwork follow its course, certain 
governmental things that have to be dealt with, and of course, 
on those time lines, there were some limitations this year. If 
I had to add anything to the situation I am involved in 
particularly, I would like to see more of the so-called elite 
clan come down and really take a look at what it takes to make 
something work in a community sense. You see, what I think 
happens is that get separated. People who can afford certain 
things think that everybody can afford certain things but 
that's not always the case. Sometimes it takes an entire 
community to make something work, and what I have learned at 
the Chamberlain school, the more you get the community 
involved--that's not just the parents, I'm talking about the 
neighborhood people, the business people in the neighborhood, 
the whole mix, police, fire department--when you get that whole 
community involved with that school, Boy Scouts, Girl Scouts, 
et cetera, et cetera, then you see that school prosper and 
flourish anywhere in the United States. But the main thing is 
that the parents at that school have to be the ones that reach 
out into their community to bring all those other things in. 
So, if anything, I would like to see more of the community 
participate.
    Mr. Sununu. Thank you.

                    more residential schools needed

    Ms. Scott. In the area of limits, I view that as a 
challenge. We need more residential schools for our kids. We 
also need facilities and an opportunity for all children to 
reach their maximum educational and vocational potential.
    Mr. Sununu. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Istook. Thank you, Mr. Sununu. I appreciate all three 
of you taking the time to be here this morning. Thank you very 
much for your testimony.

               Public Schools (Including Charter Schools)

    I might suggest on the second and third panels, since we 
are not going to have questions between them, it might be good 
if we could just seat everyone at the table at the same time 
and work accordingly. If we could have both panels come 
forward.

                               witnesses

    The second panel is comprised of Malcolm Peabody, the Chair 
of the District of Columbia Charter School Coalition; Jack 
McCarthy, Managing Director of the Apple Tree Institute; and 
Josephine Baker, Chair of the D.C. Public Charter School Board.
    The third panel is composed of the Superintendent of the 
D.C. Public Schools, Arlene Ackerman; Maudine Cooper, 
Chairperson of the D.C. Emergency Board of Trustees; and Connie 
Newman, Vice Chair of the D.C. control board.
    We welcome all of you. We very much appreciate your taking 
time to be here, and as I mentioned before, we will be placing 
your entire testimony in the record. So I invite people to 
deviate from it, shorten it, cover what is on your mind as 
opposed to what's on the paper, as need be, because the paper 
is going to find its way into the record anyway. What's on your 
mind is not going to find its way into the record unless you 
speak it. We will go in the order that I announced, and Mr. 
Peabody, we are happy to have you here.

                   Opening Remarks of Malcolm Peabody

    Mr. Peabody. Thank you, Congressman Istook, and members of 
the subcommittee. I'm chairman of the Friends of Choice in 
Urban Schools or FOCUS. We provide technical support to the 
D.C. public charter schools and information about these charter 
schools to parents and the community. We also provide support 
and leadership to the D.C. Public Charter School Coalition, 
which is an informal network of charter school leaders and 
advocates which I also chair.

                    charter school enrollment growth

    This has been a stupendous year. Charter school enrollment 
has grown from 300 to about 3,600 students, and we are very 
impressed by the talent and dedication of the charter school 
founders and encouraged by the overall quality of the schools.
    You have heard from Ms. Snipes and Mr. Lancaster, and their 
experience is not at all unusual. We've had glowing reports 
from many students and parents. For most of them, this is the 
first time school has been a place where they feel that they 
are known, where their individual needs are addressed and where 
they or their children are making real academic progress. As 
one mother of a student put it in a hearing before the District 
Council, ``Charter schools have been like a gift from heaven 
for me and my son.''.

                     positive psychological impact

    Although, it's far too early in the lives of these schools 
to make precise statements about their impact on student 
achievement, the early returns indicate that by and large 
positive psychological impact of the schools is being mirrored 
by the increases in student performances on standardized tests. 
For example, the reports thus far from the schools indicate 
that in many cases there have been a significant improvement 
during the course of the year on the Stanford 9 tests. More on 
that later.

                      obstacles to charter schools

    All these achievements of the public charter schools this 
year have been made in the face of a variety of obstacles, some 
inevitable and some which need to be addressed, but as 
difficult as these challenges have been, the public charter 
school leaders have embraced them. But there have been 
unnecessary public policy related impediments that threaten the 
viability of these schools; specifically, the lack of access to 
the unused public school buildings, burdensome oversight and 
funding problems stemming from the lack of clarity in the 
annual budget process, and a failure to fully fund the 
facilities portion of the per-pupil allowance. Ms. Baker is 
going to testify to the budget problems, but I'd like to speak 
briefly on facilities and one of the important budget issues.

                          facilities problems

    First and foremost, of course, is the facilities issue. 
Now, you have heard in real estate that the three most 
important factors are location, location and location. It's the 
same for charter schools, except that it's facilities, 
facilities, facilities. Of the 19 D.C. Public charter schools 
in operation this year, only 4 located permanent facilities. 
Many of the rest operated in makeshift circumstances, having 
hastily renovated nonschool space or made short-term 
arrangements to use the school system's property. Even with the 
per-pupil facilities allowance passed by the D.C. Council last 
year, many public charter schools this year had to dip into 
operating budget to pay for commercial rent and/or accelerated 
renovations.
    For September of 1999, several schools have yet been unable 
to find large enough facilities and have thus had to delay 
their opening or delay expanding their school and even reducing 
charter school enrollment. Next year, because of these 
hamperings, 2,000 less students will be in charter schools.
    Six of the 19 operating public charter schools, even at 
this late date, have not even finalized their location, 
including the nationally recognized Cesar Chavez Public Charter 
High School for Public Policy.
    It didn't have to be so. There's over 2 million square feet 
of unused space, as the Chairman noted, in the DCPS inventory 
and dozens of school buildings that are still vacant, blighting 
their neighborhoods and deteriorating from neglect and 
vandalism.

                  unused school space--two categories

    Now, there are two distinct categories of unused school 
space, and in the D.C. School Reform Act of '95, Congress gave 
public charter schools preference in the disposition of both of 
them. The first are the buildings that have been declared 
excess under the D.C. Code and have been transferred from the 
DCPS inventory to the jurisdiction of the Mayor's office. In 
1996 Congress gave responsibility for the disposition of these 
buildings to the Control Board and the school system's 
Emergency Board of Trustees or EBT. Most of the vacant 
buildings fall into this category.
    Then there is the vacant space within the DCPS inventory. 
This includes a number of entirely vacant buildings as well as 
space in many DCPS schools that operate well beneath capacity. 
Unlike excess property, DCPS may lease this type of space 
without waiting for Control Board approval.

                 facilities disposition policy delayed

    Now, the EBT did not develop a disposition policy until 14 
months after it had been given control of the buildings. The 
D.C. Public Charter School Coalition worked collaboratively at 
that time with EBT to draft that policy, which included a right 
to match the highest bid in a public bidding contest with a 
discount of up to 25 percent or, if no bids were received, a 
discount from the appraised price. We were pleased to get the 
process started, but we were disappointed at that time because 
public charter schools were forced to compete on the same 
footing with commercial developers in what became an 
agonizingly slow series of REI's, bids and administrative 
delays.
    In 1998, only four schools acquired buildings through the 
process, and one of those delayed opening for 1 year. Another 
opened at a reduced size, in an alternate facility. A third 
incurred $1.2 million in accelerated renovation and repair 
costs since they didn't get possession until June. The fourth 
school gained access to their building just 8 days before the 
beginning of the school year and found that it had been 
stripped of its plumbing and kitchen equipment over the summer. 
The charter of this school may be revoked, and in part because 
it never fully absorbed the shock of the $300,000 that they had 
to incur in unanticipated repair costs.
    An additional five charter schools acquired 1-year leases 
at the last minute for space still in the DCPS inventory.

                 facilities disposition process halted

    Now, regrettably, this already bad situation deteriorated 
when the disposition process was brought to a halt in October 
of '98. The applications of the Washington Math Science 
Technology and Hyde Public Charter Schools, which had been in 
the bidding process for 18 months, stalled. More on that from 
Mr. McCarthy.
    In March, at the behest of the Control Board, the EBT 
brought forward those proposals but voted them both down. The 
Control Board then overturned the EBT's decision on the Hyde 
School proposal, but by that time a charter school that had 
agreed to sublease with the Hyde School decided it was too late 
to move forward, and the deal fell through. The Control Board's 
review of the Washington MST is still pending.

          control board vice chair constance newman's new role

    We were pleased to learn recently that Mrs. Newman, here at 
the table and vice chair of the Control Board, has assumed 
responsibility for the excess properties until a new policy 
will be developed. We appreciate her action and hope very much 
that as major stakeholders, charter school leaders will again 
be invited to assist in the policymaking process. We hope 
Congress will also assist by further clarifying the preference 
language in the law to give public charter schools a first 
preference on the excess properties.
    As for schools seeking to renew or initiate leases on 
inventory property, negotiations have been interrupted by a 
succession of appointees to the DCPS realty office.
    Mr. Istook. Mr. Peabody, I realize you have more reading in 
your statement. I just need to remind people that with the 
number of witnesses and the time constraints, we do need, to 
pay attention to the time and the light system we have to help 
you. I know it's difficult to condense it all sometimes, but 
unfortunately, I think it is necessary. So if you could wrap it 
up; we do have the entirety of your statement, of course, for 
the record.

                                summary

    Mr. Peabody. Let me just summarize, then, that we are very 
concerned at this moment that four schools have not yet found 
space within the DCPS inventory and do not have their leases 
and do not know what their costs are.
    Just one or two items on oversight issue. On oversight, we 
think that the oversight responsibilities are being tackled, 
and particularly well, by the new Public Charter School Board 
set up under the law. In fact, they are doing a really first 
rate job, and although the Board of Education has chartered 
some very good schools, they are--they have not followed the 
model of the Public Charter School Board, which we think is a 
problem because we think that their monitoring focuses much 
more on administrative problems than on the basic education, 
and we hope to work with them to get that improved.
    Also, there is a problem in that there's a tendency to re-
regulate on these charter schools, and this year they--these 
schools have been audited by three different sets of groups for 
finances, and some schools facing three audits simultaneously.
    Mr. Istook. Mr. Peabody, we appreciate your statement and 
your time. Why don't we have the rest of it contained in the 
record so the other witnesses will have an opportunity.
    Mr. Peabody. Yes, I agree. I would like to have my 
statement put into the record.
    Mr. Istook. Certainly, absolutely. It certainly will be.

                prepared statement of malcolm e. peabody

    [The prepared statement of Malcolm E. Peabody referred to 
follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Istook. Mr. McCarthy.

                    Opening Remarks of Jack McCarthy

    Mr. McCarthy. Thanks, Mr. Chairman. My name is Jack 
McCarthy, and I'm managing director of the Apple Tree Institute 
for Education Innovation.

                        credibility of editorial

    I would like to express my deep gratitude to Mr. Moran for 
asking that question of Jeanee Snipes rather than me. I know 
that all of the members here have been on the receiving end at 
some point in your career of what you would think is an unfair 
editorial, and I will just mention that the opening paragraph 
of that editorial talked about a scene at our commencement, 
with tense faces and so forth. The editorial appeared on Monday 
in the Washington Times, and our commencement was held on 
Wednesday, so----
    Mr. Istook. The following Wednesday?
    Mr. McCarthy. The following Wednesday. So that's the 
credibility of the article. I would just like to move on.

                       math and science education

    I would like to talk about some positive things, and even 
more positive things that could occur if we can somehow work 
out the situation we have here with charter schools. It seems 
to me everyone recognizes that we need to improve public 
education offerings in the District. That's why my organization 
got involved with the Washington Math Science Technology 
Charter High School. We need more math and science education in 
the District.
    In Mr. Moran's territory we have this burgeoning economy of 
technology companies, and many of those people are very 
supportive of math and science education.

                       40,000 area jobs unfilled

    Virginia Tech did a study of 40,000 jobs which are unfilled 
today because the work force in the area is not being 
adequately prepared. Unfortunately, we know the problems in 
D.C. Washington, unfortunately, ranks last in the country in 
math and science education. The 8th grade math and science test 
scores are the worst. We could blame a lot of people, but we've 
got to recognize we've got a situation, we've got to do 
something about it, and this charter school, working on math 
and science education, is one solution and something that we 
are very passionate about.

                   work force preparation in schools

    There was a study put out by the American Electronics 
Association entitled ``Cyber Education,'' and they are really 
talking about how work force preparation standards need to be 
incorporated into schools. We've been working closely with the 
American Electronics Association trying to adapt some of those 
things. That's the flexibility a charter school has. We don't 
have a large bureaucracy, we have flexibility. We can bring 
folks like that in and get hands on and we can start to work to 
improve our offerings right away, and that's what makes the 
American Electronics Association excited about working with us.

           infrastructure and facilities disposition process

    I just wanted to talk about the general situation. It seems 
to me District of Columbia public schools need capital to 
improve their infrastructure. Charter schools need buildings to 
operate. And an informal arrangement was worked out in the 
legislation a couple years ago so that a preference in the 
disposition of the 60-odd empty buildings would make them 
available first to charter schools who could buy or lease them, 
and then those proceeds would go back to DCPS. I think that 
makes a lot of sense.
    We've been working for almost 3 years to try and get a 
transaction done. In the back of my testimony, I have a 
chronology that goes through the dates from the passage of the 
D.C. School Reform Act to today that lays out all of the 
meetings and all of the efforts that we've tried to make in 
good faith to close a transaction. I want to talk about one 
particular situation and why it's important.
    This Math, Science and Technology School needs a home. We 
were able to put it in temporary space under the Public 
Facilities and Cooperative Use Act of 1976 using a community 
development block grant to create 35,000 square feet of space 
that is relatively safe, that is accessible and very affordable 
for the schools.

                        franklin school building

    We bid on the Franklin School building in March of 1998 
under the process that was developed by the Emergency Board and 
accepted by the Control Board. This is, I don't know, something 
like 16 or 17 months later, and we have no idea where the 
status of that bid is. We played by the rules, we followed the 
procedures, we were given an opportunity to match the highest 
acceptable noncharter school bid with a 15-percent discount. We 
were asked to indicate our ability to close. We got National 
Cooperative Bank to provide $2\1/2\ million financing. We 
raised $150,000 in capital. We came to the table prepared to 
close.
    It took us 4 months to get a purchase and sales agreement 
negotiated. We executed a purchase and sales agreement in 
December of 1998. School system never did. Came back with 
another agreement that had additional provisions which were 
essentially deal killers.
    It seems to me--and from there it went to the Control Board 
and we still don't know where that is today, although we have 
received informal word from the broker of record about 2 weeks 
ago that the Control Board has decided to withdraw the Franklin 
School building from the market. Now, this building is 
surrounded by 200 math, science and technology companies, 
including IBM, Xerox, Lockheed Martin, Intel, Motorola, Sun 
Microsystems, all the kinds of companies that have an interest 
in math and science education; and at 13th and K Streets 
Northwest, we could have a veritable campus of opportunities, 
offering mentorships, internships, partnerships, you name it. 
And we have letters from companies, a lot of these companies 
supporting the effort, and if we can get a policy in place that 
can be implemented, I think we can start to do some really 
great things for kids that need to be done now.

                                summary

    And I think just in closing, the way to do it, a couple of 
years ago power was taken away from the Mayor and given to the 
Emergency Board of Trustees for the disposition of these school 
properties, and it made sense at the time for a lot of reasons, 
but I think that there is--if I were the superintendent of 
schools, I think I would be reluctant to be giving my 
competition access to buildings in any kind of favorable 
situation, and I think that's only human nature. But it is the 
law, and we should have a preference that makes these buildings 
available, and if we can get some of these buildings into 
charter schools, I think we can start to accomplish some really 
great things for kids.
    Mr. Istook. Thank you very much for your testimony, Mr. 
McCarthy. We will place your prepared statement in the record.

                  prepared statement of jack mccarthy

    [The prepared statement of Jack McCarthy referred to 
follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Istook. Ms. Baker.

                   Opening Remarks of Josephine Baker

    Ms. Baker. Good afternoon, Chairman Istook and members of 
the subcommittee. I am Josephine Baker, chair of the D.C. 
Public Charter School Board, and I appreciate having this 
opportunity to share our views with the subcommittee today.
    Mr. Chairman, I would ask that my written testimony be 
included in the record. For now I will summarize its key 
points.
    Mr. Istook. Absolutely. And yours will be, as will the 
written testimony of each and every one of the other witnesses.
    Ms. Baker. As we meet today, eight schools chartered by our 
board are completing their first year in operation, and what a 
year it has been. From the struggle to open schools, despite 
difficulties in obtaining facilities, to the proud moment last 
Wednesday when 17 young men and women received their diplomas 
from our first graduating class at Washington Math Science 
Technology Public Charter High School. This year truly has been 
a study in achieving against the odds.

              obstacle--conflict of local and federal laws

    The charter school movement in the District is off to a 
strong start, but we see several obstacles that must be 
overcome. First, uncertainty created by the appropriations 
process itself. The D.C. School Reform Act requires that all 
D.C. students in D.C. public schools or public charter schools 
should receive funding based on a common per-pupil formula 
according to a head count taken in September of each year. But 
local law requires that DCPS be funded on the basis of prior 
year enrollment. Because our enrollment is growing, the 
disparity between the two laws jeopardized the FY 2000 charter 
school budget.
    Fortunately, at the last minute, the Control Board and the 
D.C. Council were able to embrace the idea of a 5 percent set-
aside from the DCPS budget that will be made available to 
charters based on fall enrollment. But this is a one-time fix, 
and we should not wait for the problem to recur next year 
before seeking a more permanent solution.
    Congress can contribute by clarifying that dollars should 
follow students based on enrollment decisions made by their 
parents, and, Mr. Chairman, I thank you for your statement 
supporting the funding of charter schools.

            allowances for special education and facilities

    A second issue is adequacy of resources with respect to 
special education and facilities. We have shared with your 
staff some detailed analyses done by two of our schools showing 
that the method of allocating special ed funds under the 
current per-pupil formula Act actually leaves them with a 
significant per-pupil deficit. We plan to work closely with 
local officials on a revision of the formula, but Congress can 
help in another way by being clear that any Federal special 
education moneys appropriated to the District are to be shared 
by all public school students, not just those attending DCPS.

                facilities per pupil allotment of $1,098

    The facilities allowance remains problematic as well. The 
District's funding formula law requires that charter schools 
receive roughly the same per-pupil allocation provided to DCPS 
through its capital budget, but last year, that figure was 
arbitrarily reduced to an amount that was clearly inadequate. 
This year, according to the Council's own legislation, charter 
schools are entitled to a facilities allotment of $1,098 per 
pupil. If Congress approves the D.C. Budget with the 5 percent 
charter school set-aside contained in the Budget Support Act, 
we know that there will be enough in the bank to fund the 
charter school facilities at this level. We certainly expect no 
less.

            problems in acquiring space for charter schools

    But money is not the only issue. For some charter schools, 
the simple task of finding space has turned into a protracted 
saga, and of course, you have heard about that already in some 
detail. In recent months, the process has been marked with 
inconsistent guidance, a lack of accountability, and disregard 
for established policies.

                       public school conversions

    One particular troubling issue concerns public schools that 
seek to convert to charter status. The school system has 
indicated that schools seeking to convert will immediately have 
their buildings assessed for use as public education 
facilities. We believe this contravenes the spirit of the 
School Reform Act's charter provisions.

                           sibling preference

    Finally, I will touch on two additional items that require 
your attention. The first is the matter of sibling preference, 
an issue that is easily overlooked, but a sore point for 
parents and schools alike. The law permits conversion charters 
to give admissions preference, in their first 5 years, to 
siblings of current students, but it does not extend this right 
to new charter schools. We believe that this is an oversight in 
the law and that charter schools should be able to grant 
admissions preference to siblings of students currently 
enrolled. What a nightmare to have kids going to two or three 
different schools because you do not have the sibling 
preference.

                  school reform act terminates in 2001

    Second, I want to bring to your attention the anomalous 
situation faced by our board. The School Reform Act sunsets in 
2001. If the provision creating the D.C. Public Charter School 
Board is not extended or made permanent, we will be in the 
uncomfortable position of approving 15-year charters but 
leaving office before their first fifth-year renewal process is 
enacted. While I and my fellow board members are all volunteers 
and can certainly return full time to our other pursuits, we 
owe it to our schools and to potential applicants to be able to 
state with confidence that we will be there to do the job 
Congress and the District's elected leaders expected of us. We 
ask that Congress also attend to this matter without delay.
    Thank you, and I look forward to your questions.
    Mr. Istook. Thank you very much, Ms. Baker.

                 prepared statement of josephine baker

    [The prepared statement of Josephine Baker follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Istook. We are transcending then to the second panel, 
and Ms. Ackerman, we are very pleased to have you here.

                   Opening Remarks of Arlene Ackerman

    Ms. Ackerman. Good afternoon, Mr. Chairman and members of 
the subcommittee. I am Arlene Ackerman, superintendent of the 
District of Columbia Public Schools. I would like to first 
thank Mr. Cunningham and other members--I see he's gone--who 
are introducing the bipartisan New Millennium Classrooms Act. 
One of our schools will receive five high-tech computers with 
multimedia capabilities as a part of this introduction today, 
and we do appreciate the interest that has been shown and the 
commitment to the education of the children of the public 
schools of the District of Columbia.
    I'd also like to congratulate Jeanee Snipes on her 
testimony. She is indeed very articulate, and while we know 
that she is currently attending the Washington Math Science 
Technology Public Charter School, we are proud that for 3 years 
she did attend D.C. public schools, and so we'd like to take a 
little bit of credit for her success.
    I welcome the opportunity to speak to you. I do know that 
you have my written testimony so I will try to be brief and 
summarize also. We do have a vision for what we would like our 
school system to become, and we are creating an exemplary 
school system, and we know to make that vision a reality we 
will have to continue to focus our energy on making dramatic 
improvement in the academic achievement of our students.
    As you know, we have set more challenging expectations for 
students, principals, teachers, administrators and parents. We 
have put in place regular assessments of student achievement 
and new annual evaluations for principals, 50 percent of which 
is based on improving achievement in their schools. For 
teachers, our new evaluation system includes the shortest time 
line for removing an ineffective teacher of any school District 
in the country--that's 90 days. Central office administrators 
now have their evaluations tied to the assistance they provide 
to the schools.
    As a result of our efforts, test scores improved last year 
and preliminary data suggests that we are still making 
progress. We have had a very successful year, although we still 
have a long way to go. Since you have my written statement, I 
would like to just highlight a few things in my testimony.

             35,000 students to be served in june and july

    Under academic achievement, I would like to update you on 
the ``STARS'' program. The STARS program, ``students and 
teachers achieving results and success,'' was established last 
summer to assist students who scored below basic on the 
Stanford 9 by giving them intensive reading and math 
instruction. Last summer, 24,500 students participated in the 
program. To keep the momentum going this year, we also 
instituted for our students a Saturday STARS program where 
12,000 students attended school on Saturday. This summer we are 
planning for up to 30,000 students who will attend our 
regularly scheduled STARS program. And, in addition to that, we 
are now planning for another 5,000 students to participate in 
our new Voyager Enrichment program this summer. So we are 
planning to serve up to 35,000 students, including those who 
need the basic skills as well as those who would like to have 
enrichment programs, this June and July.

                           special education

    Special education continues to warrant a lot of our 
attention and a large portion of our budget, but we are indeed 
making dramatic changes in the way we do business in special 
education. I have appointed a new special education director. 
Because there is a nationwide shortage of special teachers, we 
are looking at ``growing our own'' by offering over a hundred 
of our regular-ed teachers the opportunity to earn master's 
degrees in special education this year. We will do this in 
partnership with two of the local universities.
    Additionally, we are changing how we deliver services to 
students, and we are putting those services in the schools near 
the families so that they can get access to those services.
    Another critical issue in special education is attorney's 
fees. This subcommittee included language last year capping 
what attorneys could charge for these cases. We appreciate this 
assistance and we hope you will include this provision again 
this year. Last year, we paid $14 million in attorneys fees; 
because of the provision, so far this year we have paid out 
only approximately $2 million, and we have not seen this affect 
the level of services in terms of advocates and lawyers for our 
students.
    I would also like to thank you for granting the extension 
on the time line last year for assessment and placement of 
students for special education services. We have a June 30th 
goal to put the District ahead of its schedule with the cases 
under the 120-day time line, and in fact by June 30th we will 
be ahead of the game, so that we can focus this summer on 
eliminating all of the backlog cases for the 50-day time line.

           school facilities improvement--CORPS of Engineers

    I'd like to just mention our school facilities improvement 
effort. As you know, over the past few years, we have made 
major strides in stabilizing our facilities, replacing roofs 
and installing new boilers and windows. We have a very strong 
cooperative and collaborative relationship with the Army Corps 
of Engineers, and we expect that we will continue making 
progress with their assistance.

                   relationship with charter schools

    Where charter schools are concerned, I would like to share 
with you that while there may have been some issues, as with 
any start-up of a cooperative relationship, I am proud to say 
that there are some things we have done very well with charter 
schools. I'd like to just name a few of those. We have provided 
technical assistance to charter schools in the development of a 
variety of grants, including Title 1, Title 2 and Title 4. We 
reviewed all of their Improving America's Schools Act 
applications. We conducted meetings with all of our charter 
schools to provide them with information regarding Federal 
entitlements and the other Federal programs.
    In the terms of allocation of funds, we've notified them of 
their funds. We've awarded many grants through a competitive 
process to teachers in charter schools. We've provided mid-year 
accommodations for prorating funds to charter schools.
    We have provided competitive grant opportunities for 
charter schools, as well as utilizing the 1998 Technology 
Literacy Challenge Fund for charter schools.
    We've provided informational packets about categorical 
programs and developed a grant announcement newsletter so that 
they would be aware of the opportunities for them.
    And lastly, we administered the State Stanford 9 test to 
charter schools in October and in May. We received the interim 
and final performance and financial reports and shared those 
with them, as well as submitted annual performance reports to 
the U.S. Department of Education.
    A comprehensive list of these services we have provided to 
charter schools is attached to my testimony.

                   FY 2000 budget for public schools

    Lastly, I'd like to talk about the FY 2000 budget. As you 
know, the consensus budget included approximately $600 million 
in local funds for the D.C. Public schools, a roughly $40 
million increase over FY 99. 90 percent of these new dollars 
will go directly to schools. We put in place a new weighted 
student formula that allows the local schools to decide how 
they will spend their dollars, and the resources do follow the 
students as they do with the local formula.
    We are very proud that our principals, parents and teachers 
did get a chance this year to develop plans at the school site 
to determine their own destiny, how to spend their dollars, how 
to staff their schools. We are now in the business in the 
central office of determining what the outcomes will be. The 
``how now'' is developed at the school site.

         consensus budget excludes $30 million in federal funds

    Finally, I want to alert the subcommittee to the fact that 
the consensus budget does include a request for a $30 million 
Federal pay bid for special education. We urge you to support 
this again this year. We have said that the school district 
will be exemplary, and we are taking the steps we believe 
necessary to achieve this goal, and we thank you, Mr. Chairman, 
and members of the committee, and I'm happy to answer your 
questions.
    Mr. Istook. Thank you, Ms. Ackerman. I appreciate very much 
your testimony. I very much appreciate the progress you're 
making with District schools, I really do.

                 prepared statement of arlene ackerman

    [The prepared statement of Arlene Ackerman follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Istook. Ms. Cooper.

                   Opening Remarks of Maudine Cooper

    Ms. Cooper. Mr. Chairman, Congressman Moran, members of the 
committee, and also in attendance, our own Delegate Norton. I 
am delighted to be here to speak on behalf of the Emergency 
Transitional Education Board of Trustees. I will try to be very 
brief because I know there are a lot of questions to be asked 
and answered.
    First of all, since our new superintendent has been here, 
we view our progress as remarkable, not just something to 
simply say we made improvements, but remarkable improvement. We 
do have our four core values that I will repeat here. One is 
the improved academic performance of all students, promotion of 
educational equality, the institution of sound management 
practices, the development of a safe, healthy and cost-
effective environment for our children.

          10-year $1 billion facilities modernization program

    All these things have not been done easily over the 
criticism, and indeed a variety of support mechanisms from 
across this community. Indeed, the concerns raised here about 
facilities, it is important to note that in FY 99 we plan to 
kick off a 10-year, $1 billion modernization program that will 
bring all schools in the District up to adequate and explicit 
architectural facilities standards for the 21st century. This 
plan encompasses an area including modernization, public-
private partnerships, and ADA improvements, and will result in 
expenditure of approximately $100 million per year over the 
next 10 years.

                          stars summer program

    Our superintendent has already spoken to the academic plan, 
but let me also say that even in the STARS program, which we 
are now applauding, our superintendent for--there was so many 
nay-sayers we thought it would not get off the ground. When we 
said 20,000 students, many said you will be lucky to get 5 or 
10. When we closed the door at 25,000 or 23,000, they said why 
are you closing the door, because so many youngsters want to 
get in? So our position is you're darned if you do and darned 
if you don't, but we keep plodding along, and hopefully the 
kind of reforms and management efforts that she has underway 
will continue.

                             trustees role

    We are careful as trustees not to micromanage. We 
understand the difference between policy and operations. 
However, we remind you that under the Shook v. The CONTROL 
BOARD Financial Management System decision, we are no longer 
the final decision makers. We make a decision. It is referred 
to the Control Board for final ratification, acceptance or 
rejection.

                        status of reform agenda

    In addition, our superintendent has talked about and spoken 
eloquently to the teacher recruitment and certification issues, 
but I must say as we look at other jurisdictions in major urban 
cities, we are far ahead of many of our sister institutions as 
they try to get to where we are through their own reform 
agenda.
    The budget process and resources for the academic plan, you 
will see there as you look through the testimony, but I must 
say, that again our desire is to support the reform agenda with 
appropriate resources.

                            charter schools

    And now I get to Section 6 of my testimony where we talk 
about the public charter schools.
    As you have already heard, 19 public charter schools 
presently operate in the District. The fall of '98 witnessed an 
expansion of charter schools, and prior to this, only two 
charter schools existed. The current budget is approximately 
$28.8 million and the proposed FY 2000 budget is approximately 
the same. However, $30 million of DCPS' funds are earmarked and 
are to be escrowed in relationship to the enrollment increases 
in the charter schools. As has been pointed out, they don't 
really have the history to determine exactly how many students 
will be in those schools. So we do have to rely on their 
projections.
    The average per-student expenditure for charter schools 
approximate, and these numbers go up and down depending on what 
factors you put into those schools and what kind of students 
they will have. For example, they may have less students who 
are in need of special education or more. So, again, the costs 
are around $7,000. This is an unaudited figure and does not 
include the approximate $400,000 allocated to the Public 
Charter School Board or the approximate $300,000 allocated to 
the Board of Education for charter school oversight expenses. 
Again, we believe that we are giving the accurate, approximate 
number for operating those schools, and we hope if there is 
additional information provided by the charters that we will 
have that so we can look at those numbers again.
    Presently, there are 3,632 students enrolled in the 19 
charter schools, and again, the numbers vacillate. They go in, 
they go up and they go down, and while we know that the dollars 
do follow the students, for those students who may have 
returned to the public schools, those dollars do not follow 
them because for the most part they have been spent.
    I might add that one of the challenges that we would like 
for this Committee to look at is the ability or the opportunity 
for the charter schools to carry over their dollars while the 
DCPS is not allowed to do that. We must spend by the end of the 
year. So in the process of looking at this, please look at that 
challenge as well.

                trustees attitude toward charter schools

    Let me just skip to the summation and say for a moment that 
there is a feeling or an explanation or a perception that 
somehow the trustees are against charter schools, and I want to 
address that head on. That is absolutely untrue. As a matter of 
fact, before taking on this responsibility as a member of the 
trustees, the Urban League was in the process of looking at the 
ability to in fact operate a charter school, and we nationwide 
have approximately 20 charter schools that are operating right 
now. So the notion is not that there's anything wrong with 
having good, quality, alternative opportunities for our 
youngsters, it is that it seems like this may be perhaps the 
worst time for us to be doing that. Not to stop anything but 
just to look at that process.
    We have a superintendent who is in a reform environment. We 
have a public school that is coming out of a crisis, and then 
we still have to deal with these many charter schools that are 
in this community. We want to do that. We need the support of 
those alternative schools to give youngsters another 
opportunity, especially those in special education.
    But in the meantime we want to set the record straight, we 
are not anti-charter. We are not anti-facilities going to 
charter schools. We hope to be able to make up for any 
misconceptions and just also say that we have had challenges in 
that area. The facilities people have come. Many have found 
this activity to be overwhelming. As you know, we are the 
largest landholder in the District of Columbia. So it's 
something that we hope that we've gotten worked out with this 
new person coming in, and again, when I leave this position, 
this volunteer position, I will start looking at my own charter 
school which will be different from the existing school system 
and in addition to, not to supplement or to undermine.
    Thank you.

                  prepared statement of maudine cooper

    [The prepared statement of Maudine Cooper follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Istook. Thank you very much, Ms. Cooper. If you would 
pass the microphone to Ms. Newman. Thank you.

                  Opening Remarks of Constance Newman

    Ms. Newman. Mr. Chairman and Mr. Moran and Congresswoman 
Norton, the charter school movement has really gotten off to an 
effective and exciting start with the growth of the number of 
schools and students in those schools, and I think this is good 
from everyone's point of view because I guess I view it all as 
one system, and it's all one system where there should be 
synergy between the charter schools and the reforms in the 
regular school system. There ought to be learning that goes 
back and forth, and I believe that is the original intent of 
the charter school movement, and I hope to see in the months 
and years to come that this becomes a part of the philosophy of 
everyone who's involved with the charter schools.

                      funds should follow students

    Yes, the dollar should follow the students, and as a result 
of our believing that, there will be a student count at the 
beginning of the school year, and the money that is reserved, 
set aside, the 5 percent, will move depending upon where the 
students are, and that's as it should be.
    It is safe to say that the District's charter school 
development has weathered some problems. We can't pretend that 
there haven't been problems. Some of them have been the 
obvious. When you're starting something up new, you are going 
to have some difficulty in planning. It is difficult to know 
how many students you are going to have in a school that is 
brand new, and it's difficult for a school system to plan not 
knowing exactly what the changes are going to be and the number 
of professors, the number of students in the school system.

            facilities for charter schools--most troublesome

    But I do believe that the most troublesome of the problems, 
and I think where the most difficult relationships have come 
about, is over the procuring of the adequate facilities, and 
that has already been addressed, and I will have to say that we 
are not proud of the process. There's no way to pretend that we 
have been proud of the process. I think that all of us who are 
involved in it are getting on top of it. We have the Staubach 
firm in now, looking at each property and giving us an 
assessment of where that property is in the process, what 
decisions have to be made about it.

               lack of agreement in property disposition

    But there's a larger issue that I probably ought to share 
with you, and that is, a city with its leadership that has not 
quite yet determined how it wants to address the disposition of 
the properties. And this is what I mean. At the outset, under 
the leadership of the Congress and our own leadership, we said 
you must get top dollar for each of these properties and that 
is the final call that you should make. Once that was the call 
and once that was the pressure on the staff, very little 
consideration was made, frankly, of the community. There were a 
few hearings, but I frankly don't think those went to the heart 
of what the community wanted and needed in their community.
    And so there is a view now that it is extremely important 
to go back to the drawing board and ask the tough questions of 
the community and of the elected officials, how do you want to 
address the needs of the community, and how do you expect and 
want these properties to respond to those needs. Does it make 
more sense to hold these properties in the portfolio of the 
school system and to lease them out? Does it make more sense to 
use the school properties as hubs for both the regular system 
and the charters? Does it make more sense to sell and bring the 
dollars in in order to use it to repair the additional 
properties in the school system?
    My point is this: There has not been the kind of management 
of the system that everybody had wanted. I think with the new 
director and with Staubach that is coming about, but at the 
same time, there is a need for a review of the policy and for 
this community to decide exactly how does it want to treat 
these properties in their community. It's obvious that no one 
wants boarded-up schools or wasted square footage, but what is 
the best usage. And I would commit to you that through the 
summer and fall, there will be serious discussions of this.

              control board to come back to the committee

    In the meantime, we were looking at what was in the 
pipeline and where we had obligations and attempting to address 
those on a fairness basis. We will be prepared to come back to 
you with what we believe is sensible direction in this regard, 
but I guess I just will end by saying that the charter school 
movement is good for the school system and for the community in 
Washington, and I think that as time goes on everybody will 
understand that it benefits the school system in that it allows 
models for reform in the regular system.

                 prepared statement of constance newman

    [The prepared statement of Constance Newman follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

            school system not created to manage real estate

    Mr. Istook. Thank you very much, Ms. Newman. I think you 
did a good job, and it was good to have you closing on the 
panel, to emphasize those very issues, the conflict between 
what's your real goal with the property; is it to make it 
available to the charter schools, or is it to achieve top 
dollar? And I realize that problem is compounded by the fact 
that the public school system was not created to hold and 
manage real estate. That's not the purpose. The real estate 
that's necessary for your needs, of course you have, you want 
to manage it, you want to take care of it, you want to improve 
it and keep it in proper condition for the students, but you 
were never established to be a real estate holding company, and 
now you're somewhat in that position. What do you do with that? 
And I think sometimes a lot of timidity and overcaution creep 
in when people are asked to do something that's outside of 
their area of expertise. I don't think you were hired because 
you had an expertise in managing vacant real estate. If so, 
they hired the wrong person, and I know they didn't hire the 
wrong person.

                  flow chart of decison making process

    So, with that in mind, I very much appreciate the 
frustrations expressed by persons involved in charter schools 
and the uncertainty that the schools feel on how do we make 
these decisions. I would appreciate receiving, if someone's 
drafted one, kind of a flow chart of the decision making 
process through which you must go, you know, all of the people 
that have input and who either are required to give approval or 
must be consulted or can otherwise generate some form of delay 
in the process. I have the feeling it would be a pretty sad 
mess to look at from the perspective of somebody that's trying 
to get a decision made, and the challenge is to help streamline 
that.

            today's problem should be resolved by next year

    You know, we have the problem today. I want to make sure we 
don't have it a year from now. What you may see as some 
difficulties in knowing what priorities are, I hope you can see 
that from the perspective of someone involved in a charter 
school. From the charter school's prespective you can easily 
see how it can appear to be a deliberate obstruction of what 
they are trying to do because the competition for students, the 
money follows the students, you've had declining enrollment for 
so many years, you're making heroic efforts to fix things in 
the public schools, and it's kind of an inherent conflict, but 
that's the nature of competition.

            incentives lacking for assisting charter schools

    I would like your feedback on what we need to do to create 
incentives for the school system to assist the charter schools 
to have the property that they desire and need and also 
incentives for the schools to get out from under the 
administrative load and the other burdens of dealing with your 
vacant real estate. I think a program that doesn't have 
incentives is not well designed, and it doesn't appear to me 
like it has the current incentives.
    So I would appreciate from everyone here suggestions on 
what we can do to streamline that process and make sure that 
something happens in this appropriations bill to assist it. You 
don't need those headaches that you are experiencing on the 
public school side, and they don't need the headaches that they 
are experiencing on the charter school side, and I am--if you 
have some comments on that now, fine, but otherwise, you may 
want to submit those for the record.
    Let me ask first if there are some particular incentives 
that any of you see would be helpful for the public schools to 
assist in the way I have described.

                   flow charts of facilities process

    Ms. Newman. May I just say something about the flow chart? 
We really ought to give you two flow charts, and the one is the 
way it has gone in the past and I think it would not be a 
pretty picture, but I think the superintendent and others have 
brought in the Staubach firm and a new director and there are 
new procedures now, and they need to be transparent.
    One of the problems in the past was that everyone didn't 
understand what the process was, and in fact, from time to 
time, it did change, and so what I would like to give you are 
two flow charts. I do believe that what the school has to do is 
to have a conversation with the public, and I am not talking 
about a long drawn-out conversation, but some of what has 
happened was a change in how the communities viewed the use of 
the community property.
    And I do think, through the hearings and the Council 
through the summer, that there will be more of a consensus 
about how to handle these properties.
    And this doesn't answer your question about incentives, but 
I think it would go a long way toward making it easier for the 
school system because they will be operating based on what it 
is the public wants and expects of them.

        schools should educate students, not manage real estate

    Mr. Istook. Certainly. We expect you to be in the business 
of educating children, not in real estate management. 
Certainly.
    Mr. McCarthy?

                       60 empty school buildings

    Mr. McCarthy. Mr. Chairman, I think everything Ms. Newman 
says makes sense, except there is just one part of it that I 
think you're sensitive to and we really need to focus on.
    The D.C. School Reform Act passed in 1996. There are 19 
schools that have been in operation, and 10 more have been 
chartered. Now, these kids who are going to charter schools are 
going to schools which are not--facilitieswise are not as good 
as they could be. And we have 60 empty buildings.
    This one building that we competed for has been empty for 
18 years, Mr. Chairman; and in researching this building we 
came upon one quote from the dedication of it in 1868 which I 
think applies here, and I would like to read it. It was by 
District of Columbia Alderman W. H. Chase at the time of the 
dedication of the Franklin School; and he said, ``I hope the 
time may never come when we would make less beautiful and 
attractive the places where our children are to receive an 
education, where lasting impressions are to be made on the 
young mind, than we would the offices of state. It has been 
well said by an eminent thinker, show me the churches and 
schools of a Nation and I will tell you what is its 
civilization and enlightenment.''.
    And there is a temptation to go and want to do studies and 
go ahead and think about this. But we have a school that has 
been open for a year. The facility that we are in is only 
available to us for 2\1/2\ years, and it takes a lot of time to 
plan the renovation and capital formation and take one of these 
buildings and make it into a functional school facility.
    And we are shortchanging the kids who are going to these 
charter schools because they are not going to schools--by and 
large, going to school in buildings that are symbols of our 
enlightenment right now. And there is a sense of urgency that 
requires us to move forward quickly.
    Mr. Istook. I think the purpose of the schools is to help 
young people to have minds full of knowledge, not vacant 
buildings. And I want the appropriations to go to fill kids's 
heads with good knowledge and values, not to manage vacant 
property, especially when it has been vacant for 5, 10, 15, 20 
years.
    Mrs. Cooper, you wanted to say something?
    Ms. Cooper. I think Ms. Newman is on the right track with 
this.

           public schools--owning property is a disincentive

    When we first started looking at our properties was in a 
different environment. General Becton was there. All of us were 
there, well intended and did not know anything about real 
estate; and we relied, sometimes to our detriment, on those who 
purported to be experts.
    But now it is time to step back and look at this. We can 
look at incentives, but owning property for us is a 
disincentive. We worry about them. People are breaking into 
them. We board them up. They take the boards off----
    Mr. Istook. You are carrying a burden you shouldn't have to 
carry.

            vacant school properties--eyesores and disrepair

    Ms. Cooper. I totally agree. And so in that light there is 
already an incentive to get rid of these properties. They are 
being broken into. They are eyesores. And we do get the 
community ire when we have these buildings standing there. And 
despite the fact that we may have made some mistakes, we do 
know that, prior to our coming on board and the control board's 
role, nothing was being sold. So while we can take some credit, 
we can also share in the blame for not moving them quickly.
    Mr. Istook. We want to help find ways to streamline that.

          control board interest in assisting charter schools

    Ms. Newman. I just want to say, in response to Mr. 
McCarthy, we do feel an obligation to assist and work with the 
charter schools during this period. And I don't mean to imply 
that we are going to have a hiatus and study and let them 
wander around for the next school year. In fact, he knows or 
many of the people in the system know, that the Staubach firm 
has helped to identify facilities for them this school year. 
And we will feel that obligation. It is part of what is 
necessary to make the charter school movement work.
    Mr. Istook. Thank you, Mrs. Newman.
    Mr. Moran.
    Mr. Moran. Thank you, Mr. Chairman.
    Do you know I used to work with Mrs. Newman in the Nixon 
administration?
    Ms. Newman. What administration was that?
    Mr. Moran. You didn't want--do you want me to repeat it? 
She was one of the real whiz kids, and she had worked for Mayor 
Lindsey in New York City and probably managed property. I 
know--in New York City.
    But, anyway, it is great to have her as the vice chair of 
the school board. You obviously didn't know that. I wouldn't 
have mentioned it, but I thought you would be interested to 
know she has a great background, not to mention running the 
Smithsonian Institution.

                revoking charters--marcus garvey school

    What I want to ask about is revoking charters when charter 
schools don't work out. Marcus Garvey is a problem. Now, the 
elected Board of Education in its chartering role revoked 
Marcus Garvey's charter, and I understand they're working on 
revoking a second. But the Public Charter School Board has not 
revoked any, and I am concerned about the oversight mechanism 
we have. Because although we hear a lot of good words, 
basically it really is requiring compliance with a memorandum 
of understanding.

                 oversight process for charter schools

    What if people don't comply with the memorandum of 
understanding? What kind of real oversight and accountability 
can you exercise?
    Ms. Baker. I would like to speak to that.
    Mr. Moran. I think you would want to.
    Ms. Baker. Of course, we came on board after Marcus Garvey, 
so it was somewhat a lesson to be learned. We have a motto that 
says: We charter success. And I think part of it was we said we 
never wanted to see ourselves in that position so we decided to 
move slowly and carefully. In the process, we start at the 
beginning of our application process really looking at 
accountability.
    It was interesting. There was an awards ceremony, a joint 
one with charter schools, about a week and a half ago, and they 
had to pull questions out of the basket, and one person pulled 
out the question: What is the first word that comes to your 
mind when you think about your process this year? And he said 
the one word is accountability.
    We have an accountability process that runs side by side 
with the charter. When they get the charter, we work diligently 
to devise an accountability plan that they have input into. It 
isn't a top-down situation. That accountability plan was sought 
after at the National Conference on Charter Schools by 
jurisdictions around the country because they see it as a 
model.
    We continue to work on it. We continue to work to improve 
it. We had a pre-opening audit for our schools before they 
opened their doors. We needed to see that certain things were 
in place which meant that they were ready to open their doors, 
not just that they had received the necessary fire code 
clearance and all of that, but a number of other things.
    And so we start there. We started even before that. We have 
recently had an ``Implementation Review''. It looks at what it 
is they said they expected to be able to do to see if those 
things are beginning, and where they are not where we think 
they ought to be.
    There is indeed that memorandum of understanding to say, 
here is where you ought to be. Here is what we will look for. 
You need to tell us right now what it is that you will do to 
move in that direction.
    Mr. Moran. Can you stop the funding if you have to, if they 
don't comply?
    Ms. Baker. Yes, eventually you could. But we feel that what 
you do is you have in place the kinds of steps that say here is 
what we are concerned about. Tell us how you are going to fix 
it.
    Mr. Moran. Well, in fairness, most charter schools have not 
been around that long. As they are trying they ought to have 
some honeymoon period.
    Ms. Baker. We have to see indicators that they are moving 
in the right direction.

                  chartering authority expires in 2001

    Mr. Moran. But the D.C.'s Board of Education chartering 
authority sunsets in 2002; right?
    Ms. Baker. No, you mean----
    Mr. Moran. Yours does.
    Ms. Baker. Yes, it's 2001.
    Mr. Moran. It's 2001? Do you continue to maintain authority 
after the chartering authority sunsets?
    Ms. Baker. It would appear to us that that is something 
that we're asking you to take a hard look at, because we say 
that we have set up guidelines for our charter schools that are 
very clear. It would be unfair to the schools that we charter 
to not have the body that chartered them move forward with 
them.
    Mr. Moran. So you think you should continue to exercise the 
oversight mechanism?
    Ms. Baker. We have a strong oversight mechanism----
    Mr. Moran. And you would anticipate it being sustained 
after the sunset?
    Ms. Baker. We would certainly anticipate that it should be 
sustained, and we would feel that this board would be the board 
that would be able to do that.
    Mr. Moran. And it would be up to the Congress to do that?
    Ms. Baker. We operate under the law that came from the 
Congress, yes.
    Mr. Moran. All right. Thank you.
    Mr. Istook. Thank you, Mr. Moran.
    Mr. Mollohan.
    Mr. Mollohan. Thank you, Mr. Chairman.

                       success of charter schools

    Perhaps, Ms. Baker, in your view could you tell us about 
the success of charter schools?
    Ms. Baker. Generally or those which we have chartered?
    Mr. Mollohan. The ones you chartered.
    And also I'm aware that enrollment has been pretty 
successful. What about the academic achievement? Has that been 
successful and have studies been done? Can you speak to that?
    Ms. Baker. We're talking about one academic year coming to 
a close. This is the year in which you get your benchmark. Some 
of the schools have materials from their students that are 
enabling them to see where they are. But this is the year they 
say here is where we are. This is where we started.
    Mr. Mollohan. Do you plan to benchmark this year?
    Ms. Baker. Oh, yes.
    Mr. Mollohan. And how do you do that?
    Ms. Baker. The SAT-9 is the benchmark as well as the 
academic plan that each of their charters has clearly 
described. And what we look at is where they are in that, and 
we expect each year to see fuller implementation of that 
charter which would also impact on the progress the students 
make academically.
    Mr. Mollohan. Is there going to be an evaluation process on 
this first year?
    Ms. Baker. Yes, the Implementation Review is a part of that 
evaluation process; and we have reviewers that went to every 
school. They are in the process now of giving us those reports, 
and those reports will then trigger a memorandum of 
understanding as to where they are and what our expectations 
are for the coming year.
    Mr. Mollohan. Do you have any preliminary indication of how 
successful academically----
    Ms. Baker. Academically, no. For instance, we're getting 
our SAT-9 scores later than the school system. We thought we 
got them at the same time. So we don't even have those scores 
at this time. So here, again, there is an issue that a number 
of our schools, for instance, never really got complete 
cumulative records for the students that are in charter 
schools, so we don't necessarily have where those kids were 
this time last year because they never completely got all of 
those records. So we can certainly deal with what we know 
starting here from the SAT-9 this year.
    Mr. Mollohan. Right. But just so I understand, between now 
and the beginning of this year you are going to sort through 
those issues so that you are----
    Ms. Baker. They will certainly look at where they are, and 
then they will devise a plan for implementation that will 
support the needs of the students based on the test scores that 
they have.
    Mr. Mollohan. And who is ``they'' again?
    Ms. Baker. Each school. Each school will get a report. They 
will----
    Mr. Mollohan. They will get a report or prepare a report?
    Ms. Baker. They will get a report on the SAT-9, and they 
will then prepare what they will do in order to implement the 
academic program to ensure progress.

 impact of charter schools on population of traditional public schools

    Mr. Mollohan. Okay. How have charter schools impacted the 
population of the D.C. public school system?
    Ms. Baker. We have 3,662 students which would mean that 
there are that many fewer. The majority of them did indeed come 
from DCPS. A few may have come from private schools back into 
the public system. So the impact there is that count that we 
know. They would have to speak to any other impacts that they 
feel exist.
    Ms. Newman.
    Ms. Newman. Well, oh, the public school count--I was hoping 
you were going to take this. The public school count is 76,000. 
So of that it is the 3,600 who are in the charter schools this 
year.
    Mr. Mollohan. That is about 5 percent in the first year?
    Ms. Newman. But there is--if you look at the number of 
schools that have been approved in this next year, there will 
be a growth probably--some are saying 5,000, some others are 
saying 7,000. But you're still looking at a fairly rapid rate 
of growth of the charter school students. And, as a matter of 
fact, the growth in the number of schools in the 3-year period 
and the students in the 3-year period of time here is much 
faster than in most jurisdictions around the country.
    Ms. Baker. Right. But we also need to emphasize that a lot 
of that growth is growth already planned for next year. Because 
many of the schools started small with one grade. They are 
adding a grade each year. So that is part of the increase that 
we are talking about.
    Mr. Mollohan. It is built-in growth.
    Ms. Baker. Yes.

      facilities are major impediment to growth of charter schools

    Mr. McCarthy. I was going to say, Mr. Mollohan, growth was 
about 5 percent the first year. It easily could be 10 percent 
the second year, but the major impediment facing the schools 
expanding really is facilities. In the two schools that we are 
involved with, we have about 35,000 square feet in what is 
called an incubator, where two schools started and we have some 
space that the schools can stay in for up to 3\1/2\ years. But 
there are limitations to how large those schools can grow in 
that space.
    If some of these facilities were available, it would more 
naturally facilitate the growth of these schools.
    Mr. Mollohan. What facilities are available?
    Mr. McCarthy. Some of the 60 empty school buildings that 
are in Washington today.

                      per pupil facility allowance

    Mr. Peabody. I might add that the facility allowance is 
also an important factor. The schools get a facility allowance 
which is according to a formula. Last year the formula was cut 
to $617, where the formula called for about $1,100. This year, 
the formula again calls for $1,100, but we don't know how much 
is in there. That facilities' budget is extremely important in 
whether or not they will be able to get good facilities, either 
commercial or renovate existing DCPS facilities.

           charter schools improve public school real estate

    Ms. Baker. The thing that is important about renovation is 
that what you do is you get improved real estate within the 
city. And the schools are putting a tremendous amount into--and 
at Edison Friendship, where you have an outside organization 
that is able to get the kind of loans that enable renovation, 
it means that buildings are truly being saved in the sense that 
they enhance the neighborhood as opposed to detracting from the 
neighborhood.
    Mr. Mollohan. I know the Chairman spoke to property issues. 
I don't know whether he got into those areas, but three people 
have spoken to the problems. I would be interested in the next 
round in hearing what suggestions you have for solutions in 
this area.
    I know I am on the red light. Thank you, Mr. Chairman.
    Mr. Istook. Thank you, Mr. Mollohan.

               100 percent increase in charter enrollment

    Let me ask because when it comes to charter school 
provisions there are concerns with the facilities' allowance. 
There is concern with the facilities' availability. You 
provided me with a checklist of different things that the 
charter schools are seeking on it.
    Mr. McCarthy, I think you said something about the growth 
rate going from 5 percent to 10 percent, but are you talking 
about 5 percent growth or are you talking about going from 5 
percent of the public school population to 10 percent? What are 
the projected numbers again for this fall compared to this 
year's numbers?
    Mr. McCarthy. Well, actually, Mike, I think, might be able 
to answer that better.
    Mr. Peabody. It's about a doubling, going from 3,600 to----
    Mr. Istook. Five percent of the student population to 10 
percent of the student population. Which is a 100 percent 
growth rate within the year on that.
    Mr. Peabody. Yes.
    Mr. Istook. And I don't know if anyone is doing trend line 
projections. I don't know, frankly, if anyone can. But that's 
why we focus on making sure that the dollars follow the child 
wherever they may be.

                           sibling preference

    But, realizing this, I wanted to ask Ms. Ackerman, for 
example, let's take the sibling presence. That is one factor 
that I know the charter schools have asked about. Do the 
District schools have a position on that?
    Ms. Ackerman. No, we have open choice, so families--usually 
when a family gets into one school, the siblings go to that 
school, also.

     impact of charter school growth on traditional public schools

    Mr. Istook. Sure. I can only imagine some of the thoughts 
that might go through your mind. You are talking about bringing 
back a public school system that has already halfed its student 
population over recent years. Now you have the charter schools 
with about 5 percent. They are saying next year they will be 10 
percent. What impact is that having upon the D.C. public 
schools? And I'm talking about in terms of whether it 
complicates different things for you on your planning or 
anything else.
    Also how it's doing as far as incentivizing teachers or 
administrators or students. What impact is it having upon the 
D.C. Schools, from your perspective?
    Ms. Ackerman. Well, I would like to start by saying that I 
think choice is certainly something that should be every 
parent's option. As a parent myself, I certainly wanted that 
available to me.
    And I think competition is healthy. I think it is healthy 
within the District. Having an open choice for parents means 
that parents across the District get to choose where their 
children go, and they don't have to go necessarily to their 
neighborhood schools.
    But again, having been a former parent, I would like to 
choose close to home. That would most likely be my choice.
    There have been some issues and there are still issues that 
we have to address related to charter schools when I hear the 
3,600 number. I also know that for the public schools that at 
the semester we got a number of students back. I'll get the 
number of students that did come back to the public schools. 
And so that number does--we get most of our----
    Mr. Istook. There is a two-way flow.
    Ms. Ackerman. That is right. There is a two-way flow. They 
do come back.
    And indeed it is not until January that our numbers reach a 
peak because we have students that are mobile in and out of the 
District. Some of those students did come back. So I don't want 
us to--it may be misleading to only look at that number. We may 
want to look at how many students ended up at the end of the 
year in charter schools.
    But there are issues that we have found that have been sort 
of troublesome for us. Trying to put in place some kind of 
process so that we can anticipate, for instance, how many 
teachers and administrators we are going to lose. They can let 
us know up until the last minute, and last year we had up to 
100 teachers leaving at the very last minute. For any school 
system that would be disruptive. What we tried to do was put in 
place some kind of time line so that we can then anticipate and 
then recruit the staff that we need.
    To tell you the truth, in terms of administration--
administrators, we have had a hard time in some ways keeping 
our administrators because the pay is better in charter 
schools. There are bonuses that are given to some of our most 
seasoned administrators; and we can't match, you know, $10,000 
and $20,000 pay raises, although we are improving.
    So those kinds of issues have been troublesome, and it 
would be helpful if we could put in place some kind of 
strategies, procedures that would help us anticipate what some 
of the issues would be. And then we can plan for them.

                     reducing administrative costs

    Mr. Istook. Does that help you, by the way, having 
incentives to try to find where do we streamline our own 
administration so maybe in order to pay some people the bonuses 
or pay them more you streamline and don't have as many other 
people? I suppose that is one way.
    Ms. Ackerman. We have streamlined. We have gone from 15 
percent of our budget, total budget, for administrative costs 
down to 5.3 percent. So we are probably as small as we are 
going to be able to get and smaller than I would say the 
majority of school districts now. So it is a matter of trying 
to find incentives to get the best quality of staff, including 
principals.
    Now, that is what we are trying to do. We are trying to 
recruit the best teachers, as well as the best principals----
    That is where we are. Those are just some of the issues. 
What happens when students come back?
    There are some things we need to work out with special 
education students, the services. What happens when students 
are expelled from a charter school? Often they come back to us.
    Mr. Istook. Sure. That is something I would appreciate your 
expanding for the record.
    Mr. Mollohan. I didn't want to leave you out here.
    Mr. Mollohan. Thank you, Mr. Chairman.

                 efforts to address facilities problems

    Well, let me ask a follow-up: What recommendations would 
you make to address the facilities' issues and problems that 
you all were alluding to in answer to my previous line of 
questioning? Anybody?
    Mr. Peabody. Well, first of all, we would love to be at the 
table with Mrs. Newman when she develops this policy. That 
would be very important to us. I'm sure that in working with 
her we can work out a better policy.
    In my testimony, I also indicated that I think charter 
schools should get first preference on these extra facilities, 
rather than to be put in the same level with the private 
developers.
    I am a private developer myself, so I think private 
developers are just fine. But, quite frankly, I think that the 
children should come first; and they are not being first in 
this policy.
    The policy was originally set up to get top dollar. Mrs. 
Newman has now raised questions about that policy. We certainly 
also raise questions about it.
    Mr. Mollohan. About maximizing the return?
    Mr. Peabody. About maximizing. Because, frankly, the way 
you maximize the benefit to the District is get a first-class 
education system. That will produce more dollars for the 
District than anything that could conceivably be gotten out of 
these properties.
    Mr. Mollohan. On what basis would you recommend these 
facilities be transferred?

                   15-year leases at non-profit rate

    Mr. Peabody. I think they ought to be either--at the choice 
of the charter school, ought to be leased for 15 years on a 
very modest basis, which is the same rate that the school 
system leases to nonprofit groups, which is $1.14 a square foot 
at this time, and I think they should receive credits for any 
improvements that they make in the buildings. I think those 
leases should run for 15 years and that those leases should be 
subordinate to bank financing; otherwise, you can't finance the 
improvements.
    Mr. Mollohan. Mr. McCarthy.

           returning facilities disposition to mayor's office

    Mr. McCarthy. Mr. Mollohan, I think--a couple of things. As 
we are moving back toward home rule I think it makes sense to 
move powers back to the mayor's office that were taken away 
during the crisis of the last few years. I think disposition of 
surplus property is one of those areas that I think it would 
make a lot of sense to put back into the Mayor's hands as the 
the Mayor's office regains a lot of their power. And this I 
think is one area that they could be well suited for if they 
desired this power at that time.
    Mr. Mollohan. How does that impact this issue?
    Mr. McCarthy. Well, what I think it does is it takes the 
disposition activity away from the public school system, which 
is just not--from a manpower point of view--is just not 
equipped to manage this kind of thing. The Director of 
Facilities I think has to do 3,000 use agreements a year just 
for the existing schools. I mean, every time there is an event 
at a public school the Director of Facilities has to do that. 
There is a tremendous amount of paperwork, and it is not a 
heavily staffed office.
    When you start talking about a complex process of sending 
out competitive bids and then going through and culling those 
bids and then communicating with everybody, it really requires 
an office that I think is more attuned to that. And the 
Director of Facilities just isn't that.
    Just echoing something that Mike said, talking about the 
quality of education versus the quality of real estate, these 
60 school buildings were built by taxpayers to educate 
children; and we shouldn't lose sight of the fact that these 60 
empty buildings were schools. We competed in the fair market 
against private developers with the 15 percent discount.

                            franklin school

    There was an appraisal done on the Franklin School building 
for $4.2 million. The transferable development rights were 
taken away from that, and a bid was accepted of $3 million by 
the Emergency Board of Trustees. We competed with a 15 percent 
discount in that fair market environment.
    So I mean, even with the current policy, we are maximizing 
value. We just need to see the process through to a conclusion 
rather than suspending it at points in time and leaving kids 
and teachers and parents hanging on what the resolution is 
going to be.
    Mr. Mollohan. Right. Thank you, Mr. McCarthy.
    Ms. Newman, do you have an observation on the idea or, Ms. 
Ackerman, on a more sympathetic consideration of these 
facilities when charter schools are interested in acquiring 
them? Which is what I think he is----

                        policy agreement needed

    Ms. Newman. I think one of the questions really ought to be 
in the discussions that we will have over the summer, whether 
or not there shouldn't be a decision to have long-term 15-year 
leases for a very low rate and except the charter schools to 
add value by renovation. I think that makes a lot of sense.
    People think if they move the activity from one place to 
another they are going to get something better. I don't know 
that that is necessarily the case. Because wherever the 
activity is going to take place they are going to need more 
people and more resources.
    I think it is more important for the city, the community, 
and the charter school movement to come to some agreement about 
what the policies ought to be.
    Mr. Mollohan. The policy ought to be with regard to--.
    Ms. Newman. With regard to what ought to be the criteria 
for disposing of the properties and the waiting and what kind 
of terms and what kind of consideration.
    Mr. Mollohan. For charter schools vis-a-vis some other 
purpose?
    Ms. Newman. Exactly.
    Mr. Mollohan. So you are sympathetic to----
    Ms. Newman. I am sympathetic to the community's interest in 
having these properties used in a way that enhances the 
community. And, generally speaking, there is an interest in the 
facilities being used as schools. As Mr. McCarthy says, that is 
what they were at the outset.
    But there are also other public purposes for some of these 
facilities.
    Mr. Mollohan. That should compete on a priority basis?
    Ms. Newman. I don't know whether they should compete on a 
priority basis.

    question of charter schools competing with other public purposes

    Mr. Mollohan. Or should charter schools compete on a 
priority basis with other public purposes or nonprofit 
purposes?
    Ms. Newman. That is a little hard for me to answer for this 
reason. Let me give you an example, that the police want to use 
one of the school facilities for one of their regional 
community centers; and the community is very interested in 
having that there. Now, should you say that that's more or less 
valuable for that community? It depends on what else is there. 
That's why I am trying not to----
    Mr. Mollohan. A little policy guidance would be good in 
this area.
    Ms. Newman. Yes, and the community saying in this 
particular community at this time, given everything else, it is 
more valuable to us to have a charter school in this building 
or it is more valuable for us to have a social service center.
    Mr. Mollohan. I got it.
    I am way on the red light, but Ms. Ackerman----
    Mr. Istook. That is fine. We have 2 minutes left.
    Mr. Mollohan. Can we actually get to the vote?
    Mr. Istook. Two minutes remaining on the clock.

               facilities process for 12 charter schools

    Ms. Ackerman. The only thing I wanted to say is, because we 
have spent a lot of time talking about at least these two 
schools, but we do have 12 charter schools in our facilities; 
and while we are looking at this, I would like us to focus on 
what went well there. How did it work? How did the process work 
for those 12 schools? Because we spent a lot of time talking 
about these two. And I have been in a couple of those charter 
schools and they are working well.
    Mr. Istook. I understand.

               cost to maintain excess school properties

    We have run out of time. I have some things I would like to 
ask for the record.
    One of them, Ms. Ackerman, I would appreciate what you can 
put together on what it really costs the schools to maintain 
the properties. Not only the cost of maintaining them, but 
security for them, the salaries, the people that are charged 
with trying to find a use for them, a comprehensive look about 
what it is really costing the schools to carry those 
properties.
    Ms. Baker. You are talking about the schools that she----
    Mr. Istook. Let's call it the excess property.
    Ms. Baker. But what is it costing the charter schools to 
maintain the buildings that they are going into. You are not 
interested in that?
    Mr. Istook. That is not my question. We have to bring the 
hearing to a close right now. I don't want to open up a whole 
new area.
    We are going to close out the hearing. I appreciate 
everyone taking time this morning.
    We will be hearing tomorrow morning from the Mayor and 
members of the Council and the Control Board concerning the 
overall fiscal year 2000 budget. We will have the other 
questions for the record.
    Thank you very much. I apologize for having to rush away, 
but in order to make the House floor vote that is going to be 
necessary, without staying to greet you further. Thank you.
    We are adjourned.

                  committee's questions for the Record

    [The Committee's questions and the Superintendent's 
responses follow:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                          Wednesday, June 23, 1999.

                      BUDGET FOR FISCAL YEAR 2000

                               WITNESSES

                                PANEL 1

WILLIAM BEACH, DIRECTOR, CENTER FOR DATA ANALYSIS, HERITAGE FOUNDATION

                                PANEL 2

HON. ANTHONY A. WILLIAMS, MAYOR, DISTRICT OF COLUMBIA
HON. LINDA M. CROPP, CHAIRMAN, COUNCIL OF THE DISTRICT OF COLUMBIA
ALICE M. RIVLIN, CHAIRMAN, DISTRICT OF COLUMBIA FINANCIAL 
    RESPONSIBILITY AND MANAGEMENT ASSISTANCE AUTHORITY
VALERIE HOLT, CHIEF FINANCIAL OFFICER, DISTRICT OF COLUMBIA

                   Chairman Istook's Opening Remarks

    Mr. Istook. The committee would come to order, please.
    We are meeting this morning to receive testimony concerning 
the budget for the District of Columbia for fiscal year 2000, 
and we have two panels of witnesses.
    On our first panel, we will be hearing from William Beach, 
who is the Director of the Center for Data Analysis at the 
Heritage Foundation.
    After Mr. Beach, the second panel includes the Mayor of our 
Nation's capital, Anthony Williams; the Chairman of the Council 
of the District of Columbia, Councilwoman Linda Cropp; Alice 
Rivlin, the Chairman of the D.C. Financial Responsibility and 
Management Assistance Authority; and the District's independent 
Chief Financial Officer, Valerie Holt.
    And also I always like to recognize Eleanor Holmes Norton, 
the Delegate from the District. Always pleased to have you, Ms. 
Norton.
    The testimony we receive this morning will be very 
important to this subcommittee as we are moving to markup on 
the Consensus Budget that has been worked through by the Mayor, 
the Council and, of course, the D.C. Control Board. We are all 
anxious to work together with everyone to continue the progress 
that we see happening here within the District of Columbia and 
to help it achieve its goals and to become the city that I know 
everyone in the Nation wants it to be as our Nation's Capital.
    We take very seriously, of course, our responsibility 
regarding the District's budget concerning schools, roads, 
public safety and all the services.

                                Tax Cuts

    One thing that I know we will be discussing this morning, 
of course, is what is on the District's agenda regarding tax 
cuts. I want again to commend the Mayor and the Council for 
their work on the historic tax cuts that they are putting in 
place for the District. I am concerned to make sure that we 
assist with the process that they have under way. I know you 
are looking at the economic stimulus that it will be for the 
District as well as helping people keep more of what they earn; 
and, frankly, I think you are setting a good example for the 
rest of the country in what you are doing.
    We want to make sure that nobody gets cold feet regarding 
the tax cuts. There was a Council vote yesterday having to do 
with whether certain economic conditions might cause the tax 
cuts to diminish.
    I recognize the need for fiscal responsibility. The 
District wants to make sure that its budget is balanced and 
there is a proper reserve. I question, however, the wisdom of 
doing it by making any tax cuts conditional, rather than saying 
if certain conditions materialize we will make adjustments on 
the spending side of the ledger to assure financial 
responsibility. We want to delve into that this morning as part 
of the testimony.

               Savings and Financial Management Programs

    I also want to hear testimony concerning what is necessary 
with the different financial management programs the District 
is trying to put in place that achieve a number of savings. It 
is a very daunting and challenging task and a very worthwhile 
task, and I want to make sure that the tools are in place so 
the Council and the Mayor can achieve those particular goals. I 
know it is very much a challenge and I want to make sure that 
we have the structure that enables the Mayor and the Council to 
pursue those administrative and internal savings. That again is 
something that we want to pursue in the hearing this morning.
    Before swearing the witnesses, Mr. Moran, do you have any 
opening comments?

                  Congressman Moran's Opening Remarks

    Mr. Moran. No, I don't need to comment, Mr. Chairman, other 
than to say that I think I have seen a real rebirth within the 
District of Columbia. I am very proud of its citizenry for 
having elected an outstanding individual to be their Mayor. 
They have fine people on their D.C. City Council. They have a 
good representative to the Congress.
    My own feeling--my bias is that they know best what should 
be the priorities for their city. The Mayor particularly is 
someone with a background of fiscal responsibility and, along 
with the D.C. Control Board, can rightfully take significant 
credit for turning this city around.
    This city, as you know, was in very deep debt. And I was 
looking through some old papers over the weekend and, boy, the 
budget deficits that had been forecast would have given anyone 
every reason to turn their back on this city and give up on it. 
But here we are in a period of time when we actually have a 
surplus.
    But in addition to that surplus, we have tremendous need, 
and it seems to me that that balancing act which requires 
astute judgment between the needs of the people of the District 
of Columbia and the benefits of a tax cut in terms of 
stimulating their economy and attracting the middle class and 
businesses that you need for a stable economy, that balance is 
a very difficult one. I do not have confidence personally that 
I know what the right decisions are, but I do have confidence 
particularly in the Mayor to make the right decisions.
    I think a moderate tax cut that enables us to only spend 
money where it needs to be spent to address the socioeconomic 
needs of the city and strengthen its people and to make sure 
that we do not slip back into the days of deficit--that, it 
seems to me, should be our priority. I know it is going to be 
mine.
    So I am going to defer for the better part to theMayor's 
judgment, with the support of the Council and the Financial Control 
Board.
    So that is where I stand, Mr. Chairman. I appreciate your 
having the hearing today.
    Mr. Istook. Thank you, Mr. Moran.
    I wanted to recognize one other member of the D.C. Council 
that is present, and if there are others I am sorry if I fail 
to recognize them. But David Catania, one of the other Council 
members, is here. He is not a witness, but we are pleased to 
have you here.

                            Witnesses Sworn

    It is the standard practice that all witnesses be sworn in 
before the subcommittee. So if I could ask all persons who are 
to be witnesses if you would stand, and I will administer the 
oath.
    [Witnesses sworn.]
    Mr. Istook. The record will show all witnesses were present 
and answered in the affirmative. Ms. Rivlin is the one witness 
who is not yet present.

                 Opening Statement of William W. Beach

    Mr. Beach, we're pleased to have you here; and we are happy 
to hear from you. I will mention to you and all witnesses that 
the entirety of your written statements will be put in to the 
record. And I think it is, frankly, better if, rather than 
rereading the statement since we have copies of it, if you 
would summarize or expand upon your testimony instead. That 
sometimes is much more useful for us and more efficient. Go 
ahead.
    Mr. Beach. Thank you very much.
    Mr. Chairman and members of the committee, my name is 
William Beach. I am senior fellow in economics with the 
Heritage Foundation and director of our Center for Data 
Analysis. It is an extreme pleasure to be here.
    The Foundation has been a long-time citizen of the 
District. Many of our employees work there. We have been 25 
years in business in the District. We have worked in the past 
for pro-growth public policy changes that helped the District, 
and we are delighted to support what the District is now 
proposing.
    Much of the context for what we're discussing today comes 
from long work, hard work, courageous and heroic work done by 
this Congress and by the District over the past many years. In 
fact, we could go back into the 1980s and take a look at the 
remarkable tax cuts of that time which set the tone and the 
environment for entrepreneurship whose abundant fruits we are 
now harvesting throughout the economy. We can look at the 
prudent financial management at the State and Federal level of 
the 1990s and understand the extreme importance of financial 
stability in lowering interest rates and creating an economic 
environment for growth.
    And last year we saw the fruits of what was done 2 years 
ago in the Taxpayer's Relief Act of 1997. In that Taxpayer's 
Relief Act key elements of the District of Columbia Economic 
Recovery Act, for which the Heritage Foundation was strongly 
supportive, Delegate Norton's economic act, were enacted, 
signed by the President and are now in force.

                        Tax Cuts and Tax Credits

    We saw strategic capital gains cut throughout the District, 
which has been important for the District's recovery. We saw a 
$5,000 tax credit for first-time home buyers, which has, 
remarkably, produced a headline. The District is now the 
fastest-growing market for new and used homes in the United 
States.

                    High Tax Burden for the District

    It is with this context in place that the City Council, the 
District's Council, has taken a remarkable and stunning move to 
propose large tax cuts. The reasons are fairly abundant. The 
District's three individual income tax rates, 6, 8 and 9.5 
percent, are all higher than the highest rates in Maryland and 
Virginia, 5 and 5.7 percent respectively. Business taxes in the 
District are also higher than in the surrounding states. D.C. 
Businesses pay a franchise tax of 9.975 percent, compared to a 
corporate tax rate in Maryland and Virginia of 7 and 6 percent 
respectively. Business and personal property taxes are all 
steeper in the District than in Maryland and Virginia.
    The Washington Post reported in February that D.C.'s own 
Office of Tax and Revenue found that a typical middle-class 
D.C. Family paid 50 percent more in taxes than it would pay in 
the Virginia suburbs. In short, District of Columbia residents 
pay a substantial tax premium to live and work in the District, 
and many residents have found this premium far too high.

               Population Decline from 750,000 to 525,000

    Let me give you some numbers. In 1970, the District of 
Columbia enjoyed a population of over 750,000. By 1997, 
however, the District's population had fallen to 525,000. If 
current trends continue, the District's resident population and 
much of its tax base will shrink even further.
    According to WENA, which is an internationally recognized 
forecasting firm, current trends imply a population of 487,800 
by the end of 2004, and 471,900 by the end of 2009. At the same 
time, the populations of the surrounding Virginia and Maryland 
counties are expected to continue growing at near double-digit 
rates.
    Now this downward drift in the resident population is 
mirrored by declines in total District employment. District 
employment stood at 248,000 at the beginning of 1999. If trends 
do not soon reverse themselves, the end of 2004, we will see 
total employment fall to 219,000. By the end of 2009, the 
Council could be trying to collect taxes from only 212,000 
worker resident workers. That number would represent a 15 
percent drop in total employment in a mere 10 years.
    Obviously, the District's school system and historically 
higher rates of crime have played a part in the hollowing out 
of the D.C. Tax base. But high tax rates also matter. If the 
District is to avoid a 40 percent fall in its population by 
2009, the Council should take action on all of these fronts.
    The District's Council argues that now is the time to begin 
to work on the tax leg of the District's set of problems, Mr. 
Chairman. Certainly with budget analysts forecasting general 
fund surpluses over the next 4 years and many economists 
expecting a continuation of the current economic expansion it 
is very hard to argue with their timing.
    We think this is a very good idea, a very positive step. 
Congress has clearly signaled to the American people that it is 
interested in changing tax policy to reduce taxes on savings, 
on capital, and to give middle-class families tax relief. 
Throughout the United States in States and municipalities that 
policy is being echoed in action, and here it is in the 
District.

             Balancing Tax Cuts With Civic Responsibilities

    Many people have argued that there are some problems with 
this, and let me just mention one in particular. As Congressman 
Moran noted, we need to balance tax cuts with the civic 
responsibilities of the District, and part of that is the 
delivery of key services.

                     Productivity Offsets Are Real?

    The District's budget, which is here on the table--it is a 
magnificent document, and I have complimented the staff on the 
preparation of that. I have looked at a lot of thesekinds of 
documents, and this is wonderful--pays for some of the tax cuts through 
productivity offsets. I think those productivity offsets are real, and 
I will mention them, if need be, in questioning.
    But in my experience working in a major American 
corporation and with then-Governor Ashcroft in the State of 
Missouri, there are two key elements to achieving efficiency: 
Significant attention and substantial attention.
    Significant, the chief executive officer must have the 
power to oversee and drive productivity and efficiency savings. 
That must be vested in a person.
    We have, of course, Congress' and the Council's oversight 
and authority and support. That has to happen. It can't be 
divided.
    Substantial attention. Substantial attention means that 
each of the senior officers, each of the senior executives must 
have as their top priority squeezing efficiency out of 
mismanagement. If that can happen, as it did in the Sprint 
Corporation when we went from a regulated to a deregulated 
operation, in the State of Missouri through Governors Bond and 
Ashcroft when we turned that government around, then I am 
confident that the productivity and management offsets are 
present.
    These are disjointed remarks, Mr. Chairman, but in the 
recognition of your admonition, I close my oral testimony and 
submit my written testimony.
    Mr. Istook. Thank you very much, Mr. Beach; and of course 
your written testimony will be in the record.

                 prepared statement of william w. beach

    [The prepared statement of Mr. Beach follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        $59 million tax cut; $41 million administrative savings

    Mr. Istook. I want to ask, recognizing the Council has 
acted, and I think very prudently, to start many good things in 
motion that begin with the tax cuts. However, the success of 
the tax cuts also requires that you keep the budget within 
balance in D.C.; and we have a reserve fund requirement that 
was imposed previously by Congress. The amount of the tax cut 
package the first year, I believe, is at $53 million--$59 
million.
    Mr. Beach. Yes, that's about right. Why guess when you can 
know?
    Mr. Istook. $59 million, is that correct? I just want to 
have it correct in the record. I didn't want to misstate it. 
You have first year tax cuts of $59 million.
    One of the key elements that I see in the budget that 
relates to this is squeezing out some $41 million in 
administrative savings through different management reforms.
    The Council, I think, has acted very responsibly in pushing 
for the tax cuts. I believe the success of the tax cuts will 
heavily depend upon the success of the administrative savings 
that have to materialize, $41 million out of the $59 million, 
if you will.
    You alluded to that. There has been, of course, all sorts 
of shifting between the Council, the Mayor, and the Control 
Board. Now we have, as you testified, a need to make sure that 
the chief executive has the tools that he needs to squeeze out 
those savings in reforming management practices.

           tools to realize $41 million in management savings

    My question is, does he have those tools? And if not, how 
can we make sure that he does to work cooperatively with 
everyone else in the process?
    Mr. Beach. Well, necessarily, those tools are in part 
absent because of the division of power right now following the 
creation of the Control Board. In 2001, God willing and the 
budgets are all in balance, more authority will be moving to 
the Mayor's office. But it is my impression that this body in 
deliberation with the Mayor's office could craft even more 
explicit powerful tools for the Mayor to use.
    Let me just point to one area where slippage could occur. 
There is in this budget a statement, and I believe you will 
find it on line--let's see--on line 31 of the budget, and 
that's in section 2, page 5. General supply schedule savings.
    General supply schedule savings, if they are affected 
throughout this budget period by 2003, will bring about 
reductions in expenditures of $15,706,000. And all the District 
has done there, Mr. Chairman, is take what they have 
accomplished in fiscal year 1999 and increased the number for 
each succeeding fiscal year by the rate of inflation. But if 
attention isn't spent to maintain the fiscal 1999 
accomplishments, then that very conservative estimate could 
slip badly backwards.
    So that's the sort of thing. It is a small thing, but it is 
a large part of the budget where the Mayor needs to be on the 
line. And everyone in his administration needs to know that his 
eyes are on that particular initiative. That goes for all of 
the initiatives in there.
    So I would strongly recommend that you look at powers of 
the Mayor with respect to these kinds of budget objectives.
    Mr. Istook. Okay. I would appreciate if you would 
supplement for the record something further on where you think 
some of that power needs to be restored to the Mayor's office, 
and I think it is an open question on something such as that, 
if this is something that is transitional as opposed to 
permanent.

    [CLERK'S NOTE.--Mr. Beach did not supply any additional 
information for the record.]

    Mr. Istook. But, again, my objective is just trying to help 
the Mayor and the Council to accomplish what they are already 
trying to do on the administrative savings and on the tax cuts 
and to doing it within the framework of a balanced budget.
    Thank you very much, Mr. Beach.
    Mr. Moran.
    Mr. Moran. Thank you, Mr. Chairman.

                  management reform savings achieved?

    It seems to me that the Mayor has shown substantial 
initiative in achieving management reform savings, would you 
not agree, Mr. Beach?
    Mr. Beach. That's my impression, Mr. Moran, yes.
    Mr. Moran. Do you think that, within the context of fiscal 
responsibility, that you would be better off postponing the tax 
cut until you are sure that the management reform savings can 
be achieved? You don't want to drive yourself into a deficit 
situation, rather, it may be more appropriate to provide the 
tax cuts subsequent to the management reform savings, since the 
Mayor has shown that he is determined to achieve those savings? 
Or do you feel that you cut the taxes first and then hope that 
you can achieve the savings to pay for them?
    Mr. Beach. Well, happily, we are not in that position. I 
wouldn't be an advocate of hoping for management savings unless 
they were real on the books and moving forward, especially in 
the District's case. But we have a record through the past 
year, I think, and it is abundant and it shows up in various 
notes in this budget, that the management team in place now, 
and that includes the Control Board, are able to find those 
savings and create efficiency, at the same time improving the 
provision of public services. And that's the key.
    Now with that record in place and with the bad tax 
imbalance which we have in the District compared to the 
counties around us, I think you can do both simultaneously, but 
absent that record I think you would want to be careful. But we 
have that record. And, as I mentioned, one instance of it where 
we have the savings from the supply schedule, all we have to do 
is manage that and we can go forward with, hopefully, $16 
million in savings just from that line. So I would do both. And 
it's very important to give the signal that financial stability 
is accompanied by economic opportunity.
    As I was mentioning to Delegate Norton prior to this 
hearing, we have really seen the District come around. And you 
made this point, and it is astounding, it is wonderful. And the 
initiative can be taken to further that through prudent tax 
cuts. Clearly, we have an imbalance. I think that that should 
move forward at the same time.
    Mr. Moran. I don't necessarily argue with anything you are 
saying. Just what I'm trying to get at is the judgment and 
balancing these priorities that we all agree on.
    Mr. Beach. Yes.

                    bond rating and balanced budgets

    Mr. Moran. One of our problems is the interest rates that 
the District has to pay to borrow money because they had a junk 
bond rating. Now very recently their rating has improved. But 
if it improved to the point of the suburbs' rating we would 
save a lot of money, for example. But with the bond rating 
agencies, my experience as a Mayor was that the first thing 
they wanted to make sure was that you could virtually guarantee 
that your budget would be balanced, that you would not go into 
deficit, that you have covered your bases and that you had 
played it conservatively.
    And I remember at one point we were going to cut property 
taxes and one of the advisors, I don't know whether it was 
Moodys or Standard & Poor's, suggested perhaps, rather than cut 
property taxes this year, you should make sure that the revenue 
estimates are as strong as you are hoping they will be, your 
management reforms are successful, and then cut them in the 
subsequent year after you have achieved the surplus.
    But we are far more concerned about you balancing that 
budget, not taking any chances. And my concern, while I agree 
with you, the economic opportunities that tax cuts present are 
substantial, and I want the District to be competitive with the 
suburbs in terms of the tax incentives, right now, there is a 
disincentive. But if we cut taxes now and we find that the 
management reforms, no matter how determined we are to achieve 
them, are more difficult than we thought because of 
bureaucratic inertia or the civil service requirements or any 
number of other things or the economy doesn't go as well as we 
thought through unforeseen circumstances. If we don't factor in 
the management reform and a tax cut right now but we do the tax 
cut when we are sure we have the surplus, I think it may 
engender even more confidence.
    So while I want the tax cuts, a higher priority it seems to 
me is to ensure a balanced budget and even a surplus so that we 
don't lose the momentum that has been developed really 
recently. We are only talking about a couple of years now. And 
to sustain that pace would seem to be the highest priority and 
not to take any chances that it might be arrested by premature 
action.

                     importance of growing tax base

    Mr. Beach. And I don't disagree with what you have said.
    Just one little piece of my own experience in working with 
Standard & Poor's and Moodys on State general obligation bond 
ratings. Not only do they want to look at the bottom line and 
your financial management practices, but in the case of a 
taxing authority, they also want to know that the tax base is 
growing and not shrinking. And especially for the Moodys 
people, this is a key element.
    That tax base in the District is growing now, and what we 
can do in the District to keep it growing but to particularly 
bring in businesses that are going to create jobs by lowering 
that differential, that should only support a better bond 
rating, a better tax rating, a better rating for the District 
than not, and that is why I think we should do both at the same 
time. They are both supported. If they are phased in like they 
are in this budget and that is the schedule and you keep to it, 
I think it should be positive. I do not see anything in the 
assumption set here which would say that we are being overly 
optimistic with respect to the economy.
    Mr. Moran. I know that they are both complementary. I guess 
I may be a little more conservative. You may have a little too 
liberal an attitude towards balancing the budget first, and I 
don't want to push it further, and I appreciate your testimony 
and your interest in the District.
    Mr. Istook. Mr. Moran, we could arrange for you to register 
Republican.
    And for the witness, I actually don't know your party 
registration, but we could arrange a swap.
    Mr. Moran. It may not happen today or tomorrow.
    Mr. Istook. Thank you.
    I want as much as possible to let members ask questionson 
our side in the order of arrival, so I will move next to Mr. Aderholt. 
And Mr. Cunningham has a thing he has to get to at 11, so I may not get 
that perfectly, but Mr. Aderholt.
    Mr. Aderholt. I don't have any questions at this time.
    Mr. Istook. That was easy.
    In that case, I need to bounce back to Mr. Mollohan.
    Mr. Mollohan. Thank you, Mr. Chairman.

               support of compromise on tax cut proposal

    Mr. Beach, do you agree with the basic outline provisions 
of the compromise that was reached on the tax cut proposals?
    Mr. Beach. Yes. Yes, to an extent. And as I have perhaps 
said, we are following this in a macro sense, so the details 
with respect to spending and so forth I would prefer that my 
colleagues behind me address that.
    But, in general, I think that we think that the move is 
right. I would have liked, to be quite honest with you, the 
original Evans and Catania approach to have been taken.
    Mr. Mollohan. It would be perfect for you to be open about 
it.
    Mr. Beach. I think that the original approach was good. It 
was aggressive. It moved in the right direction. In that sense, 
my focus was on dropping that differential between the District 
and the surrounding counties.
    Now----
    Mr. Mollohan. You were in favor of the more aggressive 
approach?
    Mr. Beach. Yes, I think the more aggressive approach from 
the tax side was a good move. Naturally, not being the budget 
officer here, I have to say that my attention on the budget 
side wasn't as extreme. And so the balance seems to be right. 
It seems to be a good balance between what we have to do and be 
prudent and make sure we don't overstep and the tax cut side of 
it.

               ``trigger'' conditions placed on tax cuts

    Mr. Mollohan. If you feel comfortable doing so, would you 
comment on the provisions that are conditions precedent to the 
tax cuts contained in the agreement?
    Mr. Beach. Well, the triggers are somewhat problematical 
from an economic standpoint. Let me explain why.
    Once you institute a tax cut, especially when you are 
cutting rates, people don't instantaneously respond. Just take 
a situation where businesses signed a lease for a couple of 
years in Alexandria. It can't immediately move to the District. 
And so the District needs to have in place a commitment over 
the long term to the lower tax rates. That's where you begin to 
see these good things happen in the economy, such as the 
commitment to the first-time homeowners tax credit. People know 
now that when they are ready to sell in Fairfax City, as my 
wife and I might do, and move into Georgetown or move into 
northeast or wherever we are going to move, that tax credit is 
going to be there.
    So the commitments--I like to think that commitment is the 
dynamic of change. And you have to have that commitment in 
place.
    So the triggers kind of bother me because they say, hmm, 
maybe our commitment isn't as solid as we are saying it is.
    Mr. Mollohan. But they are only keyed to performance.
    Mr. Beach. That's right. And the macroeconomic triggers 
seem reasonable.
    For example, there is a trigger in there that says if the 
economy--if the national economy drops below a 1.2 percent 
growth rate after inflation has been taken out, then we 
reassess. That is a fairly low growth rate and I doubt that we 
are going to achieve that over this 4-year budget window, so 
that is prudent.
    Mr. Istook. You doubt we will achieve it or you doubt we 
will fail to achieve it?
    Mr. Beach. I doubt that we will achieve such a low growth 
rate.
    Mr. Istook. So you think it will be higher. I just wanted 
that clearer for the record. Thank you.
    Mr. Beach. But, even so, the trigger has the effect of 
mitigating the District's commitment to the tax changes, which 
if I were a businessperson would mean that maybe I am not going 
to achieve those lower franchise tax rates. That is 
problematical.
    Mr. Mollohan. Thank you, Mr. Chairman.
    Thank you, Mr. Beach.
    Mr. Istook. Thank you.
    Mr. Tiahrt?
    Mr. Tiahrt. Thank you, Mr. Chairman.

                     taxpayer's relief act of 1997

    You referred in your testimony to President Clinton signing 
into law the Taxpayer's Relief Act of 1997----
    Mr. Beach. Yes, sir.
    Mr. Tiahrt [continuing]. And you note that there was a 
good, strong housing market that you think that is related to. 
You also made two references here, certain neighborhoods were 
given special treatment, sort of focused on certain 
neighborhoods. Do you think that has been productive? Are there 
numbers to back that up?

                    tax cuts and increased revenues

    I looked at the revenues, and it looks like the revenues 
are continuing to increase, and yet we have tax relief, and 
that is contradictory to what we have seen. With the District's 
Tax Parity Act we have a line item in the budget that is 
actually a $59 million deduction for fiscal year 2000. Is it 
possible to have tax relief and yet have increased revenues?
    Mr. Beach. Oh, I think that that's common--that's common 
practice. What we are seeing in the District is not historic. 
We have had rapid growth in the District beforeover the long 
history of the District, but there is a truly amazing turnaround.

                  impact of tax credit for homeowners

    There is an important report that just came out that I am 
sure the Chairman has--or if he doesn't we would be happy to 
give you--which quantifies the tax credit for homeowners and 
the reasons why people say they are moving into the District. 
They are moving into the District in part to take advantage of 
that.
    Now, that has brought a tax base increase into the District 
which is partly responsible for increased sales taxes, 
increased income taxes and, indirectly, increased business 
taxes. So just that one provision has produced a virtuous 
feedback in revenues for the District.
    Mr. Tiahrt. Have you--the Heritage Foundation or any think 
tank--done some study of what impact the Taxpayer's Relief Act 
of 1997 has had as far as for every dollar in tax reduction 
there was some type of an increase in revenues? Do you know of 
any studies in the District of Columbia or about the District 
of Columbia?
    Mr. Beach. Well, our work on the Taxpayer's Relief Act of 
1997 is a study that looks at the country as a whole, and there 
we are seeing about a 38 percent revenue feedback. And it may 
be much higher if the capital gains revenues continue to feed 
back as they have been in the last year.
    We conducted a special study for Delegate Norton in support 
of her District of Columbia Economic Recovery Act, and had the 
entire package been put into law--there were several elements 
that didn't make it into law but are proportional to what we 
have before us in the Tax Parity Act of 1999--that would have 
meant a metropolitan-wide increase of 112,000 jobs, of which 24 
percent of those jobs would have been in the District. 
Everybody would have been a winner from a stronger District of 
Columbia. It would have meant $115 billion over 10 years in 
additional household income.
    So we know from that study that the District is ripe for 
tax policy changes that stimulate the economy because the 
feedback was so strong. And I think that what you're looking at 
now in the proposal, the Tax Parity Act of 1999, would have 
very similar effects.
    Mr. Tiahrt. In the movie, Field of Dreams, the big line 
that was remembered was: Build it and they will come. I guess 
what you are saying in the dreams of tax relief is: Pass it and 
they will come.

            district tax burden discourages some job seekers

    Mr. Beach. Indeed, I used to have a business in Fairfax 
City. I was head of an educational foundation. I could almost 
always hire very, very good people who were working in the 
District by paying them less. And the reason for that is that, 
one, they avoided the commute, which is part of the overall 
cost that somebody has to bear, and that is related to tax 
rates, too; and they paid less taxes. That employment should 
have stayed in the District. Why should I have had it in 
Fairfax City 20 miles away? And I think with lower taxes that 
may be.
    Tax rates cannot do anything with the highway system, and 
that may be our next challenge.
    Mr. Tiahrt. I think you are right. Anything that reduces 
the traffic on the bridges I think is a good thing.
    Thank you, Mr. Chairman.
    Mr. Istook. Mr. Cunningham.

                congressman cunningham's opening remarks

    Mr. Cunningham. Thank you, Mr. Chairman.
    Mr. Beach, I'd like to speak, and I know the Mayor is back 
there, too, and I want his ears to pop open on this.
    As I have mentioned before, I am one of the few members who 
volunteered to stay on this committee. There are a lot of 
committees that I could do for my own district--transportation, 
or Energy, Commerce or others. Sometimes people enter into 
charities and think they can do good. I think if you look at my 
tenure on this committee it has been one of flexibility and to 
help. I bent over backwards to help in the Anacostia River, in 
education, on health care, and the waterfront; and I want to 
continue to do that.

              fish wharf and southwest waterfront neglect

    But I'm concerned because this committee put in $3 million 
into the District of Columbia to improve a neglected 
waterfront. The neglect of the Southeast Waterfront has been 
disastrous. It is run down, and it has caused loss of revenue 
instead of gaining revenue. If you are any kind of economist or 
businessman, you cannot operate one-year leases. Just the 
management of it is stupidity. The city cannot expect people to 
invest on a one-year lease system.
    So we changed that. We put the $3 million in for the 
waterfront, and I have seen very little movement. The Corps of 
Engineers is working hard, but the city continually drags its 
feet on this issue.
    This money expires in September. I want to know when before 
September are we going to have a resolution for this 
waterfront? I don't get a single guppy out of the fish market, 
and I don't have any of my constituents there. I don't get a 
dime from there. The Washington Marina that has been there for 
80 years, I don't get a dime from them.
    But I want to help those people because it is the right 
thing to do. But when are we going to get off the dime and 
resolve this thing?
    Mr. Beach. With all due respect, I think I will let the 
Mayor answer that question.
    Mr. Cunningham. I will be most anxious.
    Secondly, I want to compliment the city, Delegate Norton, 
the Mayor, the Chairman of this committee, John Porter, 
Chairman of Labor-HHS, because we are working in this fall a 
health care town hall meeting. I plan on having a series of 
town hall meetings where you have the highest incidence of 
prostate cancer of anywhere in the world in Washington, D.C., 
and health care concerns worse than most places in the United 
States. I think a lot of it is information, and I have had 
nothing but support in doing that from all the agencies.

                     garbage-filled anacostia river

    Also, on the Anacostia River. Yesterday I went down the 
Anacostia River in my little boat. I got about a mile this side 
of Bladensburg and couldn't go any farther because of the 
garbage and the trash and the cans and the plastic debri just 
literally blocked the way before you get to Bladensburg. I want 
to be very supportive of what you do, and I understand that 
there has been an agreement with Maryland, and if you could 
provide just even for the record instead of taking time, what 
are those agreements?
    For example, I see the Navy-- I am a big supporter of the 
Navy, but is the Navy polluting? I see the electrical plant 
there. I see a sand and gravel plant. The parts per fecal in 
that river are worse than any river in the United States. Have 
we identified what we have to do to clean that river up and 
where are the sources of the pollution?
    I want to help you to help clean up that river. Imean, it 
is a disgrace, and it is a health hazard.

            dc/maryland agreement on anacostia river cleanup

     You can provide that for the record if you want.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Cunningham. The education system, I'm very pleased with 
what--the direction that the city is going. There is good 
movement in the direction of our public school systems, and I 
am happy with the charter schools and the direction that they 
are going as well.

            fish wharf and southwest waterfront--no movement

    My biggest concern is the Southwest Waterfront, that I see 
no movement. I have been promised for 2 years now that we are 
going to get off the dime and do the studies and get this thing 
done, and I would sure like to see that come to fruition. I 
want to remain a strong supporter and not have to put a horse's 
head in bed with somebody.
    Mr. Beach. We are all excited about what could happen.
    One of the things that the Mayor will probably speak about 
is his initiative on managed competition. Managed competition 
is extremely important in addressing some of the issues that 
you have raised. How do we find the contractors? How do we find 
the suppliers that will do the job efficiently and under cost?
    Mr. Cunningham. In all due respect, the waterfront has gone 
in and done that. They looked and showed exactly what they have 
to do to make those investments. They have the costs already 
drawn up. They are ready to go. They are ready to put in the 
piers. They are sitting ready to clean out the piers as far as 
the hazardous waste material and the cost. The city needs to 
get in and look at the inspection of those underground pylons 
which haven't been inspected in 20 years, in total disrepair 
that the city is responsible for.
    Let's get it done. This thing expires in September. I would 
like to see it to fruition when we come back in August to make 
sure that, okay, this is going to be a done deal.
    Mr. Istook. Thank you, Mr. Cunningham.
    Mr. Beach, we very much appreciate your testimony; and we 
appreciate your being here this morning.
    Mr. Moran. Mr. Chairman, could I just ask a real quick--
just a point here?

                income tax rate comparison with suburbs

    In Mr. Beach's testimony he compares D.C.'s individual 
income tax rates with the suburbs, which is an important thing 
to do. But in referring to 6, 8, 9.5 percent rates in Maryland, 
you say that they pay 5 in Virginia, 5.75. But in the Maryland 
suburbs, the Washington metro area suburbs, in addition to the 
5 percent they also pay an additional 60 percent surcharge. So 
it is actually 8 percent in Maryland compared to 6, 8 and 9.5 
in D.C. And we're also paying a car tax on top of the 5.75 
percent State tax. That may be phased out, but I want to make 
sure that the record shows that they are actually not as 
disparate as they might appear to be.
    Mr. Beach. Thank you for that. We were comparing the 
District to the State governments.
    Mr. Moran. But the District is both a local government and 
a State; and that is, of course, a difference.
    Thank you, Mr. Chairman.
    Mr. Istook. Thank you, Mr. Moran. Keep being more and more 
aware of taxes, and that will keep you moving in that 
conservative direction that you were describing. Appreciate it.

                         alice rivlin sworn in

    We are happy to have the witnesses on the next panel. 
Chairman Rivlin has arrived. We administered the standard oath 
to the other witnesses that I would like to administer to you. 
Ms. Rivlin.
    [Ms. Rivlin sworn.]
    Mr. Istook. Let the record show she answered in the 
affirmative, so all the witnesses have been sworn.
    I think we can manage to keep the testimony going during 
the vote.
    We are very pleased to have the Mayor, Council Chairman 
Cropp, Control Board Chairman Rivlin and CFO Ms. Holt. Thank 
you for being here.
    Mr. Mayor, thank you for being patient as we heard from Mr. 
Beach. We would be pleased to receive your testimony at this 
time.

              opening statement of mayor anthony williams

    Mayor Williams. Thank you, Mr. Chairman; and thank you Mr. 
Moran.
    I want to compliment Mr. Beach on his outstanding 
testimony, particularly as it relates to the quality of our 
budget document.
    But, in all seriousness, as some members of the Committee 
know who have been with us for some time, we have put an 
enormous amount of time in the building of a financial 
organization that we hope year by year will continually improve 
our budget document. And I am very, very proud as a former CFO 
to hear those words, and I am sure that everyone in our 
organization who has produced that document is proud as well, 
and I want to thank them.

                     mayor's thanks to mary porter

    I also want to thank Mary Porter, who has worked at our 
office for a long, long time producing the legislation, the 
background legislation, and for her work with us over all of 
these years. It is appreciated, and I commend her for it and 
thank you for it. The staff work goes a long way.

                            consensus budget

    Mr. Chairman, because we have submitted our testimony for 
the record I'm just going to paraphrase and give you highlights 
of our testimony and some commentary on it.
    I think the thing that I'm most proud of is our 
budgetdocument, our consensus budget document. I believe we in our city 
are laying a foundation for the return of full home rule in our city, 
laying a foundation in our city for what we hope some day will be 
realization of full democracy in our city.
    As I stated in my inaugural address, I believe that 
democracy is not always a pretty process. It's not always a 
perfect process. It is sometimes a messy process, really. But 
democracy is about people and their elected leadership making 
the right decisions, going in the right direction. Democracy is 
about admitting mistakes. Democracy is about bringing people 
together, coming together, working together and succeeding 
together; and I believe in this budget we have done that.

                  health care for lower-income workers

    We have done this in, one, squarely addressing in this 
budget and now, in some of the work that we're doing with 
greater Southeast with our hospitals, squarely addressing the 
crisis--I hate to use a dramatic term--but the crisis, 
certainly the major challenge we confront in our health care 
industry, matching supply and demand, bringing down costs, 
addressing the needs of our uninsured, to give our citizens the 
same kind of dignity, the same kind of choice, that we think 
all citizens should have, and giving our potential employers a 
workforce that has its health care needs taken care of.
    When I was out in Las Vegas, I received a lot of positive 
comments from potential retailers in the District who felt that 
providing health care for our lower-income workers was actually 
a benefit to them. So we are very, very proud of that. Alice 
Rivlin is working very, very hard on that, and Linda Cropp and 
all of our staffs. It is something we need to do. I am very, 
very proud of the work that we're doing, moving in a new 
direction toward not just managed competition but creating in 
our city for the long term a labor strategy that I think is 
going to result over the short term, over the next year, in a 
workforce that has the investment in workforce conditions, has 
the investment in assistance, has the investment in training, 
has the investment in readiness, has good evaluation, enjoys 
the fruits of good labor, but also is ready to compete.

                          managed competition

    It's my profound belief that in our city, we are not 
introducing competition, and we face competition every day. It 
is the role of government to try to manage the risk for our 
workers and institutions, manage that risk and give our workers 
the ability to compete. And I think, given the ability to 
compete, I am very, very confident that our workers will 
compete and win in the competition and whether it is in trash 
pickup or whether in providing driver's licenses over in DMV.
    I think that long-term benefits of this cannot be 
understated. I think they are very, very important.

                         education improvements

    We make a major investment in our budget, Mr. Chairman, in 
the area of education. In the area of education, we are jointly 
committed to major capital investment in modernizing our 
schools. We're jointly committed in making the kinds of 
improvements in our school system to improve operations and to 
support a stronger curriculum and achievement by our students.

                      youth investment partnership

    And very, very importantly, make a commitment not only in 
terms of reprogramming our dollars to achieve better mileage in 
areas such as child care but setting aside for the first time 
in our budget something we're calling the Youth Investment 
Partnership where we will be able to leverage government 
dollars with dollars from the foundation community, dollars 
from the private sector, initiatives from the faith community, 
to provide that out-of-school support for our children.
    I think it is our joint consensus recognition that 
launching a child is like launching a rocket. If we don't 
launch that child right at the very, very beginning, like a 
rocket, by the time the child is 10 years old or the rocket is 
10,000 feet in the sky, there is going to be a crash or at 
least it is going to take enormous intervention to keep that 
child moving in the right direction.

                      neighborhood revitalization

    Neighborhood revitalization is an area where we jointly 
agree a lot of work needs to be done. There is a joint 
agreement in our budget on investment in substance abuse and 
treatment, very important in crime prevention; a joint 
agreement that we need to make investments in everything from 
tree trimming and tree planting to street sweeping and 
landscaping, very important in providing that sense of 
stability in our neighborhoods.

                      tax cuts and fiscal recovery

    Finally, Mr. Chairman, in the area of tax cuts, I believe 
that tax cuts are very important in our city for a couple of 
primary reasons. One, because I think they can provide in 
selected areas a stimulus effect in bringing new residents and 
businesses to our city; and, secondly, because I do believe 
that it helps us establish what we should establish and that is 
the proper role of government. But I do believe that, having 
said that, we have to ensure that we are staying on track with 
this fiscal recovery. We have to ensure that we maintain a 
fiscal soundness and a fiscal stability which is ultimately I 
think the guarantor of realizing the kind of home rule and 
democracy that we all seek.

                          three major problems

    And I would just urge on the Committee that we remember 
that--I think it was 2 years ago in testimony before this 
Committee and other places--we talked about the three major 
problems facing the District, that our size of government was 
too big, that our economy was too small, and that we had a 
disjointed Federal relationship. I think that what'shappened 
since that time is the economy has done very, very well and we have 
done well in our expenditure controls; but my latest assessment on our 
improvement in revenue is that about 50 percent of this is something 
that we are really controlling, about 50 percent of it is more episodic 
and related to the economy.
    And I would say that while we are dedicated to achieving 
this consensus budget and dedicated to achieving these tax 
cuts, I would urge that we keep this in context. That the need 
for tax cuts is there but there is also a need, again, for 
fiscal integrity, stability. There is a need to make the 
investments, the long-term investments in our workforce, for 
example, the long-term investments in education, the long-term 
investments in our schools, that provide as well as a right tax 
policy, the foundation for really putting this District on a 
competitive posture with his suburbs, a competitive posture 
with other cities.

                           consensus process

    I believe that even though the process wasn't very pretty 
and even though I made my mistakes in the process and even 
though I don't agree with everything in this budget, it is a 
result of a consensus process. It is something that I am proud 
of, on the whole; and I urge this committee to give its 
steadfast support to this document. And I thank the committee 
for this opportunity to testify.

              prepared statement of mayor anthony williams

    [The prepared statement of Mayor Williams follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                      commending mayor's statement

    Mr. Moran. Excellent statement. I know I am not supposed to 
butt in here. God, I wish I was as articulate as the Mayor is, 
but a perfect statement, thank you.
    Mr. Istook. We appreciate that, Mr. Moran. We are going to 
keep having these positive witnesses just keep on coming.

              remarks about student's excellent testimony

    Mr. Mayor, you should have heard the young lady that 
testified. She is a student at one of the charter schools and 
testified yesterday and you should have heard the superlatives 
that Mr. Moran was also putting on her. And Ms. Norton was 
present and listening and she started worrying about her job 
when she found out how articulate that young lady was. It is 
nice to have positive feedback. I appreciate that.
    Ms. Cropp, we are happy to have you here.
    Ms. Cropp. Thank you very much, Chairman Istook.
    Mr. Istook. Just to make sure things are clear for the 
record, because we have a vote on, when one of the other 
members returns I am going to have them assume the Chair while 
I go vote because I do want to keep things going.
    Ms. Cropp. We will miss you.
    Mr. Istook. I will hurry back.

             opening statement of council chair linda cropp

    Ms. Cropp. Chairman Istook, Mr. Moran, other members of 
Congress, good morning, it is indeed a pleasure to be here with 
you.
    Let me say, I was happy to hear Mr. Beach in his testimony 
suggest that he may move into the District of Columbia. We need 
to broaden our tax base. In fact, we will look for a real 
estate agent, Mr. Mayor; and we will try to help facilitate 
that process.

              remarks about student's excellent testimony

    I was not here, Chairman Istook, for the young lady's 
testimony yesterday, but I will sit here as a representative of 
the District of Columbia and say her foundation was laid in the 
District of Columbia public schools. As a former attendee of 
public schools and attendee of the School Without Walls, I 
would invite you to look at the history of the School Without 
Walls, a special school that was created in the District a long 
time ago on that same idea of trying to look at something 
outside of the box for public education. They have consistently 
had some of the highest test marks in the city, up above the 
national scale. And we are very proud that she's a product, and 
I just wish I had been here.
    Mr. Istook. And that young lady had been to the School 
Without Walls previously.
    Ms. Cropp. That's right. That's right. I'm very happy to 
hear that, and we've got plenty more like that in the District 
of Columbia, a lot of bright people coming up. And thank you 
for recognizing her. We appreciate that.

                 council's approval of consensus budget

    On May 11th, the Council unanimously approved a consensus 
budget package and tax package--and, boy, was I happy that that 
part was over--not only for the fiscal year 2000, but for 
future years as well as we looked at this whole budget process. 
There are tax breaks in it for our citizens, tax relief for our 
business community, more programs to serve our young, our old, 
and a host of top-priority service improvements. We are 
confident this budget has real potential to dramatically 
improve the city, provide long-awaited tax relief that will 
expand the District's economy and ensure long-term fiscal 
stability.
    During the past several weeks, the Council has worked 
extremely hard with the Mayor and the Authority to produce this 
financial plan that was conceived out of numerous consensus 
meetings, many hours of discussions, protracted negotiations 
and tough decisions. Throughout the process, the Council has 
always been determined to present a consensus balanced budget 
to the Congress. No doubt, the process was tedious, long and, 
at times, contentious. However, we have strived to ensure that 
the priorities of the Mayor and the Council are aligned and 
have successfully compromised on a budget that will make the 
city a much better place to live.
    And I think at this point I want to stress that it is a 
consensus budget process. The budget that is before you is the 
budget that all of us have agreed upon, and we would hope it 
would be the budget that would be approved by Congress based on 
an awful lot, believe me, of hard work between all of us. And 
we didn't all agree on many factors of this budget, but we are 
here together at this point as a united front presenting a 
budget, that we look forward to your support and, hopefully, 
also that we will not get a lot of riders on this budget.

                        review of mayor's budget

    When the Mayor submitted the budget to us in mid-March, the 
Council had already developed and adopted a list of priorities. 
We went on a retreat, looked at issues dealing with financial/
debt management, economic tax relief, economic development, 
health care for the indigent, an improved school system for our 
children, clean-up programs for our neighborhoods and looking 
at the overall citywide service delivery.
    As part of the budget review process, 21 hearings on 
thefiscal year 2000 budget were conducted by standing committees, not 
to mention the number of oversight and accountability and performance 
hearings we had on agencies earlier in the current year. So this budget 
reflects all of the hard work and public hearing process that the 
Council went through.
    Besides giving the public a chance to be heard, these 
hearings contributed to and culminated in the decisions and 
recommendations of each committee in the markup of the final 
budget. Following a review of the standing committee's 
recommendations, the Committee of the Whole made additional 
revisions in order to bring the budget into balance.
    In making these decisions the committee considered many 
factors: Our goals and objectives raised by the consensus 
meetings with our stakeholders; revenue, baseline budget, 
expenditure assumptions, budget adjustments and spending 
options proposed by the CFO; discretionary funding versus 
mandatory funding; consensus in allocating resources for the 
Mayor/Council's priorities; implications of the Council's tax 
plan, which was a high priority for the Council; findings from 
various working groups on key budget issues; and our commitment 
to avoid an annual operating deficit for the year 2000.

                   clean audit opinions and surpluses

    We are proud that D.C.'s finances are no longer in 
shambles. For a second consecutive year, we have earned an 
unqualified clean bill of health as we did in 1997. We ended 
1998 with an operating surplus and judiciously used $332 
million to pay off the accumulated deficit. Not only did we not 
borrow, but we have $112 million in reserve; and as for fiscal 
year 1999 the District is projected to have another fund 
balance of approximately $282 million at the end of the year.
    In addition, the city has regained the confidence of Wall 
Street; and we are very proud of this. This renaissance has 
been touted as one of the most rapid and remarkable recoveries 
of any city in the Nation; and there are many, many reasons for 
this:
    Legislated reductions in programs and personnel throughout 
the government by the Council which were politically difficult. 
We still have our wounds from it. Not easy to cut. As 
politicians, we are used to giving, but we took some very tough 
decisions and we cut.
    Tight control over spending.
    Better and improved tax collection by the District 
government.
    A robust economy, national economy, in which we benefit.
    And the revitalization plan that transferred many costly 
State-like functions related to the criminal justice system 
from the District to the Federal Government.
    And I would suggest if any other city in the Nation had 
some of those responsibilities that the District had in the 
past, they probably would have gone belly up much earlier than 
we; and without the other type of support that we would have. 
But all of those factors contributed to our economy.
    I would like to briefly highlight some of our achievements 
in this operating budget and financial plan and then comment on 
the tax package that was adopted by the Council and is part of 
the consensus budget.

                    achievements reflected in budget

    As part of our commitment to improve the lives of the 
residents we have made the following investments to restore and 
enhance city services, because we look at this as an overall 
combination of services to improve the District as a whole:
    A $55 million increase to public schools over current year 
funding, including $2 million for the ``Y Care 2000'' program.
    Allocating $13 million to Public Works to clean up the 
city, from its gateways to streets and alleys.
    $5.8 million dedicated to cleaning up our neighborhoods and 
abate nuisance properties, because we understand if we want to 
make D.C. better, if we want our economy to grow, we must also 
look at our neighborhoods.
    Increased funding for human services in several critical 
areas, $3 million for HIV/AIDS and for substance abuse 
programs, $5 million for homeless, $2 million for the Roving 
Leaders program for our children--in addition to the Mayor's 
$15 million for the youth initiative--$1.2 million for the 
elderly.
    $4 million to support and bolster the Mayor's plan to 
promote managed competition and productivity savings.
    And a pay raise for our workers.

                              tax cut plan

    The Council's tax plan, coauthored by two of my colleagues, 
Jack Evans and David Catania, is an affordable, progressive 
package that will cut taxes on individual income, personal 
property, business franchise, bring our tax structure in line 
moving towards parity and stimulate economic development. And 
when you put the tax package together with those other programs 
that I talked about, the specific programs in the budget, 
whether we are talking about for our youth, for our seniors, to 
deal with substance abuse, to deal with our neighborhoods and 
our communities, together these are the things that will bring 
back a revitalized community.
    The Council and the Mayor began the budget process by 
proposing a tax relief as part of the budget construction. The 
Mayor initially had different ideas of which tax should be 
reduced than the Council, but we all came together and decided 
on a package that would benefit the District as a whole.
    During the negotiations the final plan was agreed on, but 
throughout the budget process both parties never doubted the 
timeliness of reducing taxes beginning in fiscal year 2000.
    The assumption of a tax reduction, therefore, drove the 
budget process in part and paying for the reduction flowed 
through the process. Because we understood that there needed to 
be a balance.

                          paying for tax cuts

    Let me reiterate that this tax package will not be paid for 
out of the accumulated surplus and will be gradually 
implemented over a 5-year period, subject to specific ``trigger 
controls''.
    The Council, in the continuation of the consensus budget 
process, did pass two other amendments yesterday that would 
strengthen the trigger controls and also deal with the 
accelerator clause of this tax package.
    So this tax plan will not threaten the District's long-term 
financial stability or crowd out needed new investments to 
improve services to our citizens because the budget has both. 
Other beneficiaries of this tax proposal include the commercial 
property taxpayers, who will receive a 15 percent tax cut; 
residential rental owners, who would receive significant tax 
relief; and small businesses.

                conclusion of council chair's statement

    As you consider our appropriations request, we ask that 
this budget, which has been diligently and responsibly put 
together by locally elected officials, be left intact and free 
of unnecessary riders. At the end of the consensusprocess the 
Council, the Mayor and the Authority found themselves on the same page, 
approving a city budget that makes critical short-term investments in 
service delivery, continues management reform, and moves towards tax 
parity for residents and businesses. The Council will continue to exert 
oversight over the executive operations and expenditures that makes for 
a good city. That's why we have separation of powers, and I do believe 
that is probably the best form of government in the whole world.
    So the Council will continue to deal with its oversight. We 
will be responsive to our constituents who call Washington, 
D.C., their home or their headquarters. We will continue to 
collaborate with the Mayor, with the Authority, and with 
Congress and with the surrounding governments to achieve 
mutually shared goals. We may not always agree with all of our 
partners, but we will continue to be at the table, asserting 
ourselves as an institution, and working for the betterment and 
the future of the citizens of the District of Columbia, our 
Nation's Capital and home to many.
    Please join our consensus team by supporting our budget and 
endorsing it, because it will move the city forward and in the 
right direction. Thank you very much.

            prepared statement of council chair linda cropp

    [The prepared statement of Council Chair Linda Cropp 
follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Tiahrt [presiding]. Thank you, Madam Chairman Cropp. I 
want to commend you and the D.C. Council on your rapid 
turnaround of the city. I think you have taken a long step 
forward in making this city the crown jewel that we all hope 
for.
    Ms. Cropp. Thank you, Congressman Tiahrt.
    Mr. Tiahrt. Madam Chairman Rivlin, you go by many titles. 
Madam Secretary is one that always sticks in my mind. I want to 
thank you for your dedication to the D.C. Control Board and the 
decisions that you have made lately, and we appreciate it and 
turn the podium over to you.

                  opening statement of alice m. rivlin

    Ms. Rivlin. Thank you very much. I am very pleased to 
appear with the Mayor and the Council Chair to support the 
District's fiscal year 2000 budget.
    This budget, as my colleagues have emphasized, is the 
result of a consensus process. It was one in which the 
Authority played an active role in helping to resolve 
differences between the Mayor and the Council; and we made sure 
that the budget was in balance and based on sound conservative 
assumptions, not only for the next year, but for the years 
going forward.

                district's recovery from financial mess

    The District has come a long way since the Authority was 
created in 1995. At that time, the District was effectively 
bankrupt. It was running large current deficits, it was not 
paying its bills, it wasn't collecting all of its taxes, and it 
was not providing services in an acceptable manner. It could 
not borrow in financial markets. That situation has now begun 
to turnaround. Fiscal year 1998 ended with an operating 
surplus. The accumulated general fund deficit has been paid 
off. We have a positive balance, as my colleagues have noted, 
in the general fund. And the rating agencies have upgraded D.C. 
to investment grade.

                       improvements still needed

    Much remains to be done to improve city services, to train 
and equip the city's workforce, to foster the economic 
development that the city must have to revitalize the core of 
this metropolitan area.

                             fy 2000 budget

    The 2000 budget funds the next steps in that continued 
improvement of the District of Columbia. The Authority worked 
hard with the Mayor and the Council on this budget, and we are 
proud to support it. It is a balanced budget. It funds the $150 
million reserve or rainy day fund that the Congress mandated. 
It provides for an affordable tax cut beginning in the coming 
year and increasing over the next 4 years if economic 
conditions justify it.
    The tax cut is structured to make D.C. tax rates more 
comparable to surrounding jurisdictions, to make doing business 
in the city simpler and more affordable, especially for small 
business, and to make the D.C. income tax fairer by raising the 
thresholds for income subject to the top bracket rates.

           ``trigger control'' to automatically halt tax cuts

    There will be an automatic halt to the planned tax 
reduction if there is a substantial deterioration of the recent 
favorable economic conditions.

                           debt restructuring

    The financial plan also addresses the heavily front-loaded 
nature of the District's long-term debt. This year the District 
plans to repay, restructure, and refinance some of its debt. 
These transactions will provide budget relief over the next 5 
fiscal year that will help the District accomplish critical 
service delivery initiatives and help pay for the tax package. 
They also will help the District service the additional debt 
associated with the capital improvements plan.

                           budget highlights

    The budget funds major increases in funding for the public 
schools, including charter schools, and for other youth 
initiatives. It emphasizes improved management of city services 
and investment in workforce training. It supports continued 
development of the city's neighborhoods, improved public 
safety, and wider health insurance coverage.
    The Authority believes that the consensus budget and the 
financial plan, of which it is a part, are responsible and well 
thought out. We believe that enactment of the proposed budget 
will continue the District's recovery and contribute to a 
strong, vital capital city. We also believe that this budget 
will continue the 4-year string of balanced budgets and enable 
the Authority to go out of business. Thank you.
    Mr. Tiahrt. Sort of an early retirement?
    Ms. Rivlin. Right.
    Mr. Tiahrt. Thank you, Madam Secretary.

                 prepared statement of alice m. rivlin

    [The prepared statement of Alice M. Rivlin follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Tiahrt. Next we have Ms. Valerie Holt, Chief Financial 
Officer of the District of Columbia.

                 opening statement of valerie holt, cfo

    Ms. Holt. Good morning. I'll try to keep my remarks brief. 
Public Law 104-8, the District of Columbia Financial 
Responsibility and Management Assistance Authority Act, 
requires the District to address dual challenges. The District 
must balance its budget for 4 consecutive years and we are 
certainly on target to do that. The District must also achieve 
a broader goal focusing on managerial reform, coupled with 
continued financial progress.
    The fiscal year 2000 budget and outyear financial plan 
takes a step forward toward the hallmark of any well-run 
government, the point at which economic policies are geared to 
compete for new residents and the tax base is matched with 
service delivery goals to better serve all citizens. The fiscal 
year 2000 budget and financial plan incorporates the following 
strategies to meet this goal:
    First, the District plans to restructure a significant 
portion of its debt. Currently, the District's debt, as noted 
by the Chairman of the Financial Authority and by the Council 
Chairman, is excessively front loaded, with future capital 
bonds increasing the projected debt load. The debt 
restructuring, by providing more capacity to invest in capital 
improvements, enhancing budgetary flexibility, creating near-
term cash flow relief and decreasing the debt service burden, 
offers the District both programmatic and financial advantages.
    The debt restructuring facilitates prudent financial 
management, and it also reflects the District's recent 
successes in broadening support for our capital improvement 
program. We have received substantial funding through Barney 
Circle for our transportation improvements, through the Sallie 
Mae funding which has gone to schools, through our equipment 
leasing, through the ISTEA contributions for Metro. It also 
reflects the benefits of the Revitalization Act which 
eliminated the unfunded pension liability and eliminated the 
necessity for front-loading debt.
    Further, the debt restructuring has been received very 
favorably by the rating agencies. The District has over the 
last two weeks received two rating upgrades, as well as an 
earlier upgrade in April. Thus all of our ratings have been 
upgraded in the recent past.

                                tax cuts

    The second strategy that this budget provides is that it 
restructures the District's taxes. We have already had a lot of 
discussion on that. Analysts have long agreed that the 
District's tax rates are high. In fact, the District's tax 
burdens are the highest in the region for commercial real 
property, corporate income tax, retail sales, and utilities. 
The District, when compared with the largest cities in each of 
the 50 states, had the 14th highest tax burden for a family of 
four with an income of $50,000.
    Certainly these comparisons are not absolute. However, 
because the District does have to perform both city and county 
functions, the comparisons show the need for the District to 
have a tax structure that is more competitive with its 
neighbors. The pivotal issue for restructuring the District's 
tax base is how much, when and what tax? The consensus budget 
process delivered an agreed-upon scenario for these questions.

                       5-year tax reduction plan

    The fiscal year 2000 budget reflects a tax reduction that 
will be implemented over the next 5 years beginning with $59 
million in fiscal year 2000; $135 million in 2001; $186 million 
in 2002; and $226 million in 2003. These reductions will affect 
taxes on individual income, personal property, business 
franchise, and other areas in an effort to stimulate economic 
development and bring the District's tax structure in line with 
neighboring jurisdictions. In the interest of time, I won't go 
into the tax details--they will be provided for the record with 
my prepared statement.

                          $150 million reserve

    I want to, third, just very briefly talk about the reserve. 
The District's budget does include the $150 million reserve 
which was required by Congress. This reserve serves to protect 
the District against future unforeseen expenditures and revenue 
shortfalls. The District will spend the funds in such a way 
that an appropriate balance is available in the first, second, 
and third quarters to assurebalance between revenue and 
expenditures at the end of fiscal year 2000.
    The Authority and chief financial officer, in collaboration 
with the Mayor and the Council, have established criteria 
regarding the reserve. The criteria ensures budget balance in 
case of a shortfall in revenue, and funds expenditures such as 
nonrecurring initiatives that support sustainable and 
measurable increases in revenue, that enhance service delivery, 
that reduce costs, that are unforeseen or unforeseeable demands 
on District spending, or that constitute an investment in 
fostering the District's economic well being.
    In the fiscal year 2000 and outyears financial plan, the 
District maintains a portion of the reserve to cover any 
unrealized savings projections. The reserve is also sized to 
appropriately reflect the District's fund balance and resource 
requirements.
    Adjustments to the reserve reflect prudent fiscal planning 
and responsibly balances that need for conservative and prudent 
budgeting by not including significant one-time spending items 
year after year, but investing in service delivery and tax 
relief.

                  impact of tax cut on city's finances

    A lot has been discussed about our taxes and how we're 
going to do in our tax relief. It is important to note that the 
District's ability to sustain fiscal balance will, of course, 
continue to be influenced by the United States economy.
    The United States is enjoying the longest peacetime 
economic expansion in history, and the District of Columbia is 
sharing in the prosperity. Improved tax collections and a 
strong economy led to the District's $445 million excess of 
revenues over expenses. The budget improvements that the 
District is experiencing are in fact being experienced by 46 of 
the 50 States, which also enjoy surpluses. And, in fact, the 
Federal Government enjoyed a surplus.
    Against this backdrop of strong national and regional 
economic growth, the District is forecasting steady growth in 
fiscal years 1999 and 2000. However, these are at rates 
slightly below what we have seen in the last 2 years. The real 
estate sector, as noted earlier in the discussion, should 
continue to sustain our economy.
    In 1998, over 3 million square feet of new office space was 
added while the vacancy rate declined 2 percent from 1997 
levels. In addition, more than 32 percent of the available 
residential inventory was absorbed in 1998. Housing sales in 
1997 were up 35 percent. In fact, I think currently realtors 
are saying that if a house remains on the market in the 
District for more than a week, it is not appropriately priced. 
Our housing market is going very well.
    In looking ahead to the years 2001 to 2003, the key 
economic issues are how much of the national economy can 
continue to expand and the extent to which the District's 
economy will reflect the national conditions. These conditions 
enhance our ability to improve service delivery, reduce costs, 
and stimulate economic demand.
    We in the District must continue to make fiscally prudent 
decisions in order to realize the benefits of a healthy 
economy. Over the next 2 years, the District should move 
forward toward more traditional government operations. During 
this period, the District must achieve the right balance of 
authority and support as it evolves from its current control 
structure. In doing so, we must remain committed to sustaining 
the financial and service delivery gain achieved over the last 
3 years.

                             fy 2000 budget

    The fiscal year 2000 budget and outyear financial plan is 
an ambitious effort and will require the commitment of the 
Mayor, the Council, the Authority, and the staff to achieve the 
right results. We must all continue to understand that the 
District is competing to attract residents, businesses, and 
jobs well into the next millennium.
    Our best chance to successfully compete is to work together 
to provide affordable services and equitable taxes. The fiscal 
year 2000 budget provides the framework for meeting these 
challenges. Thank you.

                prepared statement of valerie holt, cfo

    [The prepared statement of Valerie Holt follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Istook [presiding]. Thank you very much, Ms. Holt.
    I appreciate your testimony and that of everyone else.

         chairman's concerns over tax cut ``trigger controls''

    Let me mention a couple of concerns that I have so that you 
will understand the things that I am trying to explore in 
dialogue with you.
    The Council has acted, the Mayor has acted for significant 
tax cuts that are seen as a key to the future of the District 
to reversing economic trends, housing trends, population 
trends, a number of trends in the District.
    I congratulate the people that have worked on that. I share 
your optimism about the great benefits that can be achieved by 
it. I recognize that it must be done--and I think the control 
board has certainly emphasized this also--it has to be done 
within an atmosphere of fiscal responsibility.
    My personal analogy, the District is still somewhat like 
someone riding a bike with training wheels on. That may not be 
the best analogy for some people, but that is the one that 
comes to my mind and like anyone doing that, you are anxious to 
have the training wheels off, and everyone else is also.
    But that is why certain control mechanisms have been put in 
place, whether it be the control board or whether it be reserve 
fund requirements and so forth. But everyone shares the 
objectives of wanting to get the training wheels off.
    I am concerned that the action that was mentioned in the 
paper this morning about what happens if certain economic 
benchmarks are not achieved, whether the tax cuts will still 
happen.
    As the first witness testified this morning, if you send a 
message of uncertainty regarding tax cuts, you are not going to 
get the same stimulus and beneficial response that you seek in 
them. And I am very concerned that if the circuit breaker in 
case problems develop, if that circuit breaker is to say tax 
cuts might not happen, then you can undercut the entire benefit 
that you want to achieve from the tax cuts.
    I want to explore what that circuit breaker needs to be and 
what tools needs to be in place. Whether, for example, a 
circuit breaker mechanism that says, if necessary to have the 
tax cuts and keep things in balance, these are the programs 
where cuts would occur first, rather than backing up on the tax 
cuts, how well that does as a circuit breaker.
    But the so-called trigger mechanisms are, frankly, of 
concern to me, and I want to explore them further with people.
    But even before we get into that, certainly, Mr. Mayor, you 
campaigned on fiscal responsibility. You have a proven track 
record of eliminating waste and correcting mismanagement from 
the time that you were CFO for the District. Of course, I know 
that means everybody is watching you, Ms. Holt, to see what you 
are going to be running for next.
    Ms. Holt. Absolutely nothing.
    Mr. Istook. We got that on the record.
    Mayor Williams. Thank you, Valerie.

              management savings of $41 million in budget

    Mr. Istook. That was a major selling point of course for 
the Mayor in his campaign and you have proven credentials. But 
yet as I mentioned before, a lot of the success in achieving 
savings within the District budget depends upon the management 
savings, whether it be managed competition, the savings bank, 
or all these other things. There are some $41 million in 
savings that are rolled into the FY 2000 budget. And the budget 
relied upon those particular savings. If they don't 
materialize, you have got major problems.

                     mayor lacks power that cfo has

    So the first question I wanted to pose is to Mayor 
Williams, which is, what could you do as CFO in trying to 
squeeze out savings and bring efficiencies to government that 
you cannot do as Mayor? I realize you don't have the same 
powers as Mayor as you did as CFO in some of those ways. What's 
the difference? I want to make sure that you and everyone else 
have the necessary tools for the job.
    Mayor Williams. As CFO I had extraordinary authority over 
personnel. Number two, in many, many instances, certainly early 
in my tenure as CFO, I worked with the Financial Authority to 
bypass a crumbling dysfunctional procurement system. But when I 
ran for Mayor, I ran for Mayor on the pledge that I would make 
the existing system work to achieve the savings that I know we 
all have to realize. And my commitment was made, understanding 
what great mayors like Ed Rendell have done in Philadelphia; 
Steve Goldsmith in Indianapolis; Dennis Archer, Mayors who have 
a civil service system.
    They are working in a union environment but through force 
of will creating unity of purpose in their communities were 
able to craft labor agreements that achieve the kind of 
productivity savings that I think we have to realize through 
the same devices as we are able to achieve changes. Maybe not 
absolute as some government managers would like, but achieve 
some real significant changes as well in civil service work 
rules. That's what I pledged to do.
    And whatever I did, whatever background authority I had, I 
would work through the labor management process--and I'm not 
saying by saying that, oh, everything is fine and I agree with 
labor on all issues. I don't. But it has to be a collective-
bargaining process.
    I think that we can make through real leadership that 
process work. I think that's what the voters' expectation was 
that I would go in, work that process aggressively, and make it 
work for our citizens and that I wouldn't come in and say, 
can't do this, I need the same authority as I had as CFO. As a 
manager, would I like to have that authority, sure. But that's 
not the commitment and the contract I made with the voters.
    Mr. Istook. Certainly. And, of course, everyone has made 
commitments to the voters regarding achieving these savings and 
achieving these tax cuts, and we want to make sure that we have 
a mechanism in place that will help all of you to achieve that.

           city council views on achieving management savings

    Ms. Cropp, let me ask you, you have a CFO that has certain 
authority; you have splits of authority with the Control Board 
and the Council. The Mayor has certain authority. From your 
perspective or the Council's perspective--sometimes you can 
speak for the whole Council and sometimes you can't--but from 
those perspectives, what are the keys as far as who needs to 
have the authority to make sure that you achieve these 
personnel savings and these procurement savings that the Mayor 
was mentioning?
    Ms. Cropp. It is a thing where both components have to work 
together. It is the executive who runs the government, who 
implements what the legislative branch says. Sometimes that 
line gets a little blurred. I think ofttimes the Council wishes 
it could implement some things and the legislative branch does, 
but we cannot.
    We can work with the Mayor in developing a policy that 
would enable the Mayor to achieve certain things. For example, 
in the Budget Support Act right now, the Council has approved 
certain things such as streamlining contract approval, 
something that the Mayor had requested that would enable him to 
be able to continue in a positive vein, to look at 
reorganization power that the Mayor has to make sure that the 
Mayor has the appropriate reorganization power to deal with the 
workforce and place the workforce in the appropriate place; and 
also to give the Mayor the ability to deal with early-out 
retirement so that we can have the right size of government.
    So what you will find in this budget process as we look at 
taxes, as we look at ways to improve service delivery to our 
citizens, you will also see the legislative side of the 
government trying to give that type of support system necessary 
to the chief executive so that he can implement the appropriate 
management reforms and carry those things out.
    I would like to also say, Mr. Chairman, that as you look at 
the history of the District over the past couple of years, we 
are moving into another phase. We reached this phase of, quote, 
``a budget surplus,'' through hard times. We reduced the size 
of our workforce by more than 10,000 citizens. We reduced 
services. Human services, for example, I recall the human 
services budget one year was cut by $70 million.
    You looked at the service delivery to our citizens. The 
challenge for us was to try to keep service delivery up at some 
point while we were also cutting the budget. So in order to get 
to the point where we are now, the revitalization plan where 
the President and Congress took some steps to help offset some 
unusual cost that the District had that no other city had, we 
took some Herculean steps. We got out of the box in reaching 
this point.
    We are now at the phase where we have to do some other 
things to help our economy to grow to sustain it. That's why we 
are coming up with this tax cut. We are looking at ways to make 
it grow. That's why we need the management reform. That is why 
the Council is supporting in the Budget Support Act the 
initiatives that will hopefully give the Mayor the tools that 
he needs to accomplish those things.
    So we are in phase two, and we will not continue to see the 
type of progress we want unless we take a combined approach of 
service delivery, improving that and supporting the executive 
with the tools necessary, and looking at ways such as how we 
deal with taxes to help our economy to grow.

            tax cuts; service delivery; and balanced budgets

    Mr. Istook. I appreciate that and I need to yield time to 
Mr. Moran. I appreciate your mentioning the need for a combined 
approach. I am well aware, of course, as I mentioned before, I 
applaud the Council in moving aggressively on tax cuts. I 
realize that the political dynamic is such that the tax cuts 
the Council has pushed for are greater than the Mayor wants 
because the Mayor wants to make sure that things stay in 
balance and continue the positive trends.
    Ms. Cropp. Wait a minute. The Council wants that to happen 
too.
    Mr. Istook. I realize that. I realize that.
    Ms. Cropp. The Council wants to balance the budget too.
    Mr. Istook. I know that. I know that. But I also recognize 
that the Mayor has had concerns about being able to keep 
everything in balance with the level of the tax cuts that the 
Council wanted to push a little farther than the Mayor did in 
that area. I understand that. I think it is great.

                      mayor needs management tools

    But I also wonder out loud to therefore help the Mayor to 
make the Council's level of tax cuts happen, if it's also 
necessary that the Mayor has all the tools that he needs to do 
the job to achieve these savings in personnel and procurement, 
in reorganization, and in all the other areas. So that's what 
I'm trying to get to, what do we need to do in approving this 
budget to make sure that we approve a package that has all the 
elements necessary for success which can include not only the 
tax cuts and the spending controls but also the management 
tools; and that's what I'm trying to look at. Mr. Moran.

                      congressman moran's remarks

    Mr. Moran. That's terrific, Mr. Chairman. That's exactly 
the statement I would want to hear and I know the D.C. 
government appreciates hearing. That sums it up entirely.
    We need to know how we can be helpful and not hurtful, how 
we can underscore your priorities; direct what resources we 
have; any influence over to where they are going to do the most 
good; and how we can support the level of confidence that has 
built up under D.C.'s elected leaders and, in fact, the D.C. 
Financial Control Board.
    So I completely agree with Chairman Istook. I do think, 
though, that the initial tax cut proposed by the D.C. Council 
was too deep and fiscally irresponsible. But it's good to show 
that the D.C. Council wants to cut taxes. I think it serves 
some political purposes, at least individually if not 
collectively.
    I'm glad we now have a consensus budget. I want people to 
be talking about cutting taxes in the District, as long as it 
is done in a prudent manner so that we can be sure that we 
never fall back into the old days of mammoth deficits.
    What I want to hear from you, though, is specifically what 
we could do beyond supporting the consensus budget, because I 
think that's what we are going to do, and it looks like the 
mark that we have will basically accomplish that. I hope we can 
keep some of those poison pills off the bill which are 
extraneous to the appropriations process. I think that might be 
helpful. But beyond that, if there were initiatives, what would 
be those initiatives?
    For example--and I don't think we should be proposing tax 
cuts. I don't think that is particularly appropriate for an 
Appropriations Committee, but the twin pillars of the new 
economy that all of you know, but particularly Ms. Rivlin as 
vice chair of the Federal Reserve Board understands, are 
technology and trade.
    How do we maximize what is happening in technology and 
trade, the new productivity? I see the D.C. School System 
probably has more classrooms wired, at least as many as 
virtually any other school system, and yet we have the lowest 
math and science scores. So obviously we have to hire more math 
and science teachers, we have to put more emphasis; we have to 
catch up to the facilities that are available.
    For example, if the D.C. Government were able to say it 
will never impose an Internet tax, maybe that would get some 
more of these tech firms. The tech firms in the suburbs are 
just doing beautifully, and hiring--we've got 19,000 unfilled 
positions. I wish we could fill more of those with District 
residents. But it would also be nice to attract more tech firms 
into the District. Maybe something like that would work. Maybe 
even a free trade zone to get more international trade.
    So I just want to elicit some ideas if there were 
initiatives that you think might be constructive. I guess we go 
to the Mayor first and then Ms. Rivlin and then Ms. Cropp.

            economic development partnership with committee

    Mayor Williams. I think, Congressman, that aside from our 
productivity and management improvement, if we talk about 
economic development, I think we can pursue economic 
development; and there would certainly be partnerships that we 
could pursue with this Committee in two different ways, 
outright expenditure or by way of tax subsidy. For example, a 
tax subsidy would be the homeownership tax credit which has a 
marked effect.
    I traveled with Senator Voinovich to Cleveland. They have 
the highest rate of housing production in the country now in 
Cleveland. Subsidies by the government by way of tax abatements 
or other incentives to bring in homeowners to a city, that is a 
no brainer. It is a direct gain to your city in terms of 
overall multiplier effects. So whatever we could do to try to 
pursue a homeownership strategy in our city is going to have, I 
think, profound effects in our city. The partnership we have 
with Fannie Mae right now, over a billion dollars, is one step 
in that direction but there are other things we could do.
    Likewise, you mentioned free trade zone, Internet tax-free 
concept. Exactly. Those are growing areas of our economy. We 
could say that out of the provision of monies we're going to 
spend either outright or by tax subsidy, we're going to spend a 
certain amount of incentives tied directly to economic 
development. That would definitely would have an effect. You 
could do it on a case-specific site, for example, in a certain 
zone. Potential restoration or redevelopment of the St 
Elizabeth's site. Same kind of concept. So those are things I 
think we could explore.

               substance abuse and prevention partnership

    Another area where we are a partnership, and we mentioned 
this--we sent the Congress as it relates to the 302(b) budget 
allocation in the whole area of substance abuse and prevention. 
And this is something where I think all of us believe it is 
very, very important to the District.
    We share the belief that, for example, better testing 
increased testing, of our probationers is important. But if you 
are going to do that, you have to back it up with better 
substance abuse and treatment. That has an economic effect 
because you are helping stabilize the neighborhood.
    Mr. Moran. Well, we got that drug court that we have been 
funding and that should help. Ms. Rivlin?

        partnerships with businesses to train district residents

    Ms. Rivlin. I think the key is supporting partnerships 
here, and what can be done to foster partnerships between 
business, including the high-tech businesses from Northern 
Virginia and both the D.C. public schools and the charter 
schools and efforts to train the D.C. workforce who are not 
even in school but who need computer training. That's in the 
mutual interest of the city and the suburbs and needs strong 
support.

                technology park in new york avenue area

    The city is already, within the context of the 
economicdevelopment plan, looking at a technology park in the New York 
Avenue area. And that can be a very important initiative.

        $25 million economic development fund and tax abatement

    As to what the Congress can do, I had a conversation 
yesterday with Senator Hutchison who thought that the National 
Capital Revitalization Corporation should have an extra power 
to use some of its funds for tax abatement-type purposes to 
attract businesses into the city within empowerment zones. That 
sounded to me like a thing worth exploring.

     new york avenue corridor; Pennsylvania avenue traffic problems

    Mr. Moran. Let me just jump in here for a moment because 
you mentioned the New York Avenue corridor. I would love to see 
some real infrastructure investment there. That is a gateway to 
the city. It looks horrible now. It has so much potential.
    Another thing is all of this traffic pouring into the 
Federal Triangle area across the 14th Street Bridge and 
Memorial Bridge, but particularly across the 14th Street 
Bridge. Congressman Frank Wolf came up with an idea of putting 
a tunnel that you could start at L'Enfant Plaza and tunnel 
traffic in under the Federal buildings and have exit ramps and 
take it under the White House. It is a disgrace, Pennsylvania 
Avenue now in front of the White House; and you look at E 
street and it is a dump.
    And I think the Secret Service--I just don't agree with 
them at all. I don't think they could care less about the 
aesthetic effect or the traffic effect. They just wanted to 
show how important they were in their authority, and they shut 
the whole thing down. It is wrong. But maybe a tunnel is the 
best way to do it.
    And if we could do that--and we could do New York Avenue--
boy, what a wonderful opportunity that might present to get 
some of this traffic congestion out of here and make it so much 
more a livable city. So if you have any ideas on that, I know I 
am way past my time. But the Chairman is generous, and I guess 
there is only the two of us anyway, Mr. Chairman. So if you 
have any ideas on that.
    Mr. Istook. That's just the red-light-at-the-end-of-the-
tunnel comments.
    Mr. Moran. Well, it is a bright light at least. What do you 
think about that? I suppose as long as it is Federal money you 
think it is a great idea.
    Mayor Williams. We are working with the Federal government. 
We're going to be announcing today a Red Line stop. This is a 
public-private partnership with the developers, the Federal 
government, Metro, and the city, to create a Red Line stop on 
New York Avenue. We have begun tearing down those unsightly 
houses on New York Avenue, putting in a lot of time and effort 
in improving that corridor. You are right, Congressman. It is 
very important. That is an example of investment.
    Another example of investment would be traffic. I will say 
yesterday in our cabinet meeting we told our people in no 
uncertain terms that we have to up the level of urgency in 
creating just an interim--forget about fancy long term--an 
interim transportation plan for downtown because the gridlock 
needs to get under control. It is a matter of traffic 
enforcement, it is a matter of towing, it is a matter of just 
rationalizing everything so it achieves an intended purpose.
    It is everything from simple things of creating--they have 
this in New York and London--a square in the middle of the 
street. If your car is stuck on the square you pay $100 to 
prevent the gridlock in the intersections; towing the cars 
strategically; doing your construction work strategically. All 
of those things have to be done, and any help we could get 
would be appreciated.
    Mr. Moran. Absolutely. And that is one of the disincentives 
of bringing businesses into the city. I think that would help 
tremendously with the economic incentives to bring them in. 
Linda?

             economic development--impact on neighborhoods

    Ms. Cropp. Thank you very much for asking that question. 
Let me say that I agree the idea of New York Avenue, a tunnel, 
is a possibility. The only thing I would suggest is we really 
would have to look at the impact on the neighborhoods for the 
ingress and egress to make sure that we don't destabilize our 
neighborhoods, because we are trying to make sure that they are 
strong.
    We are looking at New York Avenue and other gateways in 
trying to clean them up. New York Avenue, Pennsylvania Avenue, 
Georgia Avenue. As far as what you all can do, you may be able 
to look at how certain highways--and you have helped us in the 
past--enter into the city. And you can help to keep those sound 
for us. Pennsylvania Avenue, 14th Street Bridge, we have South 
Capitol Street going into the Ward 8 community. Georgia Avenue, 
which is a highway, coming from Maryland, and helping us with 
that. Because we are the Nation's Capital, we have an awful lot 
of traffic that does an awful lot to our city as a whole.
    You probably would be happy to know that part of our 
legislation in this budget act does deal with exactly what you 
are saying, no tax on Internet sales; and we have specifically 
said that.
    Mr. Moran. That is proposed interim. I was just suggesting 
to say we are never going to impose one because States are now 
looking at the imposition of Internet taxes when the moratorium 
is lifted. And I think it was the Mayor that said, you know, 
the long-term expectations are particularly important.
    Ms. Cropp. We are looking at that. And let me say, one of 
the things that we would like to have is consistency. And where 
folks can look and see what will the future look like in our 
tax policies and everything else and we are moving in that 
direction.

             local prison situation and federal government

    I must also say that the Federal government can continue to 
help us with regard to our prison situation with the 
revitalization plan. We still have some problems in that arena 
that have not totally been resolved, and actually I think we 
need a lot of help as to when the Federal government would take 
over the prison, and we need an awful lot of help along those 
lines.
    And finally, but certainly not last, it certainly would be 
helpful if we had a voting Delegate in Congress. If you can 
help us along that line also.
    Mr. Moran. You have to ask other people about that. I 
happen to agree. Okay. Thank you, Linda. Thank you, Mr. 
Chairman.

                     tax cut ``Trigger'' mechanism

    Mr. Istook. You bet, Mr. Moran. Thank you. Let me explore--
there has been discussion about this trigger mechanism, and I 
don't have the details. I've just seen a short item about the 
Council vote yesterday. And Ms. Rivlin, I regret that I missed 
your call yesterday, but we will get back together.
    I know that the purpose of the trigger mechanism that was 
the subject there is to make sure that you don't destabilize 
the District government as it's moving back to financial 
stability. The purpose, the objective I agree with. The need 
for somesort of--you can call it a trigger mechanism; I call it 
a circuit breaker mechanism, but the point is I think that there does 
need to be something to make sure that as the District makes a 
significant change in tax policy, that it can handle it in a 
responsible way within their balanced budget.
    What I don't want is to have the value and the benefits of 
the tax cuts undercut by uncertainty. I don't want to see 
headlines that say ``D.C. Tax Cuts, Fact or Fiction?'' I don't 
want that uncertainty myself because I think it can drastically 
undermine the benefits that the tax cuts can bring to the 
District and the people here.
    So that's what I wanted to discuss with you, Ms. Rivlin, in 
particular. What's the difference from your perspective and the 
Control Board's perspective, of having something that says, 
well, if some financial problems surface within the budget as 
we are going through the tax cuts--what's the difference 
between saying we will manage that by diminishing the tax cuts 
or saying that we will manage by diminishing some other aspect 
of spending? Don't either one accomplish the same fiscal 
objective of stability?
    Ms. Rivlin. Well, maybe yes, maybe no. It would depend on 
what spending had to be cut. I think we are all hoping for real 
improvements in the District's service delivery, including 
schools. And what you need to attract residents into the city 
is not just lower taxes; it's better services. A family with 
kids isn't going to come into the city even if the taxes were 
zero if the schools are bad and the streets aren't safe, and no 
one would want them to.
    Mr. Istook. I don't think anyone would propose that sort of 
adjustment.
    Ms. Rivlin. So I think you don't want to see a headline 
that says ``Service Improvements in the District, Fact or 
Fiction'' either.
    And I just don't see why one should say the tax cut must 
proceed in all cases even if the District is in deep trouble. I 
think it ought to be up to the Council what to do in that sort 
of instance. The tax cut should not proceed automatically if 
it's going to cause a deficit in the budget, if only because we 
don't want the Control Board called back in to continue under 
those circumstances.

              expenditure adjustments to maintain tax cuts

    Mr. Istook. I certainly agree with you that improvement of 
schools and infrastructure is something that's necessary. I 
think my question to you--and you don't have to give an 
immediate answer, but you know a considered answer is much 
better--is if there were adjustments made on the spending side 
of the ledger to enable the tax cuts to go forward with 
certainty, what might those adjustments be in a prudent way?
    Ms. Rivlin. Mr. Chairman, if there were expenditures that 
we regarded as unnecessary in this budget that could easily be 
cut out, we ought to cut them out now and not wait for 
difficult times.

                 cfo--agressive on productivity savings

    Ms. Holt. May I comment also? If you look at the outyear 
financial planning budget, it actually assumes that we are 
going to be very aggressive about reducing costs through the 
productivity savings and others.
    Mr. Istook. Which is why I emphasize the need to make sure 
that the executive branch has the tools to do it, maybe 
sometimes not quite the way the Council would want; but it 
helps the Council to meet the tax cut objective.
    Ms. Holt. So that knowing that those cuts are already 
there, to put more cuts on top of those in the 4 years if you 
had the precipitous drop that the trigger would call for, is 
where you would get into difficulty, because you already have 
the expenditure cuts and you would not have some place to give 
the revenue adjustments.

                   cfo--tax cut ``trigger'' mechansim

    Let me talk about the trigger itself for a minute. It is a 
very conservative trigger, and I think if you look all the way 
back to 1965--and I will give you a table--there is only a 
couple of years in which we would have hit the trigger, the 
pull, had there been a tax relief package in effect at that 
time. The most recent one would have been '90.

    [CLERK'S NOTE.--See table ``U.S. Gross Domestic Product, 
1960-1997'' on page 1059.]

    In 1990, we did hit the 1.2 gross domestic product after 
adjusted for inflation, and in that year the District suffered 
an $85 million reduction in its revenue estimate.
    That's very difficult to fix in midstream. Society-wise, 
the trigger is--it's extremely conservative. It presages a 
precipitous drop in revenue.
    Mr. Istook. But it says if times are bad, taxes go up.
    Ms. Holt. No it doesn't, really, because you would not go 
back to any of the taxes--let's suppose that it occurred in the 
third year. You would not take back the tax reductions from the 
first and second years. You would just not go forward in the 
third year until the Mayor and the Council had a chance to come 
together, look at the total financial plan and budget, and 
decide how much of what they planned----
    Mr. Istook. Not reinstate any cuts that have already taken 
place, but prevent the phasing in of future cuts.
    Ms. Holt. Exactly. And it doesn't mean that those future 
cuts do not come. It gives recognition, as the Mayor said, that 
50 percent over the last couple of years of our revenue surge 
was brought on by benefits in the economy, that the District is 
not an island unto itself, although I think sometimes it feels 
that way, that it is subject to the national economy. So if the 
economy goes down, the District will suffer equally. And it 
will have to look at its tax structure then.

              prioritizing expenditures to retain tax cuts

    Mr. Istook. Certainly. And you know, Ms. Rivlin, you 
mentioned, of course, if there are things that are unnecessary 
in the budget, they should be eliminated now. I totally agree, 
but we also recognize that there are some things in the budget 
that are higher priorities than others. So it is not 
necessarily a matter of taking out something that one person 
may consider necessary and another unnecessary. It is a matter 
of having your priorities in place so that there is a 
consequencing--if you have so much money you do this; if you 
have additional money this is an additional prudent 
expenditure. It is a matter of having that----
    Ms. Rivlin. That is clearly right, Mr. Chairman, but all 
the trigger would do is give the Mayor and the Council the 
opportunity to reassess the priorities, including additional 
tax cuts as a priority. It doesn't say there won't be tax cuts. 
It only says stop, wait a minute. Think about whether you can 
afford this and what to do about it.
    Mr. Istook. The Council's action yesterday, as I understand 
it, was done at the insistence and the requirement of the 
Control Board in the particular choice of trigger mechanisms.
    Ms. Rivlin. We wanted to strengthen the mechanism to deal 
with the contingency which, as Valerie says, is very rare; but 
if there were a precipitous drop in revenues, wewould not want 
the tax cut to proceed further.
    Mr. Istook. And I think I made my position on that clear. 
What I want to do, of course, is to look at the specifics of 
that trigger mechanism to see, as I mentioned, if there are 
alternatives to make sure there is certainty on the tax cut 
side and look at the spending side to see if there are 
adjustments that can be made in priorities.
    I think it is important, though, to recognize that, 
frankly, the Council is acting under good faith--and I think 
correct belief--that actually the tax cuts will have a stimulus 
effect. It is kind of like the debate we have in Congress 
between static and dynamic scoring.
    There has been a lot of going back and forth, and I won't 
reopen that whole debate. But I understand that the budget is 
put together conservatively presuming that it is static and 
doesn't create the dynamic situation where the tax cuts 
actually end up achieving greater tax revenue where you cut the 
tax rates, but the revenue actually increases and I realize you 
haven't scored it that way. You scored it as though the tax 
rate reductions are actually a revenue loss rather than a 
revenue gain, so you have taken the conservative approach on 
that.

                           Bond Restructuring

    I wanted to ask concerning the bond refinancing and 
structuring that are a part of the budget package. It was 
mentioned before that the city's bond rating keeps improving. I 
know you are hopeful that it is going to be better next year 
than it is this year and so forth, year after year. What level 
is it at now compared to what the top level is, Mr. Mayor.
    Mayor Williams. For example, it was triple B in Standard 
and Poors, so we brought it up two notches. But we are still 
below a benchmark quality rating.
    Mr. Istook. Is triple A highest?
    Mayor Williams. Yes, triple A.
    Mr. Istook. So there is still some improvement to be had. 
Now, here is my question: As the city's bond rating improves, 
does that mean that the potential savings from a bond 
refinancing would be significantly better a year from now if 
the city's bond rating were better? Has that been factored into 
the decision on refinancing and restructuring bonds?
    Mayor Williams. Unless I can be corrected by our CFO, 
certainly in my participation in formulation of the budget, we 
didn't factor in savings from bond rating improvements out 
there in the future, because the fall-down is quick, but the 
climb back is painstaking, and it would be foolhardy, I think, 
to factor in savings from improvements in the bond rating into 
the actual financial plans, so we haven't done that.
    You know, just as a Mayor and as a former CFO, in my mind I 
am always trying to factor in the value of the tax cuts, the 
value of the fiscal strategy, the value of the improved bond 
rating. But you have everything from trying to pick up the 
trash, provide the resources so our superintendent can educate 
the children and very importantly, providing a decent, sound 
human service network in our city. I come out of a foster-care 
home. That is very, very important that we have that--it is 
nothing people want to talk about a lot of times--but it is 
very, very important.
    And as I think this committee and all of us know, sometimes 
in the past, many times in the past, the way we managed it is 
disgraceful and we certainly don't want to go backwards that 
way either. And I am sure you would agree, Mr. Chairman.
    Mr. Istook. Certainly. I realize it that the bond 
refinancing of part of this is because of general economic 
conditions and part of it is because of a general improvement 
in the city's bond rating. I would appreciate some further 
information showing which is which, though. For example, had 
you been looking at refinancing bonds right now under your 
former rating, would it even make sense or not? I want to 
understand both of those dynamics.

                      Bond Restructuring Rationale

    Ms. Holt. May I comment? I think the first thing, the first 
two things that really make the refinancing and the 
restructuring make sense are, one, that it is the rate that the 
market is changing. And that affects also why we don't adjust 
our future year projections for that because our projections 
are already sensitive to changes in the interest markets, in 
the interest rates, which can literally occur from day to day. 
So first of all it has to reflect that.
    And second, something that made it very attractive for us 
to refinance and restructure our debt right now is the 
Revitalization Act because the District's debt was so 
aggressively front loaded because everybody wanted to get paid 
before 2004 when our unfunded pension liability would have had 
a much more substantial impact on our financial planning 
budget.
    Mayor Williams. Fatal.
    Ms. Holt. Fatal. Right. I always said I would retire from 
the District before that year. So that those are the factors 
that I think more drive the restructuring at this time rather 
than just the Wall Street rating. The Wall Street rating makes 
it more attractive certainly to investors to pick up on our 
bonds knowing that they have a better rate. But it's really the 
underlying financial position of the District that makes the 
restructuring attractive at this time.
    Mr. Istook. Okay. Well, we will continue. There is some 
further information I want to develop to better understand that 
and hopefully to become comfortable with it. You have given me 
information, and I think there is still some further things we 
want. We will work with you on that.
    Ms. Cropp. Mr. Chairman?
    Mr. Istook. Yes?

                    Bond Restructuring--Council View

    Ms. Cropp. If I could just add out of the financial part of 
it. The Council looked at the restructuring very critically in 
our oversight; and, quite frankly, initially the Council was 
not necessarily inclined to deal with the whole restructuring 
aspect. And as we looked at it, as we analyzed it more and as 
we did more research and we looked at all of the things that we 
wanted to do to help our economy to grow and to look at the 
financial outyears for the District, we were convinced not only 
by the executive branch but the Financial Authority and also by 
outside financial experts, that at this point the restructuring 
idea for the District, in conjunction with everything we were 
going to do, that this was the appropriate time for us to do 
it. And that was almost a 180 degree turn for the Council and 
we had to be convinced. And at this point we are convinced that 
that is the approach for us to take.
    Mr. Istook. Certainly. And perhaps I need to visit with 
some of the same people you visited with and review some of 
that material. I appreciate it.

    [CLERK'S NOTE.--The material referred to concerning bond 
restructuring appears on pages 1077-1142.]

        Reserve Fund of $150 Million versus General Fund Balance

    Mr. Istook. The final thing I wanted to ask is, Ms. Rivlin, 
in your written testimony you discuss the $150 million reserve 
fund of the District. Isn't it also a misnomer--don't we almost 
have two different reserve funds and we are using 
interchangeable terms for it? Because the city has run a 
surplus in the last couple of years, which is a separate 
reserve fund from the congressionally mandated $150 million? I 
would appreciate your, one, explaining that to me; and two, 
elaborating on your comments from your written testimony, 
whereas I understand you question whether it's necessary to 
have the same level of reserve fund that's been mandated. So 
when the Chair of the Control Board raises that issue, I 
certainly want to be attentive to it and listen to you.
    Ms. Rivlin. Well, we raised it for the future, not for this 
year.
    Mr. Istook. Yes, I understand that.
    Ms. Rivlin. There are two different things here. There is a 
general fund balance, which is now not only positive, but by 
the end of this year, FY 1999, it, I think, will be in a very 
healthy range, higher than most people think cities really need 
to have. I think we will be at 6 or 6.5 percent of our 
revenues.
    Mr. Istook. That is still not enough to wipe out the need 
for some short-term borrowing during the early parts of the 
fiscal year.
    Ms. Rivlin. No, I guess not, but that is normal. Most 
cities do that.
    Mr. Istook. I understand that.
    Ms. Rivlin. And in addition to our having a healthy general 
fund balance, the Congress quite rightly, I think, has mandated 
that the District set aside a rainy day fund, a reserve fund, 
of $150 million.
    Now, that seems to us appropriate. It doesn't mean that you 
don't spend it. It means that you have it there during the year 
to make sure that you don't have a revenue shortfall. And then 
as it becomes clear that you are going to be okay, you can 
spend it on needed one-time investments that would meet the 
criteria that the Congress asked the District to establish.
    Mr. Istook. It goes through Control Board approval?
    Ms. Rivlin. It goes to the Control Board. It has to be 
agreed to by all four people at this table, as I remember the 
language.
    But in the outyears, we thought that if things go well, 
that the need for that larger reserve was probably not there.
    Mr. Istook. And when you say the outyears, how far out?
    Ms. Rivlin. Well, we look 4 years out in the financial 
plan. And actually in the tax bill, we were looking beyond 
that.
    Mr. Istook. Okay. Well, I realize there has been testimony 
by people questioning that, and I just wanted to hear whatever 
you had to say to elaborate on those things. To what extent 
should the reserve fund be kept separate in bookkeeping from 
the excess in the general fund operating balance? I mean, do we 
generate confusion by separating them? Should we combine them 
for any reason?
    Ms. Rivlin. Oh, I don't think so. I think the rainy day 
fund is an explicit--has an explicit purpose of protecting 
against unforeseen emergencies or revenue shortfalls during the 
year. And that's a sensible thing for a city to have. The 
question is how big it should be.
    Mr. Istook. I think different people may have a different 
perception of the reserve fund. If I understood correctly your 
perception and your description, you see the reserve fund as 
accumulating the money during the year. Make sure that you have 
it at the end of the year, and then for what would be intended 
to be one-time projects with proper approval, some or all of it 
could be spent; but in that case you would have to begin 
reaccumulating it right away at the start of the next fiscal 
year. Do I understand that correctly, Mr. Mayor?

             $150 Million Reserve for ``One-Time'' Expenses

    Mayor Williams. My understanding as a former CFO and as now 
the Mayor is that they really are achieving two different 
purposes. So your cumulative fund balance is there for a rainy 
day, when you have an unforeseen emergency. Despite 
conservative revenue and expenditure projections, you have got 
a real problem that is not even solved by your $150 million, so 
you have got that there. The $150 million is really a device 
that gets at what we've tried to do in each of these years and 
that is conservatively manage the budget each year. The $150 
million is an added device, if you will, to ensure that in any 
given year you're managing your finances and your operations 
conservatively.
    But I would agree with the Chairman. If halfway through 
that year it turns out you're nowhere near any kind of 
contingency or emergency, there is no reason why you shouldn't 
be able to use it for one-time purposes; using it for recurring 
costs would defeat the purpose. But for one-time expenses it 
makes sense to take part of that, based on certain criteria, 
and invest it.
    Ms. Cropp. Mr. Chairman?
    Mr. Istook. Go ahead, Mrs. Cropp.
    Ms. Cropp. Just to go back to a question you asked earlier, 
you asked what tools would you need in the city to be able to 
keep the city moving in a positive vein. And I think the answer 
to that question is part of it for the city to have the ability 
when there is this one-time expenditure that's needed, for the 
city to be able to use those dollars in order to meet that 
need.
    That's a very important tool for the city to be able to 
have in order to make things function to help with the service 
delivery, to make sure that if something comes upthat the 
executive can implement something. Not ongoing every year, not part of 
the base; but we need this for this one time to make sure that we can 
keep the city going. And that goes straight back to that earlier 
question that you had asked.

                $150 Million is a ``Budgetary Account''

    Ms. Holt. If I could add really briefly just to make the 
distinctions I think helpful, the $150 million is a budgetary 
account. It is just like the budget that we would have for the 
Department of Human Services. It is just that no one has 
decided in advance how we will use it. And first we will make 
sure that our revenue stream is covered.
    Second, if that is done, then we would use those funds 
based on certain criteria. But the fund balance, that is the 
year is over, you had an excess of revenues or what is commonly 
called a surplus, and those accumulate in your fund balance 
over time.

                 $150 Million Reserve--End-of-Year Use

    I think that is the harder concept to understand. But the 
accounting and the budget requirement to comply with GAAP and 
all of that are such that every year we would budget a specific 
amount for the reserve or the $150 million, to be specific, and 
prudent accounting would require that at the end of the year if 
a certain amount of that is not spent, it can either be prepaid 
debt service or it will fall to the bottom line.
    So you would really like to spend it within the year, but 
make that amount available in later years. I think our comment 
is that we don't think that every year we need that amount to 
be $150 million because your revenue shortfall probably 
wouldn't be quite that high.
    And, second, there is only so much prudent spending for 
one-time item. That is why we show in the first year the full 
reserve to comply with the requirement, but in the outyears we 
show lesser amounts which we think are more reflective of the 
level of risk that is in the budget, if that is helpful.
    Mr. Istook. And I think the concept suffers a bit from some 
ambiguity and some different perceptions in what it is and what 
it means, but nothing that, I don't think, can't be worked out 
by people working together.
    This is not like a reserve fund that is there and drawing 
its own interest in that sense.
    Ms. Holt. No.

             $150 Million Reserve--Tracking and Benchmarks

    Mr. Istook. It is a fund that by the end of the year is to 
have $150 million in it unless special approval has been given 
for expenditure of it. But is there any requirement for 
checkpoints along the way, for example, that there be so much 
in the first quarter, so much in the second quarter? And since 
it is a bookkeeping entry, how meaningful is that, because that 
can be offset against what you have with your general fund 
unobligated balances, if that is the right term; or it could be 
offset against what you are doing in short-term borrowing. So 
how can we track it through the year to be sure that we are on 
track? What are the benchmarks along the way?
    Ms. Holt. Again, if you just think of it like you think of 
the budget for the Department of Human Services. At the 
beginning of the year we know we are going to spend close to 
$400 million. So that budget is loaded in the system. It is 
true all the cash to support that budget hasn't come in. It 
comes in over the course of the year. So that $150, million 
reserve that assumes that our revenue estimates will hold.
    Mr. Istook. I think it is more like you are saying by the 
end of the year we are going to make a purchase on the last day 
of $150 million and we have to have the money to make that last 
day purchase.

                $150 Million Reserve--Quarterly Reviews

    Ms. Holt. Yes, we have to know up until the last day of the 
year that actually if we need to hold on to some of that budget 
authority, if you will, not to spend in order to offset a 
revenue loss. Each quarter, that as we look at the revenue 
forecast, we will prudently forecast it looks like we're not 
going to need all of this, if the revenue is still coming in 
good and all the economic indicators are good. Let's go ahead 
and spend this portion of it, and we would revisit that every 
quarter of the year.
    Are there investments that we need to make? Do we need to 
hold on to the money? So that by the end of the year you would 
have either spent the money on agreed-upon transactions or you 
would have left a sufficient balance in there to cover any 
revenue shortfalls.

           $150 Million Reserve--Not For Agency Overspending

     And I think we all agree that that money should not be 
used to allow agencies to overspend.
    So it is really to cover a revenue shortfall and then to 
invest in agreed-upon items that come up during the course of 
the year.
    I think this really works in the District especially well 
because we do our budgets so far in advance of when most 
jurisdictions do. So it's important that we have some mechanism 
that allows us to adjust from that, again because we have to go 
through the congressional review process.
    I think it's also--when this reserve concept came, it was 
difficult. But I believe we have all achieved consensus that it 
is a good idea and that we need to move forward with it and we 
need to do it in a way that also assures that it doesn't 
interfere with us getting a clean opinion, because we have 
actually used it as a budgetary account and let it fall to the 
bottom line and so forth.

             $150 Million Reserve and Tax Cut ``Triggers''

    Mr. Istook. It occurs to me that it certainly has a lot of 
aspects in common with what we have been discussing and call 
triggers or circuit breakers, because we can have all of these 
other protections but that is also intended as one of the fall 
backs.

       $150 Million Reserve--Restricted to one-time expenditures

    But it does make a key difference, of course, whether it is 
a one-time expenditure or capital expenditure or something that 
is an ongoing expense. That makes a very important distinction.

                Drug Testing of All 20,000 Probationers

    I want to make one other comment in closing things. Mayor 
Williams, you made reference to substance abuse and prevention 
programs and testing probationers. And as you know, the Office 
of the Offender Supervision has proposed a very significant 
testing program. They have proposed that all 20-some odd 
thousand persons who are on probation who are required to 
remain drug free as a condition of being on probation be tested 
as opposed to the lesser number that are currently now.
    As you have mentioned, Mr. Mayor, and as they have 
mentioned in prior testimony to this Committee, and as I think 
has become pretty common knowledge, that could have huge 
benefits in decreasing the rate of crime in the District as 
well as the rate of drug usage. That's because so many of these 
persons who are in that probationary status are committing a 
great number of crimes to support their drug habits. And there 
are over 20,000 of them. It would be the most ambitious program 
in the country. But along with the drug testing, we would have 
to have the necessary increase in the drug treatment programs 
so that people know that what we really want is not to take 
them off the streets and lock themup because they are repeating 
their drug offenses, but what we really want is for them to get off of 
drugs and not be committing the crimes that are often linked to that 
drug usage.
    I certainly want to use this budget as a vehicle to 
establish that. And as you mentioned, of course, there are 
expenses associated with it and we want to work with you and 
see if we can make it happen. I think that would be one of the 
most important steps we could take to improve the quality of 
life in the District, and it would generate major benefits to 
everyone who lives here or visits here or thinks about moving 
here. It would be not just dollars and cents, but a huge 
improvement in one of the scourges that has been a problem for 
the District. So I look forward to working with you on that.
    Is there anything else before I close the hearing? Do any 
of you have anything further you want to put in the record?

           Fish Wharf; Southwest Waterfront; Anacostia River

    Mayor Williams. I would just like to let the record reflect 
that I will be personally investigating this situation. 
Congressman Cunningham's remarks about the southwest waterfront 
relate to some negotiations with leases with some of the shop 
owners down there. And I will personally intervene to see that 
the funds are spent, that we are making progress and keep him 
personally apprised.
    We have a joint interest, as all of us do, in improving our 
waterfront, and restoring our Anacostia River to the place it 
should be, not one of the worst but one of the best rivers in 
our country; and all of us play a part, our Congresswoman, all 
of us.
    Mr. Istook. Very good. If there is nothing further, we 
stand adjourned.

                       Bond Restructing Material

    (See page 1072.)

    [CLERK'S NOTE.--The following material was supplied in 
response to the committee's request for additional information 
concerning the District's bond restructuring proposal.]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                     Wednesday, September 29, 1999.

                    ENFORCEMENT OF DRUG CONTROL LAWS

                               WITNESSES

                     DISTRICT OF COLUMBIA OFFICIALS

HON. ELEANOR HOLMES NORTON, DELEGATE, DISTRICT OF COLUMBIA, U.S. HOUSE 
    OF REPRESENTATIVES
HON. BOB BARR, REPRESENTATIVE, 7TH DISTRICT, STATE OF GEORGIA, U.S. 
    HOUSE OF REPRESENTATIVES
ASSISTANT CHIEF BRIAN JORDAN, D.C. METROPOLITAN POLICE DEPARTMENT

                    FEDERAL ADMINISTRATION OFFICIALS

DONALD R. VEREEN, JR., M.D., M.P.H., DEPUTY DIRECTOR, OFFICE OF 
    NATIONAL DRUG CONTROL POLICY
MARY LEE WARREN, DEPUTY ASSISTANT U.S. ATTORNEY GENERAL
WILMA LEWIS, U.S. ATTORNEY FOR THE DISTRICT OF COLUMBIA

                            OTHER WITNESSES

KEITH B. VINES, ASSISTANT DISTRICT ATTORNEY, CITY OF SAN FRANCISCO
    Mr. Istook. The committee will come to order.
    I appreciate people coming to this meeting. I apologize, 
one, for being late; and, secondly, although I customarily try 
to keep my own comments brief, I am going to deviate and I have 
a somewhat lengthy opening statement that I want to make.

              STATEMENT OF CHAIRMAN ERNEST J. ISTOOK, JR.

    This past summer, just a few months ago, the Clinton 
administration sent its officials to testify to Congress about 
America's war against drugs.
    From the U.S. Department of Defense, in particular the Drug 
Enforcement Administration, the DEA, we were warned in 
testimony that there is a great danger in the efforts to 
legalize what some misleadingly call medical marijuana. 
Unfortunately, in trying to simplify their writing--I 
understand this because I was a reporter for many years--but, 
unfortunately, in trying to simplify their writing, the media 
have accepted the use of this misleading label of, quote, 
medical marijuana. In doing so, the media have helped the cause 
of those who are pushing to legalize drugs.
    I am not alone in remarking about how misleading the label 
is. Here is a direct quote from that testimony earlier this 
year to the Congress by the DEA: ``medical marijuana is merely 
the first tactical maneuver in an overall strategy that will 
lead to the eventual legalization of all drugs.''.
    That comment didn't come from me. It came from official 
testimony submitted to Congress on behalf of the Clinton 
administration, saying that so-called medical marijuana is a 
deliberate first step in a strategy to legalize all drugs. 
Unfortunately for our national anti-drug efforts, now the 
President of the United States has done a U-turn. This 
afternoon, because of actions taken by the President, we are 
meeting to hear testimony about how anti-drug law enforcement 
will be harmed by efforts to legalize marijuana in the Nation's 
Capital.
    We invited the Attorney General and the ``national drug 
czar'' personally to attend and testify. They were unable to be 
here but have officially sent persons on their behalf.
    I note that our witnesses, in the advance copies they have 
submitted of their testimony, include this statement submitted 
to this subcommittee by the Department of Justice about the 
proposal on legalizing marijuana in Washington, D.C.; and I 
quote from their submitted testimony: ``clearly, this will 
hamper law enforcement efforts to impede the illegal sale and 
use of the drug. The initiative undermines the administration's 
consistent and effective national drug policy.''
    Further, we will be receiving this testimony submitted to 
us today by the Office of National Drug Control Policy, the so-
called national drug czar; and I quote from that submission:
    ``The administration has actively and consistently opposed 
marijuana legalization initiatives in all jurisdictions 
throughout the Nation. Such electoral procedures undermine the 
medical-scientific process for establishing what is a safe and 
effective medicine; contradict Federal regulations and laws 
and, in the Office of National Drug Control Policy's view, may 
be vehicles for the legalization of marijuana for recreational 
use. Continued strict regulation of cannabis as a Schedule I 
drug is essential.''
    But yesterday the President of the United States endorsed 
taking that step toward legalizing more drugs. He has pulled 
the rug out from under our police and law enforcement. Using a 
pretext, and ignoring the U.S. Constitution, he vetoed the D.C. 
Appropriations bill because he says the Nation's Capital should 
be free to legalize marijuana.
    I was astounded to read the President's veto message, where 
he claimed that Congress would not stop any other place in the 
country from legalizing marijuana. Wrong, Mr. President. We 
have a national law, Title 16, United States Code, Section 
559(b), to cover the entire country, saying that marijuana is 
illegal; it is a controlled dangerous substance.
    His administration even sent people to the States, telling 
them they should not and could not violate that national law by 
adopting so-called medical marijuana laws. You cannot have a 
national war on drugs or even a national anti-drug policy if a 
patchwork quilt is created, making D.C. or other places safe 
havens for drugs.
    Furthermore, we have an additional special duty and 
responsibility regarding Washington, D.C., as our Nation's 
Capital. I will be sending the President a copy of the U.S. 
Constitution so he can read Article 1, Section 8, which says it 
is the job of the U.S. Congress ``to exercise exclusive 
Legislation in all Cases whatsoever'' over the District of 
Columbia. Mr. Clinton may not like it, but that is what our 
Constitution says. Even when Congress passed what is called 
home rule for D.C., Congress expressly retained for itself the 
final say on laws in the District. When it comes to the 
Nation's Capital, the buck stops here, Mr. President.
    His veto was not over anything new. The riders he didn't 
like are old, not new. Last year, he signed them into law. 
Several of them he has signed into law several times. Further, 
there are many more riders which he finds perfectly acceptable. 
His veto message pointedly did not object to these.
    If you want to be technical about it, the bill actually had 
72 riders, not just the seven mentioned in his veto message. 
The President made no complaint about the other 65. And why 
should he? For some of them, this is the 28th consecutive year 
they have been included in the D.C. Appropriations bill, a span 
between both Democratic and Republican control of Congress. Of 
the riders, 21 were new; 51 were carryovers. Of the seven he 
claims are the reason for vetoing the bill, only one is new. 
That is the restriction, added by the Senate, on the salaries 
paid to the District of Columbia City Council members. The 
other six cited in his veto message were all signed into law 
previously by President Clinton. This shows his veto is not 
over home rule. He is perfectly willing to accept riders, 65 of 
them. He doesn't truly care about home rule. He and most others 
who hide behind a cry of home rule care only about supporting a 
liberal social agenda--legalizing drugs, free needles for drug 
addicts, treating unmarried couples as though they were 
married, and so forth.
    This is what this is about, not over a principle of self-
determination, but over a social agenda far more liberal than 
the American people. And what is true of the President is also 
true of my friends on the Democratic side of the aisle. By 
pushing the President to veto this bill, extremists have 
ignored and thrown away our efforts to help D.C. children go to 
college. They have thrown away our efforts to crack down on 
crime and drugs. They have thrown away our help to clean up 
pollution in the Anacostia River. They have thrown away our 
work to get foster kids into stable, safe and loving permanent 
adoptive homes. They have thrown away all of these and more.
    We left alone and respected the budget of the Mayor and 
City Council. We added dollars which we had no obligation to 
add because we believed in the new Mayor and in the new 
approaches being taken by the City Council. And I still respect 
and wish to work with them. But led by the Delegate from the 
District of Columbia, city officials went along, grudgingly in 
some cases I know, and urged a veto. They have said no to our 
efforts to help make D.C. a better and safer place. They have 
said yes to what law enforcement--the Clinton administration 
itself--has told us is ``merely the first tactical maneuver in 
an overall strategy that will lead to the eventual legalization 
of all drugs.''
    The President of the United States may not care about this, 
but I do.
    This is the ugly side of what happens when some elevate the 
buzzword of ``choice'' to be their most important policy above 
all else. Having all choices means abolishing all laws. That 
means abolishing all protections for society and especially for 
those who are most vulnerable, and that includes vulnerability 
to drugs. Among other things, it means abolishing the laws that 
seek to protect us from the scourge of drugs. Ultimately the 
lack of law and responsibility removes our ability to make free 
choices.
    The Drug Enforcement administration has warned us: ``the 
medical marijuana movement and its million dollar media 
campaign have helped contribute to the changing attitude among 
our youth that marijuana use is harmless. This softening in our 
attitudes among teens has led to a 140 percent increase in 
marijuana use among high school seniors from 1994-1995.''
    The President has pulled the rug out from under the law 
enforcement effort, but I will not, and I don't believe 
Congress will. The President has surrendered in the war on 
drugs. The Congress has not and will not.
    There is now no hurry to pass a second D.C. appropriations 
bill. It is time for the President, the officials who urged a 
veto and my Democratic colleagues to sit a while in the mess 
they have created with their soft on drugs attitudes. There is 
no urgency; we should take the time to let all of America find 
out what it is really about.
    Our hearing this afternoon is not to rehash all of these 
issues. It is not to discuss whether marijuana has any medical 
uses, however slight it might be or however insignificant it 
might be when compared to medicines that are much more 
effective.
    Instead, our hearing is solely about law enforcement. How 
can they attack our drug problem in Washington, D.C., if 
Washington, D.C., or any other place adopts laws that conflict 
with the uniform law of the land--a law that hasbeen adopted by 
the collective and best reasoning of the whole country.
    As has been made clear by drug enforcement officials, there 
is no need to legalize marijuana in order to alleviate human 
suffering. Let me share with you what is published by the Drug 
Enforcement Administration--yes, by the Clinton administration 
in their publication, ``Say It Straight: The Medical Myths of 
Marijuana''. As the DEA publishes, ``There are over 10,000 
scientific studies that prove marijuana is a harmful addictive 
drug. There is not one reliable study that demonstrates 
marijuana has any medical value.''
    ``In 1994, a U.S. Court of Appeals ruled that marijuana 
should remain a Schedule I drug: highly addictive with no 
medical usefulness. The court noted that the pro-marijuana 
physicians had relied on nonscientific evidence.''
    The DEA additionally published these comments about the so-
called medical marijuana ballot initiatives in California and 
Arizona, comments which I believe also apply to the ballot 
initiative here in Washington, D.C.:
    ``The language in these ballot initiatives in California 
and Arizona are so loosely worded that they basically legalize 
marijuana for everyone, sick or well, adult or child. 
Physicians will be able to legally dispense marijuana for 
migraines, depression or any other ailments.''
    ``The medical marijuana movement and its million dollar 
media campaign have helped contribute to the changing attitude 
among our youth that marijuana use is harmless.''
    ``The pro-legalization organizations behind these ballot 
initiatives deny that there is a drug problem among our youth. 
As much as they seek to focus on people suffering with 
illnesses, we must keep the debate properly centered on the 
safety of our kids. In a time when drug use among kids has 
increased 78 percent in the last 4 years, this country cannot 
afford to undermine drug prevention efforts with these pro-
marijuana ballot initiatives.''
    I congratulate the DEA for printing these and other 
straightforward comments. Personally, I will side with those 
seeking to enforce our drug laws, not with those who seek to 
undercut them. The President and his allies are free to choose 
the other side.

          district's medical marijuana proposal--short comings

    I will note, however, that the D.C. Medical Marijuana 
Proposal does not even require a doctor's prescription. An 
informal comment by a doctor is enough under the District's 
Proposition 59 initiative. Then a person is allowed not only to 
grow and smoke their own marijuana but can authorize four 
friends to grow and keep it, too. Furthermore, it requires that 
taxpayer's money be used to provide people with marijuana in 
some cases.
    People need to be told the truth about this proposal, 
rather than just be told that this is just something called 
medical marijuana. I hope the media will make it clear what 
this is actually about, rather than just using the term 
``medical marijuana'' as a convenient shorthand term.
    We have an obligation to uphold the laws of the land, in 
all parts of the land, and a special constitutional obligation 
regarding Washington, D.C.
    I look forward to today's testimony about how law 
enforcement is jeopardized if we let this initiative become 
law.
    I thank you for your patience in putting up with my lengthy 
comments.
    Mr. Moran, I recognize you for any statement that you may 
wish to make.
    Mr. Moran. Thank you very much, Mr. Chairman. I am sure 
that the President is going to appreciate getting your copy of 
the Constitution.
    Mr. Istook. I hope he reads it.

                  opening remarks of congressman moran

    Mr. Moran. I think he understands the Constitution. He has 
acted based upon his understanding that we in the Congress have 
a constitutional mandate to not only provide oversight over the 
District of Columbia but for making certain that democracy 
prevails in the District of Columbia. And the thrust of the 
United States Constitution, I am sure you would agree, is based 
upon the rights and liberties of the individual and the 
determination by our Founding Fathers that we have an 
obligation to respect everyone's democratic rights and the 
basic sovereignty of every jurisdiction.
    That is what this is about. It is not about wanting to take 
a position on the medicinal use of marijuana or free needle 
exchanges. It is taking a position that the voters of the 
District of Columbia have a right to express themselves in a 
democratic election, in this case a referendum, and that we 
should respect that right and treat the citizens of the 
District of Columbia as we would treat the voters in our own 
congressional districts, and we are not with this D.C. 
Appropriations bill or, really, with this hearing.
    I can appreciate your concerns and the concerns of the 
other Members, including those on my side of the aisle, the 
Democratic side, about the harmful effects of marijuana and 
their concern about the ramifications of Initiative 59 which 
would legalize the medicinal use of marijuana in the District 
of Columbia. And I never had any intention of being the point 
person on the other side of this issue from the prevailing 
point of view, but while we are all entitled to our own 
opinions, we are not entitled to our own set of facts. Having 
had to do the homework on this somewhat reluctantly, but I have 
done it, and as a result I am confident that the facts may 
actually be on the side of the voters of the District of 
Columbia.
    The issue as to whether or not to legalize the medicinal 
use of marijuana and the challenge that it presents to the law 
enforcement community is a Judiciary Committee issue. That is 
my first objection with this hearing. This is not an 
Appropriations Committee matter. It should not have been part 
of an appropriations bill. It doesn't belong in an 
appropriations hearing room. It belongs to the Judiciary 
Committee where you can get experts on either side who are 
concerned about the enforcement of laws and not about the 
appropriation of money.
    We are 2 days away from the beginning of fiscal year 2000, 
which is the beginning of the new millennium, October 1st. Our 
Y2K problems are not computer related, they are the backlog of 
spending bills that have yet to clear Congress and be signed 
into law. That is what the Speaker, Speaker Hastert, referred 
to when he said, if there is anything that we are going to do, 
it is going to ensure that the train runs on time. He meant 
getting the appropriations bills funded. That is the most 
important responsibility we have.
    And yet only four of the 14 regular appropriations bills 
have passed Congress, and of those four only one has been 
signed by the President, one has been vetoed, and two are still 
pending. The one vetoed just yesterday is the fiscal year 2000 
appropriations bill for the District of Columbia, our bill, Mr. 
Chairman.
    As I have said on the House floor and I will say today, you 
should receive nothing but praise for the spending parts of 
that measure. But it was when Congress attempted tolegislate on 
that appropriations bill that the Committee included social riders that 
did not belong on that bill that we ensured a presidential veto. And we 
turned it not into an appropriations bill but some kind of referendum 
on the cultural conservative trends and issues of this country.
    It did not belong there, and it should not be there today. 
You should take those issues off, let the Congress deal with 
them separately, and we should get the appropriations bill 
done. That is what we should be doing right now. We should not 
be having a hearing on this issue. We should be getting our 
work done in the Appropriations Committee.
    But since you insist upon having such a hearing, it seems 
to me that you could have at least let us present the full 
spectrum of perspectives on this issue and not limit the 
speakers only to those in the law enforcement community. No one 
with medical knowledge or scientific knowledge or the other 
perspectives that are necessary to get a full hearing on this 
issue has been invited or allowed to testify.
    I had a number of medical experts and patients who could 
have presented different perspectives on this issue. We always 
hear from the people most directly affected, tried to get them 
to be able to testify. They were not allowed. You said, only 
law enforcement personnel. We have a law enforcement personnel 
who also happens to be a patient, and in fact the last panel 
will be someone who legally uses marijuana for medicinal 
purposes and will explain how California implements the 
medicinal use of marijuana in a legal fashion.
    Mr. Istook. I would like to ask all of our guests to take a 
seat, please. Thank you.
    Mr. Moran. Thank you, Mr. Chairman.
    Now, Mr. Chairman, you made mention of the fact that other 
States have passed referenda which allow the medicinal use of 
marijuana. What you did not make clear was the inconsistency 
with regard to the way that we treated the citizens of the 
District of Columbia and the citizens in Alaska, Arizona, 
California, Oregon, Nevada and Washington State. Every one of 
those States has passed a referenda which made it legal to be 
able to prescribe and use marijuana for medicinal purposes.
    No Member of Congress got up on the floor and attempted to 
specifically preclude those States from implementing this law. 
They left it to their State legislatures.
    In the District of Columbia we have the District of 
Columbia City Council. They have the responsibility to 
determine how to implement this referendum. They are lawfully 
elected by the citizens who voted them in, and they should have 
this responsibility. So we have not treated D.C. like we have 
treated every other State, and there were Members in every 
single one of those States who voted to treat D.C. differently 
than their own constituents even though the majority in all 
those six States passed that ballot initiative. They respected 
it for their own constituents, and they don't respect the 
citizens of the District of Columbia to be able to have their 
legislature act on the same measures that their State 
legislatures are able to do.
    I think the citizens of the District of Columbia should be 
accorded equal respect and legislative treatment. If they were, 
this would not be before us today. I know there are 
deficiencies, with the referendum but the District of Columbia 
City Council should be granted the ability to cure those 
deficiencies, as every other State legislature has been granted 
that opportunity.
    This is a public health issue at least as much as a law 
enforcement issue. The nonpartisan, nonpolitical Institute of 
Medicine report, ``Marijuana in Medicine,'' issued the report 
commissioned by the White House Office of National Drug Control 
Policy, and it acknowledged substantial consensus among experts 
on the relative disciplines on the scientific evidence about 
the potential medical uses of marijuana. Those medical and 
scientific experts should be testifying today.
    If marijuana can relieve the pain and suffering of 
seriously ill patients but must await the delivery of an 
alternative delivery system, what is the appropriate humane 
response we should provide to the thousands of terminally ill 
cancer and HIV/AIDS patients who have failed to respond to the 
regime of legally prescribed substances, but believe, and with 
some credibility, that they could find relief from pain, nausea 
and the lack of appetite for the sustenance they need from THC 
Marinol or marijuana?
    Prestigious groups such as the National Academy of Science, 
the Institute of Medicine, the Federation of American 
Scientists, the Australian Commonwealth Department of Human 
Services and Health, the American Public Health Association and 
the British Medical Association as well as the New England 
Journal of Medicine have publicly endorsed the limited but 
legal medical use of marijuana. More than 30 medical groups 
have endorsed prescriptive access to marijuana under a 
physician's supervision. Several medical groups, including the 
American Medical Association, have endorsed the physician's 
right to recommend or discuss marijuana therapy with the 
patient. Many medical groups, including the American Cancer 
Society, the American Medical Association and others, have 
endorsed the need for additional medical marijuana research.
    Several published studies have found smoking marijuana used 
for cancer therapy, glaucoma and controlling muscle spasms in 
patients suffering from multiple sclerosis, epilepsy, spinal 
cord injury, paraplegia and quadriplegia, and I have got lots 
of lists that we can put in the record for that.
    Six State research projects, according to FDA-approved 
protocol involving at least a thousand patients, found smoking 
marijuana effective as an anti-emetic for cancer patients, more 
effective than synthetic THC, which is sold as Marinol. The 
states conducting the research were New York, California, 
Georgia, New Mexico, Michigan and Tennessee, all fine States; 
they all did it properly.
    Tens of thousands of cancer and AIDS patients already use 
medical marijuana, and they report it as effective in reducing 
the nausea and vomiting associated with cancer and AIDS 
treatment and effective in helping individuals suffering from 
what is called AIDS wasting syndrome, where you waste away 
because you have no appetite. They can regain their appetite 
and gain weight by smoking marijuana.
    Those are the facts. I am not inventing this stuff. The 
views of the medical community and the views of patients who 
lack alternative medications to their life-threatening 
illnesses should also be the part of this hearing. To state 
public policy without weighing these perspectives disrespects 
our democratic process and may reflect the viewpoint that is 
behind where the majority of the public is on this subject and 
where the public has spoken in at least seven States where it 
has been put to the vote.
    The citizens of those States have their rights respectedby 
their Members of Congress. The citizens of the District have not had 
their rights respected equally by the Members of this Congress nor of 
this Committee, and that is why I think that the best thing we could do 
is to leave it to the citizens and the District of Columbia City 
Council, get this off the appropriations bill, pass the appropriations 
bill and stop these kinds of hearings that don't belong here by people 
who don't have a whole lot to add on the subject when we have so many 
studies by scientific experts that seem to be fairly irrefutable.
    Mr. Chairman, I am not glad you are having the hearing, but 
I appreciate what you did in terms of adequately funding D.C. I 
hope that this does not get as rancorous as it has the 
potential to, but we are going to stand by our guns, and I 
think the more truthful information comes out the more that we 
are going to find that D.C.'s voters deserve respect and, in 
fact, knew what they were doing when they passed that 
referendum.
    Thank you, Mr. Chairman.
    Mr. Istook. Thank you, Mr. Moran. I agree with you that we 
should have uniform enforcement of the drug laws across the 
country, and I understand that is exactly what the Justice 
Department is seeking to do, despite what referenda have been 
adopted.
    Do we have any other opening statements?
    Mr. Cunningham.

               opening remarks of congressman cunningham

    Mr. Cunningham. I will be very succinct.
    I think for most of us it is not the question of medical 
marijuana. California was brought up. Time after time and 
center after center has had to be closed because of the 
violations of the intent of medical marijuana. The chairman has 
mentioned that the D.C. initiative itself on legalization of 
marijuana has some liberal interpretations of who can use it 
and how it will be used, who can grow it and how it will be 
used.
    My own son was caught selling marijuana. He is in the jail 
system right now. It corrupts. My son's idea when he first went 
into this thing, oh, dad, we are just selling something like it 
was used back during the time when they were bootlegging 
liquor.
    It is not. It is against the law.
    I have had group after group come into my office wanting to 
legalize marijuana itself. My concern is that the legalization 
of this, and this is just the first step, especially in the 
language of the District's proposition as it was stated at 
first, is wrong, definitely wrong, because it doesn't limit it 
just to medical marijuana.
    I think if I had the wife, the son, the daughter or 
something that was suffering from AIDS or cancer or something 
and I could bring relief to that person and I had the doctor 
saying this will provide relief to that individual, I wouldn't 
object to that. But I have seen, in the past, groups use this 
as a stepping stone for saving their stash, for legalizing 
marijuana, and I think that is the real objection.
    I know in my own family it has caused a lot of heartache. 
And if you look at every one of our schools--I have private 
schools where girls have come to me, Duke, you ought to see the 
bathrooms, they are smoking marijuana in the bathrooms. It is 
the drug.
    If you look at the alteration of chromosomes, how it 
effects--I think it is definitely wrong for the President to 
say, I would inhale if I could. That is the wrong message to 
send out.
    On the one hand, my colleagues worked with the trial 
lawyers to eliminate smoking, but the liberalization of the 
laws on marijuana, I would say to my friend, Jim Moran, and I 
am not just saying that, it is from the heart, I would 
disagree. There is the difference between democratic and 
Democrat, but it is not necessarily synonymous, and it isn't 
with our side.
    Mr. Moran. Referring to democratic with the small D.
    Mr. Cunningham. And I would also tell my friend with the 
objection of law enforcement, every single day our law 
enforcement agencies live and die with drugs. When I was the 
commanding officer of a fighter squadron in the Navy, the 
majority of trouble that our sailors got into was drug related. 
Whether it was tardiness, indebtedness, family problems with 
the home, it was drug related; and most of those were with 
marijuana. The effects of this drug are overwhelming.
    I support, which goes against some of my colleagues, the 
right for D.C. to know the outcome of the referendum. I think 
that is their first amendment right. I strongly disagree with 
the first step approach of legalizing marijuana. We don't take 
this lightly. I don't take home rule lightly. But I have a very 
strong disagreement with legalization of marijuana or any other 
drugs, and I support the law enforcement agencies of this 
country in condemning it and saying it is wrong. I will fight 
tooth, hook and nail against it.
    I yield back the balance of my time.
    Mr. Istook. Thank you, Mr. Cunningham.
    Mr. Tiahrt.

                 opening remarks of congressman tiahrt

    Mr. Tiahrt. I want to make a couple of observations.
    One of the concerns is that we are overriding home rule. 
There is a little town in Kansas called Pretty Prairie not far 
from where I live. It is a town of about 1,000 people, and the 
EPA said their water delivery system is not up to standards and 
they had to build a system of $2.5 million or $3 million 
dollars. If you take $3 million and divide it by 1,000, it is a 
pretty big burden on every person in that city. And the 
majority decided that they could not provide that alternate 
delivery system for their water, but yet the EPA did not yield 
to the wishes of the populous of Pretty Prairie. They imposed 
their values on them. In their best judgment they thought that 
the negative outweighed the positive effects for having a 
system like that.
    If you look at our society, sometimes we have to weigh 
positive versus a negative, and here we have some people who 
believe that there is a positive and some believe there is a 
negative effect of marijuana.
    I was just reading what was put forward to the District's 
voters in Initiative 59. It says basically that the District 
law prohibiting possession of marijuana or cultivating 
marijuana in Section 5(a), the law shall not apply to medical 
patients or primary caregivers, and it is based on the oral or 
written recommendation of the physician.
    Now, I have some concern over that, because there are some 
physicians who can make oral recommendations or written 
recommendations as a way of generating revenue. I know that we 
had a problem with a local physician in Kansas. Somebody 
perfectly healthy would go in and before they got done they had 
18 treatments, and that was kind of scandalous, and there were 
some changes made because of that. So we have a verbal 
recommendation by some physicians.
    Then it defines what a medical patient's primarycaregiver 
is. Medical patients may designate or appoint a licensed health care 
provider, which is understandable, or a sibling or parent or child or 
other close relative or domestic partner or a caseworker or best 
friend. Well, you can go down Independence Avenue and stop the first 
car and say, you are my primary caregiver, and they would have license 
to avoid all marijuana laws in the District of Columbia.
    So I think the District's initiative is loosely written. I 
understand very well why the chief of police, Charles Ramsey, 
has a problem with this and he opposes legalization of medical 
marijuana. I think those are the scales that are being weighed 
here today. When you consider the loss of productivity and the 
loss of a sense of purpose and the loss of time that people 
have when they get caught up in this cycle of drug abuse, the 
negative effects outweigh the positive effects.
    I thank you for indulging me, Mr. Chairman.
    Mr. Istook. Thank you.

                            Witnesses Sworn

    On the first panel we have the Delegate from the District 
of Columbia, Ms. Eleanor Holmes Norton. We have Congressman Bob 
Barr from the 7th District of Georgia, and we have the 
Assistant Chief of Police, Brian Jordan. I spoke with Police 
Chief Ramsey last week, and he was unable to be here 
personally, and he asked Assistant Chief Jordan to be here.
    I would like to ask, whether it be on the first panel or 
the later panel, that all the witnesses we are to hear from 
today stand to be sworn. I certainly would not require a fellow 
Member of Congress to be sworn.
    May I ask the other witnesses, if you would stand 
collectively and let me administer the oath at this time.
    [Witnesses sworn.]
    Mr. Istook. We very much appreciate all of you coming this 
morning. First, we would like to recognize Ms. Eleanor Holmes 
Norton, the Delegate for the District of Columbia.

                  Opening Statement of Delegate Norton

    Ms. Norton. Thank you, Mr. Chairman.
    Initiative 59, the District's medical marijuana initiative, 
is probably before the District of Columbia authorizing 
subcommittee whenever the resolution of disapproval is 
introduced. Both the resolution and the bill have been 
introduced. The old District committee never failed to take up 
such, the disapproval resolution or bill, when the Democrats 
controlled the House; and the D.C. Subcommittee today can 
hardly be expected to shirk that particular duty. It is, 
therefore, difficult to find a legitimate reason for a hearing 
by an appropriations subcommittee on this issue of law that has 
been referred to the D.C. Subcommittee.
    I fully appreciate the difficulty that this issue presents 
for Members. However you choose to characterize the issue, this 
is still America and what is at stake here are different 
visions of democracy and home rule. Fortunately, for most 
Members of Congress, this is a Federal Republic and the people 
members represent are not subjected to defamation and 
vilification when they pass laws with which others disagree. 
Who is legalizing drugs in the Nation's capital and using that 
as a step stone for the rest of the country? The President? Who 
with his Attorney General is on record opposing medical 
marijuana and is bringing prosecution in States with laws 
similar to Initiative 59 even when medical necessity is offered 
as a defense?
    In light of the President's long-stated opposition to 
medical marijuana and of this administration's prosecutorial 
policy, we are left necessarily to conclude that the 
President's veto must have been on principled home rule 
grounds. Does legalization of drugs in the Nation's Capital 
refer to Mayor Anthony Williams who supported Initiative 59 on 
the merits? Can the ghost of Marion Barry be credibly raised 
when Marion Barry is no longer raised and the city's new Mayor 
has just initiated a comprehensive attack on drug markets? How 
about Council Chair Linda Cropp and the City Council, all of 
whom have supported the decision of the people on Initiative 
59? Do they have a pro-drug agenda?
    The inflammatory accusation that this initiative is about 
the legalization of drugs comes down to the people of the 
District of Columbia because they and they alone initiated the 
issue, and almost 70 percent of them voted for Initiative 59 in 
every ward and every precinct of the city, Republican and 
Democratic, from the richest to the poorest.
    They, not the President nor the District's elected 
officials, raised this issue and voted for it. Whether or not 
their decision was wise is a legitimate question. Democracy, 
however, is not conditioned on the wisdom of the electorate 
here any more than in the States that have passed similar 
initiatives.
    I refuse to sit by while the people of the District are 
slurred or marginalized as druggies or soft on drugs any more 
than the Members of this body would allow that implication to 
be raised for the residents of Alaska, Arizona, California, 
Nevada, Oregon or Washington, the six States which have passed 
similar initiatives.
    My constituents are no different from yours. They are in 
the American mainstream where, according to a recent Gallup 
Poll, 69 percent oppose the legalization of marijuana for 
general use but by a margin of 3 to 1 support making marijuana 
available to doctors to prescribe to reduce pain and suffering.
    However, I do not come to this hearing to make a case for 
medical marijuana. I come only to say that the half million 
people who live in the District insist that they be respected 
no less than Americans who live in the six other jurisdictions 
that have passed similar initiatives.
    We will not accept second-class citizenship without a fight 
any more than Californians or Alaskans would. Nor is Congress 
left as its only alternative summarily nullifying the will of 
the majority of the District's people. The D.C. Council in the 
exercise of its home rule jurisdiction has thefull power to 
review initiatives, and the Council has not hesitated to do so in the 
past. Initiatives, after all, are drawn by laymen, not legislators. 
Initiative 59 as worded is subject to legitimate criticism. In a 
democracy there can be no justification for changing a provision passed 
by a large majority of the people unless those changes are made by 
those who the people have elected and to whom they are fully 
accountable.
    The residents of the District of Columbia do not vote in 
this body, and the vote in the Committee of the Whole I won for 
them in 1993 was summarily taken from them, although they are 
fully taxed by the Federal Government as if they had full 
voting rights. The Council deserves the right to consider this 
measure. I have spoken with the Chair of the Council, and she 
has indicated that the Council is fully prepared to do so.
    Mischaracterizing as drug induced the veto of a President 
who has appointed the toughest drug czar in history, and 
himself has long opposed medical marijuana, is not credible to 
the American people, the majority of whom are to the left of 
the President on prescribed marijuana. The people I represent 
resent the conversion of their self-governing rights into a 
drug issue.
    This bill contains matters every bit as objectionable as 
the medical marijuana attachment, none more so than the refusal 
to allow our D.C. Corporation counsel to review the court 
papers in the voting rights lawsuit being paid for entirely by 
a private law firm. The bill has more controversial attachments 
and other home rule intrusions than any bill that has come to 
the President's desk in the entire quarter of a century of home 
rule.
    The bill is replete with issues that residents strongly 
oppose or that lack the District's concurrence: The placement 
of cell towers in Rock Creek Park, which cut off a hearing in 
progress; the return of victims' assistance money to the 
Federal treasury; no local funds for life-saving needle 
exchange programs, for abortions for poor women, and for gay 
and straight domestic partners who desire to buy into an 
existing D.C. Health care plan; nullification of Council 
actions on leases and on excess property; movement of money 
from D.C. Priorities. And these are not all of the attachments 
that deserve mention.
    This subcommittee will always find me ready to engage in 
problem solving. You will never find me engaging in mere 
protest of your actions or views, even when I profoundly 
disagree. My job as the only Member representing the District 
of Columbia in this body is to find solutions. I have not 
ceased to look for solutions throughout this process, even 
after the last vote.
    The people I represent--and I know we do not live in a 
perfect world, especially when it comes to the Congress. 
However, we will never willingly give up our rights. We will 
never stop fighting for every single right that you and those 
you represent claim every day. We are Americans, and if we are 
to be treated as one bit less equal than you and the Americans 
you represent, it will never be first without civil dialogue, 
and if that does not work, never, ever, without a fight.
    Thank you, Mr. Chairman.
    Mr. Istook. Thank you, Ms. Norton.
    And I certainly want to assure you and I frankly believe 
most Members of Congress, certainly the ones that I work with, 
feel this way. That what we want is uniformity, whether it be 
in the District of Columbia, California, Texas, Arkansas, you 
name it, regarding the drug laws at issue. I think that is 
actually the objective.
    I would mention to our witnesses, I realize we haven't 
really paid attention to the timing before and I didn't want to 
interrupt Ms. Norton. We do have the light system that blinks 
red at 5 minutes. I would appreciate people trying to respect 
that.
    Mr. Istook. Congressman Barr.

               Opening Statement of Congressman Bob Barr

    Mr. Barr. Thank you, Mr. Chairman, Mr. Moran and the 
subcommittee. I appreciate the opportunity to be here today.
    My colleague, Ms. Eleanor Holmes Norton, certainly is 
correct when she indicates, she states the obvious, the 
residents of the District of Columbia are Americans. We are all 
proud of that. We are very proud of our Nation's capital. But 
that also carries with it perhaps burdens, and that is our 
Constitution. They are subject to the Constitution of the 
United States and to the laws of the United States, including 
Title 21 in the Schedule of Controlled Substances.
    Mr. Chairman, I suppose our Nation's Capital sometimes is 
nothing if not a city of contradictions, and if it weren't for 
these matters being very serious, it would be comical. Within 1 
week we have the Attorney General launching a massive multi-
million dollar lawsuit against the use of tobacco, and the 
President expressly in his veto statement--he didn't ignore 
this issue, he addressed it--citing as one of the reasons for 
his veto of the D.C. Appropriations bill for fiscal year 2000 
the provision in there with which he objected, that is the 
legalization of marijuana provision.
    We have also the President making those statements and 
making it much more difficult for our law enforcement officials 
at all levels of government to fight the war against mind-
altering drugs. And we have the Justice Department 
representatives doing their best to indicate that it remains 
the policy of the Justice Department to oppose legalization 
efforts and to continue to do everything that they can, as the 
head of the Office of National Drug Control Policy has stated 
also, to continue to fight against the use of marijuana and 
against the legalization thereof.
    So you have these contradictions, and I appreciate you, Mr. 
Chairman, focusing on this, as you did during the debate and 
leading up to the debate on the floor last month with regard to 
the D.C. Appropriations bill and the amendment that I proposed 
therein.
    Also, it is rather interesting, Mr. Chairman, the brouhaha 
in the press about the issue. Many of the national media take 
great exception, write editorials about these nasty folks in 
the Congress, probably but not necessarily including myself in 
their eyes, seeking to assert the primacy of Federal drug laws 
in the U.S. Constitution. One might ask them whether or not, if 
we were here today debating whether or not Congress should 
overturn a law or a regulation that the District of Columbia 
passed imposing censorship on the press, whether they would be 
labeling us with quite the negative terms that they are. I 
think not.
    The fact of the matter is, as Mr. Moran also stated, wehave 
to deal with facts, and facts are stubborn things. But thank goodness 
the fact of the Constitution is a stubborn thing, and thank goodness we 
have laws applicable across the board across the country that say that 
mind-altering drugs, which includes marijuana as a controlled substance 
under Schedule I of the Controlled Substances Act in Title 21, that we 
do have those laws.
    It would send, Mr. Chairman, and has sent a terrible 
message to the youth of this country not only with the recent 
vote by the residents of the District of Columbia to legalize 
marijuana--and that is what this is, make no mistake about it. 
It is so full of loopholes it makes it patently obvious that it 
is not simply concerned about medical use.
    You have already indicated and other Members have already 
indicated the tremendous loopholes in here for people other 
than doctors to become involved, not even requiring a written 
prescription, allowing for outside groups to start doing this. 
And then, to add insult to injury, the initiative provides that 
Congress needs to take steps to start to enact a law that would 
make marijuana available to those that might need it.
    We need to stand firm, Mr. Chairman, against the use of 
mind-altering drugs, and that includes the legalization of 
them. We need to stand firm with law enforcement officials and 
parents across this country that know that marijuana is a mind-
altering drug, and we ought to resist efforts to have this cast 
as a home rule issue. It is not. We ought to resist efforts to 
have this cast as a health care issue. It is not. It is a law 
enforcement issue. And I applaud you, Mr. Chairman, for that 
and urge you to stand firm.
    I would ask that my statement be included in the record in 
its entirety as if read.
    Mr. Istook. Thank you, Mr. Barr. Your full statement will 
be included in the record for the hearing.

               Prepared Statement of Congressman Bob Barr

    [The prepared statement of Congressman Bob Barr follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Istook. Our next witness is Assistant Chief Brian 
Jordan of the Metropolitan Police Department. Chief Jordan, we 
are very appreciative of your being here. We realize the 
Department is kind of in a hot seat over this, and we look 
forward to hearing from you.

        Opening Statement of Assistant Police chief Brian Jordan

    Chief Jordan. Good afternoon, Chairman Istook, 
distinguished members of the subcommittee and guests. I 
appreciate the opportunity to appear before you today.
    My name is Brian Jordan, and I am the Assistant Chief in 
charge of the Metropolitan Police Department's Special Services 
Command. In this capacity, I manage the Major Narcotics Unit 
and other investigatory units of the Department.
    I am representing Police Chief Charles Ramsey, who is 
attending the FBI's National Executive Institute.
    The Metropolitan Police Department opposes the legalization 
of marijuana. Marijuana remains the illegal drug of choice in 
the Nation's Capital, and crime and violence related to the 
illegal marijuana trafficking and abuse are widespread in many 
of our communities.
    Initiative 59 proposes to legalize the use of marijuana 
strictly for medicinal purposes. The initiative would require 
that several steps be taken by the Director of Public Health, 
the D.C. Council and others before the proposal would become 
operational. These steps include establishing procedures for 
determining who would be qualified to obtain and use marijuana 
for medicinal purposes and how distribution would take place.
    Until these procedures have been finalized, it would be 
difficult for me to speculate on the possible impact that the 
medical marijuana initiative might have on law enforcement and 
public safety in the District of Columbia. The Metropolitan 
Police Department will continue to monitor this matter very 
closely, with particular attention to any potential impact on 
public safety in the District.
    Thank you very much.

       Prepared Statement of Assistant Police Chief, Brian Jordan

    [The prepared statement of Assistant Chief Brian Jordan 
follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Istook. Thank you very much, Chief Jordan.

       Police Chiefs of major cities oppose legalizing marijuana

    Chief Jordan, as you noted, Chief Ramsey was unable to be 
here. I will place in the record of the hearing a copy of the 
press release that Chief Ramsey released last October prior to 
the referendum vote.
    [The press release referred to follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Stook. We will follow the 5-minute rule regarding 
questions.

       d.c. police department still opposes legalizing marijuana

    You are probably familiar with the press release. It has a 
statement from Chief Ramsey and the Prince George's County 
Police Chief John Farrell to oppose not only the proposal in 
D.C., but also those that were pending at the time in Arizona, 
Colorado and Nevada.
    I did want to ask you if you agree, and as Chief Ramsey 
said in that release, ``Legalized marijuana under the guise of 
medicine is a sure-fire prescription for more marijuana on the 
streets of D.C. and more trafficking and abuse and more drug-
related crime and violence in our neighborhoods.'' that is his 
quote. Would you agree that is still the position of the Chief 
and yourself and of the Department?
    Chief Jordan. I would agree with that statement.
    Mr. Istook. Certainly.
    It also said in the release, and I quote from it, ``Ramsey 
said the safeguards against fraud and abuse in ballot 
Initiative 59 are so lax as to render current marijuana laws in 
the District all but unenforceable,'' and I presume that is 
what you were speaking about when you said they have to try to 
establish some sort of procedures because it certainly is not 
in the initiative itself.
    I will read from his statement again, ``This measure would 
provide adequate cover in the name of medicine for offenders 
whose real purpose is to manufacture, distribute and abuse 
marijuana. Legalization would hamstring the efforts ofpolice 
and communities to rid our neighborhoods of this dangerous drug and the 
serious crime problems associated with it.''
    Chief Farrell warns that legalizing marijuana in D.C. would 
have a detrimental impact on the surrounding areas as well.

         police would have difficulty enforcing marijuana laws

    Chief Jordan, as a police officer, especially on something 
that relates to drugs, you not only have authority to look at 
violations of local law, but there may be a violation of 
Federal law in any sort of drug investigation or arrest. Would 
the policy of the D.C. Police, if you know, be to continue to 
be agents assisting in the enforcement of the Federal anti-drug 
laws as well as those that are particular to the District?
    Chief Jordan. I think our role as a Police Department would 
be to enforce the laws that are currently on the books. We 
would have to simply investigate the cases and be guided by the 
laws and let the case follow the legal mechanisms that are 
there.
    Mr. Istook. Certainly. So although it would complicate, 
obviously, your work, it is hard to say what you would do about 
the conflict between the Federal law that might say one thing 
and a local law that tried to say a different thing?
    Chief Jordan. That is correct.
    Mr. Istook. Actually, Chief Jordan, let me yield back any 
further time. I certainly appreciate your coming forward. I 
know that this is a very difficult circumstance for D.C. police 
officers.
    I notice the Prince George's County patch, and I don't know 
if that was Chief Farrell. Oh, it is somebody on his behalf. I 
certainly appreciate your being here, officer. We appreciate 
the statements that he issued on this previously and the 
efforts of the P.G. Police Department.
    I would yield back the balance of my time to Mr. Moran.

                  process for initiative to become law

    Mr. Moran. Thank you very much, Mr. Chairman.
    Ms. Norton, it seems to me that once the Congress passes a 
law--let's say this D.C. Appropriations bill were to become law 
or let's say an initiative is passed by the D.C. citizens. 
There is a long complex process that it has to go through. If, 
for example, the referendum that we are so concerned about, 
Initiative 59, was to have become law, it first goes to the 
chief financial officer, right? Then it goes to the Financial 
Control Board?
    Ms. Norton. Yes.
    Mr. Moran. And then it goes to the D.C. City Council, and 
then I think it has to come to the U.S. Congress, and the 
Congress even has the power to reject that. Is that true?
    Ms. Norton. These are all possible steps. The Council could 
change the matter before or after it came over here. The 
Congress could decide that it didn't accept that.
    But in the past what the Council has done after an 
initiative is passed is to put it under review. Because these 
initiatives are loosely worded. They are drawn by lay people. 
They don't go to lawyers to find out what to do. And the ballot 
system is very loose because it is a democratic system.
    Mr. Moran. So the Corporation Counsel would look at it and 
your Chief Financial Officer, the Control Board and the City 
Council.
    Let me ask my friend, Mr. Barr, a question. In light of the 
relatively long and arduous process that an initiative by D.C. 
voters goes through and then finally, ultimately comes to the 
Congress which has the power to reject it, why was it necessary 
to disapprove it before the D.C. Council even gets it?
    I also want you to address specifically why it is different 
when California, Nevada, Arizona, Washington State, all of 
those other States, pass similar referenda that then had to go 
to their State legislatures, just as this would have had to 
gone to D.C. Council, why are we treating D.C. differently and 
why is it necessary to preclude them from even considering 
whether this initiative is proper or how it might be 
implemented?

               constitutional power of congress over d.c.

    Mr. Barr. I think the difference is a very profound one, 
and that is Article 1, Section 8, which provides essentially 
plenary authority for the Congress of the United States to 
legislate on all matters within the District of Columbia, that 
is not a power that Congress has with regard to California, 
Arizona, Washington or any other State.
    With regard to why at least I believed it was necessary to 
address this matter prior to the final, as you say, tortuous 
action of the D.C. Council, because I believe that simply 
because one level of government provides a tortuous and very 
complicated progress does not mean that Congress has to.
    The issue has been joined, and that is very, very clear. 
And the issue being joined, that is, the residents of the 
District of Columbia basically thumbing their nose at Federal 
drug laws, ``we want to legalize marijuana in the District of 
Columbia'', I think it is very appropriate and timely for 
Congress, if Congress reflected the will of the majority of the 
people of this country, to step in and say, it is the will of 
the Congress reflecting the will of the people of this country 
that in our Nation's Capital, which occupies a unique 
constitutional position and for which Congress has unique 
authority, to step in and say, no, the District of Columbia 
shall remain subject to Federal drug laws as our Nation's 
Capital.
    Mr. Moran. What you are basically saying is that the D.C. 
Council should not have the right to even consider whether or 
not to implement this referendum? Ultimately, if all of these 
other bodies approved it, you are circumventing that process 
and saying we don't trust--it appears that you are saying, D.C. 
Council, it doesn't really matter what you think, we are going 
to preclude you from even considering how the law should be 
implemented.
    It doesn't seem as though if Georgia were to pass such an 
initiative that we would take the same actions. You are saying 
that D.C. is special, and basically we get into home rule, and 
you begin your statement saying this is all about home rule. I 
think basically it is because that is the only reason D.C. 
citizens are being treated differently and why we take 
objection to that treatment.

                  illegal drugs prescribed in district

    Let me ask assistant Chief Jordan quickly, there is a lot 
of illegal drugs that are prescribed in the District of 
Columbia--Percodan, Percocet, Demerol, Dexedrine, Vicodin, 
Valium, Librium, and you find those----
    Chief Jordan. Yes.
    Mr. Moran [continuing]. Out on the street illegally used. 
But if you find that they are prescribed by doctors, there is a 
fairly simple method of determining that, isn't there, whether 
a doctor prescribed them, and if you find that somebody is 
possessing that, why would it--why would you not act in the 
same manner that you act with these other legaldrugs which are 
legal only if used for medicinal uses and only if prescribed by a 
doctor? What is the difference vis-a-vis marijuana than these other 
legal drugs only when prescribed?
    Chief Jordan. As I referred to in my testimony, we would 
have to see what rules governed that legalization before we 
could determine the impact that would come from it.
    So, like many of the drugs that you named, clearly there 
are certain rules that outline how we would enforce it. And, 
again, we would have to be guided by those rules to determine 
whether it was a significant change in how we operate or impact 
what we do.
    Mr. Moran. But you could conceivably use the same approach 
as you do now for legal--drugs that are legal when medicinally 
used.
    I am out of time. Thank you.
    Mr. Istook. Thank you.
    I don't want to get into a second round, but let me do a 
little followup.

  requirement for written prescriptions absent in marijuana initiative

    Chief Jordan, this is at the heart of the reason why the 
law on prescribing drugs that are controlled dangerous 
substances requires written prescriptions and copies of those 
prescriptions and imposes recordkeeping requirements. Is that 
basically what we are talking about here? Those recordkeeping 
requirements and the requirements for written prescriptions 
which are absent in this initiative, both for the patient and 
certainly for their friends?
    Chief Jordan. They do provide evidentiary value when we are 
trying to prosecute.
    Mr. Istook. And the law requires a written record and a 
trail that is available to law enforcement whenever those are 
prescribed?
    Chief Jordan. That is correct.
    Mr. Istook. Thank you very much.
    I appreciate the testimony from the first panel and thank 
you for taking the time to be here.
    If the second panelists might come forward.
    We have Dr. Donald Vereen, who is a physician as well as 
Deputy Director of the Office of National Drug Control Policy; 
Wilma Lewis, U.S. Attorney for the District; and Mary Lee 
Warren, Deputy Assistant U.S. Attorney General for the 
District.

   city council resolution requesting expedited review of initiative

    We have, dated September 22nd, a copy of the transmittal 
letter from the chairman of the City Council, Linda Cropp, to 
the Chief Financial Officer requesting that they expedite a 
review of the initiative to provide the fiscal impact statement 
that is necessary as one of the requirements for transmitting 
laws within D.C. So the Council has already, through their 
chairman, asked for an expediting of the process of moving this 
along.
    Mr. Moran. The Council is already going about it in a 
lawful manner, in your judgment?
    Mr. Istook. They are not moving slowly.
    [A copy of the City Council's letter referred to with 
enclosures follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Istook. Dr. Vereen, we are happy to receive your 
testimony.

       opening statement of dr. donald r. vereen, deputy director

    Dr. Vereen. Thank you, Chairman Istook. Thank you for 
convening this hearing.
    All of us at ONDCP appreciate your interest on this 
critical public health issue. We also want to thank Ranking 
Minority Member Moran for his support for our National Drug 
Control Strategy, and we look forward to working with you to 
ensure that the standards and efficacy of our Nation's drug 
approval process remain the safest in the world.
    I also would like to thank a number of individuals and 
organizations who have helped craft a comprehensive and 
balanced anti-drug strategy: Mary Hyde, Dean Miller and Erica 
O'Choa from the Community of Anti-drug Coalitions of America; 
Johnny Hughes, the National Troopers Coalition; James McGivney 
from DARE; Mark Hascue from the Family Research Council; Ronald 
Newbauer from the International Association of Chiefs of 
Police; Jeffrey Brandauer, he is from the National Alliance of 
State Drug Enforcement Agencies and the Kansas Bureau of 
Investigations; Lieutenant Allen Catcher, who is from the 
National Narcotics Officers Association's Coalition Union, from 
the New Jersey Police Department; Lieutenant Colonel Charles 
Pollick, who you acknowledged earlier, Major City Chiefs and 
from Prince George's County; Wes Huddleston and Jonathan Tobin 
from the National Drug Court Institute; and also Olive 
O'Donnell from the National Drug Prevention League.
    These are folks from prevention, from treatment and law 
enforcement who have been behind us. I have prepared a 
comprehensive written statement, and I ask that it be 
introduced into the record.

      prepared statement of dr. donald r. vereen, deputy director

    [The prepared statement of Dr. Vereen follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

         prepared statement of dr. mitchell s. rosenthal, M.D.

    Dr. Vereen. I would also like to ask that a statement by 
Mitchell R. Rosenthal, a physician from the State of New York 
who is the President of Phoenix House--he is calling for 
``further scientific research into the medical efficacy of 
marijuana before laws are changed to ease restrictions on the 
use of the drug,'' and we ask that be introduced into the 
record.
    Mr. Istook. Without objection.
    Dr. Vereen. Thank you.
    [The prepared statement referred to follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        clinton administration position on legalizing marijuana

    Dr. Vereen. Let me begin with the Administration's 
position.
    This Administration has been actively and consistently 
opposed to medical legalization initiatives in all 
jurisdictions throughout the United States. It is part of our 
science-based National Drug control strategy which has five 
goals, and 32 objectives.
    Our opposition is based on the fact that these electoral 
procedures undermine the medical-scientific process for 
establishing what is safe and effective medicine. These 
procedures also contradict Federal regulations and laws. That 
is what this is about. And, in ONDCP's view, these procedures 
may be vehicles for the legalization of marijuana for 
recreational use.
    The Administration is adamantly opposed to the use of 
marijuana outside of authorized research. That is the context 
in which its use can only be used and defined. However, 
legitimate medications containing the synthetic equivalents of 
marijuana components have proven effective in some medical 
conditions. Dronabinol, a synthetic form of a psychoactive 
component of marijuana, tetrahydrocannabinol, which is THC, has 
been approved by the FDA to control nausea in cancer patients 
receiving chemotherapy and to stimulate appetite in AIDS 
patients. This pill form of THC has been approved and available 
for 15 years and sold under the tradename Marinol. Recently, 
Dronabinol was rescheduled from Schedule II to Schedule III of the 
Controlled Substances Act. Again, based on science. That is what 
determines the movement among the schedules.
    Next slide, please.
    In determining the risks and benefits of a given drug, 
research-based evidence must be the foundation of any analysis. 
The purpose of this type of analysis is to protect and promote 
public health by ensuring that medical products are safe and 
effective. Research-based standards must provide a rational 
basis for concluding that the benefits of a medical product 
outweigh the risks.

       d.c. medical society not consulted on marijuana initiative

    The Medical Society of the District of Columbia makes it 
very clear where they stood on this issue for the past 3 to 4 
years. Furthermore, in the case of the District of Columbia, 
this Medical Society, the holders of the medical standard for 
the District of Columbia, was not consulted in the development 
of this initiative, and this is a medical issue.

                 marijuana is complex botanical product

    Marijuana is a botanical product. It is a complex mixture 
of active and inactive ingredients. Consequently, there are 
concerns about product consistency, the potency of the active 
ingredients, contamination--for example, if you grow something 
using herbicides, the herbicides contaminate the product--the 
stability of the active and inactive ingredients over time, 
particularly as they relate to safety, manufacturing and 
control. Those are the issues in a nutshell, and I can go into 
those in more detail later on.
    The next slide.

                      scientific studies essential

    There are risks when medicines are not scientifically 
tested, and botanical remedies are typically tested through 
trial and error, not through scientific methods. You may 
remember the experience of laetrile in the 1970s before science 
demanded safe and effective standards. We have learned to ask 
and expect statistically reliable evidence before accepting 
conclusions about remedies.
    Let me add--and this is a late piece of information which 
is in your packet--we have evidence now showing how long-term 
marijuana use not only affects the brain so that you can see 
it, but we can measure that in terms of behavior and decreased 
performance in cognitive areas and in learning.
    The next slide.
    The heart of my comments are right here. The ONDCP asked 
the Institute of Medicine and the National Academy of Sciences 
to conduct a review of the scientific research concerning the 
potential health benefits and risks of the medical use of 
marijuana and the constituent cannabinoids. ONDCP was seeking 
to obtain an objective and independent evaluation of the 
research regarding the use of marijuana for medical purposes.
    The study lasted 18 months. It began in November of 1997. 
The study is the most comprehensive summary and analysis of 
what is known about the medical use of marijuana today. And let 
me just briefly go through two major points.
    The effects of cannabinoids are generally modest, and there 
are more effective medicines generally. There are provisions 
for those patients who may benefit, and those circumstances are 
explained. While smoked marijuana delivers THC, it also 
delivers other harmful substances similar to the ones found in 
tobacco. The point here is the route of administration. There 
are no medications that we smoke, and that is the reason. It is 
because of those other exogenous, mostly harmful substances 
that you get in smoke. So another important point is it is the 
route of administration of active ingredients. We have already 
demonstrated that we can remove them from the cannabinoids.
    Next slide.
    The IOM study emphasizes evidence-based medicine derived 
from knowledge and experience and formed by rigorous medical-
scientific analysis, not belief-based medicine derived from 
judgment, intuition and beliefs untested by rigorous science. 
We are just not there any more. Because of this study we 
believe that the discussion of medical efficacy and the safety 
of cannabinoids can now take place in the context of science 
and medicine; that is what our colleagues at the American 
Society of Addiction Medicine have said, not at the ballot box.

          study conclusion--little future in smoked marijuana

    The study concludes that there is little future in smoked 
marijuana as a medically approved medication. Although 
marijuana smoke delivers the THC and other cannabinoids to the 
body, it delivers harmful substances, including those found in 
tobacco smoke. The long-term effects, the long-term harms from 
smoking make it a poor delivery system for THC or any other 
drug, and that is particularly true for patients who have 
chronic diseases where they would have to keep smoking this 
stuff for a long period of time, and it is especially an 
important point for pregnant women.
    In addition, cannabis plants contain a variable mixture of 
biologically active components. Even in cases where marijuana 
can provide relief of symptoms, the crude plant mixture does 
not meet the modern expectation that medicine of a known 
composition and quality is used. Marijuana cannot guarantee 
precise, controlled doses. That is how we prescribe medicines 
in modern medicine today.
    The Partnership for a Drug Free America has done its own 
research and comes up with some similar conclusions to ours. 
The study does not deny conclusions related to ours.

              marijuana use and use of other illegal drugs

    And one of the other conclusions that we have drawn that is 
supported to some extent by the IOM report is the correlation 
between adolescent marijuana use and the subsequent use of 
other illegal drugs. Because marijuana is the most widely used 
illicit drug, it is, predictably, the illicit drug that most 
people encounter. In the sense that marijuana use typically 
precedes rather than follows the initiation into the use of our 
drugs, it is indeed a gateway drug.
    This correlation between initial marijuana use and 
subsequent use of other illicit drugs is also noted in the 1999 
National Drug Control Strategy, and our partners have picked up 
on that.
    Mr. Chairman, I see that my time has expired, so let me 
respectfully request that I be permitted to finish. I only have 
a couple more points.
    Mr. Istook. Go ahead.

          federal government supports cannabinoid-based drugs

    Dr. Vereen. The Federal government supports cannabinoid- 
based drugs. The IOM study suggests cannabinoid-based drugs 
might be modestly effective for a variety of indications, 
particularly anti-emesis, appetite stimulation and pain relief. 
Consequently, the study recommends further research, studies 
and preclinical and clinical trials so that safe and effective 
cannabinoids might be added to the pharmacopeia of drugs that 
treat these symptoms.
    Formulations that can rapidly and directly deliver THC to 
the circulation include deep lung aerosols, nasal sprays, nasal 
gels, sublingual preparations and suppositories. Manyof these 
investigations are underway now in animals. Now, it is a process that 
is slow, but there are ways to help speed up the process. The IOM 
report outlines how we can move those procedures faster.
    In conclusion, the Federal Government is committed to 
ensuring that the analysis of the medical efficacy and safety 
of cannabinoids takes place within the context of medicine and 
science. It is imperative that the medical marijuana ballot 
initiatives do not remove the discussion from that context. 
More importantly, we don't want to circumvent the drug approval 
process. It has not done us wrong in the past.

           continued strict regulation of cannabis essential

    Continued strict regulation of cannabis as a Schedule I 
drug is essential. The components of marijuana are what we are 
after. Those will be scheduled appropriately, so we need to be 
sure that we examine these cannabinoid-based drugs for possible 
medical benefit. We are doing that now. Ultimately, appropriate 
medical authorities, not the ONDCP, will make decisions over 
what constitutes safe and effective medications.
    So thank you for your time, and I thank you for this 
opportunity to testify.
    Mr. Istook. I thank you, Dr. Vereen. I follow the 
distinction between marijuana and chemical components which may 
be part of marijuana and could go through the FDA approval 
process and so forth.
    I appreciate your testimony.
    Ms. Lewis.
    Ms. Lewis. Actually, Chairman Istook, Ms. Warren will 
proceed.

               opening statement of mary lee warren, doj

    Ms. Warren. Mr. Chairman and Ranking Minority Member, Mr. 
Moran, I am Mary Lee Warren. I appreciate the subcommittee 
providing the Justice Department with the opportunity to 
testify regarding the Department's enforcement of the Federal 
drug laws. Notwithstanding the recently enacted State statutes 
that permit use of marijuana in a medical setting, the Federal 
drug laws remain fully in force.
    All have mentioned the various State ballot initiatives in 
1996 and 1998.
    Reviewing the Department's efforts following the enactment 
of the California and Arizona initiatives, on December 30, 
1996, the Administration published in the Federal Register a 
clear and direct response based on effective Federal drug 
policy and the need to protect our citizens from prohibited 
drugs.
    Our strategic objectives in response to these marijuana 
ballot initiatives include, first, maintaining effective 
enforcement efforts within the framework of the Controlled 
Substances Act and the Food, Drug, and Cosmetic Act; second, 
ensuring the integrity of the medical-scientific process by 
which substances are approved as safe and effective medicines, 
just as the doctor has told us; third, preserving Federal drug-
free workplaces and safety programs; and fourth, protecting our 
children against increased marijuana availability and use.
    The Controlled Substances Act continues to prohibit the 
cultivation, distribution and possession of marijuana except in 
limited research situations. No existing State law that 
decriminalizes the possession and cultivation of marijuana 
affects or otherwise negates the application of any Federal 
law, including the Controlled Substances Act.
    As the State initiatives have taken effect, the Justice 
Department has continued to prosecute marijuana sales, 
cultivation and possession as it always has done. We evaluate 
the merits of an investigation on a case-by-case basis in order 
to enforce the Federal law and preserve the integrity of the 
medical and scientific process. For example, Federal 
prosecutors in California and the State of Washington have 
successfully prosecuted individuals for the unlawful 
cultivation and distribution of marijuana, despite the 
defendants having raised that the marijuana in question was to 
be used for allegedly medicinal purposes.
    Across the country in fiscal year 1998, 6,052 defendants 
were convicted and sentenced in Federal court for marijuana 
offenses as the primary offense, according to Sentencing 
Commission statistics. But enforcement of the Controlled 
Substances Act has not been limited to the criminal arena. In 
the aftermath of the passage of Proposition 215 in California 
in 1996, nearly 30 cannabis buyers clubs sprung up throughout 
California. These clubs engaged in the open distribution and 
cultivation of marijuana, and the Department developed a civil 
injunctive strategy as a measured response to the proliferation 
of these buyers clubs in California.
    On January 9, 1998, the Department filed suit against six 
cannabis buyers clubs located in the Northern District of 
California and 10 individuals associated with those clubs 
seeking preliminary and permanent injunctive relief. The 
Department's contention was that the ongoing distribution and 
cultivation of marijuana violated the Controlled Substances 
Act.
    On May 13 of 1998, the Federal District Judge granted the 
government's motions for preliminary injunction against the six 
buyers clubs and individual defendants, determining that their 
ongoing activities indeed violated Federal law.
    The judge entered preliminary injunctions against the six 
sets of defendants last spring, and four of those six clubs 
have closed. The litigation continues as to the others.
    In addition, the Department of Health and Human Services 
responded to California Proposition 215 by notifying California 
physicians that, despite the initiative, doctors providing 
patients with a recommendation to obtain marijuanarisked not 
only criminal prosecution but also revocation of their DEA prescription 
authority and exclusion from participation in Medicare and Medicaid 
programs.
    This course of action has been modified somewhat as the 
result of a physician's lawsuit in Conant v. McCaffrey in the 
Northern District of California challenging this policy, and 
the Government has been limited to taking actions only in those 
cases where, in our best assessment, there is probable cause to 
believe that the physician had the specific intent to aid and 
abet the distribution or purchase of marijuana or to conspire 
to do the same.
    In sum, the Department of Justice's position has been 
unless and until the medicinal value of marijuana can be proven 
based on scientific research conducted as the doctor has told 
us, marijuana cannot be sold, cultivated or possessed in the 
United States under Federal law. We believe that this is the 
correct course of action based upon current Federal drug law 
prohibitions.
    I thank you.
    Mr. Istook. Thank you, Ms. Warren.

                6,052 successful marijuana prosecutions

    I didn't see in your written testimony, I think you used a 
figure of 6,052 successful prosecutions for marijuana offenses? 
Is that the correct number? And in what time frame?
    Ms. Warren. Fiscal year 1998, and those are convictions and 
sentencing in Federal court where marijuana was the primary 
offense.
    Mr. Istook. Very good. I thank you, and I appreciate that 
information.
    Now, Ms. Lewis, I appreciate you deferring to the DOJ.
    Ms. Lewis. Mr. Chairman and Congressman Moran, thank you 
for your invitation to testify here today.
    As you know, Ms. Warren and I have submitted a joint 
written statement for the record and I know that will be 
included as a part of the record of the proceedings. I will 
proceed briefly to respond to that question orally.

           joint statement of department of justice officials

    [The prepared statement referred to follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        impact of marijuana legalization on D.C. law enforcement

    Ms. Lewis. In your letter of invitation to me, I was asked 
to testify regarding how the Legalization of Marijuana for 
Medical Treatment Initiative of 1998 would affect Federal and 
local law enforcement efforts here in the District of Columbia.
    Let me say first for the record, as we have said in the 
context of the joint statement submitted on behalf of the 
Justice Department, the United States Attorney's Office in the 
District of Columbia maintains an aggressive prosecutorial 
policy with respect to unlawful possession, distribution and 
possession with intent to distribute any narcotic or dangerous 
substance, including marijuana, both Federally and locally.
    With respect to the impact of the marijuana initiative on 
our Federal prosecutions, as Ms. Mary Lee Warren has stated, 
our Federal law enforcement efforts will remain unimpaired. It 
is in the District Court where we typically prosecute 
individuals associated with gangs or crews, as they are more 
commonly known here in the District of Columbia, who often use 
violence to further their marijuana-trafficking trade.
    In our local Superior Court, we seek to hold accountable in 
a variety of ways those who possess or traffic in marijuana. It 
is on this local level that the marijuana initiative, if it 
becomes law, would have its greatest impact in hampering law 
enforcement efforts to effectively prosecute those who engage 
in the illegal sale and use of the drug.
    In that regard, the Justice Department is currently taking 
a look at the initiative in terms of the potential legal and 
law enforcement ramifications that might result as well as its 
impact on the safety of the community.
    I would be pleased to answer any questions that you, Mr. 
Chairman, or any members of the Committee may have regarding 
our enforcement of the marijuana laws in the District of 
Columbia.
    Mr. Istook. I thank you very much, Ms. Lewis.

        local legalization Laws Divert Scarce Federal Resources

    Mr. Istook. Let me pose this question to Ms. Warren.
    You mentioned, of course, in your testimony not only the 
criminal litigation where people attempt to raise this as a 
defense, even though they are relying upon a local or State law 
rather than the Federal law, also the civil litigation against 
the so-called cannabis clubs and the efforts there. Would it be 
correct to say that even though these cannot override Federal 
law, nevertheless, they have caused extra work, taking some of 
the resources which we know are limited, that you are 
attempting to use, in drug prosecutions?
    Ms. Warren. That is correct. They certainly have taken time 
and resources away.
    Mr. Istook. Has anyone ever sought to quantify that? And I 
know it is hard to get everything down to dollars and cents, 
but has anyone sought to calculate how much more is it costing 
the taxpayers through the Department of Justice, through the 
DEA, through the other related Federal agencies, how much more 
is it costing?
    It is causing difficulty, it is causing confusion and 
causing extra work because of these so-called medical marijuana 
initiatives. What is it costing the taxpayers in dollars that 
ought to be going into direct drug enforcement or prevention 
efforts that are being diverted by these?
    Ms. Warren. We have not attempted to quantify, and I don't 
know if we could. As you have pointed out, it hasdrawn enormous 
precious resources that we have. The impairment is real and needs to be 
recognized.

                extra expense caused by conflicting laws

    Mr. Istook. I would appreciate it if someone could get a 
rough estimate of the quantity of those resources. I know that 
is an inexact task, but an effort would certainly be 
appreciated if you could put that in motion.
    Ms. Warren. Certainly, Mr. Chairman.
    [The following letter from the U.S. Department of Justice 
was supplied for the record:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

          secrecy provision of district's marijuana initiative

    Mr. Istook. Let me ask also, you mentioned that there is a 
revocation with different physicians of the DEA prescription 
authority which they have to be able to prescribe something 
that is a controlled substance.
    Now, you may have noticed one of the features of the 
initiative in D.C. is to grant confidentiality to physicians if 
they are asked to testify ``did you or did you not tell 
somebody that they ought to use marijuana,'' which obviously 
could lead them to some sort of liability under the Federal 
law, including their prescription authority.
    What effect does it have on your ability to investigate if 
someone tries to bring, say, in a criminal prosecution or any 
other legal proceeding, try to have that testimony not in 
public, not out in the open, as is normally the case in any 
sort of litigation, criminal or civil, but to have it behind 
closed doors with a guarantee of secrecy for what those 
physicians are doing? What is the impact on your ability to 
oversee the prescribing authority of doctors to ensure that 
they are following the applicable Federal laws?
    Ms. Warren. It would make our efforts more difficult. I 
believe we would be able to overcome it and be able to prove 
who had participated in this recommendation through different 
courses, but it would be much more difficult than the 
recordkeeping, as you pointed out, that is required for 
prescribing controlled substances, recordkeeping for the 
physician as well as for the drugstore, the pharmacy.

           recordkeeping trail undone in district's proposal

    Mr. Istook. Frankly, it undoes one of the central tenets of 
the Federal drug enforcement laws, and that is to require a 
recordkeeping trail when somebody is dealing with a legal 
application of a restricted substance?
    Ms. Warren. And the physicians' and the pharmacists' 
registrations are based on their appropriate handling of those 
substances according to the regulations.
    Dr. Vereen. Mr. Chairman, the issue of recordkeeping and 
being open and above board about medical interventions is a 
part of the standard practice of medicine. To do something 
under anonymity is not normal medical practice, and medical 
boards require the use of relevant records in order to make 
sure that its own physicians are practicing good medicine. So 
there is a policing issue within the body of medicine as well.
    Mr. Istook. So even though some persons attempt to say this 
is a medical issue and so-called medical marijuana, actually 
the whole procedure that they seek to set up in this initiative 
and others is contrary to the normal standards of medicine?
    Dr. Vereen. I give the example of cancer treatments.
    Mr. Istook. For the record, if you might say yes or no to 
the question.
    Dr. Vereen. Yes.
    In the example of cancer treatments, dangerous drugs are 
used to treat people who are terminally ill. Those treatments 
occur in the context of clinical trials when all alternatives 
have been exhausted. Those trials are set up with 
confidentiality, with full disclosure of the risks and 
benefits, and other doctors can use the information to decide 
what to do in the future. So it is done in an open and above 
board fashion.
    Mr. Istook. I thank you for that.
    I had one final question, but let me go to Mr. Moran.
    Mr. Moran. Well, thank you, Mr. Chairman.

    distinguishing between medical or recreational use of marijuana

    First of all, let me ask, I guess, Ms. Warren, if you had 
not gone after the doctors, couldn't you then have 
distinguished between the legally prescribed use of marijuana 
and the recreational use? In other words, wasn't it because you 
went after the doctors and intimidated them from prescribing 
that you then were able to crack down on anybody using?
    Ms. Warren. Frankly, we were responding to an inquiry 
request from the medical community, and our advice was to the 
California Medical Association. The doctors didn't know where 
the standard was because they looked at the new initiative and 
they also saw the Federal law, and they asked for clarification 
of where the line was. And the Department of Health and Human 
Services and the Justice Department responded.
    Mr. Moran. I think that the reason why we can't distinguish 
between prescribed use and recreational use is because it is 
legal for doctors to prescribe. We don't know whether it would 
be feasible to prescribe or not.

             quotes from institute of medicine (IOM) study

    Let me focus on the Institute of Medicine study, since this 
is what everybody is hanging their hat on, including you, Mr. 
Chairman, or at least you are hanging one of your hats on the 
viability of this IOM study.
    If I give a quote, I want you to tell me if it is wrong, if 
it is. In the press conference releasing this study, the 
principal investigator was Dr. John Benson. Did he not say and 
I quote, ``We concluded that there are some limited 
circumstances in which we recommend smoking marijuana for 
medical uses''?
    Dr. Vereen. Yes.
    Mr. Moran. He said that?
    Dr. Vereen. Yes.
    Mr. Moran. Is it not true in the study on page 70 that it 
says, ``The evidence is relatively strong for the treatment of 
pain and, intriguing although well established, for movement 
disorders,'' referring to marijuana?
    Dr. Vereen. Yes.
    Mr. Moran. Page 177, for patients such as those with AIDS 
or who are undergoing chemotherapy, and who suffer 
simultaneously from severe pain, nausea, and appetite loss, 
cannabinoid drugs--i.e., marijuana--might offer broad-spectrum 
relief not found in any other single medication?
    For the record, there is no refutation of these quotes, so 
if there is, I want you to say for the record that this is not 
an accurate quotation.
    Mr. Istook. Excuse me, are you asking him whether it is an 
accurate quotation from the document, or it is an accurate 
refutation of the facts as he understands them?
    Mr. Moran. I am asking if these words that I am reciting 
are not included in the record.
    Dr. Vereen. They are included in the report.
    Mr. Moran. I will proceed.
    Mr. Istook. That is fine.
    Mr. Moran. Because these are relevant statements.
    Mr. Istook. You are not asking him whether the statements 
are true, you are asking whether it is true that you are 
reading from a document and that is what the document says. 
Let's be fair. If the witness wants to disagree with the 
statements, let's give him an opportunity to do that.
    Mr. Moran. I am referring to the document.
    Mr. Istook. You are not asking whether he agrees with the 
statements.
    Mr. Moran. I am referring to the document, and the witness 
knows what is in the document.
    Let me continue with what is in the document.
    ``The profile of marijuana suggests that marijuana's 
effects are promising for treating wasting syndrome in AIDS 
patients. Nausea, appetite loss and anxiety are all afflictions 
of wasting, and all can be mitigated by marijuana.'' that was 
on page 159.
    On page 205 and 206, where it is referring to Marinol which 
is the form of marijuana in pill form, ``It is well recognized 
that Marinol's oral route of administration hampers its 
effectiveness because of slow absorption and patients' desire 
for more control over dosing.''
    On page 217, does it not say, ``From a scientific point of 
view, research is difficult on marijuana because of the rigors 
of obtaining an adequate supply of legal, standardized 
marijuana for study.''
    I point that out, Mr. Chairman, because people are saying 
``let's just do more study.'' It is saying that the problem is 
it is kind of a Catch-22. It is illegal to get the marijuana 
and to get it in controlled form.
    On page 5, does it not say, ``except for the harms 
associated with smoking tobacco, the adverse effects of 
marijuana use are within the range of effects tolerated for 
other medications.''
    On page 159, ``Terminal cancer patients pose different 
issues. For those patients the medical harm associated with 
smoking is of little consequence. For terminal patients 
suffering debilitating pain or nausea and for whom all other 
medications have failed to provide relief, the medical benefits 
of smoked marijuana might outweigh the harm.''
    So far these are all accurate statements, Dr. Vereen?
    Dr. Vereen. Yes.
    Mr. Istook. Let's be clear. Are you asking if they are 
accurate statements, or if you are accurately reading from a 
document?
    Mr. Moran. Okay, as long as I am accurately reading from 
this document; and if I am not, I want you to catch me on it.
    The document also says, does it not, ``Finally, there is a 
broad social concern that sanctioning the medical use of 
marijuana might increase its use among the general population. 
At this point, there are no convincing data to support this 
concern.''
    Also when we talk about whether marijuana is dangerous to 
be used as a medicine, on page 5 it says, ``Except for the 
harms associated with smoking tobacco, the adverse effects of 
marijuana use are within the range of effects tolerated for 
other medications.''
    And on page 159, ``Terminal cancer patients pose different 
issues. For those patients the medical harm associated with 
smoking is of little consequence. For terminal patients 
suffering debilitating pain or nausea and for whom all 
indicated medications have failed to provide,'' and this is 
repeating myself I know, but I want to emphasize this, ``the 
medical benefits of smoked marijuana might outweigh the harm.''
    This is the point that the citizens of the District of 
Columbia considered, and that is why we wanted to get this on 
the record. There are other points of view from those of the 
chairman and those of the majority, and they are even alluded 
to in this report.
    Page 6, ``Finally, there is a broad social concern that 
sanctioning the medical use of marijuana might increase its use 
among the general population. At this point, there are no 
convincing data to support this concern.''
    Mr. Chairman, I have a number of other quotes that address 
every issue that has been raised. And Dr. Vereen, Ms. Lewis and 
Ms. Warren can take issue with those, but the point is that 
studies have shown that there are different points of view. I 
think that the facts show that there is no proven case study 
where the medicinal use of marijuana actually increased the use 
of other illegal drugs.
    I have got lots of stuff that has been sent to me to show 
that, and they appear to be very reputable studies. And it also 
been shown that when you are dealing in some limited 
circumstances such as Dr. Benson, the principal investigator 
for the Institute of Medicine report referred to, in those 
limited circumstances they would recommend smoking marijuana 
for medical uses.
    Now, I wouldn't recommend smoking marijuana necessarily 
without knowing what its effects were, and I certainly wouldn't 
have before this hearing, but after looking at the evidence, I 
can certainly find reason to respect those people who feel that 
it has a constructive purpose.
    I would want to be the last person to judge and certainly 
in a self-righteous--I wouldn't want to judge in a self-
righteous way people who are terminally ill from AIDS or cancer 
or other tragic diseases who choose to use this form of relief 
from pain, from nausea, and from loss of appetite.
    So again, Mr. Chairman, the only point I am trying to make 
is that there are different points of view here. There might be 
sufficient cause to tolerate a different point of view, 
particularly when it is expressed by a democratic majority in 
the democratic country that prides itself on democracy and 
where you have a D.C. City Council, which wouldhave had 
authority to implement the law and determine whether it is appropriate 
to implement.
    With that, I yield back the balance of my time, which is 
absolutely zero.

                     Local Option Relating to Drugs

    Mr. Istook. I certainly would suggest, Mr. Moran, to you or 
anyone else that thinks that we ought to enable jurisdictions 
to enact these laws if they so choose, then I think an 
intellectually honest approach would be that you should propose 
a repeal of the Federal laws on the same. If you want to make 
this purely the local option issue rather than a national 
policy issue when it comes to regulating drugs, having an FDA 
to approve what is effective or proper or not and having--gosh, 
we could do away with a whole Federal law enforcement network 
if we didn't have any laws relating to drugs, if we went to 
local option purely.
    Mr. Moran. I never claimed to favor States' rights over 
Federal rights. I think there ought to be a balance.
    Mr. Istook. I absolutely agree, which is what I think the 
national drug laws have certainly sought to achieve.

               Dr. Vereen's Response to Quotes from Study

    Let me ask you, in fairness to Dr. Vereen, because Mr. 
Moran asked you if he was correctly reading statements from a 
document. That did not give you an opportunity to say whether 
you agreed with those statements. Certainly I know you 
testified previously that you would not recommend smoking 
marijuana in order to receive THC or any other drug, that for 
medicinal purposes there are more efficacious and superior ways 
to do it.
    So I want to give you the opportunity if you wish to 
comment on the things that Mr. Moran was reading, because I 
would not want anyone to mistakenly put those words in your 
mouth just because you agreed that he was correctly reading 
from a document that he had in front of him.
    Dr. Vereen. This is the document, not the individual pages, 
not the individual words or the individual facts that you 
outlined.
    I, with all due respect, would say we don't have a 
difference in terms of point of view. Everything that you 
mentioned is clear. That was the purpose of this document.
    Mr. Moran. Those were all accurate statements?
    Dr. Vereen. Yes. What was missing was the context. The IOM 
did more than collect facts. The IOM pulled the facts together 
and then painted a picture for us.
    Now a lot of the picture is already known in medicine. The 
reason that a lot of these alternatives are not used is that 
there are so many better alternatives. That is why. There are 
many other medications to treat emesis. There are many other 
medications to treat pain. Some of them are abusable.
    The opiates are the most efficient pain medicines that we 
have out there. THC is not a first-line treatment for pain. At 
best at this point in time, it is an adjunct. It can be used as 
an adjunct.
    Recently, we have discovered THC receptors in the brain. 
That is one of the reasons that THC has an effect on the brain. 
That tells us that perhaps some variant of the THC molecule 
could be used and perhaps might be more efficient than opiates. 
That is why we do the research.
    Many of the things that you mentioned leave out important 
concepts like route of administration. We have shown that the 
power of science can get us into the plant and pull out the 
parts that we can actually use. Put them in a form that is 
measurable and used in a very powerful way. But why isn't 
dronabinol used more often, when you compare it for other 
medications for all of the things that you mentioned? I can run 
through the list--glaucoma, anagesia, nausea, wasting--except 
for wasting syndrome, and multiple sclerosis, there are so many 
other alternatives.
    Medicine knows that, and this report documents that. It 
puts it in a perspective. Should we be doing more work, yes. 
That doesn't mean that the story is finished at this point in 
time.
    So I think I have made the point. I am not in disagreement, 
but context is important. Context is critical.
    Mr. Moran. It is critical. If the chairman would yield?
    Mr. Istook. Yes.

                Marijuana Considered a ``Gateway'' Drug

    Mr. Moran. In the report, and it concludes, and I think 
this is appropriate context, the principal reason that it is 
considered a gateway drug is not its addictive capacity, but 
the fact is that it is illegal. And the fact that it is 
illegal, one gets into the use of using more harmful illegal 
drugs, and I do think that it is within this context to suggest 
that marijuana in and of itself is not a substantially 
dangerous drug. It is not that you don't recommend, except 
under some limited circumstances. That is not out of context. 
And I think that is the fair description of the report.
    I don't refute the fact that there are a lot of reasons 
mitigating against recommending marijuana, but I think to give 
a balanced context to the report, because it is a fair report, 
one could make the point that it ought not be that we shouldn't 
be investing the resources that we are necessarily in marijuana 
compared to other illegal substances, and that in some cases it 
has some medical therapeutic effect.

                          Alcohol and Tobacco

    Dr. Vereen. To round out the context, alcohol and tobacco 
are the two most abused drugs by children.
    Mr. Moran. And you can make a case worse than marijuana.
    Dr. Vereen. Perhaps. But those are the three most commonly 
abused drugs by kids, and we pay a huge societal price for 
alcohol and tobacco abuse already.
    Mr. Moran. I totally agree in terms of alcohol.
    Dr. Vereen. There is enough evidence to say we do not want 
to increase the availability of a substance that is already 
illegal and in the plant form does not offer any medicinal 
value. The value is within the plant. The value is within the 
plant. It is the constituents of marijuana that is important. 
That is what science gets for us.
    Mr. Istook. I thank you.
    Let me pose one final question, and I appreciate your 
comments, Dr. Vereen.

      Problems Caused by Conflicting Local, State and Federal Laws

    Ms. Warren, realizing that drug enforcement is an 
interlocking network of local, State and Federal law 
enforcement officials and there is necessarily a lot of 
communications and referrals, a lot of joint efforts in this, 
when you have the jurisdictions that have sought to legalize 
marijuana, even though you have correctly noted that does not 
do away with the Federal law nor the Federal prosecution, do 
you find, however, that because of the confusion or whatever 
local policy may be, that this diminishes the case referrals on 
drug violations that come to DOJ from that jurisdiction or in 
any other way impairs that working relationship because now 
there is this conflict between the State and the local and the 
Federal laws?
    Ms. Warren. I don't believe that we have seen any 
diminution in case referrals just because we have so many, but 
it certainly does create confusion. In many, many localities, 
our Federal agents work in task forces with theState and 
Federal officers, and it becomes a decision in California, are you 
investigating under State law or Federal law in a particular arrest? 
And it can be very confusing, and they have sought assistance at the 
U.S. Attorney's Office for advice on how to handle those situations.
    Mr. Istook. I appreciate that. I know that is a part of 
what I requested earlier about what is the extra expense that 
is basically generated by the difficulties that this creates.

    [CLERK'S NOTE.--See pages 1200-1202 for discussion and 
material referred to.]

    Mr. Istook. I very much appreciate the testimony by each of 
you. It has been very enlightening and helpful, and we 
certainly thank you for it.

                             final witness

    We have one final witness on the third panel appearing at 
the request of Mr. Moran. He is Keith B. Vines, an Assistant 
District Attorney for the City of San Francisco.
    Mr. Vines, please come forward. I believe you took the oath 
earlier.
    Mr. Vines. Before I get started, Mr. Chairman, I flew in 
last night from San Francisco, and I got in kind of late, so 
bear with me. And I was wondering, since I feel like I am in 
the minority, I was wondering if I could have a little more 
than 5 minutes to cover some of my points.
    Mr. Istook. We will see how it goes. We want to try to keep 
within that time frame because it is stretched out already. We 
are not trying to be totally strict.

                  Opening Statement of Keith B. Vines

    Mr. Vines. First of all, I thank you, Mr. Chairman, 
Congressman Istook, and Minority Ranking Member Moran for 
allowing me to be here today and testify.
    I would like to start out and say that my involvement here 
is not part of any step to legalize marijuana or any other 
drugs, for that matter. I am not part of any vehicle or 
subterfuge to legalize marijuana. I want that stated very 
clear. Some have mentioned that--I think the chairman discussed 
that in some ways in his opening statement with regard to 
Proposition 59.
    I want it clear for the record that it is my humble opinion 
that California's Proposition 215 and indeed my reading of the 
District's Proposition 59 is clearly not a step towards 
legalization of marijuana. That is my interpretation of it, 
with all due respect, Mr. Chairman.
    Please understand that people like me who suffer from AIDS, 
specifically the AIDS wasting syndrome, and I will talk about 
that in a little more detail, needed at the time medicinal 
marijuana not to get high but to stay alive, simply put, and to 
be healthy.
    I am a former captain in the Air Force, member of the JAG 
Corps, honorably discharged with appropriate commendations, the 
highest ratings. I was proud to serve my country in that 
capacity when I did.
    I currently, since 1985, have been a prosecutor for the 
City and County of San Francisco; and, as my statement points 
out, I have prosecuted the gamut of cases. And specifically for 
a period of time from 1989 to 1991, I was involved very 
vigorously in prosecuting the drug cases and specifically was 
selected--you had to be on the Drug Task Force, which was a 
Federally funded program, to prosecute those very big cases.
    In fact, I prosecuted successfully the second largest drug 
bust in San Francisco history, involving 400 pounds of bricked 
marijuana.
    I'm proud of those accomplishments. I support the drug laws 
and I'm not here in any way to say that we should legalize 
marijuana or any other drugs under the laws. With regard to my 
story, it's covered in my statement. I'll make it brief.
    Unfortunately, I have AIDS. And unfortunately, part of 
that, one of the side effects that you can get which I got--I 
seem to catch them all--was wasting syndrome. I lost 45 pounds. 
You wouldn't know it from looking at me today. But I withered 
away. And I couldn't sit in a chair, I couldn't really get on a 
scale, I was terrified. I was told I was going to die and 
essentially got on a study through the--which is now FDA 
approved for growth hormone, and I was told the only way to 
have that drug work was I had to fuel it with eating a lot of 
food. And I had no appetite. And with wasting syndrome I have 
no appetite. I challenge anybody to eat three meals a day when 
you have no appetite and especially the kind of meals that my 
doctor was recommending that I eat. It was impossible.
    So the first thing we tried was Marinol. What Marinol is, 
my understanding as a lay person, is nothing more than a 
marijuana pill. It has the THC drug compound and the purpose of 
that pill was to hopefully stimulate my appetite. But it didn't 
work for me, as I found out through my own research that it 
hasn't worked for many others. It worked too much. It wiped me 
out for 4 or 5 hours. And in fact it didn't stimulate my 
appetite. And so, I was left again with a wasting away and what 
was I going to do to stimulate my appetite.
    It was at that point that my physician discussed with me 
the risk, the benefits and the alternatives of considering 
smoking marijuana. That put me in a very awkward position 
considering how I feel about drugs. But, as a patient who is 
dying, when my physician said that this drug for medicinal 
purposes might save your life, might give you the appetite so 
that you could fuel the growth hormone and come back to life, I 
chose to live. And it worked. And I now continue to be a 
productive member of the staff of the City and County of San 
Francisco. And I'm proud of that.

            Recommendation of DEA Chief Administrative Judge

    I heard a lot of people--I don't mean to say everybody--say 
that we need more research on the issue of whether or not 
marijuana for medicinal purposes is safe and effective. I think 
it's very interesting because I'm a prosecutor and one of the 
things I like to do as a prosecutor in my cases is I like to be 
prepared. So in getting involved in this whole big issue, I 
tried to geteducated as best I could. One of the things I found 
very interesting is in 1972, the DEA was petitioned to move marijuana 
from a Schedule I drug to a Schedule II drug. And their chief 
administrative judge by the name of Frances L. Young, after 2 years of 
medical testimony--now this is back in 1988 and here we are almost in 
the millennium, she ruled that marijuana in its natural form--and I'm 
quoting--``is one of the safest therapeutically active substances 
known.'' and she recommended that the Control Act should be changed and 
it should be transferred, marijuana, from Schedule I to Schedule II.
    Now, we hear arguments being made that we should leave it 
to the process. Well, you had a recommendation from their chief 
administrative judge to the DEA. And what did the DEA do? Did 
they follow that recommendation? Did they pay attention to the 
2 years of medical evidence? No. In fact it required an 
appellate decision to say the DEA had a right to ignore that 
decision, which the DEA did and to this date has. So that 
leaves patients such as myself and providers in a quandary. It 
seems to me there's more than sufficient evidence out there.

                     institute of medicine's report

    We've heard I think testimony today, quoted from a number 
of sources of the Institute of Medicine's March report, and I 
summarize a lot of that but I think it's clear that there is 
substantial consensus among the scientific experts that there 
is a medical use, a medicinal use of marijuana. And for 
terminally ill patients or those with deliberate symptoms, the 
one risk that we hear about is smoking. Well, you know, when 
you're facing death and you're weighing the risk and benefits 
of maybe smoking a couple of puffs of marijuana to stimulate 
your appetite, facing versus wasting away, what did you think 
the kind of decision you would make or, if asked, you would 
make if you had to sit down and talk to a family member about 
it. In the meanwhile what do patients such as myself do if we 
wait around for the system to do something about it.

                            ``marinol'' pill

    At any rate, I think the evidence has been substantial that 
there is a medicinal use of medical marijuana. And that 
although we have a Marinol pill, there are problems with that. 
And I think that's been pointed out in a number of reports with 
regard to the time it takes to work, how long the effect, too 
little, too much, and it's not predictable and so forth and so 
on. And I have found quite frankly that using the inhaled 
medicinal marijuana has--was helpful for me. It really did make 
a difference. It really saved my life.
    The Physicians Desk Reference has about 3,000 drugs and 
certainly the PDR doesn't just recommend one drug for one 
symptom. They recommend many alternative drugs that physicians 
consider with their patients in trying to deal with a 
particular health issue. And this is a health issue.

                          ``gateway'' drug use

    And it's a treatment issue. And one of the other issues 
that came up I hear, and I know this is raised many times, is 
what message are we sending to our children, you know.
    First of all, on the issue of the gateway drug issue, the--
I think that the Institute of Medicine's report in March of '99 
is my reading of it, my interpretation of it and I had some 
quotes and I'm not going to bore the committee with quoting all 
that now because I think that's been raised appropriately, but 
I will quote this. It says, ``The existing data are consistent 
with the idea that this would not be a problem if the medical 
use of marijuana were as closely regulated as other medications 
with abuse potential.''
    And it's clear that there is no conclusive evidence that 
marijuana is a gateway drug to illicit drug use. ``no 
conclusion of evidence'' was I think the language from the 
Institute of Medicine's report.

             mr. vines' personal opinion on california law

    Concerning the issue of the law, it was my--and what has my 
experience been in California where we passed Proposition 215 
in November of '96? What happened? What's my experience been as 
a prosecutor? What can I report to this Committee? Again, this 
is my personal opinion of my interpretation of what happened. 
So take it for what it's worth. But, I have found that despite 
the outcries of concern that I hear that it's going to open the 
doors to legalizing marijuana and that we're going to see a lot 
of abuses and a lot of expenses and so forth and so on, 
surprisingly in California that's not been the case.

           decline in teenage use of marijuana in california

    In fact, statistically, and I know that's been mentioned I 
think by Congressman Moran, the statistics show opposite. We've 
had decline in teenage use of marijuana. And I may be incorrect 
in that, I see a smile from Chairman Istook. So if I am, please 
correct me. But my experience and the feedback that I'm getting 
is that Proposition 215 has not created some sort of gateway 
opportunity for people to illegally obtain marijuana. The 
purpose of Proposition 215 as with Proposition 59 is to provide 
legitimate medical needs for medicinal purposes for marijuana 
when you have a seriously ill patient and you have--in 
California, we want a recommendation from the physician.

                 physicians cannot prescribe marijuana

    Now, somebody talked about prescription. You cannot 
prescribe medical marijuana. Why? Because the Federal law 
clearly says it's a Schedule I drug. Now, if the DEA wants to 
change all that, we wouldn't even have to be here. It could be 
a Schedule II drug. It could be just like the Marinol pill. It 
could be something that's done between patients and physicians. 
But that's not the way it is right now. So we're left in limbo. 
And I think that's many reasons why the compassionate voters in 
many states, including California, have stood up and said, 
``look, we need to do something for these patients who are 
suffering serious illnesses and need treatment,'' albeit maybe 
they're not right for everybody, but if a physician thinks it's 
appropriate, we should respect that. Because proposition 215 as 
with Proposition 59 allows seriously ill patients to use 
marijuana without arrest. We're talking about state level. I 
realize that we're still subject to Federal law, you know, 
technically the police could arrest people for possessing 
marijuana, for cultivating marijuana in California or any of 
these other states and they have a right to do that if they 
choose to do that. Those are the prosecutorial decisions that 
they should make in accordance with their policies around that.

               medicinal marijuana process in california

    But as far as Proposition 215 goes, each jurisdiction, at 
least in San Francisco and Oakland and San Jose when 
Proposition 215 was passed they didn't just sit back and say, 
you know, we don't want to do anything about this, we didn't 
like it, we're going to ignore it. The Department of Health, 
the police department sat down with the DA's offices and said 
this is the will of the people, let's make it work. And they 
did. They set up safeguards. Yes, safeguards. Do you know what 
I had to do to get medicinal marijuana, Mr. Chairman? Did I get 
to just walk into a buyers club and say, hi, how about a joint? 
It didn't work like that. They came over to my house, they met 
me. They wanted to see that I was a seriously ill patient. I 
had to provide documentation that Ihad AIDS. That was verified 
as far as I know. Furthermore, they wanted to see there's a 
recommendation from a physician that medicinal marijuana is appropriate 
in my particular situation. Now, that is a safeguard. It may not be a 
perfect safeguard but it was a safeguard. It made me feel good as a 
prosecutor that they were checking me out.
    Thank you, Mr. Chairman. I know I'm over my alloted time 
here. I'll try to wrap it up. I appreciate your patience.
    Now in July of '99 there was a task force, actually in 
Sacramento, to implement 215 and the health committee passed by 
a 9 to 4 vote on July 13th SB 848. It establishes a whole--a 
system for registration, safeguards and so forth that would be 
used throughout California to be consistent with the will of 
the voters. That is a way to provide seriously ill patients 
medicinal marijuana with appropriate safeguards. And I believe 
that this--that 848 will pass and so we'll have some uniformity 
throughout the state. But I believe in the interim, the 
proposition has worked and I don't think we've had some of 
the--some of the concerns that I think were legitimate did not 
come to pass, I'm happy to say.

                   conclusion of mr. vines' statement

    And in closing, I would just like to refer to my statement, 
if I may. I agree that this Nation needs an effective war on 
drugs. But I think it's an outrage with all due respect, Mr. 
Chairman, that some have thought that this war ought to extend 
to seriously ill patients. Because right now, seriously ill 
patients without the states that have passed the propositions 
are subject to prosecution and arrest. We have enough to deal 
with in our lives without worrying about whether our doors are 
going to be busted down and whether we're going to be arrested 
for having a small quantity of marijuana. So, let's keep it to 
a war on drugs for people that are doing it for recreation, 
doing it illegally, inappropriately, and not for seriously ill 
patients who are doing it under the guidance and privileged 
protections and recommendations of their physicians. And I 
thank you for allowing me to have the extra time. I hate to 
think how much further I went, but thank you, Mr. Chairman.

                  prepared statement of keith b. vines

    [The prepared statement of Keith B. Vines follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Istook. Frankly, I wasn't keeping track. It was 
significant but that's okay. I appreciate that. Since you're 
here of course at the request of Mr. Moran, I would like to 
extend him the courtesy if he would like to pose any questions 
he has first.

          congressman moran's remarks on mr. vines' testimony

    Mr. Moran. Thank you, Mr. Chairman. I think Prosecutor 
Vines' statement speaks for itself. I have had my mind opened 
by this situation. I guess I have you to thank for it, Mr. 
Chairman, because had you not----
    Mr. Istook. You're saying I've been a mind expanding 
experience? Is that what you're saying?
    Mr. Moran. It's been an enlightening experience and I have 
you to thank for it, Mr. Chairman, because if you had not been 
so intransigent on this issue and worked with Mr. Barr to 
ensure that it would be part of this bill I never would have 
gotten involved in this. But having gotten involved, I have 
learned some things that I never would have believed, that the 
public is certainly not aware of. For example, the 
administrative law judge's determination after 2 years of study 
that marijuana was not the dangerous drug that it is described 
as, but in fact, is relatively safe and can be therapeutic, I 
never knew that. I never would have believed that there was a 
recommendation from FDA to treat it like other prescribed 
substances that can relieve pain. I never would have 
particularly gotten involved or taken seriously the medical 
marijuana initiative that D.C. undertook, and yet I can see 
that this was a thoughtful response to a serious situation. 
D.C. has one of the worst AIDS crises of any urban area, and 
that is why they have taken the lead in terms of the free 
exchange of needles and because they know it has worked in 
other cities, and why their voters are trying to take the lead 
in terms of allowing doctors to suggest that there may be some 
benefit to smoking marijuana.
    And I never would have come across somebody like Mr. Vines, 
who is not just articulate, but speaks from the heart as well 
as the mind and from experience. This is a credible individual. 
It is obviously tragic that you have contracted AIDS because 
you have so much to contribute to our society and to our legal 
system. And you have proven that by your experience. And you 
have the courage to come all the way from California, fly here, 
sit down as the only witness who was willing to go against the 
grain, and in an articulate manner describe exactly why we 
should be going against the grain and why we should have the 
courage to stand up for facts, not prevailing opinion.
    And that's why I think that this request to simply respect 
the majority view of the District of Columbia voters is not an 
unreasonable one and why this should not be part of the D.C. 
Appropriations bill but should be considered separately by the 
Judiciary Committee, where the Judiciary Committee can get this 
kind of testimony. This needs to be understood by far more 
people than are ever going to come into contact with the 
information that people like Mr. Vines are willing to share.
    We've got a long ways to go, Mr. Chairman, in terms of 
trying to relieve pain and suffering and act in the most 
responsible manner. And when we are burdened by what people 
might say or think or what prevailing opinion is, we're not 
likely to move forward, we're more likely to move backward.
    You know, I think it was Plato who said that the minority 
are oftentimes wrong but the majority always are. Well, on 
something like this where public opinion is so strong, and may 
be so wrong, this hearing was constructive. And I appreciate 
the fact that you gave us the opportunity. And again, I will 
conclude my statement by saying that Mr. Vines' statement 
speaks for itself.
    Mr. Istook. Thank you, Mr. Moran.
    Mr. Vines. Thank you, Congressman Moran.
    Mr. Istook. I certainly appreciate your comments and 
certainly if you feel that that's your position, you know, you 
may wish to propose this for the people in Virginia. I don't 
know. I'm certainly not prepared to do so in Oklahoma.
    Mr. Moran. I'm not surprised.

           dea chief administrative law judge recommendation

    Mr. Istook. I would say, frankly, that the fact, if itis a 
fact, and I frankly don't know, whether an administrative law judge 
made a recommendation to the DEA.
    Mr. Vines. That is fact.
    Mr. Istook. Whichever. But the point is the recommendation 
of the administrative law judge is far different from the 
position of an agency and certainly as you indicated in your 
testimony, whatever was the underlying situation, when someone 
chose to try to say to the courts that the administrative law 
judge ought to be determining how this issue is to be resolved, 
the court said no. So I think that was very clear there.

       question of decline in teenage marijuana use in california

    I did note you mentioned in your oral testimony something 
about I believe you called it a decline in teenage marijuana in 
California. Certainly we're aware that there is an increase of 
teenage marijuana use nationally. I know your written testimony 
didn't say there was a decline in California, it just said that 
whatever it is, it's still lower than the national average. I 
honestly don't know which it is but that's the reason I noted 
that part of your testimony, Mr. Vines, and I appreciate that.

              no dissenting vote on marijuana restriction

    I would mention I find it very interesting that the 
particular amendment that was on the D.C. Appropriations Bill 
had not a single dissenting vote when it was presented to the 
House of Representatives. Every Member of the House had the 
opportunity to say no to the amendment that Mr. Barr offered. 
Every Member of the House had the opportunity to request a 
recorded vote. Not Mr. Moran nor anyone else chose to do so. So 
it was adopted unanimously by the House of Representatives as 
opposed to the agenda, as some people may say, of any 
particular individual. There was no dissenting vote in the 
House.
    Mr. Vines, I'm certainly pleased, as I know everyone is, 
that your condition is although not good, at least better than 
it was at that time.
    Mr. Vines. Thank you, Mr. Chairman.

               Mr. Vines' testimony--personal or official

    [CLERK'S NOTE.--See page 1224, this volume.]

    Mr. Istook. Do I understand correctly your testimony is 
personal, it's not official on behalf of the prosecutor's 
office in San Francisco.
    Mr. Vines. Well, let me state this in response if I may.
    Mr. Istook. Certainly.
    Mr. Vines. Before I got involved in this and I was asked to 
join the lawsuit against the Federal government, the class 
action suit when the ballot 215 was passed in November, the 
Federal government came out with certain statements that some 
people characterized as threats against physicians for merely 
recommending marijuana. A lawsuit was filed. I was asked to be 
a member of that suit. And actually that case is in Federal 
court. And Judge Fern Smith, who, by the way I mean this with 
all due respect, I prosecuted my first felony case in front of 
her, I think she's wonderful, I have some great stories about 
that, especially all my faux pas, but she ruled in a 50-page 
opinion that essentially the threats by the Federal government 
to take action against physicians for merely recommending 
marijuana--and again I'm paraphrasing, and I have the decision 
but I wouldn't dare bore everybody with that--but essentially 
it's a violation of freedom of speech, violation of the 
privilege of patient-physician relationships and she issued an 
injunction against the Federal government.
    So this is in California. But I suspect that if such action 
were taken in D.C. we'd see a similar class action and I 
wouldn't be surprised if we would see, in my opinion, similar 
rulings by the Federal court. That case is still pending.
    Mr. Istook. I have to agree, Mr. Vines, I'm never surprised 
at what an individual judge may do, whether it be an 
administrative law judge or a U.S. District Court judge. We've 
seen a lot of differences, as we all know, between judges, the 
ruling of an individual judge and what ultimately happens on 
appeal. As fellow attorneys we're both well aware of that.

       appellate court overruled injunction by california courts

    Mr. Vines. I'm just stating what the current status of the 
case is. It was very interesting that the attorney I believe up 
here was talking about the pending--about the action that was 
taken in California. And the attorney forgot to mention that 
that case, essentially an appellate court overruled the 
injunction by the California courts. I thought that was 
interesting that lawyer forgot to mention that fact to this 
Committee. But let me set the record straight on that. So again 
you never know what is going to happen on appeal.

            prosecutor treated differently by cannabis clubs

    Mr. Istook. You never do. And you know, Mr. Vines, we 
appreciate your coming forward. I notice because I'm aware that 
the Department of Justice was able to have a number of the 
cannabis clubs closed because they were not applying even 
minimal standards I'll say. I can appreciate that when a local 
prosecutor went to one of them, they made sure that they tried 
to dot the I's and cross the T's. I certainly wish that they 
were that diligent in every instance. I'm sure as a prosecutor 
you feel the same way.
    Mr. Vines. As I said, my experience was and the feedback 
I'm getting was that that's overall what's been occurring in 
California. The clubs wanted to make it work and in a way that 
is consistent with Proposition 215. They don't want to be in 
hot water with the law. I'm not saying there is not exceptions 
or problems out there.
    Mr. Istook. Which is why a number of them have been closed 
by legal action.
    Mr. Vines. I'm not sure whether I can answer yes or no to 
that. I don't know the particulars.
    Mr. Istook. Certainly. That's what, for example, the 
Department of Justice was testifying to earlier as well as the 
Drug Enforcement Administration.
    Mr. Vines. They're doing their job, they should be.

         dr. vereen not available to comment on medical issues

    Mr. Istook. Certainly. They certainly should. And I'm sorry 
that we don't have the opportunity to further ask Dr. Vereen 
about the assertions you made on particular medical issues. 
Neither you nor I are physicians. And it would have been 
interesting to hear his comment, although I believe he frankly 
covered the issues as to the necessity or non-necessity of 
those.
    We do appreciate your taking the time to testify. We 
appreciate your being here.

           california law has not obstructed law enforcement

    Mr. Moran. Mr. Chairman, may I make one last comment. I do 
think that Mr. Vines' testimony showed that at least in this 
situation, in California, in San Francisco, we have evidence 
that this has not obstructed the enforcement of drug law 
policy. And that was a critical issue. I think Mr. Vines' 
statement, when I said it speaks for itself, I think it was 
clear that it has not obstructed let alone negated enforcement 
of existing drug law policy as it relates to the truly abusive 
and properly illegal drugs.
    Mr. Istook. I appreciate the comments and I do have a copy 
of the court orders that have been issued in San Francisco 
against clubs there that were operating illegally,that were not 
complying with the law. But I don't want to get going back----

               mr. vines' testimony--personal or official

    [CLERK'S NOTE.--See page 1223, this volume.]

    Mr. Vines. You know, Mr. Chairman, I didn't answer your 
question, your first question to me, the capacity in which I 
come and testify----
    Mr. Istook. Personal as opposed to official.
    Mr. Vines. I have talked about me getting involved in the 
case. I actually sat down with my boss Terrance Hallohan, the 
newly elected district attorney of City and County of San 
Francisco, with the lawyers and lawsuit and I laid everything 
out, told them my story, my involvement and I said I in no way 
want to embarrass this office or you. And his response to me--
I'm paraphrasing--was ``Keith, I'm behind you as a prosecutor. 
I think you're taking an appropriate position and I support you 
and go for it.'' So I don't know whether that means that I've 
got the official stamp okay, but I think I'll still have my job 
when I go back to San Francisco tomorrow.
    Mr. Istook. Well, I understand, and I can only imagine 
there would be other lawyers that got real busy if you didn't. 
I appreciate that. Thank you so much, Mr. Vines.

                         conclusion of hearing

    Thank you, Mr. Moran. I appreciate everyone's attendance. 
This hearing is concluded.

                   prepared statement of jeff brandau

    [CLERK'S NOTE.--The following statement was received from 
Jeff Brandau, President of the National Alliance of State Drug 
Enforcement Agencies (NASDEA):]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

      Chairman Istooks' Prepared Statement and Letter to Witnesses

    [CLERK'S NOTE.--The prepared statement of Chairman Istook 
and a copy of the invitation sent to witnesses for this hearing 
follow. The same invitation went to the U.S. Attorney General, 
Janet Reno; General Barry McCaffrey, Director of the Office of 
National Drug Control Policy; Donnie Marshall, Acting 
Administrator of the Drug Enforcement Administration; Wilma 
Lewis, the U.S. Attorney for the District of Columbia; Chief 
Charles Ramsey of the Metropolitan Police Department; William 
Lockyer, Attorney General for the State of California; and 
Keith Vines, Assistant District Attorney for the City of San 
Francisco.]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


[LIST OF WITNESSES OMITTED]

[INDEX OMITTED]