[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]




                  DISTRICT OF COLUMBIA APPROPRIATIONS

                                FOR 2002

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS
                              FIRST SESSION

                                ________

           SUBCOMMITTEE ON DISTRICT OF COLUMBIA APPROPRIATIONS
                   JOE KNOLLENBERG, Michigan, Chairman
 ERNEST J. ISTOOK, Jr., Oklahoma     CHAKA FATTAH, Pennsylvania
 RANDY ``DUKE'' CUNNINGHAM,          ALAN B. MOLLOHAN, West Virginia
California                           JOHN W. OLVER, Massachusetts   
 JOHN T. DOOLITTLE, California
 JOHN E. SWEENEY, New York
 DAVID VITTER, Louisiana            
                          
 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 Assistant

                                ________

                                 PART 1
                             (Pages 1-1638)
                                                                   Page
  Schools (Including Public Charter Schools)......................    1
 Corrections; Federal Bureau of Prisons; Court Services and 
Offender Supervision; Public Defender Service; and U.S. Marshals 
Service...........................................................  169
 Public Safety and Justice........................................  317
 Economic Development in D.C......................................  633
 Management Reform Initiatives....................................  865
 Housing and Environmental Issues in D.C.......................... 1099
 Budget for FY 2002............................................... 1393

                                ________

         Printed for the use of the Committee on Appropriations

                                ________

                     U.S. GOVERNMENT PRINTING OFFICE
 77-733                     WASHINGTON : 2002



                         COMMITTEE ON APPROPRIATIONS

                   C. W. BILL YOUNG, Florida, Chairman

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

                                  (ii)




                             C O N T E N TS

                               __________

                         PART 1 (PAGES 1-1638)

            1. Thursday, March 29, 2001, Room 2362, Rayburn

                                                                   Page

Pulic Schools (Including Public Charter Schools).................     1
    Superintendent of D.C. Public Schools
    D.C. Public Charter School Board
    D.C. Credit Enhancement Committee
    D.C. Tuition Assistance Grant Program
    U.S. Army Corps of Engineers

             2. Tuesday, April 3, 2001, Room 2362, Rayburn

Corrections and Related Agencies.................................   169
    Federal Bureau of Prisons                                          
    Court Services and Offender Supervision
    Public Defender Service
    U.S. Marshals Service

            3. Wednesday, April 4, 2001, Room 2362, Rayburn

Public Safety and Justice........................................   317
    D.C. Courts
    Metropolitan Police Department
    D.C. Fire and Emergency Medical Services Department
    D.C. Corporation Counsel
    U.S. Attorney for the District of Columbia

         4. Thursday, April 26, 2001, Room H-140, U.S. Capitol

Economic Development in the District of Columbia.................   633
    Greater Washington Board of Trade
    Deputy Mayor for Planning and Economic Development
    National Capital Revitalization Corporation
    D.C. Chamber of Commerce
    D.C. Public Housing Authority

          5. Wednesday, May 16, 2001, Room H-140, U.S. Capitol

Management Reform Initiatives....................................   865
    U.S. General Accounting Office
    Deputy Mayor/City Administrator
    Chief Financial Officer
    Chief Technology Officer
    Personnel Director
    Procurement Officer

                                 (iii)

                                   IV

          6. Thursday, May 17, 2001, Room H-140, U.S. Capitol

                                                                   Page

Housing and Environmental Issues in the District of Columbia.....  1099
  Housing Issues.................................................  1099
    Deputy Mayor for Planning and Economic Development
    Department of Housing and Community Development
    D.C. Housing Finance Agency
    D.C. Office of Environmental Health
    D.C. Housing Authority
    Metropolitan Washington Council of Governments

Environmental Issues.............................................  1219
    U.S. Environmental Protection Agency
    D.C. Water and Sewer Authority
    Office of the Mayor
    D.C. Office of Environmental Health
    U.S. National Arboretum

             7. Wednesday, May 23, 2001, Room 2362, Rayburn

Budget for FY 2002...............................................  1393
    Mayor Anthony A. Williams
    Council Chairman Linda W. Cropp
    Chief Financial Officer Natwar M. Gandhi
    Deputy Mayor/City Administrator John Koskinen
    Control Board Chairman Alice M. Rivlin

                         PART 2 (PAGES 1-1077)

8. Budget Justification Material.................................1-1077



 
              DISTRICT OF COLUMBIA APPROPRIATIONS FOR 2002

                              ----------                              

                                          Thursday, March 29, 2001.

                           DC PUBLIC SCHOOLS

                       DC PUBLIC CHARTER SCHOOLS

                               WITNESSES

PEGGY COOPER CAFRITZ, PRESIDENT, DC BOARD OF EDUCATION
PAUL L. VANCE, SUPERINTENDENT, DC PUBLIC SCHOOLS
STEVE SELEZNOW, CHIEF OF STAFF, DC PUBLIC SCHOOLS
MARY GILL, CHIEF ACADEMIC OFFICER, DC PUBLIC SCHOOLS
KIFAH JAYYOUSI, CHIEF FACILITIES OFFICER, DC PUBLIC SCHOOLS
DAVID HEALEY, TRANSPORTATION ADMINISTRATOR, DC PUBLIC SCHOOLS
DON RICKFORD, CHIEF FINANCIAL OFFICER, DC PUBLIC SCHOOLS
JONATHAN TRAVERS, DIRECTOR OF BUDGET, DC PUBLIC SCHOOLS
JOSEPHINE BAKER, CHAIR, DC PUBLIC CHARTER SCHOOL BOARD
GEORGE BROWN, CHAIRMAN, DC CREDIT ENHANCEMENT COMMITTEE FOR DC PUBLIC 
    SCHOOLS
LAURENT ROSS, DIRECTOR, DC TUITION ASSISTANCE GRANT PROGRAM
COL. CHARLES J. FIALA, JR., COMMANDER AND DISTRICT ENGINEER, BALTIMORE 
    DISTRICT, U.S. ARMY CORPS OF ENGINEERS
DAVID MARROW, PROGRAM MANAGER, U.S. ARMY CORPS OF ENGINEERS

                Chairman Knollenberg's Opening Statement

    Mr. Knollenberg. The meeting will come to order.
    This is the first meeting of the Subcommittee on the 
District of Columbia Appropriations for the 107th Congress. I 
want to welcome all the members, some of whom are not here yet. 
Incidentally, in case you did not know, there are three, maybe 
four, different hearings being held at the same time, so you 
will see a flutter of activity. But our members have expressed 
to me that they are very much interested in this hearing this 
morning. So you will see them coming and going.


                          MEMBERS OF COMMITTEE


    I think it might be appropriate to introduce who those 
members are. Obviously, I am chairman, and then my ranking 
member, Chaka Fattah of Pennsylvania. Some of you may know that 
both Mr. Fattah and I have worked together, I would say very 
well, on the Ethics Committee; you may know that.
    But in any event, I want to introduce now some of the other 
members, as well. We have Mr. Istook, who was the subcommittee 
chairman for two years, including last year, and he is now 
chairman of the Treasury-Postal Subcommittee.
    Mr. Duke Cunningham of California has been on the 
subcommittee since 1997. He is the longest-serving of the 
current members on this subcommittee at this point, and he is 
the vice chair of this committee.
    And Mr. John Doolittle of California is starting his sixth 
term in Congress.
    And Mr. Sweeney of New York, he is starting his second term 
in Congress?
    And then finally, Mr. Vitter also, I believe is in his 
second term, from Louisiana, is a member of the committee.
    I mentioned already that Mr. Fattah and I have worked 
together, and we have had a meeting to discuss some of the 
concerns that both of us have. So we are well-acquainted, 
having worked, as I mentioned, on a previous committee. I very 
much look forward to leaning on him for some advice, because he 
knows a little about the situation here in DC, having been very 
familiar and very involved in the legislature in Pennsylvania 
with respect to the financial problems in Philadelphia. You 
know, they went through some financial problems sometime back, 
one we hope that we can certainly emerge from here and go on to 
become the city and the success that we ought to be.
    The other members on the Democratic side are Mr. Mollohan 
of West Virginia who has served on this subcommittee before. I 
do not know how many years Mr. Mollohan has been here, but it 
is longer than I have, so he is familiar with a great bit of 
what goes on here.
    Finally, Mr. Olver of Massachusetts, who is starting his 
sixth term in Congress, is also a member of this subcommittee.
    I would not pass this opportunity without introducing 
Eleanor Holmes Norton, the delegate from the District, who has 
been partnering with us, and she has been at this for a long, 
long time. I borrow on her background and her knowledge of what 
takes place in this community a great deal, and will continue 
to do that. So we welcome Eleanor Holmes Norton, the delegate 
from the District.


              TRIBUTE TO JULIAN C. DIXON, FORMER CHAIRMAN


    I also want to pay tribute to a gentleman, Julian Dixon, 
who was the chair of this committee for some 14 years. He was 
also the ranking member on the Intelligence Committee. He was 
born in this city and moved away to California when he was 9 
years old. We will certainly miss his leadership; he was a very 
resourceful and very moving individual when it came to talking 
about the District of Columbia. And so his counsel will be 
missed a great deal.


                             FIRST HEARING


    As I said, this is my first hearing as chairman of the DC 
Appropriations Subcommittee, and I am pleased to receive this 
assignment from Chairman Bill Young of Florida. I have said to 
many of you, nobody lusts for this particular position, but 
frankly I find it very encouraging. I find it very exciting.


                           CITY IS ON UPSWING


    In many ways, it gives us all an opportunity, it gives me 
an opportunity to take advantage, perhaps, of a city that is on 
the upswing and a city that, not just in education, but in 
police, public safety, also the economic environment appears to 
be getting much better. So there are some good things out there 
that we can look to as being stepping stones to an even greater 
level, and that we will talk about at another time. Today the 
focus is going to be on education.


                        PRESIDENT AND FIRST LADY


    As you know, President and Mrs. Bush have been around the 
city. They have made several visits and they made it a point to 
learn about our nation's capital and its school system.


                            VISIT TO SCHOOLS


    I have visited, as you know, several schools already. I 
found a lot of dedicated teachers. I found involved principals, 
as well as students, who are willing to learn. I know that 
there have been some great strides made in the last few years 
due to the ambitions and conscientious efforts of a whole lot 
of people, including several individuals who are here today.
    Although we have made great strides, there is still a long 
way to go to turn the city's school system into a model that 
others will envy and will want to follow. During my tenure as 
chairman, I would like to build on past successes and ensure 
that every child in the District of Columbia receives a world-
class education.
    This morning's hearing will give us an opportunity to hear 
more about the District's public schools and public charter 
schools. We want to hear about the good things as well as the 
problems and what is being done to resolve those problems, so 
that all of our children have an opportunity to attend safe, 
pleasant schools that are staffed with good principals and 
well-trained teachers, so the students can acquire the basic 
tools they need to be productive and contributing members of 
society.
    We realize that the fiscal year 2002 DC budget is presently 
being reviewed by the city council and is not expected to be 
sent to Congress until sometime around the 15th of May at the 
earliest.
    At this point, I will yield to my good friend and ranking 
member, Mr. Fattah, for any remarks he would care to make.

                  Congressman Fattah's Opening Remarks

    Mr. Fattah. Well, thank you, Mr. Chairman.
    Let me just, by way of introduction, say that it is a great 
honor for me to serve in this capacity, especially following in 
the footsteps of a great member of Congress, Julian Dixon, who 
I learned from over the years, even before I got to be a member 
of Congress. And so, I also want to pay homage to his work in 
your role.
    And I want to say that I have always had, and continue to 
have, the greatest respect for the delegate from the District, 
Eleanor Holmes Norton. I have worked with her, in my first term 
here, on a small matter relative to the District and I am happy 
to see her here today. I also look forward to continuing to 
receive guidance from her as to the authentic interests of the 
people of the District.
    In terms of my role as ranking member, I would just say a 
couple of things. One is, I am very happy to see that we are 
holding a hearing on education. It is a subject near and dear 
to my heart. I will be very interested in hearing from the 
witnesses, especially Paul Vance, who is a person whose career 
I followed over the years, as he has led school districts in 
New Jersey and in other places around the country, including 
Maryland. And I am very happy that the District has someone of 
his caliber leading the schools here in our nation's capital.
    I think that the Congress's only legitimate interest in the 
affairs of the District is that it is our capital city. It 
should be our intent to work with the leadership, the Mayor and 
others who are appropriately elected by the District residents, 
to have this be a world-class city and the finest capital city 
of any country in the world. I think that we can do a lot more 
than we have done within that context. And we want to work with 
the authorizing committee to help move forward and make 
progress in a range of areas that are important to the 
District's residents and important to the city itself.
    So, Mr. Chairman, it is a pleasure to be able to work with 
you, and I look forward to today's hearings and our work over 
the coming years.
    Thank you.
    Mr. Knollenberg. Thank you, Mr. Fattah. I appreciate very 
much, again, having you on this committee. We will be leaning 
on you, you will be leaning on me or we will lean on each 
other. But together we will bring out a good bill.
    I want to get right into the hearing this morning. We have 
six principal witnesses and one who I believe could not be 
here, that being Connie Newman, the vice chair of the Control 
Board. But she did submit a prepared statement, which will be 
placed in the appropriate place in the record.

                 PREPARED STATEMENT OF CONSTANCE NEWMAN

    [The prepared statement of Constance Newman follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



                       Introduction of Witnesses

    Mr. Knollenberg. We do have with us this morning Peggy 
Cooper Cafritz, who is the President of the DC Board of 
Education; Dr. Paul Vance, of course, the Superintendent of DC 
Public Schools; Josephine Baker, Chair of the DC Public Charter 
School Board, and George Brown, Chairman of the Credit 
Enhancement Committee.
    Is Mr. Brown here? He is here, good. We are delighted you 
are here.
    We also have with us Laurent Ross, Director of the DC 
Tuition Assistance Grant Program; and Colonel Charles J. Fiala 
Jr., who is the Commander and District Engineer of the 
Baltimore District of the U.S. Army Corps of Engineers.
    I would like to have all of the principals come forward. 
And I do not know how you want to be arranged at the table, but 
Ms. Cafritz, if you would come front and center, that is great. 
And you can gather around--and Dr. Vance--around those two. And 
we will proceed momentarily.

                         SWEARING IN WITNESSES

    We are also going to continue the subcommittee's standard 
procedure of swearing in all witnesses. I refer to Rule XI, 
Clause 2 of the Rules of the House and Section 1(b) of the 
rules of the Committee, which authorize me as the subcommittee 
chair to administer the oath.
    I will ask all witnesses, including those who may 
beassisting the principal witnesses, to please stand and raise your 
right hand, and I will stand with you.
    [Witnesses sworn.]
    Thank you. Thank you very much.
    Now, if there is no objection I would like to have all 
witnesses make their opening statements, make their 
presentations. I would hope that you could limit that to 
approximately five minutes. If you cannot, we have a little 
buzzer up here that will remind you. [Laughter.]
    And we can bring it to an end very quickly. But I want to 
start again with our first witness, Ms. Cafritz, President of 
the DC Board of Education. We will place your entire statement 
in the record and would appreciate if you would highlight it 
for the committee at this time. Thank you.

  Prepared Statement of Peggy Cooper Cafritz, President D.C. Board of 
                               Education

    [The prepared statement of Peggy Cooper Cafritz follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
                Opening Remarks of Peggy Cooper Cafritz

    Ms. Cafritz. Good morning, Mr. Chairman. It is a pleasure 
to be amongst the first to testify before you in your new role.
    And Congressman Fattah, thank you very much.
    I am Peggy Cooper Cafritz, President of the District of 
Columbia Board of Education. This board has been in office only 
three months, and thus joined the budget process at the very 
end.

                         Board is Reform Minded

    However, we are hungry for reform. We realized early on, 
however, that in addition to requiring our teachers, students 
and our superintendent to perform to exacting standards, we 
must provide them with the tools they need to achieve a school 
system worthy of our nation's capital.

         Absence of Achievement in Public Schools Mind Boggling

    Before I was elected, the absence of achievement in the 
school system boggled my mind. Thirty years ago, I founded the 
Duke Ellington School of the Arts, a public school which 
regularly sends 100 percent of its graduates to college. During 
that time, I was never able to figure out why fighting for 
success was so difficult.
    Success seemed to be penalized in DCPS. Each year, ninth 
graders entered Ellington far less tutored than the prior year. 
Convinced that this was because of incompetent people who had 
lost a passion for teaching and efficient administration, I 
yearned for change.
    Due to a twist of history, a change of governments, an 
impetuous decision and a surprising election outcome, I am now 
thrilled to have the chance to play a role in the revolutionary 
reform our system needs.

                         Performance Standards

    Now that I am in the system, the causes are much clearer. 
Yes, exacting performance standards must be applied at all 
times, but it is cruel to expect success from people who have 
none of the supports available in normal school systems, and 
certainly none of those available in school systems in the 
surrounding jurisdictions.
    Instead of widespread incompetence, I found many valiant 
people swimming upstream, refusing to give up, devoted to 
weeding out the uncaring and committed to salvaging our kids.

                           Instructional Core

    I was astonished to find that the instructional core of the 
system had been gutted and in decline for years. The people who 
are expected to write curriculum and monitor its teaching, from 
preschool through 12th grade, were most often without 
secretaries, any support staff, any way of getting out in the 
field to support teachers and to hold them responsible for 
instruction. For example, our science office has one person 
responsible for 69,000 children.
    Dr. Vance has only been here since July and recently has 
put together a top-notch staff. Dr. Vance's leadership has 
produced the lowest number of facilities backorders in years 
and the highest level of organization around special education 
in years.

                             Security Plan

    The security plan functioning in our schools is tighter 
than ever in recent memory, but we struggle mightily to avail 
our children of the counseling services they need, so that we 
can prevent incidents like those which recently occurred in 
California, altogether.
    We are proceeding with gusto, but make no mistake, we have 
a crisis. Clearly, whatever requests the Mayor finally submits 
to the Congress is the budget that the board must support. 
However, I want to convey to you the almost primitive state our 
schools find themselves in, because it would be unfair for us 
to leave you with high expectations for change and progress 
without your having clear understanding of where we are.

                          Physical Facilities

    Our physical facilities look like prisons in many instances 
and are at least 30 years old and are most uninviting. Our 
worst facilities are in the poorest part of the city, which 
has, by far, the highest concentration of students. They cry 
out for their own Marshall Plan, but I will save that for the 
next hearing.

                              Teaching Pay

    Our teachers are the lowest paid in the area. Our students 
have the least amount of supplies and equipment. As the city 
makes huge financial expenditures to address the cost of our 
social ills, education has lost its place and lost the place 
that it has in most jurisdictional budgets.

                    Percent of Budget for Education

    We spend less than 19 percent of our budget on education, 
while Prince George's County spends 63 percent and Montgomery 
County spends 53 percent, which is much closer to the national 
norm. Of course, the states pay most of the burdensome social 
costs in other jurisdictions, but even when the apples and 
oranges are factored out of the comparison, Washington is still 
forced to underfund the schools because of other social costs.
    This is a chicken-and-egg process. We cannot pay these 
enormous social costs forever, and such costs will only 
increase if we do not make the investment in education now. 
Thirty-seven percent of our adult population is illiterate. 
Every year we graduate too many girls with babies and hopeless 
fathers.
    Dr. Vance is an experienced architect, ready to construct a 
system in which no third grader who cannot read and who is not 
numerate will move on. But Dr. Vance's blueprints will not make 
it off the drafting table if we do not supply him with the 
realistic support he needs.

               Focus on Collaborating with other Agencies

    I do not come here today to ask you for millions of new 
dollars. In fact, the board has taken the initiative to suggest 
that the city focus on collaborations between the Recreation 
Department, the Department of Health and Human Services, as 
well as other agencies to make certain that we fulfill the 
Mayor's wish to align all District spending around the city's 
common goals.
    For example, perhaps there is a way that the Recreation 
Department can use its youth sports money to help cover the 
physical education needs in DCPS. We, the board, did request an 
increase in the fiscal year 2002 budget, which reflects our 
intimate knowledge of what it takes for good teachers to teach 
and earnest children to learn.
    Each of those new initiatives the board specifies in the 
budget is central to the effective functioning of any system's 
instructional core.
    I am prepared to answer your questions and provide you with 
more data and specifics, and, in fact, I have attached that.
    I urge you to join me in a tour of DC, Maryland and 
Virginia schools, so you can make your own firsthand 
comparisons. But please become our partners in stopping the 
cruel joke we have been playing on our children for more than 
two decades.
    Thank you.
    Mr. Knollenberg. Ms. Cafritz, thank you very much. And I 
appreciate your using the word ``partner.'' We would love to be 
your partner in ways that will promote some success as you 
outlined and accomplish your goals as well.
    Our next witness is Dr. Paul Vance, the superintendent of 
the DC Public Schools. And again, the entirety of your prepared 
statement will be included in the record. We look forward to 
your comments. Thank you.

  Prepared Statement of Paul Vance, Superintendent D.C. Public Schools

    [The prepared statement of Superintendent Paul Vance 
follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


              Opening Remarks of Superintendent Paul Vance

    Dr. Vance. Thank you, sir.
    Good morning, Chairman Knollenberg and members of the 
subcommittee and others in attendance.
    I am Paul Vance, superintendent of the DC Public Schools. I 
am very pleased to have this opportunity to share with you our 
progress over the past fiscal year.

                         Improvement in Schools

    As you are aware, this school district has been under 
enormous pressure to improve, following the educational crisis 
declared by the Financial Authority in 1996. Progress has been 
made. Test scores have risen. There is more accountability with 
regard to school, teacher and principal performance. We are 
continuing to improve our various operational systems and we 
are building the framework for sustained school reform.
    I am pleased to report that my deliberate assessment of our 
school system over the past few months shows a school district 
that is making progress in vital areas and one that is becoming 
a better steward of public resources.
    The fiscal year 2001 budget of $641 million has been 
implemented with fiscal prudence, as has our massive capital 
improvements program that is already making a significant 
difference in our school environment and has given our school 
community reason to be hopeful.

                         Senior Executive Team

    Recently, the hiring of a senior executive team comprised 
of the chief of staff, chief operating officer, chiefacademic 
officer, chief communications officer, director of human resources and 
two deputy directors and facilities managers was made possible by my 
restructuring last fall that flattened the organization and eliminated 
positions to free up needed resources.

                       SPRINT FOUNDATION DONATION

    A spirit of excitement is engulfing our schools, a spirit 
that grows more contagious each day. In February, the Sprint 
Foundation donated $100,000 to the new technology high school 
at McKinley and the technology center at Ballou High School for 
state-of-the-art technology education programs supported by 
public-private partnerships.

                        TEACHING FELLOWS PROGRAM

    Also in February, we announced our new teaching fellows 
program for career professionals in noneducational careers. 
Banneker Senior High School is in the final stages of 
application to offer the international baccalaureate program 
and several students have recorded perfect SAT scores as a 
symbol of what can be accomplished in the rapidly improving 
school district.

                      FAILURE-FREE READING PROGRAM

    And this summer, we will pilot a failure-free reading 
program and a special education extended school year.

                          PERFORMANCE TARGETS

    Most importantly, hard work and effective use of resources 
are yielding returns in student achievement for our general 
population and our commitment to leave no child behind. For the 
past four years, DCPS increased the percentage of students 
scoring at or above the basic level in math--that is the SAT-
9--by 20 percent and reading by 8 percent. Last year, 83 
schools met at least four of their six performance targets, up 
from 31 schools the year before.
    While this represents progress, too many students continue 
to perform below their capabilities. What is more important is 
that the established targets for schools are measurable. We now 
have detailed school and division-wide data in each subject 
matter, which we will use to support thorough analyses.
    We are generally pleased that the allocation of 
appropriated funding and support for school district priorities 
affords local schools greater latitude, and instructional 
programming supports centralizing services and meets all system 
mandates and state responsibilities.

                            FEDERAL FUNDING

    Federal funding is also used effectively to support 
extended day, Saturday and summer instructional programs.
    Even so, there are challenges that threaten to undermine 
progress. Our teacher salaries are the lowest in the area. 
Spending for special education and transportation services, 
$172 million, generally exceeds the allocated budget, and 
utility costs have outpaced all reasonable projections.

                      CAPITAL IMPROVEMENTS PROGRAM

    Our major CIP, that includes new school construction and 
complete school renovations, requires swing space that will 
preserve the integrity of school programs for displaced 
students.

                        FISCAL YEAR/SCHOOL YEAR

    Another challenge is the misalignment of the school year 
and fiscal year. This year, with your support, we will have 
access to 10 percent of our fiscal year 2002 budget in July 
2001, which will enable us to better prepare for the school 
opening.

                        WEIGHTED STUDENT FORMULA

    In summary, local schools receive 75 percent of the 
appropriated budget directly through the weighted student 
formula, instructional support services and for other school-
based expenses, such as security and athletics. The largest 
part of the remainder, about 18 percent, goes to fund state 
functions that are largely for instruction or the support 
thereof. These include nonpublic tuition payments, 
transportation programs and educational services for wards of 
the state, residents of the Commission on Mental Health and 
students who reside at the Oak Hill Youth Detention Facility. 
Only a small fraction of the budget is spent on central 
administration, less than 3 percent in fiscal year 2001.

                            68,978 STUDENTS

    The good news, Mr. Chairman, is that progress is being made 
for the 68,978 students we serve. Our schools are safer, 
cleaner and fast becoming places in which children can achieve 
and excel. Even better news is our confidence that we are 
poised to take the large steps required to move this school 
district forward and to build the foundation for true school 
reform.

            DEVELOPMENT OF BUSINESS PLAN FOR PUBLIC SCHOOLS

    On March 19, 2001, we held our kick-off meeting with the 
highly regarded McKinsey & Company management consulting firm 
that will work with us pro bono on a three-month project to 
develop a business plan for the DC Public Schools that will 
implement strategic reform.
    The McKinsey group has made four full-time staff members 
available to work with us daily. The business plan will consist 
of high impact, cost-effective initiatives to improve student 
academic achievement and will drive all future initiatives, 
academic and instructional improvement and business system 
processes. The plan will also provide for a program and 
performance-based budget development process with goals, 
performance indicators and metrics.
    Measurable indicators will not only allow us to assess 
programs over time, but will place us in the position to 
provide complete accountability for progress under the plan.

                     PROGRAM INITIATIVES IN BUDGET

    Before closing, I should mention, the program initiatives 
in our fiscal year 2002 budget will expand learning 
opportunities for all students, turn around low-performing 
schools, buy more support for teachers, develop and maintain 
specialized programs and improve operations and existing 
programs.
    I trust that in good faith, when we appear before this 
appropriation subcommittee next year, you will be able to see 
and count the fruits of our labor.
    I have submitted my lengthy testimony with greater program 
details. I would be pleased at this time to receive any 
comments and to answer any questions you may have.
    And thank you very much for your attention.
    Mr. Knollenberg. Thank you very much.
    We are holding all questions until we have heard the 
complete testimony from each of the six individuals.
    Next, I would like to welcome our next witness, Josephine 
Baker, chair of the DC Public Charter School Board. And, Ms. 
Baker, again, your complete statement will be included in the 
record, as well as your additional testimony.
    Thank you.

PREPARED STATEMENT OF JOSEPHINE BAKER, CHAIR D.C. PUBLIC CHARTER SCHOOL 
                                 BOARD

    [The prepared statement of Josephine Baker follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
                   Opening Remarks of Josephine Baker

    Ms. Baker. Good morning and thank you for this opportunity, 
Chairman Knollenberg and members of the committee.
    The Public Charter School Board is one of two chartering 
authorities in the District, along with the Board of Education. 
Our board was created by passage of the DC School Reform Act of 
1996 and was made permanent in 1999 amendments.

                   10,000 STUDENTS IN CHARTER SCHOOLS

    The charter school movement in the District is vibrant, 
with nearly 10,000 students enrolled, about 13 percent of all 
public school students in DC Charter growth has actually led a 
turnaround from decades of decline in the District's public 
school enrollment, with a net gain of more than 3,000 students 
in the past two years alone.
    Contrary to early fears, charter schools are not 
``creaming'' the most affluent and able students. In fact, 
schools overseen by our board enroll a significantly higher 
population of low-income students, 79 percent, than does DCPS, 
with about 72 percent.

                           21 CHARTER SCHOOLS

    Our board has approved 21 charters. Sixteen are already in 
operation, and five will open in September. Our motto is, ``We 
charter success.'' We have a stringent application process. You 
have copies of the current guidelines.
    As my written testimony indicates, we provide rigorous 
monitoring of each school's educational program, financial 
management and operational health. In three years, we have 
revoked no charters and only one school has been on probation.

                ACADEMIC ACHIEVEMENT IN CHARTER SCHOOLS

    Academic achievement takes time, but we are encouraged by 
early indicators of success. Standardized test scores have 
shown modest gains and most schools are demonstrating student 
gains in academic and nonacademic areas.
    A complete rundown of each school's performance is 
available on our Web site, www.dcpubliccharter.com.

                      SECURING ADEQUATE FACILITIES

    We remain concerned about securing adequate facilities for 
this growing school population. Charter schools are now firmly 
in the mainstream of public education. They need classrooms, 
cafeterias, science labs and playing fields and cannot find 
them in storefronts and church basements.
    In the past year alone, six operating schools overseen by 
our board moved into new and expanded facilities. Four new 
schools opened. Two new schools will be in temporary quarters 
next September, and one will occupy its own building. At least 
eight of our existing schools are actively looking for new 
quarters.

       CHARTER SCHOOL TO HAVE PREFERENCE TO D.C. SCHOOL BUILDINGS

    In 1996, Congress mandated that charter schools should have 
preference in getting access to DC school buildings. For 
several years that access was hampered by the foot-dragging of 
the previous administration. Congress turned that 
responsibility over to the mayor and we are now awaiting his 
decision on how many of the 33 remaining school buildings can 
be marketed to charter bidders.

                       CREDIT ENHANCEMENT PROCESS

    The credit enhancement process, which Mr. Brown will 
address, is another key component. Buying and renovating school 
buildings, or transforming commercial space into schools is 
extremely expensive. It takes far more in up-front investment 
than is provided by the facilities allotment in schools-per-
pupil formula. The credit enhancement program allows charter 
schools to use relatively small amounts of public money to 
leverage private investment. We have stressed that this must be 
carried out in an impartial, public process that allows 
competition by all potential vendors.
    We urge Congress to support and strengthen this program.
    You do have my full testimony. And I thank you for this 
opportunity and look forward to your questions.
    Mr. Knollenberg. Well, thank you very much. We appreciate 
your testimony.
    We are going to move forward very quickly to our next 
witness, George Brown.
    And, Mr. Brown, you are recognized, again, with the proviso 
that your written testimony and the notice of proposed 
rulemaking will be included in the record.

   PREPARED STATEMENT OF GEORGE BROWN, CHAIRMAN, D.C. PUBLIC CHARTER 
                SCHOOL CREDIT ENHANCEMENT FUND COMMITTEE

    [The prepared statement of George Brown follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mr. Brown. Thank you very much. Good morning, Mr. Chairman 
and members of the committee.

        PUBLIC CHARTER SCHOOL CREDIT ENHANCEMENT FUND COMMITTEE

    My name is George Brown. I am chairman of the DC Public 
Charter School Credit Enhancement Fund Committee. That 
committee is pleased to appear before you this morning and to 
provide testimony regarding the District of Columbia Public 
Charter School Credit Enhancement Fund.
    As you know, the committee was established pursuant to 
Section 603(e) of the Student Loan Marketing Association 
Reorganization Act of 1996. The committee is responsible for 
administering 50 percent of the fund and making those funds 
available as grants to charter schools and to nonprofit 
organizations that promote public charter school credit 
enhancement, and which are acting on behalf of two or more 
District public charter schools.
    The grants are available to fund credit enhancement for the 
financing of the construction, purchase and or rehabilitation 
of District public charter school facilities.

         MEMBERS OF CHARTER SCHOOL CREDIT ENHANCEMENT COMMITTEE

    Let me take just a moment to describe the committee. There 
are five members of the committee. I serve as its chair. The 
other four members are Mary Levy, James Thomas, Judine Bishop 
Johnson and Matt Hoganbruen. Ms. Levy and Dr. Johnson are 
representatives from the public school charter board, and the 
other three members, including myself, were appointed by the 
Mayor.
    These members bring a wealth of expertise to the 
enhancement of opportunities for facilities of public charter 
schools. Mr. Hoganbruen is vice president of Bank of America, 
and his speciality is involved in the underwriting of charter 
schools. Dr. Johnson has a distinguished career in education 
and is a consultant to the public charter schools. Mary Levy is 
a very strong staff attorney and director of the Education 
Reform Project and a consultant in the areas of education and 
finance. Mr. Thomas is a former patent attorney, a long-term 
resident of the District of Columbia and involved in community 
services.
    And I have been in the banking field myself as vice 
president of a money management firm and served in the District 
of Columbia government as the deputy mayor for economic 
development under Mayor Sharon Pratt Kelly.

            STATUS OF CHARTER SCHOOL CREDIT ENHANCEMENT FUND

    Let me give you the status of the fund. The committee was 
sworn in in September of 2000. We have had numerous meetings, 
since our swearing in, to move the process along. Certainly, 
first and foremost was developing our philosophy and our 
approach. And our approach was to have a partnership with the 
institutions within the District that were involved in and 
supporting public charter schools.
    We have met with organizations such as the Charter Schools 
Development Corporation, FOCUS. We have secured pro bono 
counselors as advisers. We have had numerous meetings with 
public charter schools and coalitions of public charter schools 
in attempting to developing a very multifaceted and broad-
ranged approach to dispensing these dollars.
    The fund, as I indicated, is split into two parts, as 
amended in the 2001 budget authority. Fifty percent will be 
administered by the fund, not the committee itself, and the 
other 50 percent will be administered by the Office of the 
Mayor. Both funds are being administered and implemented under 
the auspices of the Office of Banking and Financial 
Institutions and the superintendent of banking and financial 
institutions.

                      MEMORANDUM OF UNDERSTANDING

    In January of 2000, our committee entered into a memorandum 
of understanding with the superintendent that will oversee the 
publication and provide the staff assistance to the committee.

                          Status of $5 million

    We have some exciting things to report. On March 23, the 
mayor's portion of the $5 million was allocated to us.

                         Rules and Regulations

    The rules have been published, were published on March 23 
and became effective that date. They will become final soon, 
within 120 days, or sooner, and hopefully, our intent is to 
have them finalized in 30 days.
    Those regulations are not going to be dissimilar to that of 
the committee. And the committee will be having a public 
hearing on April 10 to promulgate its rules and procedures and 
have those in effect, as well. The bottom line is that we are 
prepared to begin moving and processing applications by mid-
April.

               FUND TO PROVIDE FOR DEVELOPING FACILITIES

    Let me speak to the fund in general. The fund is designed 
to provide for the construction, renovation, rehabilitation and 
associated costs that are in line with developing facilities. 
Our approach is to be multifaceted. One, we know that there are 
high-end and low-end, that there are new schools coming online 
that may need some assistance, technical assistance in 
furthering them along. We plan to provide that and ensure that 
is there.
    We also know that there are a number of public charter 
schools that have been fortunate enough to secure their own 
financing in the marketplace. Our job is to make sure that we 
can target those institutions that are necessarily online and 
want to be ready and in their facilities by this fall's school 
year. That is probably somewhere in the range of eight or nine 
facilities.

                $500,000 CAP FOR EACH CREDIT ENHANCEMENT

    We have targeted that the amount of credit enhancement 
should, at minimum, be capped at $500,000. We suspect that that 
$500,000 number, as a credit enhancement tool, is probably the 
right size. We will certainly monitor that. And that will give 
us an ability to leverage that small amount of funds very, very 
rapidly.

                          Application Process

    We will be looking at an application process that is not 
going to duplicate a process that many of these institutions, 
public schools, have already undertaken, that is, aligning 
themselves with financial institutions and the underwriting 
within those institutions. We will not be doing de novo 
reviews.
    Our role is to make sure that the application is intact, 
that a financial institution has approved, or conditionally 
approved, financing for a facility. We will, therefore, figure 
out, find out from the financial institution and the school 
what form of credit enhancement is necessary, be it a line of 
credit, be it a write-down, be it a guarantee loss reserve. 
Those are the range of options that we have to provide for 
credit enhancement.
    In summary----
    Mr. Knollenberg. Just to interrupt. This is all very good, 
but we are a little over time right now. If you could condense 
your remarks and bring it to a----
    Mr. Brown. In fact, I had finished.
    Mr. Knollenberg. Oh. [Laughter.]
    Mr. Brown. And I was going to say, we are available for 
questions.
    Mr. Knollenberg. Great. I beg your pardon. I just could not 
anticipate that coming so quickly.
    Thank you very much, Mr. Brown.
    Our next witness is Laurent Ross, director of the DC 
Tuition Assistance Grant Program. And I will let him proceed. 
We will include, your entire statement in the record, and we 
look forward to your testimony. Thank you.

 Prepared Statement of Laurent Ross, Director, D.C. Tuition Assistance 
                             Grant Program

    [The prepared statement of Laurent Ross follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
                   Opening Statement of Laurent Ross

    Mr. Ross. Good morning, Chairman Knollenberg, and good 
morning, Ranking Member Fattah.
    One year ago, the District's residents had a choice of only 
one low-cost institution of higher education that they could 
attend, the University of the District of Columbia.

                     D.C. Tuition Assistance Grant

    But now, because of the DC Tuition Assistance Grant 
Program, city residents can choose from over 2,500 public 
institutions across the entire country. Parents and students 
from every single corner of the District asked me to let you, 
the Congress, know how important this program is to them, how 
much it means for them, and how you helped so many of them 
become the first person in their family to go to college.
    We have made tremendous strides in promoting and carrying 
out this program. Students from all sectors of the District 
have now been able to take advantage of the program to make 
their dreams of attending college a reality.

                        D.C. College Access Act

    The U.S. Congress passed the District of Columbia College 
Access Act that created the Tuition Assistance Grant Program in 
November of 1999. Passage of that act came late in the 
legislative session. Some higher education funding experts 
thought that it would be an impossible task to make the program 
work by the fall of 2000. They felt that the District 
government just did not have the time to make the program work 
by then. In fact, they doubted anyone could make the program 
work in 10 months.
    However, waiting until September 2001 was not an option. 
The intent of Congress was clear. Congress funded us for the 
fall of 2000, and Mayor Williams was insistent that the program 
start by that semester. He felt that waiting an extra year 
would result in students and their parents foregoing $17 
million in scholarships. He knew that for many District 
residents, that was not just a financially uncomfortable 
option, but an actual barrier to attending the college of their 
choice.
    We were able to deliver on our promise, helping nearly 
1,800 District residents attend the college or university of 
their choice last fall. I am proud to say that with the strong 
support of Congresswoman Eleanor Holmes Norton, the DC City 
Council and the entire U.S. Congress, we were able to get our 
message out to 3,500 District residents who applied for the 
program.
    We were able to do this while developing regulations, 
developing our operating procedures, developing a database, 
hiring staff to do the work and enlisting over 450 colleges and 
universities across the country to participate in the program.

             Media Coverage for Tuition Assistance Program

    Our biggest success has been getting the word out that we 
can help District residents attend public colleges and 
universities across the nation at the same low tuition rate 
that students who live in those states pay.
    I have attached a media report that summarizes the 
extensive media coverage we have had for the program. We also 
had an extensive outreach program, visiting every single public 
high school in the city and participating in dozens of other 
outreach sessions in churches, universities, private schools 
and libraries.
    I would also like to single out the private sector DC 
College Access program that has signed up literally hundreds of 
students in the DC public schools for this program.

           Enlisting Colleges and Universities to Participate

    Our second biggest success has been enlisting colleges and 
universities to participate in our program. The DC College 
Access Act requires that we sign a program participation 
agreement with every college and university that participates 
in the program before they can participate. We have enrolled 
over 450 colleges and universities in the program.
    Another success we have had is in the good service we 
provided District residents. In keeping with Mayor Williams' 
policy of strong customer service, we constantly monitor how we 
are perceived in the eyes of the public. Dozens of parents and 
students have commended us by e-mail, over the phone or in 
writing for the fast, friendly service we have provided.

                           Pell Grant Program

    We are very pleased with the number of students who applied 
and the number we declared eligible. Compared with the first 
five years of the federal Pell Grant program, we have enjoyed a 
tremendous success in reaching students. In its first year, the 
Pell Grant program reached only 13 percent of the eligible 
applicants. I have attached a table to demonstrate that the 
Pell Grant program took nearly five years to reach its targeted 
audience.

                  Number of Eligible District Students

    Data from the National Center for Education Statistics show 
that in 1998 approximately 3,000 students from DC attended 
colleges and universities which were eligible to participate in 
the program. Of these, 650 were seniors who, by statute, were 
not eligible for the program. Of the remaining 2,350, another 
250 were adult students who were also not eligible. Thus in the 
first year of our program, we were able to reach over 80 
percent of the eligible students and award them with a grant.
    This is a remarkable achievement in light of the data from 
the first five years of the Pell Grant program described above.

                          Three Areas of Focus

    Nonetheless, there are three areas where we need to 
concentrate more of our effort. First, we have to ensure that 
every single District resident who attends an eligible college 
or university receives the grant. National statistics lead us 
to believe that there are still some students attending 
eligible institutions that have yet to receive a grant. How 
many of these did not receive a grant because they got full 
scholarships? How many just did not know about the program? We 
do not have the answers, yet, for those questions.
    The second group of students are those who were declared 
eligible but who did not attend an eligible institution. We 
declared over 2,300 students eligible for the Tuition 
Assistance Grant Program, yet not all of these students showed 
up at college. How many went to UDC? How many went to private 
colleges? We do not know. How many got full scholarships? We do 
not know that either.
    But we have to convince those that are eligible that they 
have to actually attend college also. In the bigger sense, that 
is our real job, to get these kids into college.

               50 Percent of D.C. Graduates Enter College

    The third group, which is the most important, are the 
students who never plan to go to college, as of yet. As you 
know, nearly one-third of DC public school students drop out of 
high school before graduating. Of those who do make it to 
graduation, approximately 50 percent are entering college.
    In our first year, we created the structure that was 
necessary to carry out the program. Now we must focus on those 
students who would otherwise fall through the cracks. We will 
follow up with all three groups of students, we will get the 
answers, and we will strive to see that every student in DC who 
wants to attend college can do so.
    Thank you very much, and I am willing to answer 
yourquestions.
    Mr. Knollenberg. Thank you very much, Mr. Ross.
    We will proceed now to our next witness, Colonel Charles 
Fiala, Commander and District Engineer, of the Baltimore 
Division of the U.S. Army Corps of Engineers.
    Colonel Fiala, you are recognized, and your entire 
statement will be included in the record.

Prepared Statement of Colonel Charles Fiala, Jr., Commander, Baltimore 
                 District, U.S. Army Corps of Engineers

    [The prepared statement of Colonel J. Charles Fiala, Jr. 
follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                Opening Remarks of Colonel Charles Fiala

    Colonel Fiala. Mr. Chairman, members of the subcommittee, I 
am Colonel Chuck Fiala, Commander and District Engineer of the 
U.S. Army Corps of Engineers Baltimore District. Thank you for 
inviting me to testify this morning on the District of Columbia 
public school capital improvement program.

      Role of Corps of Engineers in Assisting D.C. School Program

    I will discuss the role of the Corps of Engineers in 
assisting the DC schools program in executing this program, 
then give a brief overview of the program development and 
evolution. I will close by describing our current strategy to 
address future capital improvement and facility management 
needs.
    In early 1998, faced with a critical facility situation, 
the District of Columbia public schools came to the Corps for 
help. Next week marks the third anniversary of the signing of a 
memorandum of agreement between DCPS and the Corps.
    The partnership created by that agreement, to improve 
school facilities, remains strong. We have provided engineering 
and technical support under three superintendents and three 
governing school boards. Throughout, our objectives and 
commitment have remained consistent and we have been supported 
by each new administration. We are pleased to support Dr. 
Vance's vision of bringing a new generation of schools to the 
Nation's Capital.

                 Complex Task to Modernize 150 Schools

    It is an immense and complex task to modernize nearly 150 
schools, while continuing operations and efficiently using 
resources. DCPS staff, working with us, have approached this in 
a three-step process.

                            Facility Crisis

    The first step has been to address the facility crisis by 
making emergency repairs or replacement of failing major 
building systems. This effort has reduced fire code violations, 
reduced maintenance costs and allowed on-time school openings 
for three straight years. Dozens of schools have received new 
roofs, new heating plants, asbestos abatement and new air 
conditioning systems.
    The second step has focused on improving the learning 
environment and developing a sustainable program to address 
interior repairs that directly affect students and teachers in 
the classroom. Projects such as window replacements, interior 
painting, bathroom renovations, carpet and floor tile 
replacement and lighting upgrades have been completed or are 
ongoing in every school.

                         Long-Range Master Plan

    The third step has consisted of providing a new generation 
of schools, by replacing or modernizing school facilities. A 
comprehensive, long-range master plan has been developed and 
approved to bring DCPS schools into the 21st century. This 
community-based plan, developed under a previous board of 
education, has been approved by the present board.

                         Modernization Projects

    Currently, 12 modernization projects have been 
initiated,with 10 more proposed to begin the design phase next fiscal 
year. The first of these projects is under construction, with four more 
scheduled to be under construction by this summer.

         Authority to Contract on Behalf of D.C. Public Schools

    In the fall of 1999, we received authority to contract on 
behalf of DCPS. Since then, well over $200 million in school 
improvement contract awards have been made, over half of which 
have gone to small, disadvantaged businesses. This contract 
base has enabled us to execute a fiscal year 2001 plan that is 
nearly three times larger than that of fiscal year 2000. 
Current budget execution rates are ahead of schedule.
    Our contracts are carefully supervised and managed. We have 
a full-time staff to award and administer contracts and to 
provide quality assurance for all construction activities.

                      Asbestos Abatement Services

    We are also providing asbestos abatement services for the 
DCPS. Working closely with the Environmental Protection Agency 
and the District of Columbia Department of Health, we have 
developed and implemented asbestos management plans in every 
school. Hundreds of health, safety and security projects have 
been executed, making schools safer for students, teachers and 
the staff.
    We are also helping DCPS to develop internal staff facility 
management capacity by recruiting and developing staff, by 
building contracting capabilities and by implementing work 
management systems. These efforts are directed to ensure that 
the DCPS facility staff remains poised to open schools on time, 
to maintain new buildings and building systems, and to continue 
implementation of the long-range master facility plan.
    In closing, over the last few years, the Corps and DCPS, 
working together, have accomplished much. Roofs have been 
replaced in 31 percent of the schools. Heating and air 
conditioning repairs have been made in 51 percent of the 
schools. Temporary air conditioning has been installed in 50 
percent of the schools. Underground storage tanks have been 
removed at 18 percent of the schools. Asbestos abatement plans 
are in place at 100 percent of the schools. Partial asbestos 
abatement on an emergency basis has been performed in 90 
percent of the schools. Bathroom renovations are complete or 
underway in 54 percent of the schools. Window replacements are 
complete or underway in 14 percent of the schools. Interior 
repairs have been made in 75 percent. Security systems are 
being installed in 20 percent of the schools.

                Americans With Disabilities Act Projects

    Americans with Disability Act projects are done as 
requirements are identified. To date, work has been 
accomplished in 12 percent of the schools. Complete 
modernization projects have begun in 8 percent of the schools.

            D.C. Public Schools Capital Improvements Program

    The DCPS Capital Improvement Program has grown 
substantially in recent years. Much has been accomplished. Much 
more needs to be done. With your support, I am confident that 
our DCPS partners and we will continue to make dramatic school 
improvements.
    Mr. Chairman, that concludes my remarks. I am happy to 
respond to your questions.
    Mr. Knollenberg. Colonel, I thank you very kindly.
    And I thank all of the panel for your testimony. We will 
get down to some questions at this point. Typically, we operate 
under a five-minute rule up here as well. Knowing, as you look 
about the dais, that we do not have exactly a huge complement 
of people at the moment, we might, with your approval, Mr. 
Fattah, change that a little bit. But I would reserve the right 
to ask some questions first off.

              Introduction of Chairman Knollenberg's Wife

    Before I do that, one of the people that accompanys me when 
I go to various District facilities, including the schools, is 
my wife, who is here. And I just wanted to introduce her, 
Sandy. She did not expect this, but she comes with me and asks 
questions as well. So I do not have to do any more than 
introduce her. [Laughter.]
    I do not think she has any time on this panel, but she is 
with me on this whole matter and I welcome her here.
    I am going to ask a number of you this question. And I 
know, Dr. Vance, you may have to leave early, but we will try 
and get as many questions to you as possible before that time 
arrives.

                            New School Board

    In January, a new school board, took back oversight of the 
public school system from the Financial Control Board. 
Recently, the mayor's budget proposal has been cited as too 
invasive to the school board and does not provide enough 
funding, using the per-pupil formula that was previously agreed 
to. The school board has been criticized for failure to manage 
money properly, overspending on transportation and classifying 
a high percentage of children as ``special education 
students.''
    So, the question is, where are we now and where do we go 
from here?
    I will start initially with Ms. Cafritz, if she would mind 
responding to this question about the transition from the 
Financial Control Board.
    Ms. Cafritz.
    Ms. Cafritz. Well, we were given a school system, as all of 
you know, that was not in great shape, and we have been working 
very, very hard with the superintendent to be able to come here 
in a couple of years and say, ``Fabulous, you know, things are 
really working and things are really swimming.''

                           Per-Pupil Formula

    We have to go back to the per-pupil formula. When the per-
pupil formula was established, it was put together by a group 
of people who are not simply politicians, but experts from all 
over the city, saying this is what goes into making a good 
school system.
    When that was done, they knew and admitted straight-out 
that they would have to come back and tweak that formula and 
refine it and put things in that they could not get in in the 
beginning. But even with that realization, the initial formula 
was never fully funded. It started out about $500 per head 
behind the line, behind the starting line.
    The additions that have been made to it, there was a 
special adjustment for special education two years ago. But if 
you look at our charts, which I think we have given you one, if 
not, we will be, you will see that, had it been funded 
initially at the point that was established, it would have 
reached a level now that is greater than we, the board, that we 
are asking the City Council for, and that we will continue to 
lobby until the last minute before the budget is submitted to 
you.
    We believe that there are such a number of things that are 
not there that are necessary in terms of maintaining the low 
number of students in classrooms. Student-teacher ratio, we all 
know that that is very, very important. In order to maintain 
that, we are going to have to increase.

                  Foreign Language-Speaking Population

    We also know that with an increasing foreign language-
speaking population, that we are going to have toincrease 
bilingual education if we are to improve. And there are a number of 
initiatives that we put forth. We did not have time because we were so 
new to put those in the base, so we just put them forward as 
initiatives.
    But before the budget comes here, we are hopeful that they 
will be reflected, not as separate initiatives, but as a part 
of the per-pupil formula. Otherwise, we are not going to get 
there. And we have a similar problem on the capital side.

                     Overspending on Transportation

    Mr. Knollenberg. Dr. Vance, with respect to the question 
about overspending on transportation and also on the issue of 
proper management of money, would you focus particularly on 
those two areas in your own words?
    Dr. Vance. Yes, sir. I indicated in my testimony our intent 
to have a school system that is managed not only efficiently, 
but in a cost-effective manner. Our transportation issue is 
primarily with special education. The reality is that we have a 
long history in the school district of federal citations and 
class action suits, both in transportation and our observance 
and implementation of the IDEA original guidelines, the 
revisions to that, the additions to that, and ADA. And in two 
cases in particular, one Pettis, for transportation and 
Blackman for the other concerns, Blackman has to deal almost 
exclusively with transportation and our inability in the past 
to transport in an effective and efficient manner a little bit 
more than 4,000 students.
    As I indicated, the costs have been exorbitant.
    Mr. Knollenberg. Dr. Vance, this is----
    Dr. Vance. I am sorry.

     Special Education Students--Question of Correct Classification

    Mr. Knollenberg. Please finish your point. Do you think the 
percentage or number of students who have been classified as 
requiring special education is too high? Do you think the 
percentage or number is appropriate?
    Dr. Vance. No, sir. Our identification of special education 
youngsters is consistent with similar school districts across 
the country. However, I do agree that not only in the District 
of Columbia and urban centers across the country, we do have a 
practice of over-identifying youngsters, primarily African-
American youngsters, and particularly young African-American 
males, at a much lower age, in kindergarten and first grade, 
than we should.
    We have begun to implement strategies and programs which 
provide, between the classroom and the special education 
classroom identification, initiatives which we feel will begin 
to lessen that practice in the District of Columbia.
    Mr. Knollenberg. But you do not think they are 
mischaracterized?
    Dr. Vance. No, sir. We have a very exacting process.
    Mr. Knollenberg. I am going to accommodate, obviously, Mr. 
Fattah for questions at this point. I think we have to have an 
eye on the clock, too. I have been advised that we have two 
votes coming up, so what we will probably do is adjourn at the 
appropriate time and come on back, after the votes. This 
happens all the time, as you well know.
    So, Mr. Fattah?

                          Teacher Compensation

    Mr. Fattah. Thank you.
    Superintendent, in your testimony, you point out that one 
of your big dilemmas is your ability to compensate teachers at 
the same level as some of the neighboring school districts. 
Could you elaborate on where you are? What do you pay teachers 
now? And where does that stack up relative to some of the 
surrounding districts?
    Dr. Vance. Yes, sir. Our starting salary for teachers with 
a bachelor's degree and fresh out of college, as most of our 
new recruits are, is in the range of $32,500. We are expected 
to compete against school systems, Arlington, Fairfax, 
Montgomery and Howard, which you know by the recent accounts in 
the newspaper are not only paying upwards of $38,000 as a 
starting salary for their new recruits, but have asked for 
additional funds to increase that amount.
    What I have recommended in the Superintendent's budget is 
that we add additional funds at least to be competitive and to 
raise our starting salaries up to a minimum of $38,000 for 
those teachers with a baccalaureate degree.

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



                         Per Pupil Expenditures

    Mr. Fattah. Now, let me get back to the chair of the board. 
I want to understand more clearly this question about per-pupil 
expenditures, because I assume that it is tied to what you can 
pay teachers. So it is how many dollars you have available.
    As best as I can understand, notwithstanding the rhetoric 
about it, your per-pupil expenditure is lower than Fairfax and 
almost all of the neighboring school districts that are 
contiguous to DC.
    Ms. Cafritz. Right.
    Mr. Fattah. Now, the board has asked for what number? What 
is going on with this debate between the board and the mayor? 
Where are the numbers on that debate?
    Ms. Cafritz. Well, what the board is really asking is that 
the per-pupil formula, that the foundation of it be changed 
back to what it originally----
    Mr. Fattah. Can you quantify that for me? I am looking for 
a number.
    Ms. Cafritz. Okay. Our current formula gives us $8,026 a 
pupil. The mayor's initiative would give us $29 in addition. 
The technical adjustments that need to be made would give us an 
additional $227. And the initiatives that the board put in 
would add an additional $600 a pupil. This would keep us, 
still, $207 below the original foundation.
    Mr. Fattah. So as best as I can understand, that would take 
you to roughly $8,900?
    Ms. Cafritz. Yes.
    Mr. Fattah. Okay. And at least as best as my staff can 
understand, a comparable number to that would be $11,450 in 
Arlington and $10,029 in Alexandria?
    Ms. Cafritz. Correct.
    Mr. Fattah. How are you going to compete, given those 
differentials in their ability, even as you try to move your 
teacher salaries up, in light of the fact that they are going 
to be moving ahead of where they are now? How are you going to 
attract quality teachers? Or retain them?
    Ms. Cafritz. Congressman Fattah, you know, yesterday 
someone on the superintendent's staff said that we are really 
asking them to travel up two streams simultaneously, one of 
which is building capacity and the other is cutting out all 
excess. We have been much better on cutting out excess than 
building capacity.
    There is no way we can compete. And this is something that 
really frustrates me, it is almost as if there is a perception 
that it costs us less to do things, somehow. Educating this kid 
across the river just is a little bit cheaper than it is over 
there on the other side of the Potomac in Arlington. It cannot 
be done. It cannot be done. It is even harder here, because our 
cost of living is even greater.
    Mr. Fattah. It is higher. Okay.
    Let me ask Superintendent Vance one other question, because 
I realize we are going to have to go vote. I do want to 
recognize my colleague from the great Commonwealth of 
Massachusetts, who has joined us, and his continuing interest 
in these matters.
    Superintendent, I think most members of Congress have said, 
and not just from a partisan standpoint, they believe that many 
of these questions about schools are best handled by the people 
closest to the children.

                    Federal Regulations or Mandates

    So one of the things that might be helpful to us is if, 
given that philosophy, you could share with us now or at some 
later date in writing, any federal regulations or mandates that 
constrain the flexibility that you need to make the reforms 
that you are interested in here in the District, because I am 
sure that we would share some interest in trying to address 
those issues, because that has been part of what the 
administration and the majority say they want to do for school 
districts around the country. It seems to me that we could 
start here in the capital city to help you, to whatever degree 
we could, in your efforts.
    So you could respond now, or, again, you could share that 
at a later point.
    Dr. Vance. We do have that information, and we are building 
it. And what I would be very pleased to do is, very shortly, 
provide you and the members of the committee detailed 
information relating to that question and request, sir.
    It would be our pleasure.

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Fattah. Thank you.
    Thank you, Mr. Chairman.
    Mr. Knollenberg. Thank you, Mr. Fattah.
    We have with us, as Mr. Fattah mentioned, Mr. Olver, who 
has joined us. And we welcome him to this first hearing.
    And to save some time, very quickly, we have, we believe, 
enough time for a couple of questions, Mr. Olver. So we will 
let you proceed.
    Mr. Olver. Well, with the indulgence of my ranking member 
finishing up, and I am sure he has a great many more. Thank you 
very much, Mr. Chairman, for recognizing me now, because I 
believe when we come back from these votes, I will have three 
different subcommittees simultaneously meeting.
    Fortunately, they are all in this hallway. I just have to 
try to figure out which door gets into which one so I can spend 
some time at each one of them. [Laughter.]

              Need for Standardized Per-Pupil Expenditures

    I would like a little additional clarification. It seems to 
me it would be nice to have exactly comparable data on the per-
pupil expenditure in corresponding school districts, in 
Montgomery County and Prince George's County in Maryland, as 
well as the immediate close counties on the Virginia side, with 
a very clear, if you have those data, a clear enumeration of 
how we can compare oranges to oranges.

                         Student-Teacher Ratios

    Secondly, and my request to you here is, can either the 
superintendent or the president of the board of education give 
me what the pattern is of the student-teacher ratios--the 
change--is it about the same throughout the school system? What 
is the pattern that you are trying to achieve? What is it now? 
And what is it going to be?
    Dr. Vance. Yes, well, one of the consistent results of the 
most recent research is of the things that matter in teaching 
and impacting achievement of students is class size, 
particularly the closer you get to a ratio of 1-15. And so 
currently in our early childhood and early primary years, we 
are currently at a level of 18-1. Our budget addresses that.
    Mr. Olver. In early----
    Dr. Vance. Early.
    Mr. Olver. In kindergarten----
    Dr. Vance. That would be kindergarten, first and second 
grades.
    Our effort to change the uniform per-pupil funding formula 
is to decrease that even further. And then our range for the 
balance of the elementary grades will range between 19 and 22.
    Mr. Olver. Through grade eight, would that be?
    Dr. Vance. Through grade eight. Until you get into the area 
of departmentalization. And that varies then upon the subject.
    Mr. Olver. Your standard is now somewhere between 19 and 
22?
    Dr. Vance. I would say between 18 and 22 would be the 
standard, because of the size of our early childhood grades. In 
high school, it would range between 22 and 25, as an average.
    Mr. Knollenberg. If you wish, we have about three minutes 
until the bell. But I would come back to you upon our 
returning, if that is all right?
    Mr. Olver. I will take advantage of that.
    Mr. Knollenberg. All right, let's do that.
    Mr. Olver. If you want to think further about how best to 
communicate what you are actually living with; how many are 
right in the middle of that average and how many are outside 
and things of that sort. And what rules you have to improve 
down the road----
    Dr. Vance. And we do have staff with us today that can 
answer the specifics of that question, sir.
    Mr. Knollenberg. The Committee will stand in recess until 
we return. It will be shortly.
    Thank you.
    [Recess.]
    Mr. Knollenberg. The Committee will come to order.
    We have with us from the State of New York, Congressman 
John Sweeney, a member of the subcommittee. He would be in line 
to ask a question next, and then as soon as possible, we will 
defer back for the additional questions from Mr. Olver.
    So, Mr. Sweeney?

                 Opening Remarks of Congressman Sweeney

    Mr. Sweeney. Thank you, Mr. Chairman. It is great to be 
here.
    Let me welcome and thank the panelists, and apologize for 
missing some of the earlier portion. There are three separate 
hearings right along this hallway that I have been running back 
and forth to.
    I read through and reviewed much of the testimony. And I 
would apologize if I am going to go over some ground that you 
already covered. So I will start with a very basic question. I 
think we all have the same priorities, I think we all have the 
same concerns and interests in making improvements in the DC 
schools, including any other options that may exist to expand 
beyond what is the normal thinking.

                        FACILITIES IMPROVEMENTS

    And after reviewing the testimonies, the common themes seem 
to be more directed toward facility improvements than focusing 
necessarily on the in-the-classroom kinds of needs. And I think 
that may or may not be an accurate statement, so I will give 
you a chance to rebut that if that is the case.
    But it seems to me that the compelling interest of many of 
you has been the status of the structure, the bricks and 
mortar, if you will, which I think is probably prevalent 
throughout the nation in many respects.

                         IN-THE-CLASSROOM NEEDS

    So I would like to try to bring out from the panel a sense 
of the in-the-classroom kinds of needs and interests that you 
have; for example, teacher accountability, teacher improvement, 
the ideas that you have, what you would like to see 
implemented, those kinds of issues. If I could just start with 
that broad question, just to give me some perspective.
    Anyone?
    Dr. Vance. Yes, thank you very much for asking us to speak 
more about what we are making an effort to do as it impacts the 
academic framework of the school system, and more specifically 
in the classroom. I am going to very quickly ask our chief 
academic officer to come to the table, that is Ms. Mary Gill, 
because she is the person who has that immediate responsibility 
and can in a few well-chosen words let you know, sir, quite 
frankly, more than I can.
    Ms. Gill?
    Ms. Gill. Yes.
    Dr. Vance. Come to the table, please.
    Mr. Knollenberg. Ms. Gill, would you announce who you are, 
your title?
    Thank you.
    Ms. Gill. Good morning. Mary Gill, Chief Academic Officer.

                    IMPROVEMENTS NEEDED IN CLASSROOM

    The improvements we need in the classroom, some have been 
identified in an academic plan we have developed from 1999 to 
2003. The areas addressed are early childhood education; 
completion of our standards; assessment protocol to develop a 
comprehensive assessment system that puts instructional 
framework from the development of the standards of teaching and 
learning for reading, math, science, social studies, world 
languages, art, music, health and physical education. That is a 
part of that. The other would be improvement of technology.

            SPECIAL EDUCATION AND ENGLISH AS SECOND LANGUAGE

    The next goal in that would be the improvement of the 
services for all of our students in special education and 
English as a second language, the improvement of teacher 
competencies, teacher certification, teacher professional 
development and leadership, improving the instructional 
competencies of our principals and the entire staff of the 
school system. And the goals also would be addressing system-
wide performance and accountability.
    The direct impact in the classroom, first, we work with 
consortiums of school systems across the country around teacher 
preparation, and we know that the research is saying the 
difference in student achievement, the greatest impact, would 
be on professional development, on what the teacher looks like. 
And the most recent research says that we have been looking at 
pedagogy, the content of the teachers. So that is leading our 
school system to have a very comprehensive development system 
of our teachers, one, first in certification.

        PROFESSIONAL DEVELOPMENT OF TEACHERS AND ADMINISTRATORS

    Two is in building teacher cadres. The strength of the 
school is based on professional development from within, so 
building teams of teachers and administrators, led by school 
system goals that are aligned to curriculum goals, where 
decisions are made inside the school system, inside the 
schools, looking at assessments.
    We now have high-quality instruction materials. We have a 
five-year adoption plan.
    In the classroom, the impact will be the certification of 
the teachers; the content knowledge of the teachers; teams 
within the building, administrative and teacher teams that can 
look at the standards and develop high-quality instructional 
materials. Most significant would be thevariation of courses 
that all schools have, core reading, math, science, social studies, 
art, music, health, physical education.
    Our high schools have advanced placement courses--variation 
on that. We have an underlying intervention program that 
supports the core instruction program, and the piece on top of 
that would be all the materials and the facilities to upgrade 
to have a state-of-the-art learning environment.

                      TEACHING STANDARDS DEVELOPED

    Mr. Sweeney. Ms. Gill, I appreciate your participating in 
testimony. You mentioned that in standards development, you 
were in the process of completing, and you mentioned that you 
have also developed, I believe, standards and goals for 
teaching.
    Ms. Gill. Standards are completed, standards of teaching 
and learning, yes.
    Mr. Sweeney. Well, when did you start the standards 
development and how far away from completion are you?
    Ms. Gill. The curriculum frameworks were completed between 
1994 and 1996. And with the abolishment of the entire 
instructional unit, that delayed until 1998. The standards of 
teaching and learning for pre-K to 12 for reading, math, 
science, social studies were completed between 1999 and the 
year 2000. Everything was completed except for world languages. 
World languages are in the process now. The other standards of 
teaching and learning were completed in 2000.
    Mr. Sweeney. And I think I heard you say they used that by 
contrasting national trends.
    Ms. Gill. Yes.
    Mr. Sweeney. Okay. I have run out of time, but I would like 
to either follow up with you, or if you could send to my office 
some of that information just to give me a historical and a 
substantive perspective. I would appreciate it.
    I yield back my time, Mr. Chairman.
    [Clerk's note.--The documents ``District of Columbia Public 
Schools Curriculum STANDARDS for Teaching and Learning'' has 
been retained in the Committee's files.]
    Mr. Knollenberg. Thank you, Mr. Sweeney.
    We want to return now to Mr. Olver, who was caught 
midstream. I think he had a few minutes or so left, and so I 
will recognize Mr. Olver for his continuing questioning.
    Mr. Olver. Thank you very much, Mr. Chairman. I am going to 
use less, I think, than my two minutes. Sometimes I cannot 
judge how much time I am going to take. But then I really want 
to go and lead my usual hit-and-run at one of the other 
subcommittees.

                            CLASS SIZE DATA

    I think the simplest way maybe would be to just ask the 
superintendent or the chair of the school board to, if you 
could, summarize these class-size data in three bar graphs, 
with the bar graphs showing the percentage of students in the 
pre-school through grade 2 that are at 16-1, 17-1, 18, whatever 
the number who are presently in classroom sizes along the way, 
so one can get a picture of that. Then you have given a second 
group of three through eight, what that looks like. It is in 
the next group up from 18 through 22. And then, the high school 
groups that are higher.
    And then, if there is a difference between that, that is 
good base information. If your goals differ from that in terms 
of what you would like, you have indicated clearly you would 
like to bring the lower grades lower. Show on a similar bar 
graph what the goals ought to look like. It probably can be 
done on one bar graph that shows what the distribution is as it 
is and what they might be as goals.
    I think that would summarize the data I was looking for. 
And we could talk a lot about it and no one could rely upon it 
unless they were to make it up. And I hope that would be useful 
to others than just me.
    And I thank you very much, Mr. Chairman.
    Mr. Knollenberg. Mr. Olver, I think it would be. And in 
connection with that, would you want something in writing from 
the panel?
    Mr. Olver. I would hope it would be given to us so that it 
might be in the record.
    Mr. Knollenberg. All right. Let's request that.
    Dr. Vance. We will prepare that and see that you receive 
it, sir.
    Mr. Olver. Thank you very much.
    Mr. Knollenberg. So ordered.

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Knollenberg. Thank you very much, Mr. Olver.
    Mr. Olver. Thank you for indulging me.
    Mr. Knollenberg. You bet.

               SPECIAL EDUCATION--TRANSPORTATION PROBLEM

    Let me go back to a question on special education--the 
transportation side of that--providing bus transportation for 
special education students. From what I can gather, it is a 
mess. And this city spends about $10,000 per student, and the 
system is still plagued by long ride times, by safety issues 
and most importantly, by lateness. For $10,000 per student, we 
should be able to get our students to school on time.
    My information indicates that this is not a new problem. It 
has been around for some time. It did not happen overnight. 
Apparently, it results from poor hiring decisions, under-
performing employees and absenteeism. We have been told that 
one in five drivers is absent from work on any given day.
    That deeper look shows there are some inadequacies when it 
comes to the finance department, to procurement and to human 
resources processes. I also got word that the city actually 
paid the parents of 16 special education children to drive 
their kids to school as part of a pilot project to seeif some 
buses could be trimmed from the route. It apparently has not worked 
yet. It sounds like this is a policy that is desperation driven rather 
than actually sound policy. Now the courts have gotten involved in this 
process.
    So, Dr. Vance, kind of a long-winded preamble to getting to 
a question. Some action, I think, is clearly needed. What steps 
are you taking to remedy the city's special education 
transportation problem?
    Dr. Vance. Yes, sir. I would not deny the accuracy of your 
preamble, sir. But we are rapidly working from under that.

           Special Education--Houston Transportation Problem

    Months ago, after I took this position, I talked with Dr. 
Paige in Houston, because I knew he had had considerable 
similar transportation problems. And I was asking Dr. Paige how 
he had resolved it. And he said, ``Well, I had one man who I 
turned it over to and he resolved it for me.'' And as a 
consequence of that, we have hired and brought from Houston, 
months ago, going back to October, the gentleman who resolved 
that for Dr. Paige, long before he became secretary of 
education.
    That is Mr. David Healey, and he can quickly and briefly 
just respond to your question to me, sir. I thought you needed 
to hear from the person who is serving in almost a receiver's 
role in straightening out our transportation ills, sir.
    Mr. Knollenberg. Would you kindly, for the record, indicate 
your name and your title?
    Mr. Healey. Yes, sir. I am the transportation 
administrator. My name is David Healey, sir. And I want to 
thank you all very much.
    Mr. Knollenberg. Thank you. You are recognized. Thank you.

         Description of Special Education Transportation System

    Mr. Healey. The transportation system that you just 
described was pretty accurate when I arrived in October. We are 
in the process of making major change. I would like to describe 
for you, though, really what it is. It is not a school bus 
operation in any stretch of the imagination. This is a para-
transit operation with very, very special children.
    It is run in a tri-state area. The schools that DC 
serviced, there are approximately 144 DC campuses. There are 78 
private contractors that basically have a superintendent just 
like Dr. Vance, and then 17 charter schools that are out there 
also. The District of Columbia, at the current time, because of 
IEP requirements, IDEA, are in a position to where they have to 
take those children to those separate campuses.
    The campuses that are outside the District of Columbia are 
truly a challenge for the District of Columbia. Also there are 
about 300 to 400 children that are foster care children that 
live in Virginia, DC and Maryland that we also have to 
transport.

           Special Education--Comparing District with Houston

    I think that if I explain it in the following ways, you 
will get a bigger picture of the challenge that the District 
faces. And I would like to compare this to Houston, if I could, 
sir. Houston, we had about 50-some-odd thousand children; about 
7,500 children were in special ed. And when we took the 
children to school, basically we got them pretty much there on 
time. And it cost us around $45 million a year, $50 million a 
year.
    DC, at the current time, has about 3,700 children that we 
are transporting on a daily basis. Those children going to all 
of those different schools, each school sets their own bell 
time. So right now, for the practicality of it, every single 
school starts school at exactly the same time. And they are 
starting in three states at the same time.
    Well, that automatically increases the number of buses that 
you need and the number of drivers that you need, because you 
cannot use a bus in, typically, any more than one school. And 
that is the largest single reason to where there is a dramatic 
increase in cost here, because you have a crew tied up.

      Special education--Court Order Requires Driver and Attendant

    Typical school districts only have a driver. By the current 
court order that we are under, federal court order, we have to 
have a driver and attendant.
    A large populace also is in wheelchair. And a very large 
populace is either in trache or some other configurations. At 
the current time, there are 21 individual students, sir, on a 
bus by themselves, because basically to make the court-ordered 
ride time, we have to have those children, or either a 
behavioral problem where they would, if they were intermixed 
with another child, they may or may not be able to hurt them. 
There are an additional 23 buses that also only have two 
children on them because of a particular campus or the same 
type of situations.

                      Buses for Special Education

    Generally speaking, the buses are very new. They were 
purchased, sir, the majority of all the buses are less than 
five years old. Two of the private contractors basically care 
for the majority of those. And then a third contractor cares 
for the other. The District does no maintenance.
    The three-state area, because of the congestion, the same 
thing that Metro runs into or any other transit operation, is 
compounded by the schools basically start at exactly the same 
time that people are trying to get to and from work. We are 
trying to use the same bridges. We are going across the same 
thoroughfares.

          Special Education Transporation--Electronic Mapping

    What we have done in a very short period of time is we have 
brought a company called Edulog in here. It is an electronic 
mapping company. Wednesday of this week was the first time one 
of their mapping people came in. We are looking at global 
positioning equipment to actually determine how long does it 
take to be on there.
    But what underscores the entire effort, sir, is that we are 
under a court order that basically, unlike any other school 
district in probably the country, we have to have a child to 
most of the schools, the majority of them, within one hour. 
That poses a real problem in the District of Columbia, sir.
    Mr. Knollenberg. One of the problems I see here is that all 
these new buses are helpful, but in terms of the employee side 
of things, you can have all the new buses in the world, but if 
you do not have people showing up for work, there cannot be a 
driver. What are you doing about that?

                        Shortage of Bus Drivers

    Mr. Healey. What we are doing, sir, aggressively, is Dr. 
Vance just brought an entire new management team in. And one of 
the first things that they were tasked with, of course, is 
getting additional drivers and staff. One of our biggest single 
problems that we have had to deal with is the tight labor 
market. There is not a school district in the country that is 
not facing a shortage of drivers.

                             Driver Academy

    What we have also done that I think is very innovative 
here, we have kicked off a driver academy where we are actually 
producing our own drivers. This has been very beneficial to the 
drivers. Because in some cases, we have taken an attendant, put 
them in our own training academy here in DC, sir, and we have 
already graduated two smallsubgroups. And we are getting pretty 
good at this. The attendants like it because they get about a 30 
percent boost in pay.
    We have also identified a need. In some cases we have two 
different bargaining units. One is what you or I would refer 
to, sir, is like a full-time group. The other is a part-time. 
We have increased just recently our full-time group by about 
another 38 people.

              Salary Survey for Special Education Drivers

    We are in the midst of a salary survey to determine in an 
environment in which you are having to hire a driver that takes 
a child in wheelchair, or a child that is in a trache 
situation, what we ought to pay those. I think as our pay and 
our surveys come back in and we move toward paying prevailing 
wage rate, that would diminish. And it would also increase the 
type of driver we would get, sir.
    Mr. Knollenberg. I may want to come back to this later. 
Thank you.
    At this point, I would like to refer to the ranking member, 
Mr. Fattah, for his turn at asking questions. Thank you.
    Mr. Fattah. Thank you very much.

          Pennsylvania--State Reimburses Transportation costs

    You know, it is interesting. In Pennsylvania, the state 
reimbursed 100 percent of the transportation costs for school 
districts in our state, and 100 percent of all of the costs 
related to special education. So it is a little difficult to 
get your arms around some of these issues that the District 
faces, because it is in such a unique situation, like the idea 
of you transporting students to schools in other states.
    No school district in the country would be in that 
situation, Mr. Chairman, at all.
    And I think, some understanding of these peculiar 
circumstances would go a long way in maybe having some 
appreciation. Because the notion that the most competent person 
in the world could get such a system to function efficiently is 
hard to fathom, to be moving students around three states in 
the middle of the rush hour.
    I know as a member just trying to get to work is difficult 
in the morning. I do not know why we would think that somehow a 
bus-like vehicle could move along the road any quicker than 
anyone else could.

                         Per Pupil Expenditure

    Mr. Superintendent, I want to get back to this per-pupil 
expenditure issue for a minute, because I want to make sure 
that I understand it. Could you comment on the per-pupil 
expenditure situation in the same frame that the chairwoman of 
the board did?
    Mr. Vance. Certainly. Yes.
    Mr. Travers, will you identify yourself, please?
    Mr. Travers is our director of budget.
    Mr. Travers. Hi, I am Jonathan Travers, director of budget, 
as Dr. Vance said.
    To pick up where the President of the Board left off with 
respect to per-pupil expenditures, there is an organization in 
this metropolitan area called the Metropolitan Association of 
Boards of Education. And that organization prepares annually, I 
think, very good financial data, including data on per-pupil 
expenditures. And so, what we have tried to do is capture that 
data and apply the same methodology that they use to the DCPS 
budget.
    And so, I would be happy to share the numbers with you in 
writing at a later time. But I can go through, if you would 
like now, some of the various funding levels.
    Okay. Prince George's County, and we have broken it down 
between fiscal year 2001 actually dollars per student and 
fiscal year 2002 proposed. So, fiscal year 2000----
    Mr. Fattah. If we could just deal with the actual figure 
for 2001, that would be helpful.
    Mr. Travers. Let me just go across the jurisdictions.
    Prince George's County is just over $6,000 per student. 
Montgomery County is just over $9,000. Fairfax is approximately 
$8,500. Arlington is approximately $11,300. Alexandria is 
$10,600. And DC is just over $8,000.
    Mr. Fattah. Okay. That is very helpful. Thank you very 
much.
    Well, walk through the proposed numbers now, since I have 
been able to grasp these.
    Mr. Travers. Okay. Prince George's has a 17 percent 
increase to bring it up to $7,100. Montgomery County is at 
$9,900. Fairfax is $9,300. Arlington is $12,000. Alexandria is 
$11,100. And the DC increase, not including the various 
initiatives for 2002, so this number under-reports what the 
total is, is $8,400.
    Mr. Fattah. $8,400. That is the mayor's proposed per-pupil?
    Mr. Travers. No.
    Mr. Fattah. That is the school board's.
    Mr. Travers. This is the superintendent's proposed budget 
prior to----
    Mr. Fattah. The superintendent and the school board's are 
the same.
    Mr. Travers. Well, prior to, and this is the limitation of 
the number that I just gave you, prior to the board adopting 
the budget, the superintendent proposed a funding level under 
what the board proposed.
    Mr. Fattah. I got you.
    Mr. Travers. And this is associated with that number.
    Mr. Fattah. Thank you.
    Thank you very much. Thank you, Mr. Travers.

                       Per Pupil Expenditure Data

    [Clerk's note.--The following material was submitted for 
the record:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                 SCHOOL FACILITIES--CORPS OF ENGINEERS

    Mr. Fattah. I was quite impressed, Colonel Fiala, by the 
report that you gave on one of the issues about the school 
facilities in relationship to the Army Corps. I had some 
question about where you
group numbers together, though. Where you said, ``either in the 
process or completed'', when you talked, for instance, about 
bathroom renovation and some of the other renovations.
    Could, at some point, you supply to the Committee an 
understanding of what is completed and what is in process, 
rather than have those two items grouped together?
    Colonel Fiala. Yes, sir. We will do that. Those numbers I 
gave you were the combined team, both what the corps, my 
organization does, and with what the DCPS staff and their 
contracting vehicles. We will provide that.

                    Status of School Facilities Work

    [The following was supplied for the record:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
     CORPS OF ENGINEERS--USE OF SMALL AND DISADVANTAGED BUSINESSES

    Mr. Fattah. Among all of the credit that you have received 
for the work that you have done, some of the criticism has to 
do with the utilization of small businesses located here in the 
District. The criticism relates to those businesses being able 
to fully participate in the work. Would you care to respond to 
that?
    Colonel Fiala. Yes, sir.
    I am very proud of our effort to outreach in the community. 
Just to give you an example of contracts starting November 1998 
to present, small businesses a total of 63 percent, 
disadvantaged businesses 55 percent, and DC-based is 29 
percent.
    Mr. Fattah. I have that chart in front of me. Is this the 
number of contracts? Or is this the percentage of the total 
contract amount?
    Colonel Fiala. That is the amount of money under those 
contracts. So what you are measuring is dollars there.
    Mr. Fattah. So, 29 percent of the dollars went to DC?
    Colonel Fiala. DC-based. Yes, sir.
    Mr. Fattah. Okay. I got you.
    And are we making every effort possible to make sure that 
the business community here that helps to finance the schools 
also has a chance to----
    Colonel Fiala. I think we are making----
    Mr. Fattah [continuing]. To have procurement opportunities?
    Colonel Fiala. I think our program is very aggressive in 
that, in getting small businesses to have the opportunity to 
compete. And we have had a couple series of outreach job fairs 
in the past. And in conjunction with the school system, we are 
planning one, I think, in May.
    Mr. Fattah. At some point, I would like to follow through 
on that, Mr. Chairman. And I note the red light is on. So I do 
not know how liberal the chair is being on this matter, but I 
do have at least one more question for the superintendent. But 
I will yield my time back----

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Mr. Knollenberg. Why don't I come back with a question or 
two, and then I will----
    Mr. Fattah. Go right ahead.
    Mr. Knollenberg. Obviously, if we do not get any other 
member, you will be right back on the stage.
    Mr. Fattah. All right.
    Mr. Knollenberg. I recognize the problems that you have 
with the transportation of special education students--the 
gentleman is not here anymore--but Dr. Vance, there are 
problems, obviously, this being a multi-state area, in terms of 
providing the transportation when schools located in various 
jurisdictions have the same opening times.
    But I noticed you have a driving academy. And apparently, 
you have a driving academy because the quality of the work 
force is not that good. I presume that is one of the reasons.

          Special Education Transportation--Workforce Quality

    Certainly, there is the absenteeism rate. And that is the 
concern that I have, Mr. Fattah, that if people are not showing 
up, those buses are not going to get out there no matter how 
much difficulty you have in getting them around this 
metropolitan area.
    So is the work force quality a problem? Is that what the 
academy is for? And what can we expect to see happen here with 
respect to a better quality work force that does show up for 
work on time?
    Mr. Healey. To answer your question directly, sir, what we 
have done is another initiative. We are working with some local 
universities right now. We are going to be bringing in 
different type of training to the actual work force. In 
conjunction with that, we have met with other school districts 
that are in the vicinity and discussed similar problems that 
they were having recruiting or how you get around there.
    One of the biggest efforts, since October, has been in the 
area of discipline. We are under a time line now to develop a 
strategy on how to deal with, like, leave, or people taking off 
when they were not supposed to.
    So, we are aggressively behind that. The new management 
team is in place. And they are pushing as fast as they can. We 
are bringing other contractors in as we need them to support 
the staff. And we have seen, in the last, let us say, three-
week period, we are even seeing dramatic improvement compared 
to weeks ago in the number of buses that we were having to 
double up on.
    So, I think the sustained efforts that we are going to put 
forward, plus our driving academy and getting others to train 
the staff, I think that, just like any parent, or any of us, we 
would want the most qualified and most competent staff out 
there, sir.
    Mr. Knollenberg. We wish you well in the direction of 
bringing that about and I thank you very kindly.

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Mr. Knollenberg. Let me go to a question now for Dr. Vance, 
perhaps get one for Josephine Baker as well.

                        Superintendent's Tenure

    Last July, I believe, Dr. Vance, you assumed your position.
    Dr. Vance. Yes, sir.
    Mr. Knollenberg. You have been on board for the better part 
of a year. You came from an affluent suburban setting in 
Montgomery County, where, I guess, things run relatively 
smoothly. Now you are asked to lead, as some would describe, 
certainly a bruised if not broken school system, which contains 
over 70,000 youths.

                   Shortage of Textbooks and Supplies

    A short time ago we did a field trip here in the city. We 
did not pick a particular school, but we happened to wind up at 
Maury Elementary. I was stunned when one of the students, when 
she was asked ``What do you need?''--you should expect to get 
anything when you ask that question. But I thought it was kind 
of strange when the little grammar school child said, ``We need 
textbooks, supplies.''
    Here we are in the 21st century in the Nation's Capital and 
the school system does not get books to the students? I have 
heard even other stories, which may or may not be valid, 
anecdotal, that you cannot take a book home because there are 
no books to take home. Now, that may be challenged. But it is a 
concern, certainly.
    What can you say, what can you speak to that ensures that 
this little girl and her counterparts in the city will get the 
books and school supplies they need through the procurement 
system, Dr. Vance?
    Dr. Vance. Catching up and bridging that handicap is going 
to require a constant influx of additional resources. We have 
the past two fiscal years put large sums of money into our 
budget for textbooks. We have, as a matter of fact, established 
a unit whose exclusive work is textbook examination, 
certification and work with the vendors to make certain that we 
do get textbooks in the classrooms in an expeditious manner.
    Mrs. Gill addressed the extent to which we are coordinating 
selection of textbooks with our curriculum. And so, last year, 
we put upwards of $8 million in our budget for textbooks. And 
we have included similar figures in this year's budget.
    It is going to take time. It is not only textbooks. It is 
our media centers, our libraries. Visit the schools----
    Mr. Knollenberg. Dr. Vance, would you say the problem is 
resources? Or is it procurement? Or is it both, is it a blend 
of both? Are those the problem?
    Dr. Vance. Well, it has been in the past not just the 
procurement system, sir, it has been the lack of resources to 
purchase textbooks. The budget just did not have sufficient 
funds in it to do that. And we are in the position now where we 
are just trying to catch up. And we have, I think, in the past 
two years have indicated, and hopefully this year, make 
remarkable progress in doing that.

                        Materials for Libraries

    My other point was going to be it is not only textbooks for 
the classroom. It is print materials for our libraries, which, 
and I have to be candid, are just in a dastard fashion.
    I visit the schools. To date, I have visited close to 60 
schools. And invariably, I go to the libraries and media 
centers and talk with the librarians and I ask them about, 
``Where do we rate in terms of the national average and 
recommended standards for print materials per child?'' And they 
laugh at me as I am bereft of reason.
    And I say to them, ``Well, if you were to remove all print 
materials from your shelves and in your stacks that are 30 or 
35 years old, what would that do to your collections?'' And 
invariably they say, ``Dr. Vance, it would eliminate between 40 
and 50 percent of the books we have.''

                  Public Schools--Procurement Problems

    Mr. Knollenberg. Dr. Vance, is there an apparent 
transparency problem within the procurement system, in your 
judgment?
    Dr. Vance. Not now, sir.
    Mr. Knollenberg. It has changed?
    Dr. Vance. Recently, those responsibilities were 
transferred to the school system. And we have made rapid 
progress, primarily through the work and association with the 
Commission for Excellence in Government and their associates. 
And we are well on our way to what I believe is going to be a 
state-of-the-art procurement system and second to none in the 
United States.
    Mr. Knollenberg. If I could turn to Ms. Baker and then I 
will get back to Mr. Fattah.
    Do you have a similar problem in terms of procurement, in 
terms of getting supplies?

                CHARTER SCHOOLS--NO PROCUREMENT PROBLEMS

    Ms. Baker. Well, we must remember that each charter school 
is an LEA, an individual LEA, so they do all of their 
procurement as a unit themselves. Theirs is a question of 
organization and handling. And what we do as a board, to be 
sure that those things are there when they are supposed to be 
there, especially the first year, which is, of course, in a 
way, the most important, is we have a pre-opening audit in 
which we have consultants who go into the buildings to be sure 
that the buildings themselves have all of the necessary safety 
certificates, et cetera, but also that the materials are there 
and ready for students to use.
    Mr. Knollenberg. Is it an ongoing kind of a thing? Is it 
continuing? You see that at the beginning, but do you----
    Ms. Baker. We see it at the beginning. And then our 
monitoring process also gives the people who go in during the 
school year, as a part of the oversight, an opportunity to 
observe that all of those things are there and that the 
students have use of them.

            CHARTER SCHOOLS--PROGRAMS FOR SPECIAL EDUCATION

    I also would like to mention, as you talked about 
transportation and special ed, that one of the things that we, 
as a charter community, hope will happen, and that is that one 
way to solve some of that problem, or at least to have two 
things solved, is that charter schools can be havens or can be 
organizations that plan programs for special ed students, in 
which case their location and their availability and the number 
of students going, instead of being spread all over, would be 
concentrated.
    We do have one school that concentrates on special ed 
students. While any child, of course, by law can apply to go 
there, special ed is their emphasis. The Board of Education 
also recently opened a school that is primarily focused on 
special education. So special education and charter schools, 
that may be part of a solution that could take place.
    Mr. Knollenberg. Thank you, Ms. Baker.
    I am going to now yield back to Mr. Fattah for further 
questions.
    Mr. Fattah. Thank you, Mr. Chairman.
    Let me get to my principal question first. I am going to 
come back to this transportation issue.

              SCHOOLS--NO DEDICATED SOURCE OF TAX REVENUE

    The local tax structure to raise money for schools is based 
on a property tax in the District? How are monies that are 
raised for the per-pupil expenditures raised from the District 
taxpayers?
    Ms. Cafritz. There is no dedicated tax for schools. It is 
not taken from property tax, per se. It is taken from----
    Mr. Fattah. It is taken out of the District's----
    Ms. Cafritz. General fund, that is correct.
    Mr. Fattah. Okay. The District has a property tax, right?
    Ms. Cafritz. Yes, we do.

                    PROPERTY IN D.C. NOT ON TAX ROLL

    Mr. Fattah. What percentage of the property is not on the 
tax roll? Does anybody know?
    Ms. Cafritz. Excuse me. Say that again?
    Mr. Fattah. What percentage of the property in the District 
is not on the tax rolls?
    Ms. Cafritz. It is very, very large.
    Mr. Vance. The staff says it is approximately 40 percent.
    Mr. Fattah. About 40 percent of the property in the 
District is not taxed?
    Mr. Vance. That is what they are indicating.
    Mr. Fattah. That means that the buildings belong to the 
churches or universities or the federal government----
    Ms. Cafritz. Yes.
    Mr. Fattah. I want to make note that, as best as I can 
understand this, and I am just trying to learn as I go, but as 
best as I can understand, the state function in the District 
would only reimburse for special education transportation. All 
of the other transportation costs are being borne by the 
District of Columbia.

        PERCENTAGE OF SCHOOL TRANSPORTATION COSTS PAID BY STATES

    In the 50 states in the Union, it is obvious that states 
generally pick up 85 to 100 percent of the costs for 
transportation of students in their school districts.
    [The information follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
          STATES REIMBURSE LOCALITIES FOR TRAINING BUS DRIVERS

    Mr. Fattah. It is not true in every single case. But even 
in those cases where it is not true, like in your home state of 
Michigan, the state provides a reimbursement for the expenses 
of training bus drivers, which I know is a concern of yours, 
the reimbursement to nonpublic schools and expenses associated 
with obtaining certain special ed services in public schools. 
And on and on and on.
    This outlines that the District is in a circumstance that 
is unique and I think an unfair burden, and hampers the 
District, probably, I would assume, in terms of getting other 
education-related items purchased.

             FEDERAL INSTITUTIONS RELATIONSHIP WITH SCHOOLS

    Let me ask you one thing about the library issue that was 
raised. We have a number of federal institutions here, which I 
know do not contribute in terms of the property tax base. I 
wonder if they contribute another way. We have the Library of 
Congress. We have the Smithsonian. Do some of these 
institutions have special relationships with the District 
school system? And do they work with you in ways that are 
useful?
    Dr. Vance. Yes. And I would say, based on past experiences 
of mine, in a most exemplary fashion. We have mentorships, 
tutorialships. We have activities, school-wide initiatives. And 
the support for our school systems, as I am suggesting, is 
exemplary.
    Mr. Fattah. Okay. Thank you very much.
    Mr. Knollenberg. Thank you, Mr. Fattah.

 PER PUPIL ALLOCATION IDENTICAL FOR CHARTER AND REGULAR PUBLIC SCHOOLS

    Ms. Baker, one other question, and for Dr. Vance as well. 
And I recognize there are other items that are not 
distinguishable maybe on the surface. But is it not true that 
charter schools have the same funding level as the----
    Ms. Baker. We function with the per-pupil allocation, yes.

             PROCUREMENT NOT A PROBLEM FOR CHARTER SCHOOLS

    Mr. Knollenberg. It would seem to me that if the per pupil 
allocation is the same, there should be some similarity in 
terms of the procurement working as well in the regular public 
schools as it does with the charter public schools.
    I just wanted to note that. A response is not required. I 
know that there, obviously, are other details. But it is an 
observation.

             CHARTER SCHOOL PARTNERSHIP WITH KENNEDY CENTER

    Ms. Baker. May I also make a comment about the museums? We 
do have one charter school that has a partnership with the 
Kennedy Center, and our application clearly indicates an 
initiative to involve the Library of Congress. That has always 
been on the radar. They have not come on board yet. But every 
year----
    Mr. Fattah. I just wonder how we could have in the same 
city the world's greatest library collection and school 
libraries that do not have a respectable collection. And I want 
to find a way to make sure that those two extremes do not 
exist.
    Ms. Baker. Surely.
    Ms. Cafritz. I would like to add a couple of points to 
that.
    The philanthropic dollar that goes to charter schools is 
greater than the philanthropic dollar that goes to public 
schools on a school-by-school base.

                      CHARTER SCHOOLS PROCUREMENT

    But most importantly, charter schools can procure school by 
school. And so it is much faster to go to the office and to say 
to the business manager, ``We need `X' and here is all the 
paperwork,'' than it is for those people in charge of 69,000 
children to engage in a process. So it is very important that 
that be factored in.

        DUKE ELLINGTON SCHOOL OF THE ARTS AND THE KENNEDY CENTER

    Also, the Kennedy Center has a formal governing 
relationship with one of the public schools, that is the Duke 
Ellington School of the Arts, which they do jointly with George 
Washington University, in which they join the superintendent on 
a board of the school that functions as a public school.
    I am well aware, because of my, sort of, other life, of a 
lot of relationships between the schools and the Federal 
community. Some work better than others. We need to bring 
more----
    Mr. Knollenberg. I would like some information about the 
ones that do not work as well as they could. [Laughter.]
    Ms. Cafritz. I will be happy to contact your office and 
provide you with as accurate information, that, you know, I 
cannot really approach in this setting.
    Mr. Knollenberg. If you would do that----
    Ms. Cafritz. I would be happy to. Thank you.
    Mr. Knollenberg. Mrs. Cafritz, I appreciate that very much.
    [Clerk's note.--The information supplied was retained in 
the Committee files.]
    Mr. Knollenberg. I have a question for Dr. Vance before he 
leaves.

                  MCKINLEY TECH HIGH SCHOOL RENOVATION

    Dr. Vance, the Corps of Engineers is involved with 
renovating the McKinley Tech High School. Occupancy is planned 
for July 31, 2002, about 16 months from now.
    Dr. Vance. Yes.
    Mr. Knollenberg. How is that project coming along and what 
planning has the school system done regarding the school? How 
will the students and faculty be selected for the school?
    Dr. Vance. The planning has gone along quite well. We have 
the architectural firm, and they are building a design, and 
Colonel Fiala can tell you much more about that.
    But in terms of staff, we are currently advertising for 
staff. We have applications out nationally for the principal of 
the school. We have developed a profile of the academic 
programs and offerings, and developing the job description of 
the teachers and of the staff members who will be there to 
teach in those programs.
    We are busily identifying the attendance area and the 
criteria for the selection of the students, and we soon will be 
on the street affording them the opportunities to make 
application.
    So we are very pleased with the committees, both support 
from the Mayor's office and Council, and internally within the 
school system, that are working on this project.

              OCCUPANCY OF MCKINLEY EXPECTED JULY 31, 2002

    As I mentioned in my testimony, we recently received a 
$100,000 grant from Sprint Corporation to help us with our 
planning. So it is moving along quite well. And I have every 
expectation that we will open on time with a full complement of 
students in the first year of the program.


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Mr. Knollenberg. Well, thank you for that update. By the 
way, I think you are destined to leave here in about two 
minutes. I will turn back to Mr. Fattah to see if he has any 
question for Dr. Vance. Otherwise, I will proceed to ask a 
question of the Colonel regarding the Corps and their program.

      EFFORTS TO ENCOURAGE FEDERAL ASSISTANCE TO DC PUBLIC SCHOOLS

    Mr. Fattah. Well, Dr. Vance, I do not have any further 
questions given your time constraints. I do look forward to the 
opportunity to help find ways to assist the school district, 
given my role. And I think there are ways, that are abundantly 
obvious to me, that the Federal governmentcould be a real 
partner, beyond appropriations, with the District, given its resources.
    We have some institutions that could be of assistance to 
the District schools. Not just the Library of Congress, but we 
have some educational expertise with the military academies. 
Seems to me they could provide some assistance. And I just 
think that we need to search for ways where we can help you do 
the job that needs to be done.

                           Graduating Classes

    You have about 70,000 students. How many would be 
graduating in any given year?
    Dr. Vance. Use the figure \1/12\ of that number, sir. Our 
graduating classes range between 5,500 and 6,000 students.
    Mr. Fattah. Well, you know, I look forward to working with 
you and I am glad to see you here in the District. And this 
school district, in my estimation, should receive all of the 
help that the Federal government could provide to it and all of 
the various national initiatives, including some of my own, 
like the GEAR UP program and others, I think there should be a 
full foundation of participation here among the District 
students. And I am going to be searching for ways to have that 
happen.
    I thank you for your testimony today.
    Dr. Vance. Thank you very much, Sir.
    Mr. Knollenberg. Dr. Vance, I, too, want to join Mr. 
Fattah. We are very pleased that you are here with us today. 
And some of the questions may be pointed, but I believe you 
have had those asked of you before in other settings, if not 
here.
    Dr. Vance. Yes, sir.
    Mr. Knollenberg. And we do want to help. What we are trying 
to do is improve whatever it is we can to rise to a level, and 
I know you do, too, that will produce, for this city, a school 
system that will make people want to come back into the city. I 
do not think I overspeak when I say that, because that is 
obviously what a lot of people are looking for with you in 
terms of your leadership in that position.
    So we, again, appreciate your being here today and look 
forward to working with you.
    Dr. Vance. Thank you, sir. My apologies for having to leave 
before the hearing is over. I think, sir, you shall find us 
attentive and responsive to your requests. Thank you.
    Mr. Knollenberg. Thank you very much.

             Maury Elementary School and Corps of Engineers

    Let me now turn the question to Colonel Fiala. I think I 
have the information here. As I mentioned previously, we 
visited some of the schools and what I noticed, and I continue 
to hear about, is the condition of the infrastructure of the 
buildings. Certainly Maury Elementary is a case in point. It is 
a combination of an old building and a new building--new being 
50 years old or thereabouts, but that is new. The other portion 
was built in 1880. I mean, you could say that is three 
centuries ago.
    I had a tour of the old section, which I wanted to do, and 
I found that there is a building where no windows work. As a 
matter of fact, the air conditioning is something that has been 
``Rube Goldberged'', in the sense of a system that is put in 
place to actually measure up to what might be called an air 
conditioning system.

               Window Replacements and Asbestos Abatement

    I know you are doing some good work in terms of the 
progress that you have made. I noticed that window replacements 
are complete or under way in 14 percent of the schools. Now, 
complete is something less than 14 percent, and under way is 
the rest of it. But if I add or I subtract, there are 86 
percent that are not getting dealt with at all. And I know you 
are treating asbestos, and I think I see here that 90 percent 
of the schools have some abatement program in place. And I know 
we want safer schools for children.
    How much success have you attained if you look at all these 
numbers? And where are you in terms of completing what would be 
a goal of having all schools have windows that work, and school 
systems that are safe?
    And the windows in particular, I would like you to relate 
to that as to are you miles away from ever getting it done? Can 
we expect completion? Is it over your head in terms of being 
beyond what monies you have available? Is it beyond the 
capacity of the Corps of Engineers, is beyond the capability of 
the District? Those are some direct questions. If you would 
relate to any one of those, and particularly on the issue of 
windows, because I noticed that is something that occurs in a 
number of schools around the city.

       Corps' Response to Condition of DC Public School Buildings

    Colonel Fiala. Yes, sir. Let me talk to that. What you are 
seeing at Maury Elementary is a condition of the school system. 
It has been up until 1998. I mean, the Corps came into this 
program because the school system was under crisis, facility-
wise. I do not know how that system was allowed to get to that 
point, but the system was. You are not going to make a 
turnaround in the condition of schools and the facilities 
overnight. We have, to date, $151 million worth of contracts 
out on the street.
    Window replacements are a very tough job to do. They are 
very expensive. The number that I have is roughly $500,000 to 
$1 million a school.

   DCPS Responsible for Programming, Budgeting and Prioritizing Work

    We are involved in identifying the problems; however, the 
school system is responsible for programming, budgeting and 
prioritizing work. And you are not going to get it done 
overnight.
    So Maury----
    Mr. Knollenberg. The priority is not yours to say or to 
determine. It is done by the school system.
    Colonel Fiala. We have input, but it is the school system's 
job to----
    Mr. Knollenberg. There is a priority system in place?
    Colonel Fiala. Yes, sir. So how far and when are we going 
to get to buy out of windows is a very complex question, 
because it also is related to the major modernization and 
replacement piece. So if we have a school that may be scheduled 
to start new construction two, three or four years down the 
road, then the school system has to make a decision whether or 
not we go and put windows in there or we wait, hold things 
together until we get to a new design and new construction. So 
it is a whole multitude of issues that go in.
    The specifics on Maury I do not have, and I can provide for 
the record. I do know, and I think we, in conjunction with 
DCPS, have been in there to do some bathroom renovations and 
some other work. The windows, we have not gotten to yet.

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Mr. Fattah. If the chairman would yield for just a second?
    Mr. Knollenberg. Be happy to yield.

                     $1.4 Billion to Repair Schools

    Mr. Fattah. Is there a number associated with all of the 
work that needs to be done in all of the schools?
    Colonel Fiala. I do not think we have it, and we can 
provide that for the record. I do not know.
    Mr. Fattah. Where is the expert on the budget information?
    Colonel Fiala. Let me ask my program manager to come up 
here.
    Mr. Knollenberg. Would you identify yourself by name and 
your title?
    Mr. Morrow. Yes, I am David Morrow, program manager with 
the Corps of Engineers. And that seems like a very 
straightforward question.

                           Number of Schools

    Mr. Fattah. How many schools are there? There are 100 and 
something?
    Mr. Morrow. One hundred forty-seven schools.
    Mr. Fattah. One hundred forty-seven. Are you going to 
repair or replace all of these facilities? How much?
    Mr. Morrow. The Corps, in 1998, did an assessment of every 
single school. Order of magnitude, $1.4 billion to repair the 
schools. Order of magnitude to replace the schools, which is 
really what we need to look at, because we otherwise would end 
up with 50-or 75-year-old schools----

                        Cost to Replace Schools

    Mr. Fattah. What is the number?
    Mr. Morrow. Just over $2 billion.
    Mr. Fattah. $2 billion.
    Mr. Morrow. Yes, sir.
    Mr. Fattah. Okay. And maybe the budget expert--Mr. Travers, 
is it?--okay, could help with this. Do you agree with those 
numbers?
    Mr. Jayyousi. It is over $2 billion. I am sorry, my name is 
Kifah Jayyousi. I am the chief facilities officer for the DC 
Public Schools.
    Mr. Fattah. Over $2 billion, over $2.5 billion?
    Mr. Jayyousi. It is over $2 billion.
    Mr. Fattah. $2.1 billion, $2.2 billion?
    Mr. Jayyousi. It is very close to $2.2 billion.
    Mr. Fattah. $2.2 billion.
    Mr. Jayyousi. Over 15 years----
    Mr. Fattah. Then the chairman could go visit any school and 
they would be in wonderful shape?
    Mr. Jayyousi. If the funding is available.

                      Capital Budget Expenditures

    Mr. Fattah. Let me ask one last question on this point. 
This capital budget expenditure you said is $150 million this 
year that you have under contract?
    Mr. Jayyousi. I gave you the total number, $251 million, 
since November 1998, yes, sir.
    Mr. Fattah. Okay, this year's capital budget is what, $172 
million?
    Mr. Jayyousi. $169 million.
    Mr. Fattah. $169 million. Don't mind me, I am just 
learning. So at that rate you are talking about a long time 
before these schools are in shape.
    Mr. Jayyousi. Yes, sir.

                 Capital Program Financed Through Bonds

    Mr. Fattah. And the capital program for the city is bonded? 
I mean do you go out on the market through bonds and you borrow 
the money? How does this work?
    Mr. Jayyousi. Yes, sir. The response is what Dr. Vance had 
initiated, the former board, the current board. We have just 
completed a master plan, a long-range facilities----
    Mr. Fattah. That is where you get the $2 billion from.
    Mr. Jayyousi. Yes, sir.
    Mr. Fattah. I am trying to understand how the financing 
works.
    Mr. Jayyousi. The capital financing comes through the city 
every year.
    Mr. Fattah. And are these bond proceeds?
    Mr. Jayyousi. Most of these are bond proceeds. Over 90 
percent are bond proceeds.
    Mr. Fattah. Mr. Chairman, I am going to yield back to you 
and wait for my own time on this subject.

         Charter Schools not included in City's Capital Program

    Mr. Knollenberg. All right. Let me also understand, is the 
money that we are talking about here, does that apply also to 
the charter schools?
    Mr. Jayyousi. No, the $2.2 billion, only regular DC Public 
Schools.

                Capital Figure Compared to Other Cities

    Ms. Cafritz. But also, I really need, as a citizen on 
behalf of the people, to point out a few things.
    This $2.2 billion projected figure is quite low. If you 
compare it to a far smaller number of schools in a city, New 
Haven, one-third our size, their re-do budget is over $2 
billion, one.
    Number two, we do not have a firm plan for financing all of 
this.
    Number three, even when you look at McKinley, which is 
budgeted now at about $47 million, if you compare that to what 
it cost to build Stuyvesant-Bronx Science School and other 
similar kinds of schools, Montgomery Blair, it is much, much 
more when you talk about the whole package. And so, I really 
question the reality of these numbers being able to replace all 
of the aging schools in the system.
    And in addition to that, there are a few schools that it 
does not include. It does not include charters at all, and it 
does not include specialty schools.
    Mr. Knollenberg. Ms. Baker, would you care to respond to 
the same question, or maybe you would like to simply comment?

             Charter Schools Responsible for Own Facilities

    Ms. Baker. I certainly can comment. We know that charter 
schools are responsible for their own facilities. They do 
receive a facilities allowance, but that facilities allowance 
is obviously not anywhere near what is needed. And as Ms. 
Cafritz has said, they do often have fund-raisers, get support 
from businesses within the community and so forth. Some are 
more astute at that than others, and some of them have raised 
very little money and find themselves in circumstances where 
others are, sort of, trying hard to makeit.
    So, facilities are indeed, as you have heard from Mr. 
Brown, with the Credit Enhancement Fund, one of the biggest 
problems. Nationally one of the big problems for charter 
schools is how to provide facilities for them.

                        SEED RESIDENTIAL SCHOOL

    However, it is interesting that where they have done it, 
such as at the SEED charter residential school, they have 
really upgraded the total community. So this is one of the 
things that charter schools is doing in various places, when 
they go in, they take an old building, they renovate it. Before 
it had just been a haven for drug activity and other things. 
They have, indeed, improved that segment of the community. So, 
that is another asset that charter schools are bringing to 
communities across the District of Columbia.
    Mr. Knollenberg. Thank you, Ms. Baker.

         EXPLANATION OF DCPS FAILURE TO OVERSEE CAPITAL PROGRAM

    Ms. Gill. Mr. Chairman, there was a question asked by Mr. 
Fattah about why are they like this. We would like to move from 
what needs to be done.
    However, you may not be aware, but the school system has 
not had authority over the capital projects; that was under 
public works. And when the school system, I believe it was a 
suit to get control over capital projects, the school system 
was not given adequate funding.
    So, through years, I think it was around 1990, we can 
verify that for you, but when the school system received 
authority to make improvements and to have a capital budget, we 
did not have funds to recoup the years that the city had not 
maintained the facilities with adequate funding. And then there 
was no capital budget to begin to repair and improve and build 
schools.
    We have never recently had a long-term capital project, 
where most school systems recycle their schools every 10, 20, 
30 years. So it was getting the schools in a state of disrepair 
and not having the appropriate budget to develop capital 
projects and then the capability to deliver those projects. And 
so, getting them in disrepair and trying to make up for those 
years.
    So one is building and the other was the capability to 
maintain on a regular basis, which the school system has had. 
And we have never been able to recoup those years.
    Mr. Knollenberg. I appreciate that, Ms. Gill.
    I will now yield back to Mr. Fattah, if he has a round of 
questions.

  $745 MILLION APPROPRIATED OVER 3 YEARS FOR DCPS CAPITAL IMPROVEMENTS

    I do want to come back to this point, though, about capital 
improvements--it may be a question for you or Ms. Cafritz, but 
in the last 3 years $745 million has been approved in local 
funds for capital improvements of DC public schools. We will 
touch on that in a moment.
    So, I will at this time yield to Mr. Fattah.

                  $170 MILLION FOR REPAIRS IN FY 2001

    Mr. Fattah. Yes, I am just trying to understand the 
numbers. You have $2 billion worth of need. You are spending 
about $170 million this year. And I am trying to understand 
whether that $170 million that is being spent this year pay for 
the actual improvements or is it being spent to pay bond debt 
on past improvements. Could somebody answer that?
    Mr. Jayyousi. Yes, sir. The $170 million this year, one-
third of that pretty much covers health, safety and security 
projects, the ongoing upkeep of the District, making sure these 
aging buildings----
    Mr. Fattah. Is any of it being used to pay bond debt?
    Mr. Jayyousi. No.
    Mr. Fattah. It is as capital improvement?
    Mr. Jayyousi. It is pure capital construction dollars.


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mr. Fattah. So, conceivably, if one was running an 
enterprise, you would go to the market and borrow the $2 
billion, fix the schools, and with the $170 million this year 
you could pay the note on the $2 billion. And you would pay for 
those school repairs over the next 20 years going forward, 
versus trying to, kind of, catch up in a situation where you 
cannot catch up.

         SUGGESTION TO BORROW $2 BILLION FOR SCHOOL RENOVATIONS

    I am not necessarily burdening you with that point, because 
I assume you do not have the authority to act. But that is how 
one would normally approach a dilemma in which there was $2 
billion worth of needed renovations to critical facilities and 
you had something around $170 million a year: You would borrow 
the money, do the renovations and then pay the note.
    Ms. Gill. The school system does not have that capability.
    Ms. Cafritz. We do not have our own bonding authority.
    Mr. Fattah. Okay.
    Thank you, Mr. Chairman.
    Mr. Rickford. My name is Don Rickford. I am the chief 
financial officer for DC Public Schools.

          CAPITAL PROJECTS FINANCING--CITY'S BONDING AUTHORITY

    All of the funding that we get for capital projects comes 
through the city's bonding authority. The city has a limited 
bonding authority and over the past two years, DCPS has 
received most of that funding. I do not recall the exact limit 
that they have, but there is limited bonding authority the city 
has. And we receive most of that.
    So, there is not an opportunity, I believe, at this time, 
to go out and borrow $2 billion to fix up the public schools.

                      CAP ON DISTRICT'S BORROWING

    Mr. Fattah. Do you know what the limit is on the District's 
authority?
    Mr. Rickford. I cannot recall it at this time. I can 
provide that later.
    Mr. Fattah. And I know that Moody's and the other rating 
services have upgraded the city's bond rating, which is a major 
compliment, I think, to the fiscal controls implemented by the 
leadership of the city. But you do not know what the limit is?
    Mr. Rickford. Not off the top of my head.
    Mr. Fattah. Thank you.
    Mr. Rickford. You are welcome.
    [The following information was submitted for the record.]

    The District of Columbia currently has outstanding debt of 
$3.11 billion. The debt limit cannot cause the amount of 
principal and interest collectively referred to as debt service 
required to be paid both serially and into a sinking fund in 
any fiscal year on the aggregate amounts of all outstanding 
general obligations bonds and Treasury loans, to exceed 17% of 
the District local general fund revenues.

    Mr. Knollenberg. Would you mind standing right there, 
because this may apply to you? I do not know if it does, and we 
will find out shortly. [Laughter.]
    I recognize this bonding situation, and I do know that Dr. 
Vance and Ms. Cafritz are involved. As new as you are to the 
position, I know that this is a concern of yours, too.

              $745 MILLION APPROPRIATED FOR SCHOOL CAPITAL

    Last year Congress appropriated some $218 million for 
capital improvements in DC public schools. The year before it 
was $365 million. And the year before that it was $162 million. 
That totals out to $745 million. I recognize that that is just 
authority; that you have to bond that in some fashion.
    Give us a status, if you can, and if not you, somebody or 
if you cannot, tell me and if nobody else here can, maybe you 
can get that information for us. We would like to know how much 
of that $745 million has been obligated and how much is still 
available?
    Mr. Rickford. All of the bonding issues are handled by the 
city treasurer's office. I do not have good information on 
that. I can tell you, though, that of the funding we have 
received through that process we have obligated practically all 
of those funds to it.
    Mr. Knollenberg. So that information we should seek 
elsewhere?
    Mr. Rickford. I can ask the city treasurer to provide it.
    Mr. Knollenberg. We can accept that as an offer or we can 
do it ourselves, but if you will be so kind as to do this, we 
will follow through.
    Mr. Rickford. Sure.
    [Clerk's note.--The DC Public Schools failed to submit any 
further information on this subject.]

            STATUS OF DISPOSITION OF SURPLUS SCHOOL PROPERTY

    Mr. Knollenberg. Thank you very much.
    This question may relate to someone else on the panel. What 
is the status of the issue surrounding the disposition of 
surplus school properties? Who would the party be that would 
respond to that question? We would like to know if a policy has 
been initiated for those surplus properties?
    Mr. Jayyousi. Yes, sir, Mr. Chairman, as you are aware, the 
control board has issued an order that would transfer the 
surplus properties to the mayor. Those properties did transfer. 
A number of those properties have been identified as a list to 
be offered to charter schools to bid on. And another set of 
those properties will be identified, I believe, next month as 
important economic development properties for the District 
government's use. And the balance of that would be offered for 
development if, of course, they have been identified as having 
no use for the charters at all.

               POLICY FOR DISPOSITION OF SURPLUS PROPERTY

    There is a policy that has been drafted, a very clear 
policy by the mayor's office. The Office of Property Management 
is controlling that, again, under District government. And they 
are in the process, again, of finalizing those three different 
categories of the properties. The school district no longer has 
jurisdiction over those surplus properties.
    Mr. Knollenberg. Mr. Fattah, do you have any further 
questions?
    Mr. Fattah. No, I am done for the day, Mr. Chairman.
    Mr. Knollenberg. All right. Thank you. I will be done 
shortly, as well, and then we can conclude at our appointed 
deadline of, say, about 12:30.

                 SCHOOL SAFETY AND DRUG ABUSE PROGRAMS

    I do want to go through a couple of three or four questions 
that have to do with school safety. All of us are horrified, of 
course, by the shootings within various schools around the 
country, and also fires that have been deliberately started in 
schools. Now, I am talking about DC. I think we had two or 
three indications of that kind of a problem.
    And youth violence is in the news, I think, far toooften. 
However, our information indicates that it is declining, but we are 
concerned about the fires. Now that Dr. Vance has left, any member of 
the panel is welcome to respond and explain school safety as well as 
the substance abuse education programs that are currently in place. 
That may be a question for you, Ms. Gill.

                            Security Systems

    Ms. Gill. We have numerous safety, security and drug abuse 
programs. In the last three years, we had a very rigorous, 
reforming change in our security division. We have Metropolitan 
Police Department provide security in all of our schools. Not 
only that, Mr. Pat Fiel, who is the director, has been in to 
secure really state-of-the-art monitoring systems, external 
cameras. In fact, the last incident, the students were picked 
up as they were leaving the gym.
    I do not have the numbers with me, but our incidence in 
schools----
    Mr. Knollenberg. Are you referring to the one about the 
fire that was started?
    Ms. Gill. Yes. The students were picked up leaving the gym 
through the camera system that is monitored through a 
principal's office. We have security systems that are outside 
cameras. There is an electronic system for our schools to open 
the schools from within that are monitored by the principal's 
office.
    We have very specific numbers on the reduction in 
incidences and violence in the schools, that is reported weekly 
and monthly by our security office and our student services 
office. And we can provide that data.
    [Clerk's note.--The DC Public Schools failed to submit 
further data on this subject.]
    But as a result of the rigorous security, one in 
technology, one in the security force. One is the liaisons that 
Mr. Fiel has been able to establish with the jurisdictions and 
with the Metropolitan Police Department. It is a close 
partnership. They have ones that are formal partnerships, and 
really grassroots partnerships around security that have really 
made a significant change in the school system.
    Mr. Knollenberg. Are police officers assigned to the 
schools?
    Ms. Gill. There are police officers working in conjunction 
with our security forces.
    Mr. Seleznow. I am Steve Seleznow, chief of staff of DC 
Public Schools.
    As Ms. Gill mentioned, we do not have police officers 
assigned in individual schools; the security is done through a 
security contract. But all of the monitoring of security is 
done by the school system and our Division of School Security 
and Safety.

                      Peaceable Schools Initiative

    We also have a whole division in the school system and an 
initiative called Peaceable Schools. And through that 
initiative we have social workers, counselors, psychologists to 
engage in preventative activities: peer counseling, peer 
mediation, student intervention and support programs designed 
to prevent violence from occurring.
    Mr. Knollenberg. Are those available in all the schools?
    Mr. Seleznow. Those are available throughout the system.

                      DARE Substance Abuse Program

    Mr. Knollenberg. Okay. Just a question regarding substance 
abuse. Is the DARE program a part of any of the substance abuse 
programs? Is that, in your judgment, successful?
    Ms. Gill. Yes, it has been. We have data on that. We also 
have substance abuse as a part of our curriculum, beginning at 
the fourth grade. That is related between the health curriculum 
and the science curriculum. And that begins at fourth grade. We 
also have been a part of the Federal program of drug and safe 
schools. And some schools have been awarded drug-free areas. 
Our school zones also had signs that we have around that the 
school areas are drug-free, and those signs are around all of 
our schools and enforced.

       Violence by Teacher and Principal at H.D. Cook Elementary

    Mr. Knollenberg. This may not be your question, but we are 
going to call upon you or Ms. Cafritz. There is an 
investigation that is under way with respect to HD Cook 
Elementary School. Apparently The Washington Post reported a 
teacher using violence towards students and the principal using 
obscene language toward parents. We only know what we read. I 
would like to have you respond or comment on your observation 
of the accuracy of the claim.
    Ms. Gill. Mr. Seleznow has been investigating that.
    Mr. Seleznow. That is my responsibility, sir.
    That is currently under investigation. As soon as we 
received allegations as you described, we immediately placed 
the teacher on administrative leave with pay pending the 
outcome of an investigation.
    We have a team of investigators. The allegations involve 
non-English speaking Latino students. We have had Spanish-
speaking investigators as part of our investigative team. We 
are speaking to students, parents, teachers. We are reviewing 
all of the procedures and the climate within that particular 
school and have developed a plan to address some of the broader 
concerns within that particular community. As soon as we 
complete our investigation, we will take the appropriate 
actions as determined by what the investigators find.
    Mr. Knollenberg. All right. Thank you.

                         Electronic Monitoring

    How many schools have electronic monitoring?
    Mr. Seleznow. I can get you all the specifics on that. All 
of our high schools, to my knowledge, have the electronic 
monitoring video systems. Most of the junior high and middle 
schools. Many of the elementary schools have a monitoring 
system whereby you come to the front door of the school, there 
is a video camera there so people within the building can see 
who is at the front door and determine access at this point.

                             Security Staff

    Security staff, the security teams, are typically stationed 
at the front doors of all of our schools.

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Mr. Knollenberg. Well, I thank you for that. And I think we 
are winding down pretty close to the mark here.

                         Conclusion of Hearing

    I want to thank all of our panelists, all those who 
appeared, in addition to being named panelists, to provide some 
insight, put some meat on the bones in terms of some of these 
questions.

                        Questions for the Record

    Mr. Fattah, would you have any interest in submitting 
questions for the record? If so, we can take that up at this 
point.
    Mr. Fattah. I would like to reserve that opportunity, not 
just for myself, but for other members of the minority who are 
not now present.
    Mr. Knollenberg. And likewise, I would, obviously, for the 
Republican members, to make sure those who could not be here 
would have the right to also offer questions for response from 
the various panelists.

            Thanks to Chairman Henry Bonilla for Use of Room

    This is not our regular hearing room, as you may not have 
known. We want to thank our host, Chairman Henry Bonilla of 
Texas, whose Subcommittee on Agriculture typically occupies 
this room. But we are not proud; we will go anywhere to have a 
hearing and certainly will have more coming up.
    I really am very appreciative of all of you showing up here 
today. We have learned, I think, a good bit. We want to learn 
more. We want to work with you in the best possible way.
    The Committee will be adjourned until 1:30 p.m. on Tuesday, 
April the 3rd, when we will receive testimony from the 
Corrections Trustee, the Court Offender Supervision Trustee, 
the Public Defender, Director of the Federal Bureau of Prisons, 
and officials from the U.S. Marshall Service in the District of 
Columbia.
    Again, we have to lean on Chairman Bonilla because that 
hearing will be held in this same room, right here, the 
Agriculture Subcommittee hearing room.
    So with that, this meeting is adjourned.
                                            Tuesday, April 3, 2001.

                    CORRECTIONS AND RELATED AGENCIES

                               WITNESSES

JOHN L. CLARK, DC CORRECTIONS TRUSTEE
KATHLEEN HAWK SAWYER, DIRECTOR, FEDERAL BUREAU OF PRISONS
JASPER ORMOND, INTERIM DIRECTOR, COURT SERVICES AND OFFENDER 
    SUPERVISION AGENCY FOR THE DISTRICT OF COLUMBIA
CYNTHIA E. JONES, DIRECTOR, PUBLIC DEFENDER SERVICE FOR THE DISTRICT OF 
    COLUMBIA
DONALD W. HORTON, U.S. MARSHAL, FOR THE DISTRICT OF COLUMBIA
TODD W. DILLARD, U.S. MARSHAL, D.C. SUPERIOR COURT

                Opening Remarks of Chairman Knollenberg

    Mr. Knollenberg. The meeting will come to order.
    We are meeting this afternoon to receive testimony from a 
distinguished panel, relating to the corrections matters in the 
District of Columbia.
    As I have stated a number of times, and at the onset of my 
tenure as chairman, that public safety is one of my principal 
priorities. And this hearing and the one we have scheduled 
tomorrow will focus on that issue.
    Public safety is one of the keys to the continued 
revitalization of the District of Columbia. By many measures, 
public safety in the city is better than it has been for many 
years, but there are still, as I think we would all agree, ways 
to improve.
    Our witnesses today are closely involved with corrections 
and the reentry of individuals who have been incarcerated back 
into society.
    This hearing will concentrate on corrections activities in 
the District, as well as the impact of the National Capital 
Revitalization and Self-Government Improvement Act of 1997. 
Specifically, the closure of the District's prisons at the 
Lorton complex, the creation and initiatives of the Court 
Services and Offender Supervision Agency to reduce crime 
through drug treatment and sanctions programs, the public 
defense of indigents and the prompt payment of Criminal Justice 
Act attorney fees, and the impact of a significant fugitive and 
prisoner population transferred to the Federal government.
    I will turn to my ranking member, Mr. Fattah, for any 
remarks or statement he would like to make.
    Mr. Fattah?

                 Opening Remarks of Congressman Fattah

    Mr. Fattah. Thank you, Mr. Chairman.
    I look forward to the testimony of today's witnesses, some 
of whom I have met and others whose testimony I have had an 
opportunity to review. And I think it is important for our work 
as an appropriations subcommittee to understand what the needs 
are and where we can be helpful in terms of responding to the 
demands placed on various entities who have a responsibility 
for public safety.
    So I appreciate the Chairman convening this hearing. And I 
think here in the District, as the nation's capital, it should 
be the role of the United States Congress to try to make sure 
that we have the finest example of both corrections and public 
safety initiatives, inasmuch as we want this to be a world-
class destination city. And moreover, for the residents who 
live here, I am sure that they want the same, and perhaps the 
Congress can help more and we can learn from the witnesses how 
we can be helpful.
    Thank you.
    Mr. Knollenberg. Thank you, Mr. Fattah.
    We have with us today five agencies: the District of 
Columbia Corrections Trustee, the Federal Bureau of Prisons, 
the District of Columbia Court Services and Offender 
Supervision Agency Trustee, the Public Defender for the 
District of Columbia, and the U.S. Marshals Service for the 
District of Columbia.
    Our principal witnesses this afternoon are: Mr. John Clark, 
District of Columbia Corrections Trustee; Dr. Kathleen Hawk 
Sawyer, Director of the Federal Bureau of Prisons; Jasper 
Ormond, Interim Director for the Court Services and Offender 
Supervision Agency for the District of Columbia; Cynthia Jones, 
Director of the DC Public Defender Service; and we have two 
individuals from the U.S. Marshals Service, Donald Horton, U.S. 
Marshal for the District of Columbia Federal Court--and Todd 
Dillard, U.S. Marshal for the DC Superior Court.
    I realize the principal witnesses have people with them 
that might be called on to answer some questions, so we welcome 
you all here this afternoon and look forward to your testimony. 
I will swear in all of you, including anyone who might be 
called upon to make comments or answer questions. So let's 
continue with the subcommittee's standard procedure of swearing 
in all witnesses.

                         SWEARING IN WITNESSES

    Rule XI, Clause 2 (m) of the rules of the House, and 
Section 1 (b) of the Rules of the Committee, authorize me, as 
Subcommittee Chairman, to administer the oath. So I would ask, 
all witnesses and all those who may be called upon to assist to 
please stand and raise your right hand.
    [Witnesses sworn.]
    Mr. Knollenberg. Thank you.
    If there is no objection, we will hear all of the opening 
statements before we go into questions. And we will be flexible 
about utilizing the five-minute rule. It seems that, Mr. 
Fattah, you and I are the only ones here at the moment, but 
others are on planes or at other hearings, and as you know, 
they may come in and out.
    We will make sure that your entire statement is included in 
the record. And if you would, as we call upon you, please 
highlight, what is specific in as close to a five-minute time 
frame as you can. And we will be a little liberal perhaps, but 
we would like to see you confine your summary to about five 
minutes.
    The first individual will be Mr. Clark.
    We will be pleased to receive your testimony now, Mr. 
Clark, and you are recognized.

   PREPARED STATEMENT OF JOHN L. CLARK, CORRECTIONS TRUSTEE FOR THE 
                          DISTRICT OF COLUMBIA

    [The prepared statement of John Clark follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
                    Opening Statement of John Clark

    Mr. Clark. Good afternoon. Thank you, Mr. Chairman, Ranking 
Member Fattah.
    I am pleased to appear before you today to report on the 
progress that has occurred in carrying out the mandates of the 
1997 Revitalization Act as it relates to the Corrections 
Trustee for the District of Columbia.
    I wish to thank you, Mr. Chairman, for the opportunity to 
share with the committee not only our progress, but also the 
challenges that still face us.
    The Corrections Trustee, or our office, was established by 
the Revitalization Act for several purposes: First, to provide 
a funding vehicle and consequent financial oversight for the 
implementation of the federal responsibilities to the District 
of Columbia Department of Corrections under the Revitalization 
Act during the period when the DC felony population is being 
transferred to the federal prison system; also, to facilitate 
the implementation of aspects of the act related to the closure 
of the Lorton Correctional Complex; and further, to provide 
assistance to the Department of Corrections in upgrading its 
operations.
    More recently, the unique role and perspective of our 
office has led to a somewhat broader mandate in terms of 
facilitating interagency communications in the District. This 
role evolved from requests from the Office of the Attorney 
General to investigate and help remedy severalproblems, 
particularly those involving the coordination between District and 
federal criminal justice agencies, and the re-engineering of the 
interagency processes altered by the act.
    Mr. Chairman, I am proud of the way that our office and our 
staff have fulfilled these mandates. For the fiscal year period 
from 1998 through 2001, the Corrections Trustee will have 
provided the District of Columbia with approximately $640 
million provided by the Congress in operating funds, in 
addition to having financed necessary short-term repairs at the 
Lorton facilities and certain new major initiatives such as the 
improvement of technology and information systems in the 
Department of Corrections.
    We work closely with the Department of Corrections to 
provide technical assistance, with the goal of creating a 
streamlined, efficient Department of Corrections well-prepared 
for its new role as a more typical urban jail system, 
responsible for its pretrial and misdemeanor population. Among 
other projects, we have helped to implement a system of 
internal audits and controls within the department.

                 REVIEW OF PRIVATE PRISON IN YOUNGSTOWN

    The Corrections Trustee has also prepared several 
investigative reviews at the request of the Justice Department, 
particularly on the problems at the private prison in 
Youngstown, Ohio, and another on problems associated with the 
District's interagency processing of offenders. These reports 
have made a number of recommendations which have led to 
significant improvements in both situations.
    More recently, the Trustee has also been asked to play a 
role in funding and shepherding several pilot projects for the 
larger DC justice system to improve the case-processing flow 
from arrest through court processing and into custody. Four 
pilot projects are at some stage of development under that 
funding.

           PROGRESS AND IMPLEMENTATION OF REVITALIZATION ACT

    Mr. Chairman, let me briefly address what I understand to 
be the major interest of the committee today: the progress and 
the implementation of the Revitalization Act and the closure of 
the Lorton complex. It would be hard for me to overstate the 
magnitude and complexity of the implementation tasks which have 
been thrust upon the various agencies by the Revitalization 
Act, particularly on the DC Department of Corrections, the 
courts and the other agencies represented on this panel.
    The scope of the operational and logistical changes 
required to be made during a relatively brief period is 
unprecedented in my experience. Frankly, the challenges are 
made more complex and cumbersome in the District by the unique 
nature of the responsibilities and relationships among the 
local and federal criminal justice agencies here. Those 
relationships have been significantly altered in the new 
scheme, often with difficult operational consequences which 
could not have been foreseen by those involved in the 
formulation of the Revitalization Act.
    On the other hand, while there is a long way to go to 
finish the job, I am firmly convinced after three and a half 
years that in the end, the operations of the local criminal 
justice system and the public safety of the District of 
Columbia will have been significantly enhanced in the process.

                 CLOSURE OF LORTON BY DECEMBER 31, 2002

    I want to assure the Committee that the transition will be 
completed on time. By the end of this year, Lorton will be 
vacated of inmates and all the prisoners will have been 
transferred to the Bureau of Prisons.

                         D.C. INMATE POPULATION

    Of the current DC inmate population, numbering about 
10,300, 8,000 are adult felony inmates, of which about 3,300 
have already been transferred to the permanent custody of the 
BOP. Since 1997, four of the five facilities at Lorton have 
been closed. The last two each closed approximately two months 
ahead of schedule.
    This transfer process is being successfully accomplished in 
large part due to the excellent coordination and cooperation 
among a number of agencies. There are regular bi-weekly 
meetings on a staff level. There is good communication at the 
management level. There is a high-level interagency working 
group chaired by the Trustee, which meets monthly and includes 
15 agencies and judges from both courts.

                           PROPERTY AT LORTON

    I would also point out that, although the adult felony 
inmates will have been transferred to the Bureau of Prisons by 
the end of this year, the actual transfer of the final portions 
of the property at Lorton to GSA will not occur immediately on 
December 31. After the inmates have left, there will be a 
period of decommissioning the property and disposing of 
extensive records and equipment.

                       IMPACT ON STAFF AT LORTON

    Mr. Chairman, let me briefly mention what has been one of 
the most difficult areas, a human area: that of the impact on 
the staff of the Department of Corrections. The size of the DC 
staff is being reduced by more than two-thirds, from 3,300 
employees to about 800. Without my going into detail, you can 
imagine the anxiety and disruption this has caused, although 
generally the staff have adjusted well.
    At the same time, extensive efforts have been made by our 
office and the Department of Corrections to establish a career 
transition center at Lorton, and to implement a priority 
consideration program in order to mitigate the difficulties of 
these separations and to provide an array of employment-related 
counseling.

                CHALLENGES REMAINING FROM LORTON CLOSURE

    Finally, Mr. Chairman, let me mention briefly the major 
challenges which remain for the agencies during the coming 
year. There is the final movement of several thousand prisoners 
to dozens of prisons across the country. The Lorton facilities 
and property must be decommissioned. The DOC must be downsized 
by at least an additional 800 employees. And further, we must 
completely implement, first, the new interagency processes to 
designate and transport 2,500 to 3,000 new prisoners per year 
into the BOP, and also the processes of returning a like number 
from prison to the streets and communities of the District each 
year.
    Mr. Chairman, I am confident that we will continue to 
jointly meet these challenges and will successfully complete 
the implementation of the Revitalization Act.
    This concludes my remarks and I will be pleased to answer 
questions later.
    Mr. Knollenberg. Mr. Clark, thank you very much.
    We will take questions after we hear from the complete 
group.
    I wanted to recognize Eleanor Holmes Norton, my colleague. 
Congresswoman Norton is here to be witness to what is taking 
place, and we welcome her.
    Let me go on now to Dr. Hawk Sawyer, who is next in line. 
You are recognized for your comments.

PREPARED STATEMENT OF KATHLEEN HAWK SAWYER, DIRECTOR, FEDERAL BUREAU OF 
                                PRISONS

    [The prepared statement of Kathleen Hawk Sawyer follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
                Opening Remarks of Kathleen Hawk Sawyer

    Dr. Hawk Sawyer. Thank you. Good afternoon.
    I am pleased, also, to appear before you today to discuss 
the transfer of felons sentenced under the DC code into the 
Federal Prison System.
    Let me begin by thanking you, Chairman Knollenberg and 
Congressman Fattah, for this opportunity today. We are proud 
also of our progress to date in the Bureau of Prisons, and we 
are on target for receiving all of DC's sentenced felons into 
the Federal Prison System by the statutory date of December 31, 
2001.

                POPULATION OF FEDERAL BUREAU OF PRISONS

    The current inmate population in the Federal Prison System 
is over 149,000 inmates. Approximately 15 percent of that 
population is in contract care. The remainder is housed in 98 
Federal prisons across the country, and we have about 30 more 
new prisons that are at some stage of design or construction.

              RATE OF GROWTH IN FEDERAL PRISON POPULATION

    The rate of growth in the federal prison population has 
continued at a record pace, adding over 11,300 inmates in 1999, 
and 11,436 in fiscal year 2000. We project by the end of this 
fiscal year, our population will exceed 158,000 inmates, and 
that growth is expected to continue over time.

                    OVERCROWDING IN FEDERAL PRISONS

    This dramatic growth in the inmate population and continued 
crowding in our federal institutions has made the management of 
our prisons even more challenging. Our prison facilities are 
currently operating at 32 percent over capacity system-wide, 
with crowding levels at an even more severe rate of 57 percent 
at medium- and 51 percent at high-security facilities.

             Increase in Prison Capacity for D.C. Prisoners

    Thus, the Bureau of Prisons has carefully planned and 
phased in the transfer of the DC population to ensure the least 
possible disruption in our already-crowded facilities. The 
Administration and Congress have supported us in adding 
capacity to absorb the DC population. They provided funds for 
the Bureau of Prisons to build seven new facilities to add 
capacity for the approximately 8,000 DC felons.
    Earlier versions of the Revitalization Act directed a 
Lorton closure date of 2003, consistent with our estimates for 
construction completion of these new facilities. However, when 
enacted, the date was moved up two years, to 2001. But despite 
the fact that only one of these new institutions will be fully 
activated within 2001, the Bureau of Prisons will still meet 
the statutory requirements to assume custody of all DC felons 
by the end of this year.
    Now, since passage of the Act, 4,133 DC-sentenced felons 
have already been transferred to the Bureau of Prisons. Of 
these, 3,306 remain in our custody, and during the remainder of 
this year there are approximately 3,750 more inmates to be 
transferred from the DC Department of Corrections, plus an 
estimated 1,300 new commitments from Superior Court to come 
into our custody.
    The Bureau of Prisons staff are working diligently to meet 
the Revitalization Act in a variety of different ways. We are 
continuing to move low-security inmates that are suitable for 
private placement into contract beds. We are expanding existing 
Bureau of Prisons institutions. We are adding beds through 
intergovernmental agreements with other systems, and we are 
adding more inmates into Bureau of Prisons' current 
institutions. We are also adding additional staff to help us 
manage the crowding.

        BUREAU OF PRISONS TO HELP IMPROVE PUBLIC SAFETY IN D.C.

    The transfer of responsibility to the Bureau of Prisons of 
the District's felon population also provides the Bureau of 
Prisons with the opportunity to help improve public safety in 
the District by providing inmates with substance abuse 
treatment, educational and vocational training, opportunities 
to develop work skills, and programs focusing on enhanced 
parenting skills, anger management, counseling programs and 
general life skills. The Bureau or Prisons' staff is committed 
to working with all of our inmates to encourage the development 
of skills that they need to lead productive, law-abiding lives 
upon release.
    By absorbing the DC-sentenced felons into the Bureau of 
Prisons, it presents an extraordinary and daunting challenge 
for us. Bureau of Prisons institutions are already very 
crowded, and the additional prison capacity to totally absorb 
the DC felons will not be ready by the transfer deadline. But 
again, despite these challenges, we have carried out this 
transfer in the most efficient, economical and humane manner, 
and we will meet the deadline.
    I look forward to working with you, Mr. Chairman, and the 
subcommittee, and the others present here today. This concludes 
my prepared remarks and I look forward to answering any 
questions that you might have.
    Mr. Knollenberg. Dr. Hawk Sawyer, thank you very kindly.
    We will now proceed to Mr. Ormond. I think I mentioned 
this, but your entire statement will be included in the record. 
You may highlight what it is that you wish to say within the 
five-minute time frame.
    Thank you.

 PREPARED STATEMENT OF JASPER ORMOND, INTERIM DIRECTOR, COURT SERVICES 
                    AND OFFENDER SUPERVISION AGENCY

    [The prepared statement of Jasper Ormond follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mr. Ormond. Thank you.
    Mr. Knollenberg. You are recognized.

                   Opening Statement of Jasper Ormond

    Mr. Ormond. Good afternoon, Chairman Knollenberg and Mr. 
Fattah.
    I am pleased to appear before you today on behalf of the 
Court Services and Offender Supervision Agency of the District 
of Columbia, known as CSOSA.
    I would like to thank the subcommittee for the opportunity 
to share with you our progress and hopefully our excitement in 
improving community supervision of defendants and offenders in 
the District of Columbia, and for the subcommittee's past 
support for our agency.

 RESPONSIBLE FOR RESTRUCTURING PRETRIAL SERVICES, PROBATION AND PAROLE

    Under the Revitalization Act, we were responsible for 
restructuring pretrial services, probation and parole. We are 
assuming probation from the DC Superior Court and parole from 
the DC Board of Parole. The DC Pretrial Services Agency, or PSA 
was established as an independent entity in CSOSA. The DC 
Public Defender Service receives funding through a transfer 
from CSOSA.
    Susan Shaffer, the executive director of the DC Pretrial 
Services Agency, is with me today to answer any questions 
specific to PSA, and the director of the Public Defender 
Service, Cynthia Jones, is also here to testify for that 
agency.
    During the three years of trusteeship from 1997 to 2000, 
CSOSA prepared itself to function as an independent federal 
agency. We received certification from the attorney general on 
August 4, 2000. The executive summary of the certification 
report is included in our materials.
    As we prepared for certification, CSOSA developed a 
strategic planning framework. PSA also links to and supports 
that strategic planning framework, and it is within that 
framework I really would like to make my comments because it 
developed our outcome measures and strategies for addressing 
public safety in Washington.

                            GOALS OF AGENCY

    We have two primary goals. The first goal is to establish 
strict accountability and prevent the population we supervise 
from engaging in criminal activities. The second goal is to 
support the fair administration of justice by providing 
accurate and meaningful recommendations to criminal justice 
decision-makers.

                        CRITICAL SUCCESS FACTORS

    How do we achieve these goals? By achieving our five 
critical success factors. The first factor is to improve needs 
assessment of our offender population, and 14 percent of our 
2001 budget was designed to focus on needs assessment. The 
second factor is close supervision and accountability; 48 
percent of our 2001 budget was focused on close supervision and 
accountability. The third factor is support services and 
treatment; about 16 percent of our 2001 budget focused on 
treatment services and support services. The fourth factor is 
partnerships with the community and about 3 percent of our 
budget is focused on those partnerships. And the fifth factor, 
to improve the quality and timeliness of information we produce 
for decision makers and use in supervising defendants and 
offenders, received about 19 percent of our FY 2001 budget.

                                 GOALS

    What do we hope to achieve? We have established a 50 
percent reduction in recidivism for violent and drug-related 
crime as our primary goal over the next five years; a strict 
goal, but a goal that we feel we could very easily achieve 
through these five critical success factors; also to provide 
productive members back into society, particularly the people 
that we are supervising under probation and parole.

                 NUMBER OF OFFENDERS UNDER SUPERVISION

    We currently have 16,561 offenders under our supervision; 
10,988 probationers and 5,663 parolees. There are roughly 9,500 
defendants currently being supervised by the Pretrial Services 
Agency.
    Nationally, at least 70 percent of sentenced offenders 
serve all or part of their sentence in the community, and 80 
percent of prisoners are released back into community 
supervision. More than 1,800 prisoners will return to the 
District of Columbia this year.

                   OFFENDERS FACE SERIOUS CHALLENGES

    Offenders under our supervision face serious challenges. On 
average our offenders have been arrested about nine times, with 
four prior convictions. So they have a long history of being 
involved in the criminal justice system. They are basically 
unemployed and have very unstable employment histories. They 
have a significant history of substance abuse, and almost half 
have had untreated substance abuse problems.

                        EDUCATION LITERACY LEVEL

    Their educational literacy level is around seventh grade, 
and 40 percent present some personality disorders or mental 
health illnesses. Twenty-two percent are charged with some form 
of violent offenses, and about 45 percent are there because of 
some form of substance abuse. Therefore, violence and substance 
abuse set the framework for our overall performance outcomes.
    The diagram you have here basically shows our primary 
structure for addressing our population, and again, it 
indicates a continuum with the Bureau of Prisons, and our 
transitional facilities.
    But in that regard, our first critical success factor is 
that of developing a risk screener. We are very pleased that 
within the past fiscal year, we were able to put in place for 
the first time a risk assessment instrument for offenders that 
is currently being validated through the University of 
Maryland. This screening process allows us to be clear about 
the individual criminality of each person that we are working 
with.

                 EXPANSION OF ILLEGAL DRUG USE TESTING

    Also under that risk assessment, with the support of the 
subcommittee last year, we have been able to expand testing for 
illegal drug use, both by establishing a state-of-the-art 
laboratory that we are all very proud of, and in addition to 
that, we have established collection sites throughout the city 
that allow us at this point to provide universal testing for 
the offenders that we supervise. Given that, we have been able 
to increase drug testing by 41 percent. We have been able to 
increase our sampling by 89 percent. And the frequency of our 
testing has increased 61 percent.
    Under the second factor, supervision, we have been able to 
reduce our probation and parole caseloads from a base of 100-1 
to our current ratio of 45-1, which really allows us to improve 
our supervision of that population.
    We have also been able to establish two new field offices 
within the community last year. This particular graphic gives 
you a geo-mapping of our population throughout the city. The 
best technologies say that we have to serve our people where 
they are living. So our six field sites, plus an additional 
site we hope to establish within the city this year will enable 
us to address the offenders within those communities.

            ESTABLISHMENT OF CASE MANAGEMENT AND SUPERVISION

    The Pretrial Service Agency has been able to establish case 
management and supervision within the D.C. Superior Court. They 
have also expanded case management within the U.S. District 
Court for federal defendants. We have alsobeen able to add 
staff to the supervision effort within the halfway houses to assist 
with the escape problems, and with getting offenders into drug 
treatment, and we have seen a significant reduction of problems 
throughout the halfway houses.

                    ESTABLISHMENT OF REENTRY PROGRAM

    In addition, we have established a reentry program for 
people transitioning from prison back into the community. That 
reentry program has allowed us to frame a systematic effort to 
reduce criminality among the offenders that we are serving.
    We have also included graduated sanctions, which is a 
critical intervention that allows us to respond to each 
violation of release conditions. Prior to that, there were 
significant gaps between the violation and the response. We 
have been able to close that gap, and again we have seen 
significant outcomes.

                     EXPANSION OF TREATMENT SUPPORT

    Our third critical success factor is treatment. We have 
been able to significantly expand our treatment support. To 
date, under the Community Supervision Program, we have 6,900 
offenders, roughly, that are testing positive for drugs. Under 
the PSA, we have roughly 5,400 defendants that are testing 
positive for drugs or failing to appear for tests. Within the 
framework, we are able to establish treatment interventions at 
this point. This year, we are only able to serve about 40 
percent of offenders needing treatment within the community 
supervision program, and only about 23 percent of defendants 
under pretrial supervision. Again, there is a significant gap 
between the need for treatment services and what our current 
resources would allow us to address.

                  PARTNERSHIPS WITH POLICE DEPARTMENT

    The fourth factor is that of partnerships. We have 
established 30 partnerships with the Metropolitan Police 
Department; a critical innovation that improves public safety 
by linking community policing with community corrections. Now, 
we are talking. We are communicating. We are closely 
supervising offenders within those communities. In addition to 
that, the community has become a critical aspect of that 
partnership.
    We are also establishing a sanctions center. We have a 
pilot program that has been evaluated by the University of 
Maryland----
    Mr. Knollenberg. Mr. Ormond, let me just break in and say, 
can you consolidate your thoughts in the next few seconds, and 
bring it to a close?
    Thank you.
    Mr. Ormond [continuing]. And that innovation has been very, 
very significant.
    Finally, let me address our ability to transfer and provide 
decision-makers with information. PSA is providing 16,000 bail 
reports each year. We are providing thousands of pre-sentence 
evaluations.
    We have seen significant results. Over the past three 
years, we have seen a 67 percent reduction in the number of 
parolees being rearrested, and we think that these results will 
continue with the proper resources and the continued support of 
the subcommittee.
    Thank you very much.
    Mr. Knollenberg. Thank you, Mr. Ormond. Thank you kindly.
    Next, we have Cynthia Jones, the Director of the Public 
Defender Service for the District of Columbia.
    Ms. Jones, you are recognized.

PREPARED STATEMENT OF CYNTHIA E. JONES, ESQ., DIRECTOR, PUBLIC DEFENDER 
                  SERVICE FOR THE DISTRICT OF COLUMBIA

    [The prepared statement of Cynthia Jones follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
                   Opening Statement of Cynthia Jones

    Ms. Jones. Good afternoon, Mr. Chairman and Mr. Fattah.
    I appreciate this opportunity to come before you today to 
provide information on our agency operations during fiscal year 
2000 and our continued progress in fiscal year 2001.
    Pursuant to the Revitalization Act, the Public Defender 
Service became an independent, federally funded District of 
Columbia agency. The responsibility for providing 
representation to indigent people in the District of Columbia 
is divided between the Public Defender Service and the court 
system, through the Criminal Justice Act.

            PDS PROVIDES LEGAL REPRESENTATION FOR INDIGENTS

    The Public Defender Service provides constitutionally 
mandated legal representation to indigent people who are facing 
a loss of liberty in the District of Columbia.
    While much of our work is devoted to ensuring that no 
innocent person is ever convicted of a crime, we also provide a 
wide array of services to the mentally ill facing involuntary 
civil commitment proceedings, parolees at parole revocation 
hearings, and children in the criminal justice system who have 
learning disabilities and are entitled to benefits under the 
federal Individuals with Disabilities in Education Act.

                  NATIONAL REPUTATION FOR LEGAL TALENT

    The strength of our agency has always been the quality of 
the legal services that we deliver. The agency has a national 
reputation for providing the best and the brightest legal 
talent from around the country. Judges and prosecutorsalike 
respect and acknowledge the competence of the lawyers at the Public 
Defender Service.
    There are four legal services divisions at PDS: the Trial 
Division, the Mental Health Division, the Appellate Division, 
and our newest division, the Special Litigation Division, which 
was created to provide representation to parolees pursuant to 
the support of this committee in fiscal year 2000.

                        PDS to Handle More Cases

    I am pleased to report that, in response to a request from 
the court that the Public Defender Service handle more cases to 
ease the burden of paying lawyers under the Criminal Justice 
Act, the Public Defender Service has responded. We have 
increased the number of cases that we handle by 27 percent, 
approximately 1,000 additional cases in our Trial Division. I 
am also pleased to report that in our Mental Health Division we 
are providing representation to nearly half of all people 
facing involuntary civil commitment in the District of 
Columbia. There are approximately 1,000 cases filed in Superior 
Court each year, and we handle 53 percent with just seven 
lawyers.

                  PDS HAS SPECIAL EDUCATION ADVOCATES

    We are also providing quality representation to people in 
other areas of the criminal justice system. For example, we 
have special education advocates on board. Their job is to make 
sure that children in the criminal justice system receive 
adequate educational benefits. We provided that service to 
approximately 300 children in the last fiscal year, and we 
continue to make progress through grant funding to provide that 
service to Public Defender Service clients as well as juveniles 
represented by Criminal Justice Act attorneys.

                               DRUG COURT

    Another area where we provide assistance to the court and 
improve the overall administration of justice is in the area of 
the Drug Court. The Public Defender Service, the Pretrial 
Services Agency and the Superior Court work together to ensure 
that people who are substance abusers in the criminal justice 
system receive adequate legal representation and the court 
system is able to respond quickly and effectively when there 
has been a positive drug test or any violation of the Drug 
Court program. The Public Defender Service provides legal 
representation to Drug Court participants in approximately 250 
sanctions hearings each month, over 3,000 cases a year.

     PDS Provides Technical Support and Training for CJA ATTORNEYS

    The Public Defender Service is also available to provide 
technical support, training and assistance to lawyers who 
practice under the Criminal Justice Act. Each year, we produce 
an 1,800-page, two-volume set of materials. We provide 
conferences and training throughout the year to support the 
Criminal Justice Act bar, and we also provide assistance to the 
court.

                       Lorton Closure Initiative

    Mr. Chairman, the Public Defender Service had just one 
initiative in fiscal year 2000, and that was our Lorton Closure 
Initiative. As a result of the Revitalization Act and the 
closure of the Lorton facility, all of the DC code offenders 
were transferred, as you know, to the Bureau of Prisons, and 
all of the parole functions were assumed by the U.S. Parole 
Commission.

              Establishment of Special Litigation Division

    The Public Defender Service, with the support of the Court 
Services and Offender Supervision Agency and the U.S. Parole 
Commission, established a new unit, called the Special 
Litigation Division. That division has provided representation 
to nearly every parolee facing revocation before the U.S. 
Parole Commission this last year, approximately 700 cases. 
There are only 10 lawyers in that division, and they have done 
an outstanding job.
    They have also provided representation at Federal habeas 
corpus proceedings in the U.S. District Court. We filed a class 
action lawsuit on behalf of those parolees seeking to force the 
commission to comply with its regulations. And they are 
continuing to be productive. We are only halfway through this 
fiscal year, but the unit has been very productive and cost 
efficient. We estimate that approximately $600,000 would have 
to have been spent by the court to provide this representation 
to parolees under the Criminal Justice Act.
    In fiscal year 2000, we are continuing with our progress.

                         Mental Health Programs

    We are currently working with the Corrections Trustee and 
with the court system to establish a mental health diversion 
program. I am happy to report that, this month, our program for 
nonviolent offenders who are suffering from mental illness will 
come into play. The Pretrial Services Agency and the 
corrections trustee have set up a program to provide community-
based mental health treatment services, when appropriate, for 
nonviolent misdemeanants. The Public Defender Service has a 
role in that, and we are very proud of that.
    Mr. Chairman, I would like to thank the Committee and the 
members for your support of the Public Defender Service, and I 
will answer any questions if you would like.
    Mr. Knollenberg. Well, thank you, Mr. Jones. Thank you very 
kindly.
    We next turn to the U.S. Marshal from the U.S. District 
Court, Donald Horton.
    Mr. Horton, you are recognized.

 Prepared Statement of Donald W. Horton, United States Marshal for the 
                          District of Columbia

    [The prepared statement of Donald Horton follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
                   Opening Statement of Donald Horton

    Mr. Horton. Good afternoon, Mr. Chairman and Ranking Member 
Fattah. I am pleased to speak to you today about the United 
States Marshals Service and, in particular, to provide you with 
information regarding the impact of the DC Revitalization Act 
on the United States Marshal's Office for the District of 
Columbia. I have submitted a statement for the record and would 
like to offer you this brief synopsis.

                 U.S. Marshals Service Created in 1789

    The United States Marshals Service was created by the first 
Congress in the Judiciary Act of 1789. The Judiciary Act 
granted U.S. marshals extensive authority to support the 
Federal courts within their judicial districts to carry out all 
lawful orders issued by judges, Congress or the President.
    Now approximately 4,000 Deputy U.S. Marshals and career 
employees perform our core missions: protecting the Federal 
judiciary, witness security, apprehending fugitives, handling 
and transporting prisoners, managing and disposing of seized 
and forfeited properties. All of these programs are 
administered locally by the United States Marshal's Office for 
the District of Columbia.

         Impact of Revitalization Act on U.S. Marshal's Office

    I would like to move now to my primary reason for being 
here today: to convey to you the impact of the revitalization 
legislation on the U.S. Marshal's Office for the District of 
Columbia.
    The first impact I would like to share with you 
dealsspecifically with the dramatic increase of federal parole violator 
warrants issued by the U.S. Parole Commission. Prior to August 5 of 
2000, this district held less than 50 Federal parole warrants. However, 
as of August 6, when the legislation took effect, the District of 
Columbia Marshal's Office received an additional 1,423 warrants, 
amounting to an almost 3,000 percent increase.
    These warrants were transferred from the District of 
Columbia Adult Parole Authority ultimately to the U.S. Parole 
Commission. Of the 1,423 warrants received, approximately 579 
were determined to be at large and 844 were issued as 
detainers. The detainers are lodged throughout the District of 
Columbia Department of Corrections, as well as at other state 
and local institutions around the United States.
    Due to extensive planning, this district was able to 
effectively manage the physical transition of the parole 
warrant process. However, the administrative process and 
operational responsibility for these new cases brought a 
tremendous increase in workload for this district. Our staff 
mobilized the necessary resources and logged countless hours 
tracking prisoners to make significant strides in the reduction 
of the federal parole violators.
    I would report to this Committee today that the Marshal's 
Office for the District of Columbia has effectively managed a 
fugitive apprehension effort to ensure these violators and 
other felons are not at large.

                          Detention Bed Space

    The second impact of the Revitalization Act deals with the 
issue of detention bed space. Currently, the bed-space issue is 
manageable due to the fact that all of our prisoners are held 
by the DC Department of Corrections at the DC Jail Central 
Treatment Facility, the Lorton complex, and our contract 
facilities in Virginia and Maryland.
    But even if all the processes work perfectly to keep the 
prisoners moving through the system, there is little, if any, 
room for real increases in the prisoner population. Even now, 
this District houses overflow pretrial detainees in contract 
facilities in Orange County, Virginia, which is 85 miles away, 
and the Northern Neck Regional Jail in Warsaw, Virginia, 110 
miles away.
    Should there be an increase in the prisoner population, the 
District of Columbia could very well run out of local bed 
space. Whether this problem shortage occurs within the next two 
years or at some future date, it presents a need for a large 
private detention facility to service the entire Washington-
Baltimore metropolitan region.
    Further, when Lorton closes, any increase in the prisoner 
population could result in prisoners being housed at contract 
facilities in Maryland, Virginia and possibly other states.
    All of which increases the time needed to produce these 
defendants in court for various status calls, trials and other 
judicial proceedings. Federal defenders and other attorneys 
will be required to travel greater distances to have adequate 
access to their clients, and our deputies will necessarily 
spend longer periods on highways transporting prisoners to and 
from our courthouse.
    These distances are compounded by our region's traffic 
problems. As you know, the DC area suffers from a severe 
problem with traffic congestion.
    In summary, I would ask that the Committee focus attention 
on the workload increase that has resulted from the DC 
Revitalization Act. Please consider the increase in fugitive 
cases, as well as the need for logistically feasible detention 
bed space. Both impact the judicial process within the District 
of Columbia.
    Thank you, Mr. Chairman, for the opportunity to appear 
before you today. I am now prepared to answer any questions.
    Mr. Knollenberg. Mr. Horton, thank you.
    We turn now to the U.S. Marshal of the District of Columbia 
Superior Court, Todd Dillard.
    Mr. Dillard, you are recognized.

 Prepared Statement of Todd W. Dillard, United States Marshal for the 
               Superior Court of the District of Columbia

    [The prepared statement of Todd Dillard follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
                   Opening Statement of Todd Dillard

    Mr. Dillard. Good afternoon, Mr. Chairman, members of the 
subcommittee.
    My name is Todd W. Dillard, and I am the first 
presidentially appointed United States Marshal for the Superior 
Court of the District of Columbia, a position that I have held 
for the past 10 years. I am pleased to have the opportunity to 
appear before you today and explain the unique role of my 
office and the role it plays in the criminal justice system for 
the District of Columbia. I have prepared a written statement, 
and I would like to make a brief oral one at this time.

     U.S. Marshal for Superior Court De Facto Sheriff's Department

    Although the position of U.S. Marshal for the Superior 
Court of the District of Columbia was created in 1988, the 
Marshals Service operation of the Superior Court began long 
ago, and it is an integral part of ensuring the smooth flow of 
justice within the nation's capital.
    It might be most helpful to you to understand the mission 
of my office if I explained that we are often referred to as 
the de facto sheriff's department for the District of Columbia. 
Because the District of Columbia is a federal enclave, they 
have no sheriff's department, and we serve that function.
    In addition to the traditional duties, as mentioned by 
Marshal Horton, such as transporting prisoners to and from 
court, arranging for the housing and medical needs ofprisoners, 
providing personal and physical security for the judiciary family and 
courtrooms, and also locating and arresting fugitives, Deputy U.S. 
Marshals perform supplemental duties in my office, such as execution of 
any type of court order, be it civil or criminal, including writs of 
restitution, more commonly referred to as evictions.
    Nearly all individuals arrested by any agency in the 
District of Columbia will pass through the Superior Court 
Marshals cell block.

                SUPERIOR COURT MARSHAL'S OFFICE LARGEST

    The Superior Court Marshal's Office is the largest of all 
94 Marshals Service districts, both in terms of personnel and 
workload. My office operates from 5:00 a.m. to 8:00 p.m., six 
days a week, including holidays, unless the holiday happens to 
fall on a Sunday.
    One hundred seventeen deputies, 26 detention enforcement 
officers, are assigned to the Superior Court office, where they 
apprehend, process, transport and produce prisoners for court.
    The prisoners are charged with a wide range of crimes, 
including felonies, such as homicide, domestic violence, drugs, 
sexual assault, aggravated assault and burglary. And they also 
are charged with misdemeanor offenses, such as simple assault, 
disorderly conduct, theft, and even traffic violations, such as 
driving under the influence. Depending on the court calendar, 
deputies produce anywhere from 250 to 550 of these prisoners 
daily, and many of these prisoners are violent.
    In addition, the Superior Court office operates two totally 
separate cell block complexes, one for adult prisoners and one 
for juveniles.
    The Marshals Service, both Superior Court and the District 
of Columbia office, continue to work on a cooperative basis 
with other federal and district correction agencies to 
proactively implement the act.

             LORTON CLOSURE WILL INCREASE WORKLOAD AND COST

    My first concern is that the upcoming closure of Lorton 
will result in both an increased workload and cost for housing 
and transporting prisoners. Today, there is not enough bed 
space at DC Jail and the Central Treatment Facility for all 
Marshals Service prisoners. According to numbers provided by 
the DC Department of Corrections, I understand that there may 
be a shortage of approximately 300 beds once Lorton closes.
    As was mentioned before, this region is the second most 
congested area in the nation. As a result, the increased travel 
distance will dramatically increase travel time and deputy 
fatigue, and may increase the propensity for vehicular 
accidents. Additionally, the Lorton closure means an increased 
number of prisoner movements to distant contract jails, 
resulting in a greater escape risk.
    The largest vehicles used by my office are 42-passenger 
buses. However, many prisoners require separation; in addition 
to moving them, you have to separate them. And you cannot 
travel long distances with witnesses and co-defendants on the 
same vehicle. That greatly increases the number of trips, staff 
and vehicles required for transporting, even if you are going 
to the same facility; and if you have to go to numerous 
facilities, this increases that even more.

         SUPERIOR COURT RESPONSIBLE FOR TRANSPORTING PRISONERS

    Currently, the DC Department of Corrections transports 
sentenced prisoners from Lorton to their court appearances. 
Although they are sentenced, the prisoners are often required 
to appear in court to answer additional charges or to testify 
as prisoner witnesses. Once Lorton closes, sentenced prisoners 
will be housed, at least in the short term, by the Bureau of 
Prison facilities in various distances from the District of 
Columbia. In compliance with a memorandum of understanding 
between the District of Columbia and the Office of Management 
and Budget, the prisoners will require writs from the court, 
and the Superior Court office will assume full fiscal and 
coordinating responsibility for all prisoner movements once 
Lorton closes.
    In addition, Superior Court staff will become responsible 
for handling and transporting sentenced prisoners and 
reconciling jail bills. The added workload presents a 
significant challenge to the Superior Court office, especially 
in light of its current shortage of staffing. In view of the 
Superior Court office's increased responsibilities as a result 
of the act, additional resources will be required.
    My final concern is that prisoners being housed at great 
distances from the court could potentially impede the swift 
administration of justice. Defense counsel may file ineffective 
counsel motions due to their difficulty in traveling the great 
distances to adequately counsel and confer with their clients. 
The cooperating prisoner witnesses may not be as inclined to 
assist the government in prosecutions when they are housed so 
far from their lawyers, family and the court itself.

          REVIEWING ALTERNATIVES TO HOUSING AND TRANSPORTATION

    Despite the concerns I have mentioned, the Marshals Service 
is reviewing both short-and long-term alternatives to current 
housing and transportation challenges. In particular, we are 
assessing a variety of short-term solutions, such as upgrading 
the Central Treatment Facility to allow for housing of more 
prisoners, finding contract facilities to house sentenced 
prisoners that were otherwise held at the DC jail, expanding 
the use of technological advances such as video 
teleconferencing, and increasing usage of other Marshals 
Service contract facilities.

            LOCATING AND CONTRACTING WITH PRIVATE FACILITIES

    In addition, the Marshals Service is evaluating a long-term 
alternative solution of locating and contracting with a private 
facility in the Washington, DC-Baltimore metropolitan area.
    Thank you, Mr. Chairman, for the opportunity to appear 
before you today, and I will be more than happy to answer any 
questions you may have.
    Mr. Knollenberg. Thank you, Mr. Dillard.
    Thanks to all of the individuals who offered testimony this 
afternoon.
    What we will do to ourselves, as we tried to insist with 
our witnesses, is follow the five-minute rule. I think we can 
flex that a little bit from time to time.
    I will begin with the questioning, and I want to start by 
going to Director Clark.

                    LORTON CLOSURE DECEMBER 31, 2001

    I was glad to hear you say that final closure of the Lorton 
Correctional Complex now has been affirmed for December of 
2001. That I did hear, did I not?
    Mr. Clark. That is correct, Mr. Chairman.

                 STATUS OF INTERAGENCY DETENTION GROUP

    Mr. Knollenberg. What is the status of the Interagency 
Detention Group?
    Mr. Clark. Yes, I would love to. About a year and a half 
ago, the deputy attorney general, at that time Mr. Holder, 
after some of us had spoken to him and after this report our 
office had prepared on this Leo Gonzales Wright case and all 
the problems associated with that, he asked me ifI would 
undertake to organize an interagency group to facilitate communications 
and to facilitate the, I guess you would say, re-engineering of many of 
the processes that have to go on for the processing of prisoners under 
the new scheme of things under the Revitalization Act.
    So we have been meeting for about 15 or 16 months. We have, 
as you mentioned, 15 or 16 agencies who meet regularly; the 
heads or ranking members of most of the agencies are there 
monthly. We have several federal and several Superior Court 
judges who are involved. And I am very happy to report that the 
six committees are doing excellent work to reinvigorate and to 
re-engineer many of these processes.
    As an example, under the previous process, which had been 
in place for years, when prisoners are sentenced in Superior 
Court, they had usually been held in the DC jail and they would 
continue to be held in the DC Department of Corrections, so it 
was just an internal matter.

           PROCESS FOR PRISONERS SENTENCED IN SUPERIOR COURT

    Now, when they are sentenced in Superior Court, of course, 
they will have to go to a federal agency. To move the prisoner 
from the courtroom to the Federal Bureau of Prisons requires 
the involvement of the judges' chambers, the clerk's office, 
the Marshal's Office, the DC Department of Corrections, several 
parts of that agency, and the Federal Bureau of Prisons, who 
will determine a designation, then go back to the marshals to 
get the individual moved. All of that has to happen in a couple 
of thousand cases a year.
    So this is just an example of part of what we have been 
trying to do to re-engineer these processes. We have taken it 
on a gradual, rational, phased-in basis, and I am very 
confident that by the end of the year this will be working very 
well.
    This ties into the comments of both the marshals: One of 
the real concerns here is, if things do not move expeditiously 
in this complicated process, cases will get stacked up at the 
DC jail, we do not have beds to have that happen, we do not 
have the money to have that happen, and it is going to be a 
problem for the marshals and the Department of Corrections. So, 
again, I think a theme that I would have today in this regard 
is, there is a ways to go, but there has been excellent 
cooperation and coordination among all of these agencies.

                  CONTRACT WITH VIRGINIA PRISON SYSTEM

    Mr. Knollenberg. The contract with the Virginia prison 
system terminates, I think, this July, is that true?
    Mr. Clark. That is correct.
    Mr. Knollenberg. There is an average of 785 inmates that 
are in the daily population; what happens to them?
    Mr. Clark. Actually, there are about 1,300 inmates down 
there at two facilities under contracts with the Department of 
Corrections.
    That is today's number.
    Mr. Knollenberg. Okay.
    Mr. Clark. It has been staying pretty steady around 1,200 
to 1,300. That contract, you are correct, will run out at the 
end of two years in July, and at that point those prisoners, of 
course, will become a responsibility of the Federal Bureau of 
Prisons. We have been working closely with them, and I would 
hesitate to speak for Director Hawk Sawyer.
    Mr. Knollenberg. All right.
    Mr. Clark. But I think they have a plan, which may 
involve----
    Mr. Knollenberg. Why don't I turn directly to Doctor Hawk 
Sawyer.
    Would you respond?

           FEDERAL BUREAU OF PRISONS RECEIVING D.C. PRISONERS

    Dr. Hawk Sawyer. Yes, Mr. Chairman. We are going to be 
receiving inmates. We have currently been receiving from DC 
Department of Corrections for the last several months at a rate 
of 40 to 80 to 120 a month. That will pick up even more as of 
this week, actually, April 1. We are starting to bring, not 
only the medium security inmates that are in the DC Department 
of Corrections, but also the high security ones. So we will be 
bringing inmates in at the rate of somewhere between 80 to 120 
to 160 inmates a week into our system.
    The DC Department of Corrections under Director Odie 
Washington and their staff make the determination of which 
inmates they are going to be sending us at any given time based 
upon all of their paperwork being completed and their 
classification being worked through and everything. But I would 
assume that if they are losing capacity there at the Virginia 
facility, that they would be looking to target those inmates as 
being the ones that they want us to pick up.
    Now, we have some beds under contract with the State of 
Virginia also, and some of the inmates are simply moving from a 
contract that DC may have in Virginia over to one of the 
institutions where we have a contract in Virginia. So some of 
the movement does not require much distance. Some requires no 
distance at all. But I would assume DC is identifying those 
inmates they are to move to us more quickly.
    [The following information was submitted for the record.)

   Bureau of Prisons Progress Toward Meeting Requirements of the Act

    As of April 9, 2001, the Bureau of Prisons had accepted 
4,320 D.C. sentenced felons since passage of the Act. 
Approximately 3,498 D.C. sentenced felons remain in BOP custody 
including 271 who were in BOP custody prior to passage of the 
Act. During the remainder of this calendar year, there are 
approximately 3,700 more inmates to be transferred from D.C. 
Department of Corrections locations, plus an estimated 1,200 
new commitments from Superior Court. The inmates remaining to 
be transferred to the BOP are classified by the BOP 
classification system as medium and high security level. In 
order to meet the 2001 deadline for closure of the Lorton 
Complex, the BOP has been placing medium security D.C. felons 
in existing BOP institutions until additional beds are 
constructed, and plans to obtain additional bedspace through 
Intergovernmental Agreements (IGAs) with Virginia.

                        YOUNGSTOWN OHIO FACILITY

    Mr. Knollenberg. Let me turn to both of you on this 
question, and then I will turn it over to Mr. Fattah.
    You are all familiar with the Youngstown facility. As a 
matter of fact, our colleague Mr. Traficant has an interest in 
that particular facility. My understanding is that the 
Youngstown facility contract provides for a bed space of about 
1,700 District of Columbiainmates.
    It is my understanding that it is not being used to its 
full capacity and may, in fact, be only at about 560 inmates. I 
recognize the problem with the two homicides there, and I may 
want to go into another question at a later time with respect 
to these inmates who were categorized as being medium security 
when, in fact, they should have been classified as maximum 
security. This all resulted in a very tragic situation.
    But why is that facility not being utilized to the extent 
of its capacity?
    Mr. Clark. I would be glad to answer that, Mr. Chairman.
    Essentially, that is part of the whole phase-down of the DC 
Department of Corrections operations. As I have mentioned, we 
have attempted to do this whole phase-down in a sort of 
rational, phased-in fashion. We have closed four of the five 
Lorton institutions.

                    YOUNGSTOWN FACILITY PHASING OUT

    One of the last assets to come off-line with DC prisoners 
is the Youngstown facility. We have been continually in contact 
with the CCA management over the course of the last three 
years. They have realized that during the course of this year, 
this contract with the DC Department of Corrections will be 
phased out and that within the next several months, not only 
down to 500, but the whole population will be removed.
    But again, this is a contract of the DC Department of 
Corrections. These prisoners are gradually becoming a Federal 
responsibility, and so they are gradually being moved into the 
Federal system. There is no contract between the Federal 
government and this CCA entity.
    Mr. Knollenberg. Did you want to alter or add anything, Dr. 
Sawyer?
    Dr. Hawk Sawyer. Not necessarily, unless you wanted any 
more.
    Mr. Knollenberg. No. I think if you had anything, fine, 
otherwise I will turn to Mr. Fattah at this time.
    Thank you, Mr. Clark.
    I will turn to Mr. Fattah.
    Mr. Fattah. Thank you, Mr. Chairman.
    I guess, in terms of appropriation issues, we are waiting 
for the President's budget generally--everybody can just nod--
before you actually give us any numbers, right? Because that is 
our principal role. But I do have a couple of questions.

                            REPEAT OFFENDERS

    One is, in terms of this issue of people leaving 
incarceration and then being rearrested--and I guess I will 
direct this to Kathleen Hawk Sawyer--the fact is that impact on 
rearrests for a prisoner as far as the Federal Bureau of 
Prisons is concerned is what?
    Dr. Hawk Sawyer. The elements that have been found, via 
good research, to be directly connected to criminality to 
returning to crime on the street are issues of substance abuse, 
issues of work skills, issues of education level. There are 
other things in terms of dysfunctional adjustment in 
communities. But the first three are three that have been 
identified through research as having direct nexus to 
criminality.
    Mr. Fattah. I want to ask you about a couple of those. 
Also, are family connections and connections to the community 
important?
    Dr. Hawk Sawyer. Right. Contact with families and support 
in the community that they are able to maintain and have there.

                       SUBSTANCE ABUSE TREATMENT

    Mr. Fattah. Well, in your testimony you said that by these 
inmates being transferred into the Federal facilities, you were 
able to provide substance abuse treatment. Is that true across 
the board or is this for some percentage of Federal prisoners?
    Dr. Hawk Sawyer. That is true, basically, across the board, 
sir. We are required by statute in the Federal Prison System to 
provide residential drug treatment to every single inmate who 
has a moderate to severe drug treatment need, as identified 
through diagnosis, and who will volunteer for the program.

            92 PERCENT OF INMATES ENROLLED IN DRUG TREATMENT

    Right now, 92 percent of all the inmates in the Federal 
prison system do volunteer and are enrolled in residential drug 
treatment. We graduated approximately 13,000 inmates out of 
residential drug treatment out of the Bureau of Prisons last 
year.
    Now, a portion of the program is nine months within our 
institution in a residential, kind of, a therapeutic 
environment, and then we mandate up to six months in a halfway 
house to transition them back into the community, so that when 
they get back into the community, where drugs are available to 
them, that treatment continues with them for six months after 
that.
    Mr. Fattah. You said you had a total of 100,000-some 
inmates in the Federal system?

               DRUG TREATMENT GEARED TO INMATE'S RELEASE

    Dr. Hawk Sawyer. Right. But we target the treatment, and it 
is one of the things that we have found in doing research with 
the National Institute of Drug Abuse, National Institute of 
Mental Health, is that treatment needs to be geared close to 
the inmate's release to the community.
    Mr. Fattah. Right.
    Dr. Hawk Sawyer. Years ago, it provided the treatment when 
you walked in the door, and then you might get released eight 
years later----
    Mr. Fattah. I got you.
    Dr. Hawk Sawyer [continuing]. And we were surprised that 
you had relapsed. Now we target in the last two to three years 
for treatment. And as I said, 100 percent of the inmates who 
would volunteer for treatment now get that treatment.

                   LOCATION OF INMATES AWAY FROM D.C.

    Mr. Fattah. Let me ask you one other question, the 
connections to family and community: One of the concerns about 
inmates from DC going into the Federal system is they are being 
located far away. And notwithstanding the fact that we have 
already heard testimony about cost and relations with lawyers 
and the like, but in terms of family and visitations, how are 
you taking that into account in terms of deciding that some 
inmate from Washington would be housed in New Mexico?
    Dr. Hawk Sawyer. Congressman Fattah, we share that concern. 
And back when the issue was first discussed of us taking over 
the DC population, we argued very strongly to keep some of the 
Lorton property in order to place some of the Federal 
institutions on those grounds, in order to enable inmates to 
stay very close to home. We were obviously unsuccessful in that 
attempt.

                FEDERAL INMATES WITHIN 500 MILES OF HOME

    What we did agree to, though, is that we would keep DC 
inmates, or at least the initial designation of them, within 
500 miles of their home, which is the basic standard we have 
for all Federal inmates, that we place them within 500 miles of 
their home.
    And the new institutions----
    Mr. Knollenberg. Could I interrupt, Mr. Fattah?
    This is true for all Federal prisons?
    Dr. Hawk Sawyer. Initial designations.
    If you get in trouble and misconduct arises, or you have 
major separation cases, or you have a significant medical 
problem and need to be placed in one of our medical facilities. 
Otherwise all inmates coming into our system are initially 
designated, or the goal is to have them within 500 miles of 
their release destination.
    Mr. Knollenberg. Thank you.

                      INMATES RESTRICTED PHONE USE

    Mr. Fattah. Your department just recently has said that 
inmates would be restricted in terms of phone use. So if I am 
housed in New Mexico, which is a little bit beyond the 500 
miles, I would also have a limitation on phone contact with 
children or spouse or family members?
    Dr. Hawk Sawyer. You're speaking about the New Mexico 
contract.
    Mr. Fattah. Do you want me to pickup on the New Mexico 
contract?
    Dr. Hawk Sawyer. No, all I am saying is that it is a 
contract the DC Department of Corrections has in New Mexico. 
That is not a Bureau of Prisons contract.
    Mr. Fattah. Is that contract coming to a conclusion, too?
    Mr. Clark. Yes, that is actually the same contract with the 
Youngstown facility.
    Mr. Fattah. Okay. We will get back to that.
    Mr. Clark. That will be phased out in the next few months.
    Mr. Fattah. Okay. Thank you.
    Dr. Hawk Sawyer. But in terms of the phones, sir, we have 
recently made a determination to limit inmate access to phones 
to 300 minutes a month, which amounts to----
    Mr. Fattah. About 10 minutes a day.
    Dr. Hawk Sawyer [continuing]. Roughly 10 minutes a day. And 
the reason why we did that is two fold.
    We did a very significant analysis of phone usage and phone 
access with our inmates, because we believe very strongly--and 
we are the ones who have argued for years--in the need to keep 
inmates closely connected to their community support, their 
family and all of this.
    What we found is, there is a relatively small percentage of 
the inmates who use the phones for more than 300 minutes a 
month. About 75 percent of all of our inmates use the phones 
for 300 minutes or less; most of them less than 300 minutes.
    The ones who are using it longer tend to be the ones who 
most often get involved in illegal activity in our 
institutions. Unfortunately, some of the inmates, after they 
are incarcerated, continue to try to run their illegal drug 
businesses or run whatever scams they were involved in before.

                           PHONE CALLS TAPED

    Mr. Fattah. Yes, I understand your concern. But all of the 
phone calls are monitored, right?
    Dr. Hawk Sawyer. No. All of the phone calls are taped, and 
that gets exactly to the point. All of the phone calls are 
taped, but if you would consider 140,000-some inmates making 
unlimited numbers of phone calls that they might choose to 
make, and if we had to have staff listening to all those, it is 
a huge number of minutes that need to be monitored.
    What we are trying to do----
    Mr. Fattah. I guess in the abstract I can understand your 
point, except I am trying to understand in the DC context, 
which is, you have an inmate who was arrested here in DC, lives 
here, has two or three children, has a spouse, is going to be 
incarcerated for some period of time, and is shipped halfway 
across the country and now cannot use the phone to talk and 
stay in contact, when the research would suggest that part of 
the ability of this person not to end up re-arrested is to 
continue to have a close association with his family.
    Dr. Hawk Sawyer. Again, all of the inmates in the federal 
system are roughly intended to be within 500 miles of their 
homes. So the DC inmates are not going to be in any uniquely 
different situation than the other inmates that we have in 
terms of closeness to home.
    And as I indicated, three-quarters of our inmates make less 
than 300 minutes of phone calls a month already.

                         INMATES FAMILY CONTACT

    Now, the only ones, as I was saying, who go beyond that are 
generally the ones who are involved in some illegal activity or 
who have a particular crisis happening in their family lives. 
In those instances, if you have a crisis in your family life, 
you still have the option to come to the staff, the counselors 
that are there. They can allow them to make more than 300 
minutes a month if it is because of a family crisis. But we 
analyze the numbers very carefully, because we do believe that 
family contact is very important.

                PHONE USE TIME ABUSED BY TOUGHER INMATES

    In fact, to tell you how concerned the inmates are, in a 
few of the institutions when we announced that we were cutting 
the access down to 300 minutes, the inmates cheered, because 
what is happening is, if you allow unlimited access, the 
strong-arming inmates, the ones who are tough enough to 
intimidate the others, tend to monopolize the phone system.
    So many of our inmates are applauding our attempt to reduce 
the number, to limit the numbers to a fixed amount. That way, 
the vast majority of the inmates have easy access to the number 
of calls they want to make. And they are not able to be strong-
armed or intimidated, and the phones cannot be monopolized by 
the other inmates. So we believe the 300 minutes will really 
work quite well.
    Mr. Fattah. I am going to have another round.
    Thank you, Mr. Chairman.
    Dr. Hawk Sawyer. Okay.
    Mr. Knollenberg. Mr. Olver has joined us, and he would be 
recognized if he is ready to ask a question or two.
    Mr. Olver.
    Mr. Olver. Thank you, Mr. Chairman.
    I have come to learn, even though I may come in late, that 
I better take the line of questioning when I can, because we 
may not come back again at any point.
    Mr. Knollenberg. Well, we would not do that to you, not 
now. [Laughter.]
    Mr. Olver. I may need to go someplace else; the usual hit-
and-run tactic.
    I am looking through the testimony, since I missed it as it 
was orally given by Mr. Clark and Dr. Sawyer, and I am a little 
bit puzzled. Lorton had how many inmates? There were five 
different sections of Lorton. Who would be able to talk at 
that?

                    NUMBER OF CORRECTIONS FACILITIES

    Mr. Clark. At one time, there were actually seven prisons 
out there. When we started this process in 1997, there were 
five facilities. And at one time, I think when we started it at 
that point, there were probably about 5,000 or 6,000 prisoners 
out there. And, of course, there were other DC prisons----
    Mr. Olver. Within DC?
    Mr. Clark. There are two within DC.
    Mr. Olver. They will remain open?
    Mr. Clark. They will remain open. The DC Department of 
Corrections will remain as a typical, local, urban jail system, 
housing pretrial defendants and sentenced misdemeanor cases.
    Mr. Olver. Well, this is my first set of rounds on this 
kind of thing. I see a set of numbers of current inmate 
population of 10,300 inmates; 8,000 adult felonies and so on. 
Does the 10,000 include all of the loci where they are housed?
    Mr. Clark. That is correct.
    Mr. Olver. In DC, out at Lorton, already 3,300 of them have 
been moved. And what number remain at Lorton, or the five 
places at Lorton that have been now terminated?
    Mr. Clark. The only facility that is left open is the 
central facility, which houses about 1,800 today. In addition 
to the groups you mentioned, today there are about 1,300 
prisoners in contract facilities in the State of Virginia and 
another, I believe, 800 in private contract facilities.
    Mr. Olver. All within Virginia?
    Mr. Clark. No, those are the cases that have been referred 
to earlier, in Ohio, and about 150 in New Mexico, another 150 
in Arizona.

                     Bureau of Prisons Overcrowded

    Mr. Olver. I notice, Dr. Sawyer, in your testimony, you 
commented that Bureau of Prisons facilities are currently 
operating at 32 percent of over-capacity system-wide. How are 
you absorbing another group, a significant group that is only a 
couple percent, I suppose, or 2 or 3 percent more? Maybe that 
is the problem; we just think that it is only a little bit 
more.
    Dr. Hawk Sawyer. Well, we certainly do not think it is a 
little bit more, sir. We think it is a significant number for 
us. We are absorbing them.

                     Funding for Seven New Prisons

    We did get funding for seven new prisons to be built to 
house the population. The problem is, as I mentioned earlier, 
that the prisons are not going to be built in time. The 
original time line for the revitalization transfer was 2003, 
which would have enabled us enough time to build the seven 
institutions. It was moved back to 2001.
    But those seven prisons are coming. One will be fully 
activated this year to help absorb some of the population. We 
are going to be contracting with the State of Virginia for a 
little over 2,000 beds through next year until some of our new 
prisons start coming along. We are also moving out some of our 
own low security inmates into other contracts around the 
country. And we are simply just bringing these inmates into 
already crowded institutions.

            Increasing Staffing Levels to Cope With Crowding

    And we can do that, we feel, by increasing staffing levels, 
because our institutions are relatively large. We are 
increasing our staffing levels in order to cope with the 
crowding. And that will be okay for a while, because we have 
outstanding staff. As long as we have enough staff present, we 
will be able to continue the programs and the opportunities for 
the inmates. We do not want to do that for very long.
    Mr. Olver. Staffing to take care of the crowding and people 
in the facilities and such, is it not that overcrowded?

                          Inmate Time in Cells

    Dr. Hawk Sawyer. They are crowded.
    But our inmates spend very little time actually in their 
cells. In the traditional institutions that we are talking 
about will be absorbing the DC inmates, the inmates are really 
only locked in their cells to sleep at night, from roughly 9:30 
in the evening until 6:00 in the morning.
    Mr. Olver. If I remember correctly, you have roughly 
150,000 in the normal Federal system and that number is going 
up. You are building more prisons, but you are 32 percent above 
capacity where those 150,000 presently are. I do not know what 
it would be if you had all the other seven in place. Given that 
you have close to 100 facilities, seven more is not going to 
take care of 30 percent overcrowding, unless you are building 
much larger ones.
    What portion of DC's 10,000 inmates are going to end up in 
the Federal system?

                   30 New Prisons--7 for D.C. Inmates

    Dr. Hawk Sawyer. You asked several questions in there. Let 
me try to get them all. We have seven new prisons coming to add 
capacity to absorb the DC inmates. We have a total of 30 new 
prisons that are funded, or partially funded, that are at some 
stage of design or construction. So the other 23 are going to 
help us with that 32 percent already over capacity. The seven 
facilities are just intended to absorb the DC inmates coming 
our way.

           2000 of D.C. Prisoners to Go to Private Contracts

    In addition to those seven, we were directed in the 
Revitalization Act to privatize 2,000. It is 8,000 DC inmates 
roughly we will be absorbing into our system. We are required 
by the Revitalization Act to contract out 2,000 of those, so 
that leaves 6,000. And the seven new prisons will give us the 
bed capacity easily to bring in those 6,000.
    Mr. Olver. So seven new ones are for the DC----
    Dr. Hawk Sawyer. For the DC inmates, yes.
    Mr. Olver [continuing]. Of this lump. You have a whole lot 
more that are being built.
    Dr. Hawk Sawyer. We have others being built, too.
    Mr. Olver. That helps a little bit, although only a little 
bit, because I am seeing 1 out of 50 people in DC. How many are 
men and how many women?
    Dr. Hawk Sawyer. Our average percentage of female inmates 
runs 7 percent in the Federal system. I think, in the DC system 
it is roughly about the same. It is less than 1,000.
    Mr. Olver. And it is going to be both men and women who 
will be moving out into the Federal system?
    Dr. Hawk Sawyer. Yes, all felons.
    Mr. Olver. How many correctional facilities within DC will 
continue to function? Who knows how many slots there are in the 
prisons within DC?

                           Facilities in D.C.

    Mr. Clark. There are, again, two secure facilities and, of 
course, some halfway houses in the District. The two secure 
facilities are the Central Detention Facility, also known as 
the Jail, which has a court-ordered capacity of 1,674. And 
right next to it is what is known as the Correctional Treatment 
Facility, which is run on contract with the District by the 
Correctional Corporation of America. And that actually has 890 
cells. Because of budgetary reasons, the capacity has been 
limited to 800. So between those two facilities, there are 
about 2,500 secure beds.

                     Percent of D.C. Inmates Felons

    Mr. Olver. I think I am picking up that there is about 1 
out of 50 or 2 percent of the DC population are felons 
somewhere in either the local or the Federal system. And 
nationwide, I guess it must be 0.6 percent or thereabouts. It 
is a much higher percentage in D.C., apparently----
    Dr. Hawk Sawyer. In DC.
    Mr. Olver. And somehow it just seems to me, there has to be 
a better way than the way we are doing this all.
    Thank you, for now.
    Mr. Knollenberg. Mr. Olver, thank you.
    Let me get right back into it. If the rest of you think we 
are ignoring you, we are not. But we are focusing on a certain 
section here, and I do want to cover some ground on it.
    The adult-sentenced felons are going to the Federal BOP. 
Then you are dealing with other inmates, and you are dealing 
with pretrial juvenile cases, et cetera. Is there enough space 
at the DC jail? What we have heard is that the DC jail is 
filled to capacity.
    Now, added to that, let me just throw on something else to 
make you grind a little bit. If I am reading correctly, you 
have these seven sites that are coming on-stream. But they are 
not coming on-stream for a while. There are only two that will 
be available this year. Some will not be ready until 2004. So 
what does this do in terms of the immediate crunch? What does 
it do to stymie compromise? What are you trying to do in terms 
of having enough space?
    I will turn to Dr. Hawk Sawyer first, and then Mr. Clark.
    Dr. Hawk Sawyer. I will deal with the second part of your 
question, because the Jail really falls under the Trustees' 
purview.

        Crowding and Date for Movement of D.C. Prisoners Changed

    As I indicated, we are crowded right now. Bringing in the 
extra inmates will make us even more crowded in the next couple 
of years, until the new prisons come along.
    As I indicated earlier, the original understanding, from 
the Revitalization Act, was that the movement would not occur 
until 2003. That is what we believed to be the negotiated date, 
because that is when we knew we could get the beds built in 
time to absorb them. Unfortunately, that date was changed by 
powers higher than me here in Congress. And they changed the 
date to 2001.
    So, we have been working as diligently as we can, Mr. 
Chairman, to make the bed space available in a very safe way, 
because we do not want to jeopardize the inmates. And we are 
doing that through a couple of ways.
    Mr. Knollenberg. What is the mix going to be, in terms of 
maximum-medium security, et cetera?

                 Breakdown of Inmates by Security Risks

    Dr. Hawk Sawyer. Thirty-nine percent of the inmates are 
high security, 30 percent are medium security, 25 percent are 
low and 5 percent are minimum. We break it down to a four-
scale, like that. High security is your penitentiary inmate. 
That is the highest security: 39 percent are high, 30 percent 
are medium, 25 low and 5 percent minimum.
    And, as I indicated, we are going to absorb the numbers in 
a number of different ways. We are going to have roughly 2,200 
beds we are securing through the Virginia Department of 
Corrections that we will be able to have access to, we believe, 
into next year.
    Mr. Knollenberg. You do not think you will need those. You 
have private contracts expiring, like the one in New Mexico.
    Dr. Hawk Sawyer. Those are not our contracts. Those are DC 
contracts.

                    Federal Procurement Regulations

    And to follow on from your earlier question, that you had 
asked, Federal Procurement Regulations forbid us from simply 
borrowing on or picking up on a contract that was let by 
somebody else or made by somebody else. The difference between 
the Youngstown and the New Mexico contracts versus the Virginia 
contracts: Virginia is another government entity. And we can do 
intergovernmental agreements through the Federal Procurement 
Regulations. It enables us to do that in a much easier way than 
you can do with these contracts with private vendors.
    In order for us to have a contract with CCA, we have to go 
out--and we have many. We have 13,000 inmates in private 
facilities around the country. We just awarded contracts for 
3,000 new beds to CCA within the last six months.
    So, we do a lot of contracting. But in order for us to 
award any new contracts, we have to go out through competitive 
bid, allow everyone to bid on these contracts and then make an 
award. And that is why it is not possible for us simply to pick 
up on the Youngstown contract that is already in contract to 
DC.
    Mr. Knollenberg. All right. Am I hearing you say that you 
can meet the demand, you can find the space that you need?

                   Money for Contracts with Virginia

    Dr. Hawk Sawyer. Yes, Mr. Chairman. That is what I 
indicated in our testimony, that through a number of different 
mechanisms, we can, as long as we get sufficient staffing and 
the monies to do the contracts with Virginia, we can absorb the 
inmates.
    Mr. Knollenberg. The monies to do the contract with 
Virginia? So you are looking for more money or there will be a 
problem?
    Dr. Hawk Sawyer. Well, yes, if we do not get enough money, 
there could be a problem. Our Appropriations Committee has been 
very good to us in the last years, in terms of recognizing the 
destructive consequence of crowded institutions. And they have 
been working very hard to help us, you know, get the resources 
we need to run safe institutions.
    Mr. Knollenberg. Thank you.
    Mr. Clark, would you respond to the other part of my 
inquiry?
    Mr. Clark. Yes.

                 Capacity of Department of Corrections

    The other part of your question had to do with the 
continuing capacity of the Department of Corrections to meet 
its longer-term mission here. And I see Director Washington, 
from the Department of Corrections, is here, and a number of 
his staff. And we have all shared this same concern. And the 
marshals had mentioned this concern. And it is one of the 
reasons we have had these monthly, interagency meetings.
    But while I am concerned, in my estimation the situation is 
manageable. And let me explain it this way. As I had mentioned, 
in response to a previous question, there is a capacity, at the 
two secure facilities, of about 2,500 prisoners, setting aside 
the halfway house operations. Right now, the Jail, for the last 
several days, has been over its court-ordered capacity, which 
happens from time to time because of the pace of business.
    On the other hand, between the Jail and the correctional 
treatment facility next door there are, right now, about 650 
sentenced felons who will be the responsibility of the Federal 
Bureau of Prisons next year. This is a mix of mental health 
cases, medical cases with dialysis issues, some women, some 
younger adult offenders, and just the broad mix of sentenced 
cases that we have had to put there.
    So when those move, during the course of the rest of the 
year, that is going to open up about 650 beds. At the same 
time--and this is not an easy calculus, necessarily, right off 
the top--down at the Lorton, at the central facility, there are 
about 350 cases waiting for parole violation hearings or some 
sentence misdemeanor cases who will have to come back into 
these two facilities in the District. So the net gainthere 
would be about 300.
    Now, what has not been factored in there, is the issue that 
I have already mentioned twice, which is this processing of the 
cases once they are sentenced or once their parole is revoked 
and how quickly we can move those cases from the point of 
sentencing or the point of parole into the federal system. If 
that does not move more quickly, that is going to test the 
limits, or if there is some other initiative that would raise 
the pretrial population within the District.

               Correctional Treatment Facility--890 Beds

    A couple of other aspects to this issue--and the marshals 
have a very legitimate concern here, but as I mentioned, the 
correctional treatment facility next door to the Jail has about 
890 beds. For financial, budgetary reasons, we have only been 
putting about 800 cases in there. But that is not to say we 
could not fill all the cells or, in fact, as is typical in most 
federal facilities, double-bunk some of that facility. So that 
would add some capacity, especially for misdemeanor cases, and 
some of the less, real secure cases.

                  Misdemeanor Cases in Halfway Houses

    The other outlet that has been discussed from time to time 
if we get into that kind of pinch, is that there about 350 or 
more misdemeanor cases, some of whom are already housed in 
halfway houses. I mean, they are serving sentences of a few 
weeks or whatever. We could expand the number who are currently 
held in secure facilities as we put them into halfway houses.
    So, again, my overall summary is that this is a real 
concern. We are trying to work on these processing issues. But 
I think it is a manageable situation, unless there is some turn 
for the worse, in terms of----

                               Contracts

    Mr. Knollenberg. Can we contract?
    Mr. Clark. Can they contract? Well, they certainly can. And 
again, the one facility is run by the Corrections Corporation 
of America. The problem is finding suitable contract beds in 
the immediate vicinity of the District that would be accessible 
to the courts. These are cases moving back to the courts 
frequently.
    Mr. Knollenberg. Mr. Fattah?
    Mr. Fattah. Thank you, Mr. Chairman.
    I could ask a number of other questions about the prison 
issue, but I do not want to neglect the rest of the panel. So 
let me start over here.
    In terms of your appropriations request for this year, Ms. 
Jones, whatever that might be when the President's budget comes 
over, you are budgeting enough for expert testimony and DNA 
testing and all of the other sundry issues that are important 
in terms of providing an adequate defense?

                        PDS Uses Expert Services

    Ms. Jones. Yes, the Public Defender Service currently uses 
expert services on a regular basis. As I mentioned in my 
testimony, we handle the more complex felony cases.
    Mr. Fattah. I understand.
    Ms. Jones. And those issues----
    Mr. Fattah. So, you do not have an issue in that regard at 
this time?
    Ms. Jones. No, we do not.
    Mr. Fattah. Okay.

                      Reduction in Re-Arrest Rate

    I have questions about juveniles, but first, let me say 
that the reduction in the re-arrest rate by 67 percent is since 
1998. Is that correct?
    Mr. Ormond. Since May of 1998, yes.
    Mr. Fattah. It is probably the best news we have heard all 
afternoon, and I do not want it to go without being noted.
    Let me ask you in particular about juveniles. I note that 
in Boston, for instance, there had been an intensive effort 
made in terms of attention to juveniles who normally might 
involve themselves in antisocial activity, and there was a 
significant reduction in terms of youth violence and other 
related matters. Is that part of what you are doing here? Are 
you focused a lot on the juvenile question also?

                Superior Court Responsible for Juveniles

    Mr. Ormond. No, we have no responsibility.
    Mr. Fattah. You have no responsibility for juveniles. Who 
has responsibility for juveniles?
    Ms. Jones. The Superior Court.
    Mr. Fattah. They are not here. Okay. Let's get back to 
that, then.
    Mr. Fattah. I am learning as I go, you know.
    So, your effort is just related to adults?
    Mr. Ormond. Yes.
    Mr. Fattah. And you had mentioned that you had intensified 
your drug testing efforts, right?
    Mr. Ormond. That is correct.
    Mr. Fattah. And I thought I heard you say that there was 
going to be a need for additional treatment resources in terms 
of drugs.
    Mr. Ormond. That is correct.

                    90% of Crime in D.C. Drug-Driven

    Mr. Fattah. The National Institute of Justice did a study, 
Mr. Chairman, that indicated that something above 90 percent of 
the crime in the District is drug-driven, that is people who 
have an addiction and are, stealing things, breaking into 
buildings, doing things in order to feed their addiction.
    And so, this question would be to aid public safety. It 
would aid public safety greatly if we found the resources to 
make sure that everyone who needed treatment, received 
treatment.
    At least, based upon the National Institute of Justice's 
study, it would cut into the street crimes issues here in the 
District, and, obviously elsewhere in the country, to the 
degree that we applied ourselves to that. So could you talk a 
little more specifically about what you found in the testing 
and what kind of treatment alternatives are available from a 
capacity standpoint?

                  Number of Inmates Needing Treatment

    Mr. Ormond. We have about 7,000 offenders, roughly, that 
are testing positive multiple times. And those folks need some 
form of treatment. Roughly about 3,500 of those offenders need 
the high-end, formal treatment services. Currently, we are only 
able to address about 40 percent of that capacity, given our 
current resources. And that also includes looking at the public 
resources that exist within the city.
    Mr. Fattah. So, you are addressing 40 percent, now----
    Mr. Ormond. That is correct.
    Mr. Fattah [continuing]. Of people who are being tested and 
are indicating drug use, multiple tests.
    Mr. Ormond. Multiple drug tests, yes: at least three 
positive tests or more.

                   Budget Increase for Drug Treatment

    Mr. Fattah. And when your budget submission comes over, 
when the White House sends their numbers over, is it going to 
reflect some increased request for drug treatment?
    Mr. Ormond. We would really hope so, sir.
    Mr. Fattah. Okay. All right.
    Thank you, Mr. Chairman.
    Mr. Knollenberg. Thank you, Mr. Fattah.
    Mr. Olver.
    Mr. Olver. Thank you, Mr. Chairman.
    I am going to just follow one short line here. I have been 
looking for what one might call demographic data here. I think 
the closest thing that I can find about the population that you 
are trying to serve--you realize this is the first time I have 
been on this Committee. And so, I am trying to learn something. 
It would be good to have some good base information.

                          Offenders Unemployed

    Mr. Ormond in your testimony, you have this tantalizing 
paragraph which says that the typical offender under 
supervision--it starts with a typical offender has four prior 
convictions and nine prior arrests. It speaks of how many are 
unemployed. Probably almost all of them who are in the jails 
are unemployed, I would guess. Maybe you mean that, too; they 
were unemployed at the time they were convicted. Or what does 
that mean?
    Mr. Ormond. The majority of people were unemployed at their 
point of conviction, yes.

                      Literacy Level of Offenders

    Mr. Olver. Almost half have no high school diploma or GED. 
Literacy level is seventh grade. Three-quarters have a history 
of substance abuse, and almost half present current substance 
abuse issues. And on it goes there for a while.
    It is difficult for me to visualize all of this. I am 
wondering if there is some report. And maybe my ranking member 
has mentioned the place. It is the National Institute of 
Justice Study, or something similar.

          Need for Good Report with Basic Offender Information

    Is there a good report that gives a decent, basic set of 
graphs and figures and tables and bar graphs or such that would 
tell something about some of the key features here, the age, 
levels of substance abuse, how many are alcohol, how many are 
marijuana, how many are hard drugs, what the literacy levels 
are, so that it would be possible to at least think seriously 
about some of these interconnections?
    There must be some kind of analytical data or study of a 
good nature that would try to address the issue of the 
relationship between level of substance abuse and seriousness 
of crime and the literacy levels and the age levels, with 
cross-tabs and so forth, a good statistical study, that would 
give us some sense, at least, of where our serious targets are 
in this system and how many of them there are. Then it would be 
possible, maybe, to think about what to do next.

          Office of National Drug Control Policy Annual Report

    Mr. Ormond. We have two sources. The Office of National 
Drug Control Policy at the White House has an annual report 
that is probably one of the most comprehensive reports, focused 
on the criminal justice population.

                 National Institute of Justice Reports

    Also, the National Institute of Justice is constantly 
providing current reports that give a good demographic profile 
of the population that we are serving.
    Those two are the major sources.

                        Substance Abuse Analysis

    Mr. Olver. I take it that the drug office at the White 
House is dealing only with issues of substance abuse.
    Mr. Ormond. They are primarily dealing with substance 
abuse, but within the substance abuse issue, they are also 
dealing with other factors, particularly those preventive 
factors that are critical to stop substance abuse.
    Mr. Olver. Well, when you say that three-quarters have a 
history of substance abuse and almost half present current 
substance abuse issues, what of those three-quarters would be 
alcohol and marijuana, for instance, soft drugs, alcohol and 
soft drugs--maybe those are both considered to be soft drugs--
versus hard drugs? And what portion of those that are current 
would be in the same categories? Do you know offhand?

                     Types of Drugs Used by Inmates

    Mr. Ormond. First, with our defendant population we have 
trends through the Pretrial Services Agency for the last 15 
years. Our offender population primarily has tested positive 
for crack cocaine, about 65 percent; the opiates, around 25 to 
30 percent; marijuana use, as a pure use, only about 10 to 15 
percent among our adult population. And there is always a mixed 
use of alcohol and drugs. We do not have a person as a pure 
user. Most of these folks are polydrug users: a combination of 
cocaine and alcohol or heroin and alcohol.
    Mr. Olver. Maybe those statistics are too complicated for 
me to understand.
    Mr. Ormond. Not really. I mean, right now cocaine abuse----
    Mr. Olver. It is also very much age related as well. You 
have said of the adults, much of it is hard drugs. What about 
the youth?

                         Use of Drugs by Youth

    Mr. Ormond. The youth, around 65 percent to 70 percent of 
those folks, at arrest, are testing positive for marijuana. At 
age 16, 17, we are beginning to see increase; probably around 
25 percent are beginning to test positive for cocaine. But 
primarily marijuana for the younger folks.
    And we are also seeing an increase in alcohol use among the 
young folks.
    Mr. Olver. Thank you, Mr. Chairman.
    I will have to see if there are some studies that have 
executive summaries that are chewable.
    Mr. Knollenberg. Thank you, Mr. Olver.

                Goal to Reduce Recidivism by 50 Percent

    Mr. Ormond, picking up on the idea of your operation, it is 
my understanding that you have some 16,000-plus individuals 
that are under probation. You apparently have set a goal that 
you are going to reduce the recidivism of these individuals by 
50 percent over the next five years, which is great if you can 
get there. I think that goal is one that is very, very 
optimistic, but I do not want to deprive you of the opportunity 
to get there.
    But I know, last year, in the District of Columbia 
appropriations for fiscal year 2000, there was a question about 
some of the findings that Mr. Carver, your predecessor, I 
believe, spoke to, and he indicated that there are findings 
that have been made that deal with high-rate substance abusers 
and that they are finding, after they studied this situation, 
that some of these high-rate abusers are committing between 300 
and 500 crimes a year.
    I do not expect you to necessarily agree with that, but if 
they are even half right, that is scary, because what they are 
doing, probably, are some small breaking-and-enterings, 
burglaries, thefts, that kind of thing. So they may not be 
maximum-security-type individuals, but it sure adds to the cost 
to society.

              Drug-Sanction Approach Versus Incarceration

    And incidentally, I know that these people have to, of 
course, be arrested, they have to be put through the process. 
And there is no question that it is cheaper to use the drug-
sanction approach, which you are doing, which is about $8 a 
day, plus a few cents, versus $62 dollars a day for the 
incarceration.
    But the question is, do you really feel that you can reach 
that goal? I mean, is recidivism something that you can beat 
down that quickly, in five years?
    Mr. Ormond. We really believe we can. We are really looking 
at a 10 percent reduction each year, and as we have seen with 
the re-arrest rates of the parolees, with a comprehensive 
system----
    Mr. Knollenberg. How do you intend to do it? Tell me how 
you intend to do that.
    Mr. Ormond. First, starting with the Bureau of Prisons, we 
are feeling very hopeful that the educational supports, the 
treatment supports are in place, so the initial interventions 
take place there.
    The second phase is a transition phase. We are actually 
transitioning people through halfway houses or community 
correction centers.
    Mr. Knollenberg. Are they integrated with----
    Mr. Ormond. A collaboration, yes. For 120 days, we are 
putting our staff in those facilities. Issues like family 
reunification, we start that then. Substance abuse treatment 
begins at that point. Employment, housing, are critical 
factors.
    The factors that Dr. Hawk Sawyer noted, we start that. And 
then once we get them in a community, we are working with the 
Metropolitan Police Department, putting our staff within these 
communities, closing the supervision gap. And all this has 
shown significant results.
    For instance, in our first pilot in Police Service Area 
704, we saw a 35 percent reduction in the crime within that 
area, just through collaborating with the police department. So 
a full continuum, starting with prison, throughout the halfway 
houses and in the communities will show results.
    Mr. Knollenberg. So tomorrow when Chief Ramsey comes in, he 
will be able to confirm or verify these numbers?
    Mr. Ormond. To speak about these numbers, yes.
    Mr. Knollenberg. Thank you.

                     Drug Treatment Can Stop Crime

    I did not mean to interrupt you.
    Mr. Ormond. And in addition to that drug treatment, it is 
critical, I think, given the predominance of drug abuse, we 
absolutely have to have the resources to address that. We have 
clearly defined treatment as a significant intervention that 
can stop crime.

                           Rate of Recidivism

    Mr. Knollenberg. You say that this will reduce recidivism. 
Is there something that you can compare in DC with the national 
averages? Is there any kind of correlation between what it is 
here and what it is nationally?
    Mr. Ormond. In reference to recidivism?
    Mr. Knollenberg. Yes.
    Mr. Ormond. There are some national studies. I think, 
nationally, we are looking at roughly 50 percent, in some 
jurisdictions, of people constantly recidivating once they come 
into the community. And that was the baseline that we are 
beginning to look at.
    Mr. Knollenberg. But my question really is, does the 
Washington experience, the DC experience, relate with a 
national average?
    Mr. Ormond. In reference to recidivism?
    Mr. Knollenberg. Yes.
    Mr. Ormond. Yes, it does.
    Mr. Knollenberg. So it is coming down all over?
    Mr. Ormond. If the proper interventions are in place. In 
the jurisdictions that have put comprehensive treatment in 
place, comprehensive sanctions in place, we begin to see a 
reduction. So I think the models and the interventions are 
pretty universal, and we are getting results nationally, yes.
    Mr. Knollenberg. Thank you.
    I am just referring, again, to last year's bill. This would 
have been for the prior budget year. The crime rate was reduced 
by some 36 percent. What are your trends this year? Do you have 
anything to offer?

             67 Percent Reduction In Re-Arrests of Parolees

    Mr. Ormond. Actually, the primary trends are those re-
arrest rates, and at this point, we have seen a 67 percent 
reduction of re-arrests among the parolees.
    Mr. Knollenberg. That is the parolees?
    Mr. Ormond. That is the parolees.
    The 36 percent relates to the partnerships with the 
Metropolitan Police Department. And again, that trend has been 
pretty consistent.
    Mr. Knollenberg. Thank you.
    Mr. Fattah.

                     Location of Seven New Prisons

    Mr. Fattah. These seven new facilities are going to be 
built where?
    Dr. Hawk Sawyer. In, for the most part, states surrounding 
the District. There are two in West Virginia, one in Virginia, 
one in Pennsylvania, one in Kentucky, one in South Carolina.

           Contracts to House Prisoners In Private Facilities

    Mr. Fattah. In this Ohio outfit, CCA, could you send to the 
committee, for my benefit, information about the--what is the 
name of this group?
    Dr. Hawk Sawyer. Corrections Corporation of America.
    Mr. Fattah. Yes, and their relationship with the Bureau of 
Prisons.
    Dr. Hawk Sawyer. With the Bureau of Prisons or the DC 
Department of Corrections?
    Mr. Fattah. The Bureau of Prisons, because you said that 
you had a contract for over some number of beds; 3,000, I 
think, was the number.
    And in terms of their relationship with the District, which 
was a question earlier asked by the Chairman, in the Ohio 
facility, you know, if you could send me some summary 
information about this contract and when it expires and so on.
    [The following information was submitted for the record:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
        Legislation Required Privatization of 2000 D.C. Inmates

    Mr. Fattah. It is interesting to me that the legislation 
required a contract to privatize 2,000 beds. Was there report 
language associated with that? Or is this requirement just, 
kind of, laid out there for it to be bidded, or what?
    Dr. Hawk Sawyer. I do not remember, specifically, the 
report language, but it was a directive to the Bureau of 
Prisons that 2,000 of the inmates would be privatized. What we 
then, in turn, did was go out with solicitations for bids.
    [Clerk's note.--Section 11201 of Public 105-33, 
approved August 5, 1997, regarding privatization of 2,000 beds 
as follows:]

    ``(A) at least 2000 District of Columbia sentenced felons by 
December 31, 1999; and (B) at least 50 percent of the District of 
Columbia sentenced felony population by September 30, 2003.'' (See 
excerpt from Public Law 105-33 below.)
    Regarding the privatization requirements, however, General 
Provision, Sec. 115, in the FY 2001 Departments of Commerce, Justice, 
State, the Judiciary, and Related Agencies Appropriations Act (Public 
Law 106-553, approved December 21, 2000; 114 Stat. 2762A-68) ensures 
more discretion for placement of offenders in privately managed 
facilities, and directs the placement of D.C. offenders consistent with 
other Federal prisoners, based on safety factors.
    Section 115 reads as follows:

           114 STAT. 2762A-68, PUBLIC LAW 106-553--APPENDIX B

          * * * * * * *
    Sec. 115. Beginning in fiscal year 2001 and thereafter, funds 
appropriated to the Federal Prison System may be used to place in 
privately operated prisons only such persons sentenced to incarceration 
under the District of Columbia Code as the Director, Bureau of Prisons, 
may determine to be appropriate for such placement consistent with 
Federal classification standards, after consideration of all relevant 
factors, including the threat of danger to public safety.
    Further, the Revitalization Act directed the Attorney General to: 
``conduct a study of correctional privatization, including a review of 
relevant research and related legal issues, and comparative analysis of 
the cost effectiveness and feasibility of private sector and Federal, 
State, and local governmental operation of prisons and corrections 
programs at all security levels; and submit a report to Congress no 
later than one year after the date of enactment of this Act''. A copy 
of this study is attached for your information.

    [Clerk's note.--The study referred to has been retained in 
the Committee Files.]

    The following is the relevant excerpt from Public Law 105-33:

             111 STAT. 734, PUBLIC LAW 105-33--AUG. 5, 1997

          * * * * * * *

                      Subtitle C--Criminal Justice

                         CHAPTER 1--CORRECTIONS

SEC. 11201. BUREAU OF PRISONS.

    (a) Felons Sentenced Pursuant to the Truth-In-Sentencing 
Requirements.--Not later than October 1, 2001, any person who has been 
sentenced to incarceration pursuant to the District of Columbia Code or 
the truth-in-sentencing system as described in section 11211 shall be 
designated by the Bureau of prisons to a penal or correctional facility 
operated or contracted for by the Bureau of Prisons, for such term of 
imprisonment as the court may direct. Such persons shall be subject to 
any law or regulation applicable to persons committed for violations of 
laws of the United States consistent with the sentence imposed.
    (b) Felons Sentenced Pursuant to the D.C. Code.--Notwithstanding 
any other provision of law, not later than December 31, 2001, the 
Lorton Correctional Complex shall be closed and the felony population 
sentenced pursuant to the District of Columbia Code residing at the 
Lorton Correctional Complex shall be transferred to a penal or 
correctional facility operated or contracted for by the Bureau of 
Prisons. Such persons shall be subject to any law or regulation 
applicable to persons committed for violations of laws of the United 
States consistent with the sentence imposed, and the Bureau of Prisons 
shall be responsible for the custody, care, subsistence, education, 
treatment and training of such persons.
    (c) Privatization.--
          (1) Transition of inmates from lorton.--The Bureau of Prisons 
        shall house, in private contract facilities--
                  (A) at least 2000 District of Columbia sentenced 
                felons by December 31, 1999; and
                  (B) at least 50 percent of the District of Columbia 
                sentenced felony population by September 30, 2003.
          (2) Duties of deputy attorney general.--The Deputy Attorney 
        General shall--
                  (A) be responsible for overseeing Bureau of prisons 
                privatization activities; and
                  (B) submit a report to Congress on October 1 of each 
                year detailing the progress and status of compliance 
                with privatization requirements.
          (3) Duties of attorney general.--The Attorney General shall--
                  (A) conduct a study of correctional privatization, 
                including a review of relevant research and related 
                legal issues and comparative analysis of the cost 
                effectiveness and feasibility of private sector and 
                Federal, State, and local governmental operation of 
                prisons and corrections programs at all security 
                levels; and
                  (B) submit a report to Congress no later than one 
                year after the date of enactment of this Act.

                  BIDS DIRECTED TO PRIVATE CONTRACTORS

    Mr. Fattah. And you bidded to both governmental entities 
and for-profit entities?
    Dr. Hawk Sawyer. No, it was directed that those 2,000 had 
to be private contracts.
    Mr. Fattah. Was this to steer a contract? I am trying to 
understand what the purpose of this requirement is.
    Dr. Hawk Sawyer. It was to ensure that some of the work 
went to private contractors.
    I failed to mention another 1,000 beds that we have in a 
privatized contract. Out of those 2,000 beds that were required 
to be privatized, we have a contract with a company in North 
Carolina now to run 1,200 beds for us there as part of this 
2,000.

                 CONTRACT FOR FACILITY IN PENNSYLVANIA

    And then we also were prepared to award a contract to a 
company that had bid for a facility in Pennsylvania. It is hung 
up in the courts right now because of a lawsuit that the local 
community filed on environmental issues.
    So the 2,000 beds we were required to contract, that is 
those 2,000 right there.

               TOTAL COST AND STATUS OF SEVEN NEW PRISONS

    Mr. Fattah. These seven new prisons, can you give me a 
sense of what the cost-per-cell construction is?
    Dr. Hawk Sawyer. For us?
    Mr. Fattah. For these seven new prisons that are coming on-
line.
    Dr. Hawk Sawyer. Right. The seven new prisons, the rough 
construction cost, I do not have that. I will have to get that 
to you. I do not have that.

             COST-PER CELL FOR CONSTRUCTION OF NEW PRISONS

    Mr. Fattah. Can you give me a rough ballpark of what it 
costs to build a cell in the Federal system?
    Dr. Hawk Sawyer. Yes. It is about $100 million per prison, 
for seven prisons. And each one would hold 1,000 to 1,500 
inmates. So I would have to do the calculations.
    Mr. Fattah. So about $100,000 per cell?
    Dr. Hawk Sawyer. Roughly, roughly. It depends. There are 
medium security and high security. Obviously, high security 
cells are more expensive.
    Mr. Fattah. You say they run the gamut. They start down 
here and go up----
    Dr. Hawk Sawyer. Right. It would be a range. It would cover 
a range of cost.
    But I can get you the specific numbers, Congressman, if you 
would like to have them.
    Mr. Fattah. Yes.
    [The following information was submitted for the record:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
                           FOR-PROFIT PRISONS

    Let me just get back to these for-profit prison concerns.
    Dr. Hawk Sawyer. Okay.
    Mr. Fattah. How many of these entities exist?
    Dr. Hawk Sawyer. Private companies?
    Mr. Fattah. How many competitors are there to CCA?
    Dr. Hawk Sawyer. I would say, in terms of sizable that have 
a fair number of beds, there are roughly a handful, roughly 
five or six sizable companies.
    I believe we, in the Bureau of Prisons, contract with at 
least four or five.
    Mr. Fattah. Okay, so there would be competition for----
    Dr. Hawk Sawyer. Yes. There is competition. Yes.
    Mr. Fattah. Are there any reports on these for-profit 
prisons operations that are available?
    Dr. Hawk Sawyer. Okay. In addition to CCA, you would like 
all of them?
    Mr. Fattah. Yes. Just a general----
    Dr. Hawk Sawyer. Okay.
    Mr. Fattah. I would like to learn more about that.
    Dr. Hawk Sawyer. Okay.
    Mr. Fattah. Thank you.
    [The following information was submitted for the record:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
                    CSOSA TREATMENT AND SUPERVISION

    Mr. Knollenberg. I want to now to turn to Ms. Jones, and 
also I have some questions to ask Mr. Ormond.
    First, Ms. Jones, as the director of the Public Defender 
Service, what are your thoughts on the CSOSA treatment and 
supervision programs?
    Ms. Jones. Well, I find that it is a viable alternative to 
incarceration. It is a more humane way of addressing the root 
causes of crime. And the Public Defender Service has been able 
to partner with CSOSA and we hopefully will partner with them 
more in the future on community reentry.

                 PAROLEES FACE WHOLE RANGE OF PROBLEMS

    What we have found, having represented most or nearly every 
parolee facing revocation, is that frequently people who have 
been incarcerated for 10 or 15 years, by the time they come 
out, they have a whole range of problems, not all of which can 
be addressed by CSOSA--legal needs, child support, the laws 
have changed regarding sex offender registration--and they 
really need a lawyer to assist them with that community reentry 
and transition process.
    Mr. Knollenberg. I am interested in the education of 
children. Do you have a lot of dealings with children?
    Ms. Jones. Yes.

             SPECIAL EDUCATION--REPRESENTATION OF CHILDREN

    Mr. Knollenberg. Can you tell me about your representation 
of them with the school board? Can you tell me a little about 
that?
    Ms. Jones. We have----
    Mr. Knollenberg. What type of follow-up procedures do you 
have?
    Ms. Jones. What generally happens is we represent about 
half of all children charged with acts of delinquency in the 
District of Columbia. We have about eight lawyersrepresenting 
just juveniles and a few lawyers who specialize in doing just that.
    We try to identify children who have learning disabilities 
and we represent them. We have four special education 
advocates, two staff members are funded by the appropriation 
and two who are grant funded. They provide representation 
before the DC School Board, securing alternative placements.
    These are not just children with learning disabilities. 
Sometimes these are children who simply cannot learn in the 
traditional classroom setting and they act out and they cause 
problems and then end up in the delinquency system.
    We represent them. We refer them for educational diagnostic 
testing services, and we locate alternatives to the traditional 
classroom educational setting for those children.

                      BACKLOG OF D.C. PAROLE CASES

    Mr. Knollenberg. For both Mr. Ormond and Ms. Jones--and I 
will turn to Mr. Ormond first--I have been told there is a huge 
backlog of DC parole cases that were transferred through CSOSA 
to the U.S. Parole Commission and some were without proper 
paperwork to process in a timely manner.
    Can you explain why? Why were they transferred without 
proper paperwork, and why this huge backlog?
    Mr. Ormond. Well, first, there is still some question about 
how huge that backlog was, for the record. I mean, our staff 
reports are saying there were roughly 80 people that were 
backlogged. So there still is some discrepancy about the 
number.
    Mr. Knollenberg. I am referring to the March 10 Washington 
Post article that related to that.
    Mr. Ormond. And that is the one I am referring to. There 
still is some discrepancy about what was reported in The Post 
and what the reality was in reference to the backlog.
    In many instances the pre-sentence investigation report was 
not available. We put together a real aggressive effort to make 
sure that we have those pre-sentence reports in, so that would 
not hold the process up.
    Mr. Knollenberg. Would you like to comment, Ms. Jones, on 
the same thing?
    Ms. Jones. Yes. The Public Defender Service has found 
increasingly that there are hundreds of people who have been 
arrested on outstanding parole warrants, and under the 
regulations and under the Constitution those folks are required 
to be processed. If their parole is going to be revoked, there 
has to be a revocation hearing within about 60 days.

         CLASS ACTION LAWSUIT FILED BY PUBLIC DEFENDER SERVICE

    That has not been occurring and that is actually the basis 
for the class action lawsuit that the Public Defender Service 
filed.
    It still has not been corrected. There have been measures 
in place by the U.S. Parole Commission and we have been working 
closely with CSOSA to make sure that there is no delay on the 
front end. And that has, by and large, not been the problem.

                U.S. PAROLE COMMISSION--NOT ENOUGH STAFF

    Once the cases get to the commission, we have been told, 
and what we are learning in the course of the lawsuit, is that 
the U.S. Parole Commission has not been equipped, in terms of 
staff, to handle the volume of violators that CSOSA is 
identifying.
    So if a person violates the conditions of parole, CSOSA is 
very quick and efficient about bringing that person to the 
attention of the Commission and CSOSA requests a warrant. The 
commission issues a warrant, but then the Commission is not 
able to follow through and adjudicate the complaint and make a 
timely decision about whether to revoke parole or to retain the 
person.
    Mr. Knollenberg. So there are some rough spots in the road.

              YOUNGSTOWN--ERRORS IN CATEGORIZING PRISONERS

    Let me go to a question for Dr. Sawyer and Mr. Clark that 
has to do with how you categorize individuals who are either 
minimum security, medium security, or maximum security, those 
that are on the extreme end, the extremely more difficult 
types.
    There was some suggestion that the individuals that were 
transferred to Youngstown, for example, were anything but 
moderate or medium security risks; they were, in fact, much 
higher than that.

                        CATEGORIES OF PRISONERS

    Are there four categories--maximum, medium, low, and is 
there another category?
    Dr. Hawk Sawyer. It depends upon whether you are talking 
about DC Department of Corrections or the Federal Bureau of 
Prisons.
    Mr. Knollenberg. I am talking about those that were 
transferred from here to Youngstown.
    Dr. Hawk Sawyer. Those would be DC inmates and they have a 
different system of classification than the Bureau.
    Mr. Knollenberg. So, if I understand--well, I will wait for 
Mr. Clark's response.
    [The following information was submitted for the record:]

                Bureau of Prisons Inmate Classification

    The inmate security classification system in the Bureau of 
Prisons (BOP) consists of four security levels: minimum; low; 
medium; and high (penitentiaries). Additionally, there is an 
administrative category for specialized populations such as 
pre-trial, medical, etc., and a separate classification system 
for females. Inmates classified by the BOP as minimum and low 
security do not ordinarily have histories of violence and are 
serving sentences mainly for drug related or property offenses. 
Inmates classified by the BOP as medium and high security often 
have histories of violence (more recent and more serious) and 
are more likely to be serving sentences for violent crimes.
    Offenders are classified to ensure that they are placed in 
the least restrictive and least expensive correctional 
environment appropriate to their programming and security 
needs. This results in a reduction in the mixing of aggressive 
and non-aggressive offenders. Federal prisons range from 
minimum security work camps without fences to penitentiaries 
with walls and towers.

    Mr. Knollenberg. Mr. Clark?
    Mr. Clark. Thank you, Mr. Chairman.

                    CONTRACT WITH CCA AT YOUNGSTOWN

    Several things. First of all, this contract, just to be 
clear, with CCA at Youngstown predated the Revitalization Act. 
It was in place at the time the Act was passed. It is not 
anything that has been done subsequent to that time.
    Secondly, as I had mentioned in my written submission, I 
was commissioned by the attorney general to investigate, 
review, report on the problems at Ohio with the killings and 
the disruptions and the six escapes and so on, and I produced 
a300-page report, which I think we have already forwarded to the 
committee already. That was in 1998.

            YOUNGSTOWN--DC PRISONER CLASSIFICATION PROBLEMS

    Now, we found that classification was a problem, but there 
were multiple problems. Certainly, whatever you call them, the 
prisoners who were sent were beyond the capacity of that 
facility. Not the physical capacity, but they were overmatched 
with the staff. There was not adequate staff training. The 
facility was filled much, much too quickly.
    As much respect as I would have for my former agency, the 
Federal Bureau of Prisons, they could not have taken this 
population nearly as quickly as was attempted in Youngstown and 
adequately handled them. So there were those issues.

     YOUNGSTOWN--LACK OF MONITORING AND OVERSIGHT BY DEPARTMENT OF 
                              CORRECTIONS

    There was, frankly, also a lack of adequate monitoring and 
oversight on the part of the Department of Corrections. There 
was a lack of internal controls within the company. There were 
a number of problems. The one that is most frequently mentioned 
is that the higher security prisoners were sent and that is 
certainly a problem.

    YOUNGSTOWN--DC AND CCA OFFICIALS KNEW OF CLASSIFICATION PROBLEMS

    And it also was a problem--let us say it was not something 
that was one without both sides having their eyes open. The 
District officials and the CCA officials both----
    Mr. Knollenberg. They both had their eyes open?
    Mr. Clark. They all knew----
    Mr. Knollenberg. They knew?
    Mr. Clark. They all knew.
    Mr. Knollenberg. And they did----
    Mr. Clark. They all knew that they were sending some of the 
toughest inmates in the District to a brand new facility with a 
brand new staff.
    Mr. Knollenberg. But both ends knew?
    Mr. Clark. Both ends knew fully.
    Mr. Knollenberg. So any claim to the contrary would not----
    Mr. Clark. And I spoke to the warden, to a number of 
officials from CCA. The warden came out personally and reviewed 
cases sent. He personally, from his prior experiences as a 
Federal warden, knew many of these prisoners. So there was full 
knowledge on both sides.
    Mr. Knollenberg. Thank you.
    Mr. Fattah.

         UTILIZING FOR-PROFIT ENTITIES TO INCARCERATE PRISONERS

    Mr. Fattah. You know, I have difficulty with the notion 
that we should be utilizing for-profit entities to incarcerate 
our prisoners. I am not sure we should be headed in that 
direction. But I will not belabor the point. I want to get some 
information from the Bureau on it and will delve into it 
further.
    I do not have any further questions, Mr. Chairman.
    Mr. Knollenberg. Thank you, Mr. Fattah.
    I have a couple of questions for our U.S. Marshals who are 
here today. First of all, I want to thank both of you for 
taking some time to speak to us last week. That helps us.

          CONDOLENCES TO FAMILY OF U.S. MARSHAL PETER HILLMAN

    Let me first extend my sympathy to the family of U.S. 
Marshal Peter Hillman, who died tragically last Summer simply 
because he was in the midst of transporting prisoners to 
California. I understand that Deputy Hillman had a 
distinguished career with the U.S. Marshals Service, and I know 
that he will be greatly missed.

       NUMBER OF U.S. MARSHAL WARRANTS DUE TO REVITALIZATION ACT

    I want to go back to look at your testimony again--this is 
for U.S. Marshal Horton. To reiterate your testimony, your 
district in one day received 1,423 warrants due to the 
Revitalization Act legislation. Further, I understand, and 
correct me if I am wrong, that 579 were determined to be 
fugitives and 844 were administratively located as prisoners in 
institutions in DC and around the U.S.

                 DAILY AVERAGE OF U.S. MARSHAL WARRANTS

    It is now seven months after that date. What is the daily 
average being received now and how are you managing the 
administrative and the investigative requirements or 
responsibilities that you have?
    Mr. Horton. I believe we receive approximately 70 warrants 
a month from the U.S. Parole Commission. If we look at these 
statistics for just the month of March, it is very impressive. 
We were able to close 128 parole cases.
    We do so through our Fugitive Investigative Unit within our 
office and with some assistance from the DC Joint Fugitive Task 
Force. It is a Herculean effort, but we get out as early as we 
can in the morning and we make just tremendous efforts in that 
regard to apprehend the fugitives.
    A lot of them are also arrested by other agencies. Some of 
them are. But for the most part we just make a very intensive 
effort in trying to locate and track the fugitives.

           NUMBER PAROLE VIOLATORS ARRESTED BY U.S. MARSHALS

    Mr. Knollenberg. Do you have a daily average of DC parole 
violators arrested and placed back in the prison system?
    Mr. Horton. I do not have a daily average with me right 
now, sir, but I would be happy to get that information to you.
    Mr. Knollenberg. If you would, to give us some reflection 
of the actuality of those numbers.
    [The following information was submitted for the record.]

    From August 2000 through March 2001, the District of 
Columbia Marshal's Office is averaging three per day which 
works out to sixty per month.

    Mr. Knollenberg. Marshal Dillard, with the closure of 
Lorton--and we have a firm statement now; we read it, but we 
have heard it now from Mr. Clark--you have expressed concern 
with the lack of jail space.
    Mr. Dillard. Correct.

                  TRAVEL REQUIRED BY PAROLE COMMISSION

    Mr. Knollenberg. And then, of course, the extra time and 
the expense it takes to have to travel great distances. What 
recommendations would you provide for this panel?
    Mr. Dillard. Well, at this point Mr. Chairman, I would not 
have enough real meaningful background to make a 
soundrecommendation. One of the reasons is this is new to all of us. 
And right now we are not sure exactly how many prisoners we will have 
to physically transport ourselves and how many that we can depend upon 
help from the Bureau of Prisons.
    The Bureau of Prisons----
    Mr. Knollenberg. Are you being ordered to transport 
prisoners now for, say, family court and for other non-criminal 
legal purposes?
    Mr. Dillard. On a limited basis, yes, sir.
    This was a major concern to us when this first came up and 
so far that aspect, though, has not been insurmountable, 
because the Superior Court judges and all of the people 
involved in the process have come to realize it is a new ball 
game.
    Before, when they were at Lorton, it was a very simple 
matter for me to dispatch a bus, a van or whatever, and go get 
the people whenever they were needed pretty much. It was not 
easy, but it was doable.
    Mr. Knollenberg. Criminal and civil?
    Mr. Dillard. That is correct. Mostly criminal.
    Mr. Knollenberg. Evictions?

                          NUMBER OF EVICTIONS

    Mr. Dillard. The evictions we do 70 to 100 a day routinely, 
though all of those are local, of course. Those are within the 
District.

                   U.S. MARSHALS--WORKFORCE REDUCTION

    Mr. Knollenberg. How much has your work force decreased in 
the last, say, three years?
    Mr. Dillard. We are down from about 207 down to 171, my 
chief advises me. And this is not just enforcement people. We 
also have administrative people who have to do all the 
paperwork processing. We are about two-thirds staffed in that 
area also.

                           VIDEO-CONFERENCING

    Mr. Knollenberg. Has video-conferencing been attempted?
    Mr. Dillard. Yes, Mr. Chairman. With the help of Mr. Clark, 
my office provided one unit and Mr. Clark's office provided one 
video-conferencing unit to the courts. So far they have not 
been operational because there were problems expressed by the 
court to do with the installation of proper lines for the usage 
of them or whatever.
    But we are hopeful that they will be in use very soon, 
which will make a big difference for us.
    Mr. Knollenberg. Let me talk to Mr. Horton for just a 
moment. Due to the reduction in local prison space and the 
continued escalation of parole violators, escapes and treatment 
failures, what initiatives are you able to take to deal with 
this problem?

                      PRETRIAL DETENTION BED-SPACE

    Mr. Horton. What we have to do, with regard to our pretrial 
detention bed-space issues, we have made greater utilization of 
our contract facilities out in Orange County, Virginia, and 
down in the Northern Neck area. That is what has saved us.
    There are a couple of other issues with the pretrial 
detention, bed space issues, with regard to cooperating 
witnesses, that the government is using in these cases, that 
will not allow us to put them in certain institutions. So there 
are a list of separatees, that we have to make sure certain 
inmates are not placed in certain jails. So, we make regular 
use of the contract facilities in Virginia and Maryland. And 
these are with the sheriffs' departments down there.
    Mr. Knollenberg. Thank you.
    I am going to ask if Mr. Fattah has any further questions. 
I may have a couple more, but I am going to regroup, in just a 
second, if you want to take the mike.
    Mr. Fattah. No, Mr. Chairman, I do not have any further 
questions.
    Mr. Knollenberg. Thank you.
    We are coming along nicely. And we may even get out of here 
before we are supposed to. That is the good news. It is nice 
when you do not have votes. But then, we would not be here if 
we did not have votes, right?
    Mr. Fattah. Exactly.

      LACK OF COORDINATION--CRIMINAL JUSTICE COORDINATING COUNCIL

    Mr. Knollenberg. Mr. Clark, there was an article in The 
Washington Post, on Saturday, March 31--no surprise, I am sure, 
to you--``Agency coordination criticized.'' I know the GAO 
issued a report to Congress on the 30th of March, identifying 
some problems with lack of coordination in the District 
regarding the criminal justice process. This, by the way, was 
mandated in the fiscal year 2000 appropriations bill. It was a 
report to look at the past activities, of the Criminal Justice 
Coordinating Council, and its more recent, diminished role, due 
to the lack of staff and financial support within the District.
    What is the objective of this coordinating committee, and, 
for example, how often do you meet? Are they meeting more often 
now?
    Mr. Clark. Thank you, Mr. Chairman. I did read the report. 
I thought it was an excellent, very timely report. Actually, 
several of us on the panel, here--
    Mr. Knollenberg. You are referring to the report, and not 
the article in The Washington Post.
    Mr. Clark. Well, the report that was mentioned in the 
article.
    Mr. Knollenberg. Yes.
    Mr. Clark. Yes.
    Mr. Knollenberg. Thank you.
    Mr. Clark. Several of us on the panel, are among the--that 
is it, yes--are among the participants. And some of the others 
might want to comment. And you asked several questions there.

         DISAPPOINTMENT--CRIMINAL JUSTICE COORDINATING COUNCIL

    The problems of lack of coordination among the agencies are 
longstanding. These are not new issues in the District that 
have been highlighted here. In fact, you asked about the 
Criminal Justice Coordinating Council. It began meeting, as an 
offshoot of the previous memorandum of understanding group, 
began meeting about three years ago and, I thought, was making 
excellent progress, in terms of bringing more coordination, 
more communication, between the Federal and District agencies. 
There were several, very well-functioning committees that 
several of us worked on, and our staffs worked on.
    It has been a little bit disappointing that for the past 
six months or so there has been no staff support for that 
council. And, I think, over the past six months, there has only 
been a handful of meetings.
    The reason--and again, it was pointed out in the report--
that there is no staff support, is that the staff was financed 
by the control board in the District, which was phasing out. 
And its budget was cut. And one of the places they cut was the 
staffing for this council.
    The other thing that happened was that the very excellent 
staff director was promoted to deputy mayor for criminal 
justice issues in the District. So she departed at about the 
same time the staffing ran out. Nothing has been done in the 
meantime.
    And I very much support--and I think many of us do--the 
finding of the GAO, that this Council should be 
institutionalized in some form and that some form of support 
should be given to it. There are just too many important issues 
in the District that need this kind of coordination, and it 
takes staff work.
    Mr. Knollenberg. Thank you.
    Dr. Sawyer, I do not know that, that would be something for 
you to respond to. I think that is basically Mr. Clark's 
dominion. But if you care to----
    Dr. Hawk Sawyer. Well, we are actually a party to that 
Council, also.
    Mr. Knollenberg. All right.
    Dr. Hawk Sawyer. We are members of the council----
    Mr. Knollenberg. Any different views?
    Dr. Hawk Sawyer. We share much of Mr. Clark's comments. I 
think it would be worth commenting that the deputy mayor 
continues to do an outstanding job chairing the council. So the 
Council is continuing.

     STAFF SUPPORT NEEDED FOR CRIMINAL JUSTICE COORDINATING COUNCIL

    Where the real need is, as Mr. Clark is indicating, is in 
providing some staff support, because, with her workload, she 
just needs some assistance, in terms of her doing a lot of the 
in-between work, to make things happen. But we have been very 
pleased with the job she is continuing to do, chairing that as 
the deputy mayor.

                      SALE OF YOUNGSTOWN FACILITY

    Mr. Knollenberg. I want to come back, not on the basis of 
repeating myself, to Youngstown and talk about that situation. 
If I sound like a broken record, I guess I am. But, I 
understand the CCA has offered to sell the Youngstown facility 
to BOP, to the Bureau of Prisons. I think there is a price tag 
of around $92 million. Does that sound right? What is the 
status of that situation, if you can respond?
    Dr. Hawk Sawyer. The CCA did approach the Bureau of Prison, 
indicating possible interest in selling it. No price has been 
identified by CCA. We did, at their request, send a team of 
staff up there, a week or so ago. And we are still in the 
process of reviewing their findings, looking to see if that is 
anything we would be at all interested in.
    There are no funds available for us, right now, to consider 
purchasing it. So it is still very much in the----
    Mr. Knollenberg. So you cannot buy it, is what it amounts 
to.
    Dr. Hawk Sawyer. We are looking at it, right now, to see if 
it is something that we would want to pursue.

                 AVERAGE COST PER BED TO BUILD PRISONS

    Mr. Knollenberg. You can tell me if I am right about this, 
but I have been told that a 2,000-bed facility costs an average 
of about $85,000 per bed, to build, and that would total 
somewhere in the neighborhood of $170 million, if you were to 
factor it out. I have not checked the math. Does that sound 
right?
    Dr. Hawk Sawyer. It would be a pretty significant price 
tag, yes.
    Mr. Knollenberg. I mean, you are saying it may not be 
prudent to buy it. Is it a number that you would consider, 
perhaps, if you had the money? Would it be a desirable thing to 
do?
    Dr. Hawk Sawyer. Well, that figure is really immaterial, in 
terms of us purchasing anything, because, under the Federal 
standard, there is actually an appraisal that has to occur. And 
there is an appraisal system that is used by the Federal 
Government to purchase anything. So I am not sure where that 
figure that you are stating fits in with any appraisal that 
might be done.

                 OPPOSITION TO BUILDING PRISON IN D.C.

    Mr. Knollenberg. I do know this, that a few years ago, 
there was an effort being made, a study being made, to actually 
find a site in DC for a prison facility. Whatever became of 
that effort?
    Dr. Hawk Sawyer. That was a very unfortunate situation.
    Mr. Knollenberg. What was the opposition to that?
    Dr. Hawk Sawyer. We actually had received funding, from the 
Congress, to build a jail facility, a Federal jail facility, 
which would have offset much of the concerns that our two 
Marshals are raising. We had that funding in 1990. We worked 
very aggressively to locate a site. It was to assist DC and the 
surrounding Maryland and northern Virginia Federal courts. We 
worked diligently. We identified approximately 20 sites, 
narrowed it down to four sites, which were very viable, from 
our perspective, but received huge opposition from elected 
officials and community sponsors in the DC area, and the 
Maryland area.
    Mr. Knollenberg. The Council, for example?
    Dr. Hawk Sawyer. Senator Mikulski, from Maryland----
    Mr. Knollenberg. Are you talking about----
    Dr. Hawk Sawyer [continuing]. Then Mayor----
    Mr. Knollenberg [continuing]. The Congress.
    Dr. Hawk Sawyer [continuing]. The Council, Delegate Eleanor 
Holmes Norton. I mean, it was pretty broad-brushed, 
neighborhood councils. And so we struggled with that for 
approximately three years. And finally Congress rescinded the 
funds. And we still have no federal jail in the DC area.
    Mr. Knollenberg. That brings us to the final point. I do 
not think I have any other questions.
    Anything further, Mr. Fattah?

                       YOUNGSTOWN--PROPOSED SALE

    Mr. Fattah. No, Mr. Chairman. But included in the 
information on CCA, if you could send any information relative 
to this solicitation of purchase.
    Thank you.
    [The following information was submitted for the record:]

                       Youngstown, Ohio Facility

    Regarding the proposed sale of the Youngstown correctional 
facility by CCA, a team of corrections, facility, and program 
experts from BOP recently visited the facility to conduct a 
technical review and assess the feasibility of utilizing it for 
sentenced Federal inmates. After analyzing the team's findings 
and reviewing current needs, we have decided not to pursue the 
acquisition of the facility.

                         CONCLUSION OF HEARING

    Mr. Knollenberg. I sincerely want to thank everybody for 
appearing here today and for your testimony. If I did not say 
it, all of your written testimony will be included in the 
record, and we look forward to working with you during the 
year.

               THANKS TO CHAIRMAN BONILLA FOR USE OF ROOM

    Incidentally, I might just add, we need to thank again, 
Chairman Henry Bonilla for allowing us to use this room. This 
is the Agricultural Subcommittee's room.
    On the way out, by the way, as you go out the door that we 
came in, you might want to take a look on the wall, there is an 
interesting large photograph there. It is a good thing it is 
not up here, I guess. But take a look at it.

                   HEARING TOMORROW ON PUBLIC SAFETY

    I want to indicate that tomorrow we are going to have the 
public safety agencies, the police department, the fire and 
emergency medical services department, the U.S. attorney for 
the District of Columbia and the DC Corporation Counsel's 
office. Did I miss anybody? The courts.
    Mr. Fattah. No, Mr. Chairman, but I do want to mention that 
we want the police chief to bring in information about the e-
mails and so forth.
    Mr. Knollenberg. I believe that might be a question, Mr. 
Fattah.
    Thank you. [Laughter.]
    We do read the newspapers, so we pick up on those things. 
So I would bring this meeting to a close. We will adjourn until 
tomorrow at 1:30.
    Thank you.

                  COMMITTEE'S QUESTIONS FOR THE RECORD

                      DC Department of Corrections

    [Following are (1) responses from the DC Department of 
Corrections to questions submitted by the Committee; (2) 
letters from DC Council Member Kathy Patterson to Director Odie 
Washington and to Mayor Anthony A. Williams; and (3) an article 
from the Washington Post dated February 9, 2002:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



                                          Wednesday, April 4, 2001.

                       PUBLIC SAFETY AND JUSTICE

                               WITNESSES

RUFUS G. KING, III, CHIEF JUDGE, SUPERIOR COURT OF THE DISTRICT OF 
    COLUMBIA
MARGRET KELLEMS, DEPUTY MAYOR FOR PUBLIC SAFETY AND JUSTICE
CHARLES H. RAMSEY, CHIEF, METROPOLITAN POLICE DEPARTMENT
RONNIE FEW, CHIEF, FIRE AND EMERGENCY MEDICAL SERVICES DEPARTMENT
WILMA A. LEWIS, UNITED STATES ATTORNEY FOR THE DISTRICT OF COLUMBIA
ARABELLA TEAL, PRINCIPAL DEPUTY CORPORATION COUNSEL, OFFICE OF DC 
    CORPORATION COUNSEL
    Mr. Knollenberg. The meeting will come to order.

                Opening Remarks of Chairman Knollenberg

    I see that we have our witnesses arrayed variously in some 
seats. Would all of you kindly come forward, those six 
principals that are going to testify? It will save us a step 
later.
    We have Chief Judge Rufus King, Margret Kellems, Police 
Chief Ramsey, Fire Chief Few, Wilma Lewis and Arabella Teal. 
Does that take care of everybody? Good.
    We are meeting this afternoon to continue receiving 
testimony concerning public safety in the District of Columbia. 
Yesterday, we heard about corrections and related matters from 
District and Federal officials. Today, we have with us 
representatives of the District of Columbia Courts, the Mayor's 
public safety and justice cluster, the United States Attorney 
for the District of Columbia, and the District's Office of 
Corporation Counsel.
    As I mentioned yesterday, I believe that public safety is 
one of the keys to the continued revitalization of the District 
of Columbia. Our panelists this afternoon are on the front 
lines of improving public safety in our Nation's Capital, and 
they have made, I believe, considerable progress.
    However, as always, there are still things to be done--much 
to be done, perhaps. There have been some slips and some trips 
along the way, and there are many difficult decisions that lie 
ahead. Among other things the Committee is concerned about is 
the e-mail situation and the status of the department's 
investigation. I expect that our subcommittee members will have 
many questions about the current state of public safety in the 
District of Columbia.
    At this time, I will turn to the ranking member, Mr. 
Fattah, for any comments he would like to make.
    Mr. Fattah.

                 Opening Remarks of Congressman Fattah

    Mr. Fattah. Thank you, Mr. Chairman. Let me also welcome 
the witnesses for this second in a series of hearings on the 
subject matter of public safety. I look forward to hearing from 
the witnesses in their various roles, and in particular hearing 
from them as to what it is they believe the Congress can do to 
assist in the progress that has already been made, particularly 
to respond to questions relative to the budget and the 
appropriations.
    Obviously, we will not ignore some of the immediate 
controversies, but I want to thank the chairman for convening 
the hearing and look forward to the testimony of the witnesses.
    Mr. Knollenberg. Mr. Fattah, thank you for your comments.

            WELCOME TO KATHY PATTERSON, CITY COUNCIL MEMBER

    With us today, in addition to the panelists, is Kathy 
Patterson, who is the chair of the Council's Committee on 
Public Safety. And we welcome her.
    Again let me introduce the witnesses by name and their 
title: Judge Rufus G. King III, Chief Judge of the Superior 
Court of the District of Columbia; Margret Kellems, Deputy 
Mayor for Public Safety and Justice; Charles Ramsey, Chief of 
the Metropolitan Police Department; Ronnie Few, Chief of the 
Fire and Emergency Medical Services Department; Wilma Lewis, 
United States Attorney for the District of Columbia; and 
Arabella Teal, the Principal Deputy Corporation Counsel of the 
District of Columbia.
    We welcome all of you.
    I realize the principal witnesses have people with them 
that they might call upon to answer questions. So we welcome 
you all here this afternoon as well. And consistent with our 
policy, we will continue to swear in the individuals, both the 
principal witnesses as well as any individual that might be 
called upon to make comments by one of the panelists.

                        Swearing in of Witnesses

    Rule XI, Clause 2(m), of the rules of the House and Section 
1(b) of the rules of the committee, authorize me, as 
subcommittee chairman, to administer the oath. So I would now 
ask that all of the individuals who will be testifying to 
please stand and raise your right hand.
    [Witnesses sworn.]
    Mr. Knollenberg. Thank you.
    If there is no objection, we will hear all of the opening 
statements before we go to questions, and we will, as close as 
possible, operate under the 5-minute rule. We would hope that 
you will limit your oral testimony to 5 minutes. Your entire 
statement will be included in the record. That is guaranteed. 
And after all of you present your testimony, and then we will 
go to questions for each and all of you.
    The first individual we will hear from today will be Chief 
Judge King of the DC Superior Court.
    Judge King, we would appreciate it if you would highlight 
your comments within the statement that you are presenting, and 
you are recognized.

 PREPARED STATEMENT OF RUFUS KING III, CHIEF JUDGE, SUPERIOR COURT OF 
                        THE DISTRICT OF COLUMBIA

    [The prepared statement of Judge King follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Judge King. All right.

            Opening Statement of Chief Judge Rufus King III

    Mr. Chairman, Representative Fattah, Representative Olver, 
thank you for the opportunity to discuss the District of 
Columbia Courts' budget and the status of our indigent defense 
programs and ongoing work with the District of Columbia 
criminal justice agencies to enhance public safety.
    I have submitted my prepared statement which addresses 
these issues in some detail. This afternoon, I would like to 
mention a few highlights and respond to any questions you have.

                         Courts' Budget Request

    The Courts recently submitted their fiscal year 2002 budget 
request of $153 million in budget authority for court 
operations and capital improvements and $40 million for 
Defender Services. It is a fiscally responsible budget that 
continues to build on recent improvements and invests in the 
Courts' future through targeted funding increases, primarily 
for human resources, information technology, our aging court 
infrastructure, and Defender Services.

                        FY 2001 Budget on Target

    For fiscal year 2001, the Courts are on target to meet the 
budget. The Courts' top priority, employee pay parity, has been 
addressed, and we are seeing a positive affect on employee 
morale and on retention. The Courts' fiscal year 2001 capital 
plan begins to address the deterioration of the Old Courthouse 
at 451 Indiana Avenue, with the installation of a new roof. We 
will continue to closely manage the budgetand monitor spending 
to ensure that operations remain cost-effective and within budget for 
the fiscal year.

                  CHANGES IN DEFENDER SERVICES PROGRAM

    The Courts have implemented several changes in the Defender 
Services programs to strengthen management and provide better 
service to the community. We have initiated an automated system 
to track vouchers, and we have reduced the time to pay 
attorneys by nearly half since the beginning of the fiscal 
year. So on average, the Court now pays claims 29 days after 
they are submitted; well within the 45-day limit.
    The Courts are on track to timely pay all Defender Services 
obligations. Through February, 42 percent of the fiscal year, 
we have obligated $12.5 million, or 36 percent, of the Defender 
Services appropriation. In addition, the Courts took 
extraordinary and painful steps in fiscal year 2000 to ensure 
the solvency of Defender Services funding, by creating a 
reserve in the operating budget, we had a carry-in balance in 
the Defender Services account of approximately $3.6 million.

                            POLICE OVERTIME

    As we understand it, the police overtime problem is 
centered on two areas: papering and scheduling. The Court is 
committed to working with the Metropolitan Police Department, 
prosecutors and other criminal justice agencies to reduce 
police overtime in both these areas.
    As to papering, the Court already does not require a police 
officer's presence or testimony at arraignment or presentment. 
We are exploring ways to make it easier for the necessary sworn 
affidavit to reach the Court with maximum efficiency, and we 
will work with the other agencies to do so.

                           SCHEDULING TRIALS

    As to scheduling, the Court has employed a short-term 
mechanism--that is, certification among different calendars--to 
address inefficiencies in the current system of scheduling 
trials, so that cases go to trial as much as possible. In the 
long term, we plan to implement a differential case management 
program. The goal of the process will be to ensure timely 
disposition of cases and efficient use of criminal justice 
resources, which we believe will go right to the bottom line in 
enhancing public safety.
    The Court is now working with the Criminal Justice 
Coordinating Council to contract with experts in court 
management to implement a pilot program in differential case 
management by October 2001.
    Thank you for the opportunity to comment on these important 
and pressing issues. The D.C. Courts look forward to working 
with you to ensure that justice in the District of Columbia is 
administered promptly, fairly and effectively.
    I will be happy to answer any questions which you may have 
as we go through the afternoon.
    Mr. Knollenberg. Thank you, Judge King.
    Next, Margret Kellems, the deputy mayor for public safety 
and justice, is recognized to make her comments. And again, the 
entirety of your prepared statement will be included in the 
record.

 PREPARED STATEMENT OF MARGRET KELLEMS, DEPUTY MAYOR FOR PUBLIC SAFETY 
                              AND JUSTICE

    [The prepared statement of Margret Kellems follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Ms. Kellems. Thank you.
    Mr. Knollenberg. Thank you.
    You are recognized. Thank you.

                  Opening Statement of Margret Kellems

    Ms. Kellems. Good afternoon, Chairman Knollenberg, members 
of the subcommittee.
    I thank you for the opportunity to discuss with you today 
the accomplishments, challenges and plans for improving public 
safety in the District of Columbia.
    Because this topic area is quite broad, and there are many 
distinguished panelists presenting on their individual agencies 
in greater detail, I will limit my remarks to a few highlights 
of the Williams administration public safety priorities.

            WILLIAMS ADMINISTRATION PUBLIC SAFETY PRIORITIES

    One of the reasons I highlight these particular areas is 
because they require the cooperation and collaboration of all 
of the people seated here today, as well as other agencies, the 
private sector and the community.

                       POLICE PRESENCE ON STREETS

    The first priority area is police presence on the street. 
This has been a recalcitrant issue for the city for many years. 
In the last two and a half years, there has been significant 
progress in this area, and Chief Ramsey will discuss the 
increase in numbers and other operational changes he has 
implemented to increase police presence. But the net effect was 
an increase of 344 additional officers on the street in fiscal 
year 2000.
    In addition to raw numbers, the area which has the 
potential to yield even greater police presence on the streets 
is the reform of mandatory court and prosecutorial-related 
overtime. As two recent reports have explained, this is an 
enormous burden on the police department. Many hundreds of 
officers are called each day by the prosecutors and the court 
to perform investigative work, participate in witness 
conferences or testify at trials that may or may not occur when 
scheduled.

                POLICE OVERTIME DUE TO COURT SCHEDULING

    Court overtime is a complex issue, the resolution of which 
requires the coordination and cooperation of many agencies 
outside of MPD and outside of the District government. To the 
greatest extent possible, the District agencies are changing 
the way they do business to minimize the drain on police 
resources. Chief Ramsey and Ms. Teal will discuss one such 
collaborative reform effort that has just recently begun 
between the two of them.
    We remain optimistic about the prospects of meaningful 
reform under the new leadership of Chief Judge King, and with 
the cooperation of Wilma Lewis and the United States Attorneys 
Office. At the same time, we recognize that there is no easy 
fix. All of the District agencies will continue to participate 
actively and push for court and prosecutorial-related overtime 
reform. Improvements in this area equate to officer hours on 
the street.

                           EMERGENCY RESPONSE

    The second priority area is emergency response. In early 
fiscal year 2000, MPD was criticized for its poor response to 
calls for service. During the fiscal year, MPD made a number of 
operational and infrastructure improvements in this area that 
are included in both Chief Ramsey's and my written submissions.
    A major criticism of the District's emergency response 
system was the separation of police and fire. We are solving 
that problem. MPD's 911 system is being integrated with the 
fire EMS emergency dispatch system. The anticipated completion 
date for this integration is June, 2001.
    At the Fire and EMS Department, Chief Few has been 
successful in decreasing response time for critical medical 
emergencies, partly through the paramedic engine company 
initiative. Chief Few is also planning the one-plus-one 
staffing program to further reduce response time. Our goal 
remains to respond with advance life support to critical 
medical emergencies in 8 minutes.

                            VICTIM SERVICES

    The third priority area is victim services. For many years, 
the District has had virtually no victim service system for the 
thousands of victims of violent crime annually. Chief Ramsey is 
putting a number of programs in place at MPD, but the primary 
source of funding for the victim services remains the limited 
federal grant dollars that are sub-granted through my office to 
community-based service providers.
    It is essential that we secure approval to use the $18 
million in surplus victim's compensation funds to catalyze the 
development of a service system, as we build new programs into 
our various agencies and support capacity development in the 
community.

                    QUALITY OF LIFE IN NEIGHBORHOODS

    The fourth priority area is quality of life in the 
neighborhoods. This is one of the areas of most notable 
improvement, both in the service provided by the police, as 
well as by non-public safety agencies. MPD's community policy 
partnerships for problem solving are now in place in 55 of the 
District's PSAs, and will be in place in all 83 by the end of 
the fiscal year.
    These partnerships are integrated with the neighborhood 
services core teams in each of the city's wards. The core teams 
are multi-disciplinary groups that work with community members 
to identify, prioritize and resolve chronic neighborhood 
problems such as nuisance properties that require the resources 
of many agencies.

                  COMMUNITY REVITALIZATION INITIATIVES

    The District's community revitalization initiatives are 
bolstered by the community prosecution program in the United 
States Attorneys Office, which assigns prosecutors to specific 
geographies in the city so that individual prosecutors can work 
with communities to identify priority problems and leverage the 
prosecutors' tools to resolve them.
    Similarly, the partnership between MPD and the Court 
Services and Offender Supervision Agency that manages the 
District's pretrial, parole, and probation populations has been 
hugely successful in curbing recidivist crime and restoring 
peace in the neighborhoods. The Williams administration is very 
supportive of the Court Services community supervision and drug 
treatment efforts, and we are grateful for the difference they 
are making in the lives of the District's residents.

             RE-INTEGRATION OF OFFENDERS INTO THE COMMUNITY

    The final public safety priority that I will highlight is 
the re-integration of offenders into the community. There are 
approximately 9,000 individuals under pretrial supervision, and 
an additional 16,000 probationers and parolees under active 
supervision. The keys to successful re-entry are jobs and 
education, mental health and substance abuse treatment, and 
housing opportunities. The District is actively engaged with 
our federal partners and with community and faith-based 
organizations to develop wraparound programs for these special 
populations.
    One of the most recalcitrant problems we are facing is 
siting community-based housing facilities for these 
populations. The Williams administration is committed to 
ensuring the fair and appropriate distribution of these social 
responsibilities and facilities throughout the city. We have 
had tremendous cooperation on this issue from our federal 
partners at Court Services and the Bureau of Prisons.

                 CRIMINAL JUSTICE COORDINATING COUNCIL

    All of these priority areas require collaboration on 
solutions and coordination of operations. The Revitalization 
Act had a tremendous impact on the District's justice system, 
fragmenting the services in the local and federal agencies. In 
response, the Criminal Justice Coordinating Council was created 
by agreement of the parties in common recognition of this need 
for greater collaboration.
    The CJCC features prominently in the recent General 
Accounting Office report on the District's justice system. Like 
all members of the CJCC, Mayor Williams is an avid supporter of 
the organization. In fiscal year 2002, the Mayor has included 
two staff people and the associated funding to support the CJCC 
in his budget request. It is our hope that the other members of 
the CJCC will include resources in their fiscal year 2002 
budget requests as well.
    We continue to look at the CJCC as the primary mechanism 
for identifying problems, developing solutions and imposing 
accountability for the results that our citizens deserve.
    Thank you, and I would also be pleased to answer your 
questions.
    Mr. Knollenberg. Ms. Kellems, thank you much.
    Thanks to both witnesses thus far who have kept their 
comments within 5 minutes, or very close to it.
    We now welcome Police Chief Ramsey, whom we have spoken 
with before at some length. We would be very pleased to hear 
from you. Chief Ramsey.

PREPARED STATEMENT OF CHARLES H. RAMSEY, CHIEF OF POLICE, METROPOLITAN 
                           POLICE DEPARTMENT

    [The prepared statement of Chief Ramsey follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
             Opening Remarks of Police Chief Charles Ramsey

    Chief Ramsey. Thank you and good afternoon, Mr. Chairman 
and members of the subcommittee, staff and guests.
    I appreciate the opportunity to present a brief statement 
outlining progress and challenges in the Metropolitan Police 
Department. My complete statement has been submitted to the 
subcommittee and is available on our department's web site, 
www.mpdc.org.
    This afternoon, I will touch on the highlights and discuss 
two issues of critical importance to our department and the 
community.
    The Metropolitan Police Department continues to make 
significant progress in rebuilding our department and reducing 
crime. Over the last three years, we have shored up our 
physical infrastructure through a 5-year, $100 million 
facilities upgrade program. We have implemented critical new 
information technology projects. We have expanded training and 
provided new equipment to our officers. We have put more 
officers on the street during higher crime periods, through a 
combination of better recruiting, lateral hiring and changes in 
shift schedules and deployment strategies. And we have enhanced 
the three prongs of our policing for prevention strategy: 
focused law enforcement, neighborhood partnerships and systemic 
prevention.

                         Narcotics Strike Force

    Last fiscal year, for example, with the support of a 
special $1 million congressional appropriation, we created anew 
narcotics strike force. With more than 600 arrests and the recovery of 
35 weapons last quarter alone, this unit is having a noticeable impact 
on open-air drug dealing and the violence that is often associated with 
it. We would certainly welcome additional support for the strike force 
and other anti-drug efforts.

                             Homicides Down

    Overall, our results have been encouraging. Crime in the 
District of Columbia is at its lowest level since the early 
1970s, with the year 2000 marking the fifth consecutive annual 
decline. Homicides last year were at their lowest level since 
1987, and they are down by one-third through the first quarter 
of this year.
    Of course, our department continues to face serious 
challenges. We have identified four critical priorities that 
will require the continued support of our District and federal 
partners. First is improving criminal investigations and 
increasing our homicide closure rate. My written statement 
provides details of our efforts in this area.

                      Superintendent of Detectives

    One additional reform: I am pleased to announce the hiring 
of the former FBI special agent in charge of criminal 
investigations, Jack Barrett, to become superintendent of 
detectives, overseeing all of our violent and property crimes 
investigations in the District.

                       Improving Customer Service

    A second challenge: improving customer service and 
satisfaction. This effort is focusing on enhancing our response 
to victims and survivors of crime, as well as improvements in 
basic courtesy and telephone etiquette.

                     Controlling Overtime Spending

    A third challenge, and one that I know the committee is 
acutely interested in, is controlling overtime spending, 
especially court overtime. As the Council for Court Excellence 
recently reported, our officers are spending far too much 
unproductive time in court. This not only drives up overtime 
costs, it also reduces officers' availability on the street.
    I am pleased to report some movement in this area. On 
Monday, we began a pilot project with the Office of Corporation 
Council to streamline the papering process for various quality-
of-life and traffic cases. We are also making progress in 
reducing officer time spent at traffic adjudication hearings.
    These reforms will only take us so far, however. By far, 
the lion's share of court overtime cost comes from felony cases 
prosecuted by the U.S. Attorneys Office in DC Superior Court. 
We continue to meet with these agencies to explore possible 
solutions to the current situation. And I am confident that, 
under the leadership of Chief Judge King and our U.S. attorney, 
we will finally achieve some concrete reforms.

                      E-Mail Communications Issue

    The fourth priority is perhaps the biggest and most 
pressing challenge we face, and that is healing wounds and 
restoring the trust that has been breached by the inappropriate 
and offensive e-mail communications that some of our officers 
have engaged in.
    First, let me assure members of the Committee and everyone 
who lives in, works in or visits DC that there is no place in 
the Metropolitan Police Department for police officers or other 
employees who display the type of racist, sexist and malicious 
speech, and possibly actions, that are represented in some of 
these e-mail communications.
    I generally do not like the term ``zero tolerance'' as it 
has been used in policing. But in this matter, there will be 
zero tolerance for intolerance in the MPD. Members who speak 
profanity, perpetrate ugly stereotypes or make references to or 
engage in biased policing of any sort will be identified, and 
strong disciplinary action will be taken.
    Briefly, I would like to update the committee on the 
investigation and the steps we are taking as a result. 
Approximately one month ago, I asked for an audit of some of 
the car-to-car transmissions over our mobile digital computer, 
or MDC, network. What I saw from just a sampling of e-mail 
messages was truly shocking.
    I immediately directed our Office of Professional 
Responsibility to initiate a thorough and wide-ranging 
investigation. Their investigation is continuing, with a large 
number of officers facing disciplinary action up to and 
including termination. Even as the investigation continues, we 
are taking a number of steps to address the current situation 
and prevent a recurrence in the future.
    MDC transmissions continue to be scrutinized very closely. 
Where transgressions are discovered, we will continue to take 
swift action. Where new procedures or additional training are 
needed, we will provide them. But when all is said and done, no 
one, and certainly no police officer, needs a training course 
to tell them that offensive language, racism and biased 
policing are wrong. Period.

              Police Officer Contacts During Traffic Stops

    Another critical step I announced last Thursday: Our 
department will soon begin collecting data on contacts our 
officers have with citizens during traffic stops, field 
interrogations and other activities. I continue to meet with a 
variety of experts from the law enforcement and civil rights 
communities to determine the best methods for collecting, 
analyzing and using this type of data.
    While data collection is no panacea, it will provide 
important insight into the daily activities of officers and 
will help ensure that they are not engaging in any form of 
biased policing. I will keep the committee apprised of the 
implementation of this policy decision and the progress of our 
investigation.

           Chief's Commitment to Rebuilding Police Department

    In closing, I want to reaffirm my commitment to the 
continued rebuilding of the Metropolitan Police Department, not 
just our physical and technological infrastructure, but also 
the morale and professionalism of our members and the 
confidence of the people that we serve.
    My biggest fear from the whole e-mail matter is that the 
actions of a small group of police officers will serve to 
undermine three years of progress in reducing crime and 
implementing community policing. But I am determined not to 
allow that to happen.
    Thank you, and I, too, will be happy to answer any 
questions that you have.
    Mr. Knollenberg. Chief Ramsey, thank you very much. We do 
appreciate your comments.
    Let me introduce a couple of members who have come in: 
Congressman Alan Mollohan from West Virginia, and Congressman 
John Olver from Massachusetts are on the dais.
    We want to welcome Chief Ronnie Few, Chief of the Fire and 
Emergency Medical Services Department. Chief Few, you are 
recognized, for your comments. Your entire statement will be 
included in the record.

  Prepared Statement of Ronnie Few, Chief, Fire and Emergency Medical 
                          Services Department

    [The prepared statement of Fire Chief Ronnie Few follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
               Opening Statement of Fire Chief Ronnie Few

    Chief Few. Thank you, Mr. Knollenberg and members of the 
subcommittee.
    I am Ron Few, Chief of Fire and Emergency Medical Service 
Department. And I would like to thank you for this opportunity 
to speak to you today on the improvements I have made in the 
department and the challenges I have encountered thus far in my 
plan for future reform.
    The mission of the Fire and EMS Department is to improve 
the quality of life for those who work, live and visit and do 
business in the District of Columbia. We respond to over 400 
calls for emergency assistance per day. These calls are for 
fire, urgent medical assistance, hazardous material incidents 
and a number of other calls.
    When I arrived in Washington, DC, in July of 2000, I found 
an excellent agency which had temporarily lost its way. The 
agency was struggling with constant leadership turnover, 
internal strife and financial pressures. But I quickly 
identified some key problem areas which I made my top 
priorities.
    I have also continued the excellent intitiatives begun by 
my predecessors. These initiatives have made a big difference, 
and I believe with continued effort that we can restore the 
agency to its position as one of the best Fire-EMS agencies in 
the country.

                   Five Firefighters on Ladder Truck

    As of April 8, 2001, there will be five firefighters on 
every ladder truck in the District of Columbia. And 
assumingfunds are approved as requested, the initiative will continue 
through fiscal year 2002.

                          Battalion Chief Aide

    The battalion chief aide position has been in effect since 
the beginning of the fiscal year. Unfortunately, we were forced 
to cut back because of spending pressures, so that 3 of the 16 
ladder trucks, were without the fifth person, but we have now 
restored the fifth person.
    The EMS Bureau has one of the busiest Fire-EMS operations 
in the country. In fiscal year 2000, EMS averaged 363 calls per 
day, and the number is growing. Our priority is on increasing 
availability of advanced life support. Essentially, we are 
talking about increasing the availability of paramedics who can 
perform medical procedures such as starting IVs and intubation.

                        Paramedic Engine Program

    The Paramedic Engine Program is a successful approach in 
increasing advanced life support availability. In this pilot 
program, we assign paramedics to selected engine companies. 
When they respond to medical incidents, they arrive on the 
scene with a paramedic trained to provide advanced life 
support, not just first aid. It is usually within 6.5 minutes. 
There are currently six paramedic engines strategically located 
throughout our community.
    The pilot program has proven advantageous, and it has been 
successful. However, the Paramedic Engine Program has 
significant additional costs associated with it. This is 
because all PECs have five members: four firefighters plus an 
additional paramedic. As a result, we have been unable to field 
an many of our paramedic engine companies as we would like. The 
proposed lateral transfer legislation, once enacted, would 
increase the availability of paramedic engine companies.
    The proposed legislation will allow paramedics currently 
assigned to the Emergency Medical Service to receive 
firefighter training and become firefighters without a loss of 
pay. In addition, they would be given the same benefits, 
including pension benefits, as firefighters. Once trained, the 
paramedic will return as a firefighter, thus freeing up an 
additional firefighter for assignment elsewhere.

            Personal Grooming Policy for Uniformed Personnel

    The lateral transfer legislation would also move the 
department toward the most important goal: unification. The 
legislation will give paramedics and EMTs the opportunity to 
achieve parity in benefits and workers' compensation with their 
firefighting colleagues. In line with this unification goal, I 
have abolished the traditional uniform policy, which required 
differentiation between firefighter uniforms and the uniforms 
of the other service providers. And on April 1, I have 
instituted a personal grooming policy which applies to all 
uniformed personnel. This policy, which has been cleared by the 
Office of the Corporation Counsel, sets standards for beards 
and hairstyles that are consistent with the proper wearing of 
uniforms.
    The training facility, as well as the training curriculum, 
is undergoing major changes. Funding has been approved for a 
pre-engineered building at the Fire Training Academy to provide 
additional classroom space and adequate facilities for women. 
Construction will begin in October, 2001.

                  New Fire Training Simulator Building

    In addition, a new fire training simulator building is 
under construction with the scheduled completion date of April 
25, 2001. The department has not had a place to perform live 
fire training since 1987, when the old building was condemned. 
The new building is state-of-the-art, ecology-friendly, and has 
many safety features to give the new recruits and active 
firefighters the best possible training.

                  Training Academy Curriculum Revamped

    In addition to improvement of facilities, I have totally 
revamped the training academy curriculum to provide specialized 
training to all of our officers. Many of the fire officers have 
not received all of the necessary management and supervisory 
training. The new curriculum would teach officers how to 
recognize and reward performance excellence, how to deal with 
difficult employees, how to manage budgets and other important 
management skills.
    I have continued my efforts to expand community outreach 
programs for the District of Columbia. These programs will 
include open houses at firehouses, as well as fire prevention 
education presentations in firehouses, community centers, 
faith-based organizations and schools.
    We will initiate an ``Are You Okay Program?'' and our 
senior citizen fire marshal program, aimed at decreasing senior 
citizen mortality in fires.
    Again, thank you for this opportunity to speak today, and I 
am prepared to answer any questions.
    Mr. Knollenberg. Chief Few, thank you kindly. We appreciate 
those comments.
    Next we will hear from Ms. Wilma Lewis the United States 
Attorney for the District of Columbia. We will include the 
entirety of your statement in the record.
    You are recognized to proceed.

Prepared Statement of Wilma A. Lewis, U.S. Attorney for the District of 
                                Columbia

    [The prepared statement of Wilma Lewis follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
        Opening Statement of Wilma Lewis, U.S. Attorney for D.C.

    Ms. Lewis. Thank you very much, Mr. Chairman, members of 
the subcommittee and staff. It is a great pleasure to have the 
opportunity to appear before you today.
    As I sit here in the waning days of my three-plus year 
tenure as United States attorney, I am very pleased with the 
progress that we have made in the U.S. Attorneys Office that 
has enhanced our efforts in crime-fighting here in the District 
of Columbia.

                    Community Prosecution Initiative

    We have launched many, many initiatives over the past 
three-plus years. Chief among them has been our community 
prosecution initiative. We have taken this initiative city-
wide, from a pilot program to a city-wide operation.
    This proactive, geographically-based approach to 
prosecution has enhanced our partnerships with the Metropolitan 
Police Department, with other local government agencies and 
with the community at large, and it is enabling us to do a 
better job as we pursue our mission in the United States 
Attorney's Office.

               Establishment of Gang Prosecution Section

    Another important initiative that has a significant bearing 
on the crime problem here in the District has been the 
establishment of our gang prosecution section. Since the spring 
of 1999, that section has, of course working together with our 
law enforcement partners, tried or indicted a total of five 
major gangs with the resulting positive benefits in the 
neighborhoods here in the District of Columbia.

                     Operation Ceasefire Initiative

    A third initiative that I will mention is our Operation 
Ceasefire initiative, a 10-point, comprehensive gun violence 
reduction program that focuses on enhanced prosecutive efforts, 
enhanced intelligence-gathering and prevention initiatives 
focused on the youth of our community.

            Scheduling court Appearance for Police Officers

    But I was asked to come here today, not to talk about all 
of our initiatives, but to focus my remarks on the issue of 
scheduling of court appearances for officers of the 
Metropolitan Police Department; the issue that is obviously 
related to the question of police overtime.
    This issue of limiting police overtime for court-related 
appearances has long been a challenge to the law enforcement 
community in the District of Columbia. Over the years, the U.S. 
Attorney's Office has been making substantial efforts to 
improve the efficiency and the effectiveness with which 
casework with MPD is accomplished, an important goal of which 
has been to reduce unnecessary overtime expenditures incurred 
by MPD police officers.
    Let me first focus on the overtime spent by police officers 
when they appear in court to paper cases, which I understand 
from your staff is the area of concern for you. Just briefly, 
as you know, the papering process is one by which a police 
officer who has made an arrest presents the facts underlying 
that arrest to prosecutors in the U.S.Attorney's Office, and 
the prosecutors decide whether to file charges or, as we call it, 
``paper'' the case and proceed with a prosecution.
    That process has historically required the arresting 
officer to appear at the papering office in the District of 
Columbia Superior Court, present the paperwork and provide an 
account of the case to a supervisory prosecutor.
    The following two initiatives relate to the papering 
process that I have just described.

                    Officerless Papering Initiative

    First, the officerless papering initiative: During the 1998 
to 1999 time period, the U.S. Attorney's Office and the 
Metropolitan Police Department agreed to implement a pilot 
program in officerless papering that was designed to test 
whether papering could be accomplished without the presence of 
officers in prostitution and shoplifting cases.
    Part of that agreement was a mutual recognition that MPD 
officers needed training to ensure that the paperwork prepared 
by the officers would contain all of the necessary information 
to allow papering to proceed without the presence of the 
officers.
    Another essential criterion was a reliable communication 
system with accountability within MPD, to ensure that 
prosecutors could contact officers in the event that additional 
information was necessary to complete the papering process.
    Recently, the Metropolitan Police Department and the Office 
of Corporation Counsel have been working toward officerless 
papering for certain offenses that MPD officers present to the 
Corporation Counsel's Office, and I am sure you will hear more 
about that from Arabella Teal. As part of that effort, MPD is 
addressing, with the Office of Corporation Counsel, the same 
types of issues that bear on the successful implementation of a 
similar pilot program with the U.S. Attorney's Office.
    So when the officerless papering program, with the Office 
of Corporation Counsel, is operational, with the training, the 
technology and the communication in place, we intend to extend 
it to prostitution and shoplifting cases papered by the U.S. 
Attorney's Office. That will obviously impact overtime costs 
that are incurred whenever an officer must appear at the 
courthouse after his or her tour of duty to paper such a case.

                             Night Papering

    The second initiative is night papering. The chief judge of 
the Superior Court, the Chief of Police and I have agreed that 
during the next 90 days, our respective organizations will 
engage in a careful analysis of the feasibility and utility of 
a night-papering operation. The purpose of this analysis is to 
review our prior history with night papering in the District 
and to consider whether such a program should be reinstituted 
in light of the current operation and needs of the criminal 
justice system.
    The current analysis must evaluate whether a night-papering 
operation will result in an efficient and cost-effective 
utilization of resources under existing circumstances.
    The analysis obviously has to address a number of issues, 
including the number of adult arrests; the extent to which 
night papering will save on police overtime; the extent to 
which costs, financial and otherwise, to the U.S. Attorney's 
Office and the Superior Court of maintaining such an operation 
are, in fact, offset by the resulting savings to MPD; and in 
fact, whether a sufficient number of cases can be papered after 
normal working hours, given that there is an interrelationship 
and a necessity to involve other entities and persons in the 
papering of cases, who are only on duty during normal working 
hours.
    Once the U.S. Attorney's Office, and the Superior Court, 
and the Metropolitan Police Department have evaluated these and 
other issues related to a night-papering operation, we will be 
in a position at that time to make an informed decision on the 
utility of night papering.

    [Clerk's note.--See pages 414-417 for answer to question 
for the record and relevant news article.]

           Police court overtime--other initiatives to reduce

    In addition to these two initiatives, there have been other 
activities over the years aimed at the same goal of minimizing 
officer overtime.
    In addition to conducting regular training in-house in the 
U.S. Attorney's Office, which instructs prosecutors on the 
proper use of officer appearance notices and the various means 
of minimizing officer overtime, we have collaborated with MPD 
in several respects.
    These collaborative efforts actually began in the early 
1990s, when representatives of our office discussed with 
various MPD officials the need to develop greater control by 
MPD's command structure of the officers involved in cases. To 
that end, we suggested the creation of a standard form, which 
has since come to be called the 168, which is designed to list 
every officer on a case and describe each officer's role.
    This form is an important tool, and it enables----
    Mr. Knollenberg. Excuse me, Ms. Lewis.
    Ms. Lewis. Yes?
    Mr. Knollenberg. Could you consolidate your final comment?
    Ms. Lewis. I most certainly will.
    MPD Form 168 enables the MPD to control the officers who 
are involved on a case, and it also enables the prosecutors to 
look at that form and determine whether those officers are 
necessary to testify in court or to come for witness 
conferences and the like.
    The only other initiative that I will mention is the 
computer-assisted notification system, for which we have an MOU 
with MPDwe are taking a look at, that is also designed to 
reduce or minimize any officer overtime.
    I would like the full written statement to be included in 
the record.

          Correction Re: 86 minutes per case for ``Papering''

    I would like to make one correction, if I could, to the 
written statement to make sure that the record is accurate, and 
that is found on page 5 of the written statement, where it 
indicates that we did a study and it takes 86 minutes per case, 
as measured from the arrival of the papering officer at the 
U.S. Attorney's Office to submission of the papered court 
jacket to the court.
    That should read: ``It takes 86 minutes per case, from the 
time that an officer first sits down with an attorney to paper 
a case until the submission of the paperwork to the court.''
    Thank you, and I would be pleased to answer any questions.
    Mr. Knollenberg. Ms. Lewis, thank you very much.
    We have just been joined by Congressman Duke Cunningham 
from California.
    We proceed now to our next and final witness.
    Ms. Teal. It is nice to have you here. You are recognized 
to summarize your statement.

 Prepared Statement of Arabella W. Teal, Principal Deputy Corporation 
                                Counsel

    [The prepared statement of Arabella Teal follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
                   Opening Statement of Arabella Teal

    Ms. Teal. Good afternoon, Mr. Chairman and members of the 
subcommittee.
    I am Arabella W. Teal, principal deputy corporation 
counsel. I would like to thank the chairman for the opportunity 
to appear today to make a statement on behalf of the 
Corporation Counsel for the District of Columbia who is 
currently serving military duty in Kuwait.
    The Office of the Corporation Counsel is charged with 
conducting all the legal business for the District of Columbia, 
including all lawsuits instituted by and against the District 
government. Because of its unique status, which involves 
aspects of state, county and local government functions, the 
office provides a variety of legal services. These services 
include matters typically handled by state attorneys general, 
county and municipal law offices.
    Recently, OCC conducted a review of the DC Code to 
determine the breadth of our duties. There are over 300 
statutory references.
    To accomplish its varied responsibilities, which relate to 
approximately 14,000 matters each year, four major offices and 
11 divisions carry out the office's work. These units are 
divided among two major programmatic areas: legal services and 
child support.
    As I am sure the Committee is aware, the District's 
criminal justice system recently has been the subject of 
tworeports. Thus, for purposes of my presentation this afternoon, I 
will discuss OCC's role in the District's criminal justice system and 
what the office is doing to address some of the findings contained in 
the reports.

              Criminal Justice Coordinating Council Report

                    (See pages 423-632, this volume)

    In 1999, the District of Columbia Criminal Justice 
Coordinating Council commissioned a report concerning the 
management of criminal justice resources in the District. The 
report contains key findings and recommendations for the 
improvement of case processing in connection with offenses 
handled by OCC and the United States Attorney's Office for the 
District of Columbia.
    One of the findings is that an unnecessarily large number 
of police officers are being notified for prosecutorial and 
court-related proceedings. For example, the Council for Court 
Excellence and the Justice Management Institute (CCE-JMI) 
report found that, of a sampling of 297 traffic, juvenile and 
DC misdemeanor, neglect and other proceedings, there were 830 
notifications for prosecutorial and court-related proceedings, 
accounting for approximately 14 percent of all notifications--
felonies and misdemeanors--during a 2-week period. The report 
also analyzes the number of Metropolitan Police Department 
hours billed during the same period, including hours billed for 
papering.

                    GENERAL ACCOUNTING OFFICE REPORT

    In addition to the CCE-JMI report, the United States 
General Accounting Office issued a report on the District's 
criminal justice system on March 30, 2001. The GAO report finds 
that, because of the unique structure of the District's 
criminal justice system, there are numerous challenges to 
coordinating functions. Among these include the requirement in 
each case, including misdemeanors, that an officer 
knowledgeable about the facts of an arrest and any witnesses 
meet with the prosecutor before a formal charging decision is 
made. Both reports discuss the pilot papering project that OCC 
and the Metropolitan Police Department have just embarked on.

                   General Practice for ``Papering''

    A detailed description of what has been the general 
practice for papering insofar as it involves DC offenses is 
contained in my written statement. In sum, MPD officers have 
played an integral part in the administrative and legal 
functions necessary to papering. Officers typically spend an 
average of 1 hour in our office in order to complete papering. 
In a typical day, the General Crime Sections may paper 
approximately 50 cases. The Juvenile Section of our office 
papers an average of 20 cases each day.
    Certainly, two matters that contribute to the length of 
time necessary to complete the papering process is the time 
spent compiling paperwork and the number and length of face-to-
face interactions between an officer and an assistant 
corporation counsel. Under the practice as I have described it 
in my written statement, for every arrest involving a 
misdemeanor, an assistant corporation counsel must administer a 
Gerstein oath.

                   ``PAPERING'' REFORM PILOT PROJECT

    In April, 2001, OCC and MPD are putting in place a new 
process for processing cases on a pilot basis called Papering 
Reform 2001. The goals of the project are to improve the 
overall quality of incident and arrest reporting and reduce the 
time spent by officers at the court and our office in 
connection with papering cases.
    The pilot will begin in three police districts: Districts 
1, 3 and 5. Initially, it will include 17 quality-of-life and 
traffic charges. Those are listed in my written statement.
    The key features of the pilot are as follows: ultimately, 
the electronic transmission of automated arrest and incident 
reports from the police districts to our office; promoting the 
quality of reporting by requiring two levels of review at the 
sergeant or lieutenant level and at the assistant district 
commander or watch commander level before the report is 
transmitted to our office; and coordination by the court 
liaison division of the Metropolitan Police Department of 
documents and the use of electronic time stamps that track when 
reports are submitted and reviewed at each step.

        AUTOMATED REPORTING WILL STREAMLINE ``PAPERING'' PROCESS

    The use of automated reporting will streamline the process. 
It will eliminate both appearances at our office for the 
papering of an initial set of charges and the need for the 
officer to obtain additional information before papering a 
case. It will involve an enhanced papering review process and 
establish a computerized tracking system to ensure timely 
problem identification and resolution.
    Over time, we intend to expand the pilot papering reform 
project as practicable to additional police districts and to 
include additional charges under the jurisdiction of the Office 
of the Corporation Counsel.
    MPD and OCC estimate that the District will save 
considerable officer time during the pilot and its expansion to 
other police districts and applicable offenses. This not only 
translates into budgetary savings, but it will obviate the need 
for officers to appear off-duty to paper charges and can help 
to increase the presence of officers in our communities.
    Papering Reform 2001 is just one step in a process of 
improving the District's criminal justice system. OCC will 
continue to work with its local and Federal partners to promote 
efficiency within that system, without compromising due 
process. The office is committed to developing a coordinated 
approach to addressing problem areas.
    Thank you again for the opportunity to appear here today. I 
would be happy to answer any questions you may have for me.
    Mr. Knollenberg. Ms. Teal, thank you for yoursummary. 
Obviously, we look forward to hearing from this panel.
    I will begin the process and start questioning the panel, 
and I will try to keep as close to the 5-minute mark as I can.
    Incidentally, we do have a vote, in about 20 minutes or so. 
So if we can get through this first grouping of people in the 
order of their appearance, we shall do so. If I stop talking, 
we will have more time, right? [Laughter.]

                            RACIAL PROFILING

    Chief Ramsey, I know there will be a number of questions on 
this issue, but I thought I would bring up the one that you 
spoke quite eloquently about in terms of racial profiling and 
what has taken place within the department. It is a national 
issue, obviously; it is not just here in the District of 
Columbia.
    But the recent problems you mentioned with e-mails have 
caused you some consternation, and obviously that issue has 
made its way into the newspapers. I do not have to tell you 
that this subcommittee takes that matter very seriously, and 
you will hear, I am sure, from a number of members on that.

                        INVESTIGATION OF E-MAILS

    A couple of questions. One is, what is the status currently 
of your investigation? You have one under way, and if you could 
add on a question as to what action, if any, is being taken 
against any officers? What immediate or what specific changes 
have you made already? If your changes are in contemplation, 
tell us that as well. So starting with the first question on, 
what is the status of the investigation today.
    Chief Ramsey. Thank you, Mr. Chairman.
    The status, as I mentioned, about a month ago, I asked for 
an audit of the e-mails. I had not received any complaints. 
However, I am aware that departments across the country have 
experienced some problems with e-mail transmissions dating back 
as far as the Rodney King incident more than 10 years ago. We 
just recently got a number of our MDCs up and operational with 
the e-mail function. And we ran a check and found that we did, 
in fact, have a problem.
    I immediately called in the Office of Professional 
Responsibility and ordered a confidential investigation. The 
reason I asked for a confidential investigation was in order 
for us to take a look at this without the officers being aware 
that we, in fact, knew what they were doing, in the event there 
was some criminal misconduct taking place, and obviously 
profiling is criminal, and other activities, it would have 
given us an opportunity to conduct a more thorough 
investigation. However, unfortunately it was leaked to the 
media and that pretty much compromised that investigation.
    We have several investigators from OPR working on this 
case. We have had numerous conversations with the Department of 
Justice. They have copies of the disk from 2000 and also a disk 
from 1999. They are going to be going through it as well, 
looking for any potential civil rights violations. So they, 
too, are working along with us.
    We have yet to identify all the officers involved. We had 4 
million transmissions on the year 2000 tape alone. Three 
million of those were license checks and so forth. About 1 
million were e-mail transmissions, the majority of which were 
fine, no problem. But we do not yet know how many officers are 
involved.
    Some involve just profanity. Some involve liberal use of 
racial slurs and other types of derogatory remarks. Some of the 
comments indicate that some people were being singled out based 
on race or ethnicity, and it seems to run across the board. It 
is not just white against black. It is black against white. It 
is between black and Latino. It seems to cover just about 
everything you would imagine.

            SPECIAL ORDER PUBLISHED ON E-MAIL TRANSMISSIONS

    We have general orders in place. A special order was 
published in January of this year that talks about Internet and 
e-mail transmissions. Going back as far as 1976, we have had 
publications on the books around the use of that kind of 
language and so forth. And it is certainly included in the 
training.
    We are going to do, from this point on, regular audits of 
these transmissions, anywhere from maybe 3 weeks to once a 
month. Monitoring: We are looking at software where key words 
can be entered into a software that automatically flags it if 
that word is used and is sent to a supervisor for immediate 
review.
    So we are working very aggressively in this area. I have 
met with a lot of different civil rights groups--the NAACP 
Civil Rights Task Force, which I meet with quarterly anyway, I 
met with last week, and others--to talk about this issue and to 
come up with some permanent solutions.
    Mr. Knollenberg. Any death threats among those e-mail 
messages?
    Chief Ramsey. None that I have seen so far, but we are 
still deciphering many of the messages. The vast majority of 
what I have seen has been profane language. However, there is 
some liberal use of derogatory terms--in some cases members of 
the same racial group using them toward one another, 
unfortunately.

                NO ACTION YET AGAINST ANY POLICE OFFICER

    Mr. Knollenberg. At this point, you would say, then, that 
you have not taken any action against any particular officer.
    Chief Ramsey. Right. What we have to do now is, once we 
identify an officer, we have to track that officer's 
transmissions back. I do not want to rely on a single 
transmission that a person may have made. We can track through 
the identifier all transmissions they have made over the period 
of time that they have had access to the MDC. Sowe may have a 
year's worth of transmissions from one particular officer. If we see a 
pattern of this kind of conduct, it certainly makes for a stronger 
case.
    Mr. Knollenberg. Chief, thank you very kindly.
    I am going to yield now to the ranking member, Mr. Fattah.
    Mr. Fattah. Thank you, and let me thank the chairman for 
starting out with that question. Obviously, it is an important 
one, and I am happy to see that this came to light because of 
your own efforts.

                          ONE MILLION E-MAILS

    I am trying to get some sense of the nature of the problem. 
You said 1 million e-mails; you do not have any guesstimation 
about what percent of them represent some level of concern?
    Chief Ramsey. I do not because we are still going through 
them. What I have discovered is that this is not like a chat 
room where you can just simply start squirreling through. You 
have to pull these messages off. There are certain codes. And 
it is going to take a little time to go through all of them.
    What we have seen so far, however, is the majority of them 
were uses----

               CONTENT OF E-MAILS SENT BY POLICE OFFICERS

    Mr. Fattah. Let me go to the extreme. Are there 
circumstances, in what the department now has knowledge of, in 
which any of the messages relate to activities that may be 
criminal?

                 BIASED POLICING AND POLICE MISCONDUCT

    Chief Ramsey. There is some indication of biased policing 
taking place, comments being made about singling out 
individuals of particular racial groups. That certainly has 
been something that I have seen thus far. And we are continuing 
to look to see if there are other forms of misconduct that 
could be present in some of these transmissions as well.
    Mr. Fattah. I wish you well with it. I come from a city not 
too far from here, Philadelphia. We have had our share of 
problems, so I do not want anyone to get the impression that 
someone is pointing the finger. I do not think that there is a 
law enforcement agency in the country that has not faced its 
share of concerns, including Federal entities like the U.S. 
Customs Service. But nonetheless, it is our responsibility, as 
it is yours, to be concerned about this.

    QUESTION AS TO WHETHER E-MAIL MESSAGES JEOPARDIZE CURRENT CASES

    And what I was asking was whether there were instances 
where they related to police shootings or other circumstances 
in which cases may have been prosecuted that would now be 
brought into question based on knowledge of what was in various 
transmissions.
    Chief Ramsey. I have no knowledge at this point, but that 
is not to say that some of that may not be uncovered during the 
course of the investigation. One of the things I ordered OPR to 
do from the very beginning, before it became public, was to go 
back and look at complaints made against officers and try to 
match e-mail transmissions with that allegation.
    We may have had a situation that would not sustain a 
complaint, but this additional information would cause us to 
reopen that case and perhaps have the ability to then sustain 
an allegation because of the transmission. So we are looking, 
and we are in the process of trying to match previous 
complaints made against officers with specific transmissions.

                 FIRE DEPARTMENT UNDERGROUND NEWSLETTER

    Mr. Fattah. And let me ask the fire chief a question. There 
is some indication that there is a similar matter in your 
department having to do, not with e-mail, but with a newsletter 
of some type. Could you comment on that?
    Chief Few. Yes. Two months after my arrival here in the 
city, there was an underground newsletter circulating within 
the department. And I came out very strongly against that 
newsletter, and I actually went to many of the different areas 
and let them know that I would not tolerate that.

                 DIVERSITY TRAINING FOR FIRE EXPLOYEES

    And then we went a step further and we instituted diversity 
training for all of our people. It is mandatory every year. And 
I have got to say that we have not had another incident in the 
last 6 months.
    So we feel like we made some progress. We feel like that 
diversity training was some of the best diversity training that 
we ever got in our department because we actually used some 
live incidents that we had in previous incidents. We just 
changed the names of them and used that, and we did a lot of 
role-playing. And we felt like that was some of the best 
training that we ever could have received, and we have been 
getting high marks among our people for that particular 
training.

                E-MAIL ISSUE--FOCUS ON POLICE MISCONDUCT

    Mr. Fattah. Let me go back to the e-mail transmissions, and 
let me just say that, as I said, this continues to be a subject 
of national concern. I have heard the president and the new 
attorney general, Mr. Ashcroft, speak out against some concerns 
about racial profiling. But I am really focused more on the 
question of misconduct, and I am hopeful that your 
investigation will shed some light on that.
    There has been serious resistance in the uniformed services 
in every city in the country to the integration of those 
services with African-American and Latino officers, female 
officers. There are a lot of concerns. My question would be to 
you here in the District, how you are going about it? We saw a 
front-page story about how New York was failing at it, 
substantially, in terms of some of these issues. What are your 
general policies and is there anything going forward that this 
committee could be helpful with?

                  DC POLICE PRIMARILY AFRICAN AMERICAN

    Chief Ramsey. Sir, what is unique about the Metropolitan 
Police Department, unlike many major police departments, our 
make-up, the demographics of our department is quite different.
    Sixty-six percent of the sworn members in our department 
are African-American; 4.8 percent Hispanic; 23 percent female. 
So we really have a great deal of diversity. However, what we 
found and what really disappointed me was the fact that racism 
and other types of problems are alive and well.
    And what we have found, just in a cursory view of some of 
the materials we found, is that in some instances it is 
directed from black officers toward white citizens. We have 
seen white officers using derogatory remarks toward black 
citizens. We have seen black versus Latino. It does not seem to 
be any particular pattern.

         DIVERSITY IN POLICE DOES NOT SEEM TO MAKE A DIFFERENCE

    So diversity in your work force, in and of itself, does not 
seem to make any difference. There is a much deeper problem 
that we have to deal with here, not only inside the department, 
but even when you look outside to our relationships with the 
community. And that is incredibly disappointing.
    I came from the Chicago PD, and I did not think, when I 
took this one over, that we would have the same kinds of racial 
problems that we had back in Chicago. But I was wrong.
    Mr. Knollenberg. Thank you, Mr. Fattah.
    I am going to recognize now, in the order of the appearance 
on the Republican side, Mr. Cunningham for any questions that 
he might have.
    Incidentally, before you speak, Duke, we have been joined, 
obviously, by another member, John Doolittle from California, 
as well.
    Mr. Cunningham.

               Opening Remarks of Congressman Cunningham

    Mr. Cunningham. Thank you, Mr. Chairman. I apologize for 
being late. I am tied up with this EP-3 China deal on the Intel 
Committee, and it is important, not that you are not.

                COMMENDATION OF PUBLIC SAFETY PERSONNEL

    I would like to make a couple of statements just real 
quick. First of all, I think we are very, very fortunate to 
have the law enforcement and firefighting that we have in this 
country. Quite often, whether it is military or police or fire, 
when something happens, the media and people and Members of 
Congress focus on the negative. I think we are very, very 
fortunate to have you and the people that represent us in 
uniform, and I want you to know a lot of us appreciate that.

                WATERFRONT AND POLICE AND FIRE PRESENCE

    With that, a couple comments that I would like to make. I 
live down on the waterfront. There has been a tendency to pull 
officers off the waterfront because of the need in the inner 
city and elsewhere. Especially in the summertime regardless of 
the increased number of boaters, I am trying to clean up the 
Anacostia River.
    Chief Ramsey. Right.
    Mr. Cunningham. Please make sure that we have coverage down 
there and not pull them off. Those guys work hard down there, 
their workload is pretty tough, and we do not have much law 
enforcement or fire protection, you know, until we go all the 
way down the river.

                      TRAFFIC PROBLEM--WATERFRONT

    One of the things that I have heard and seen myself, there 
is not a day goes by I do not have somebody cut off in front of 
me--taxicabs cutting through the lines, people running stop 
signs. It seems like more in DC than any other place that I 
have been, the traffic situation, people do as they damn well 
please. And it is aggravating. You know, I have yelled some 
things, I am sure, and most of you have too under traffic rage 
or whatever you call it. But I think that is a prescription for 
problems unless maybe we tighten up just a little bit on the 
traffic, I think. I mean, it is a daily thing that goes with 
that.
    I appreciate that I was made an honorary fireman, I have my 
fireman's hat now, and do that. And the same thing on the 
waterfront, those guys are important as well.

       RECOMMENDATION FOR OPEN DOOR POLICY FOR CERTAIN SITUATIONS

    One recommendation: When I was commanding officer of a 
squadron in the military, I know chain of command, and I know 
how you have to go through the chain, but I had several things 
that, from the lowest seaman to master chief to my chiefs that 
worked for me--they could walk right through the chain of 
command, walk into my office, close the door, with complete 
belief and knowledge that nothing they ever said would be 
brought forward to the rest of the people.
    One of those was any known drug use, which you would not 
want within either one of the organizations. Another one was 
either verbal or oral slurs, so you could put a bud in it. I 
saw the USS Ranger torn apart because of ethnic problems.
    And the other was, because of the military, and I think a 
lot of times in our law enforcement you are away from home, it 
is a tough job--any known child abuse or spousal abuse. And 
that was evident in the military. That is just a recommendation 
that you have an open-door policy for anybody who walked 
through that door and maybe even skipped through the chain of 
command.
    And with that, I want to tell you, we are proud of you, 
and, you know, be damned all the negative stuff that comes out. 
You guys are doing a good job. Thank you.
    Mr. Knollenberg. Mr. Cunningham, thank you.
    And now we will turn to Mr. Olver for any questions.
    Mr. Olver. Thank you very much, Mr. Chairman.

              POLICE DEPARTMENT--AFRICAN AMERICAN MAJORITY

    Chief Ramsey, you had mentioned, I guess the numbers I 
heard were 66 percent African-American and just under 5 percent 
Latino. This is, sort of, half addressed to you and to Ms. 
Kellems. We have just completed a census which has the most 
comprehensive data on the diversity of ourpopulation on a 
nationwide basis, and of course it is broken down by the state and 
municipal jurisdictions, so that we certainly have that data in the 
case of DC.

       Profile of Population Versus Profile of Police Department

    Has anyone compared what the profile of the population is 
versus the profile of the police department, the 3,650 or 
thereabouts sworn officers of the police department? Do you 
know if anybody has made a comparison?
    Chief Ramsey. I have.
    Mr. Olver. I would like to see such a comparison of the 
two. Because we had really good, comprehensive data on the 
general population.
    Chief Ramsey. I have taken a look at the latest census 
data, sir. We are under in representation in our Latino 
community. The Latino community has increased over the last 10 
years. We are just under 5 percent. It is somewhere around 8 
percent. So we are under.
    Our Asian community has also grown. We are at 0.93 percent. 
It is a little under 2 percent, I believe, from the latest 
census.
    African-American community, it is 66 percent, it is 
actually over what the new census shows in terms of overall 
population within the District of Columbia.
    So we really work very hard and we will continue to work to 
maintain our diversity within the ranks, but we are falling 
short in recruiting Latino officers and Asian officers.
    Mr. Olver. I do not expect those to be exactly 
proportionate, but I would appreciate it if someone in the 
Mayor's office might work with you to lay out what those 
comparison profiles are. It would be helpful for me, and I 
would like to have it for the record for the Committee.
    Chief Ramsey. Yes, sir.
    [The following was supplied for the record:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
                         E-Mail Communications

    Mr. Olver. I must say, Chief Ramsey, in this flap over the 
inappropriate and offensive e-mail communications that you have 
dealt with, it seems to me it shows a substantial disrespect 
for the diversity of the community as a whole, but also, from 
what you are saying, a substantial lack of respect for the 
diversity within your own department.
    I want to commend you for your action in asking for zero 
tolerance here. I have to say, I suspect that is a very 
ambitious goal.
    I come from an area where we have a half-dozen cities of 
between 30,000 and 50,000--that is the size of the cities that 
I represent. They go from very homogeneous to ones not as 
diverse as DC, but quite diverse nonetheless. A couple of them 
are certainly close. And I do not know that I could ever hope 
for better than a situation--and I have carefully written this 
out so I would say it correctly--where publicly expressed 
intolerance by public officers who are serving the public, or 
officials for that matter, in dealing with adiverse public 
would not be tolerated. I would be quite happy to see that, because one 
cannot really legislate against intolerance, particularly thoughts on 
the part of people.

                   Diversity Screening in Recruitment

    I was wondering if it is possible for you to do or if you 
do what you might call diversity screening in the recruitment 
in the first place and what kinds of changes in diversity 
education or continuing education are planned. I do not know 
whether you have incentives for additional educational 
achievements, master's degrees, or whatever it might be on the 
part of officers, that might be something that we could get at 
in that kind of way. It is really distressing that one has lack 
of respect both for the public being served and for the people 
serving with you in that sort of situation, however many cases 
there are of it.

   Chief Ramsey's Goal is to Fire Officers Engaged in Biased Policing

    Chief Ramsey. Well, sir, I appreciate your comments, and I 
fully recognize how difficult it is to have any kind of zero-
tolerance policy. However, when it comes to officers engaging 
in biased policing, my goal is not to rehabilitate them, my 
goal is to fire them. I think that one officer is too many.
    Mr. Olver. Or not to have them in there in the first place, 
if you could.
    Chief Ramsey. If we could screen them up front, absolutely, 
absolutely. I think that what we are going through now is the 
result of a few of our officers, yet they have managed to 
tarnish the reputation of an entire department.
    The vast majority of our officers go out there every single 
day and provide quality service, they care about the people 
that they serve, they harbor none of those kinds of prejudices. 
But all it takes is a few to tarnish the reputation of an 
entire department, and no one individual is worth that.
    So my goal, again, if they can be rehabilitated, it will be 
somewhere other than in the MPD, because I have no interest in 
rehabilitating them. But I have all the interest in the world 
in firing them.

                           Community Policing

    Mr. Olver. Well, I appreciate your comments on that.
    In the communities that I serve that I mentioned, we do 
community policing. It has been a very important part of the 
last several years. And that often has meant getting people who 
are walking the beats, who are on bicycle patrols. I am 
wondering, because I saw nothing that really described what 
your community policing activities really look like in those 
categories, do you do those things?
    Chief Ramsey. Yes, sir.

                        Diversity In Squad Cars

    Mr. Olver. And to what degree? Do you have diversity in a 
squad car if there are two people in the squad car or whatever?

                        Policing for Prevention

    Chief Ramsey. As I said before, I think we have one of the 
most diverse departments in the entire country. We have a very 
aggressive community policing strategy. We call it Policing for 
Prevention. We have three key component parts to that: focused 
law enforcement, systemic prevention, neighborhood 
partnerships.
    And we work very aggressively with our PSA concept, having 
monthly meetings with our communities. The majority of our 
officers are assigned. Even those outside of that have certain 
roles and responsibilities. We have a redeployment plan where 
officers get engaged in community policing activities, 
developing plans on how to address crime and disorder.
    I have a lot of material. I would be more than happy to 
forward it to you. I believe very strongly in community 
policing. I think that is the only way we can effectively fight 
crime and the only way we can build relationships with our 
community.
    Mr. Olver. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Knollenberg. Mr. Doolittle from California is 
recognized.

                Opening Remarks of Congressman Doolittle

    Mr. Doolittle. Mr. Chairman, thank you very much. I am 
chagrined that I arrived late and I am going to have to be 
leaving early. But I will look forward to reading the 
testimony.
    I do have an interest in the District, and I believe the 
men and women sitting here before us are working hard to 
improve things. And I think things are improving, I am 
encouraged to note, and I hope, as a member of this 
subcommittee, that I can lend my efforts to assist you as you 
seek to improve the quality of government and life here in the 
District of Columbia.
    I think, as Mr. Cunningham observed, there is, sort of, a 
general breakdown, it seems like, in law and order around here, 
and I know you are trying to correct that, but it takes the 
cooperation of the citizenry as well.

                     Disregard for Traffic Signals

    And one of the things I have always noticed that is quite 
different from where I come from is just the utter disregard 
people here have for the traffic signals and so forth. And I do 
not know if that is just the difference between the East Coast 
and the West Coast or if it is particularly bad here, but it is 
just amazing to me to see that.
    But I do think there is a certain underlying attitude that 
that reflects, and I think it is going to take some time maybe 
to reinculcate those values.
    But I do appreciate your being here today, and I just 
wanted to say congratulations. I think we have a long way to 
go, but I really think we are headed in the right direction.
    Thank you, Mr. Chairman.
    Mr. Knollenberg. Mr. Doolittle, thank you.
    I am going to turn now to Mr. Mollohan from West Virginia.
    Mr. Mollohan. Thank you, Mr. Chairman.
    Mr. Knollenberg. You are welcome.

                Opening Remarks of Congressman Mollohan

    Mr. Mollohan. Chief Ramsey, I note that you really have 
some nice statistics to report to the Committee and to the 
cities: crime in the District is at the lowest level since the 
early 1970s, 2000 marked the fifth consecutive annual decline, 
homicides last year were the lowest since 1987, and that this 
year they are down a third through the first quarter of the 
year.
    Those are really very nice numbers to report, and I just 
want to begin by congratulating you on that.
    Chief Ramsey. Thank you, sir.

                          NARCOTICS TASK FORCE

    Mr. Mollohan. I certainly appreciate your good efforts and 
the kind of effort you are bringing to our city.
    You have initiated a new narcotics task force; am I 
correct?
    Chief Ramsey. Yes, sir.
    Mr. Mollohan. Evidently, because I do not find it in last 
year's appropriation. That is 2000 money?
    Chief Ramsey. Yes, sir. We were given a $1 million 
appropriation to specifically fight drugs last year.
    Mr. Mollohan. When you say last year, you are not talking 
about 2001?
    Chief Ramsey. I am talking about fiscal year 2000.
    Mr. Mollohan. Yes.

                         NARCOTICS STRIKE FORCE

    Chief Ramsey. It was during that period of time. We bought 
a lot of equipment that was sorely needed, and we also 
developed the Narcotics Strike Force, where we have been able 
to really focus our efforts on drug trafficking.
    Mr. Mollohan. Did you develop that Narcotics Strike Force 
on the basis of that $1 million Federal appropriation in 2000 
partially or totally?
    Chief Ramsey. Well, actually, yes, sir. We started off with 
it being pretty broad, and what we did in the latter part of 
the year, because we were not having much impact, we really 
started to focus on certain districts.

            FEDERAL FUNDING FOR NARCOTICS TASK/STRIKE FORCES

    Mr. Mollohan. No, I am sorry. My question was, was the 
money you relied upon totally Federal money?
    Chief Ramsey. Not totally, but the vast majority of it was.
    Mr. Mollohan. A significant part was Federal money.
    Chief Ramsey. Yes, sir.
    Mr. Mollohan. When did the task force begin operating and 
spending the 2000 money?
    Chief Ramsey. We started spending it almost as soon as we 
got it, sir. We began purchasing certain kinds of equipment 
that we needed. The surveillance equipment that we had was very 
old--vehicles.
    Mr. Mollohan. How much do you have left?
    Chief Ramsey. None.
    Mr. Mollohan. Oh, you are out of those funds?
    Chief Ramsey. We spent it, yes, sir.

                      RESULTS OF NARCOTICS EFFORTS

    Mr. Mollohan. As I am reading this testimony, I am assuming 
that during the last 3 months the strike force made more than 
600 arrests----
    Chief Ramsey. Right.
    Mr. Mollohan [continuing]. Cleared 25 warrants.
    Chief Ramsey. We continued it. What we did was we took 
officers from our Major Narcotics Branch. Some of the officers 
we had were part of our redeployment, and we put them into the 
task force, and we began to continue to do it.
    Mr. Mollohan. So you are funding the task force out of 
your----
    Chief Ramsey. Right.
    Mr. Mollohan [continuing]. Out of DC dollars, I guess is 
the right way to say that.
    Chief Ramsey. Yes, sir.
    Mr. Mollohan. Or a way to say it. Okay.
    Chief Ramsey. Yes, sir.
    Mr. Mollohan. Do you intend to continue the task force?
    Chief Ramsey. Yes, sir. It would be very helpful if we had 
some additional assistance, but we do plan to continue. You can 
never have safe streets as long as you have open-air drug 
trafficking.
    Mr. Mollohan. Right.
    Chief Ramsey. You just cannot.
    Mr. Mollohan. Right.
    Chief Ramsey. So we have to continue to be very, very 
aggressive around that.

             FEDERAL ASSISTANCE FOR NARCOTICS STRIKE FORCE

    Mr. Mollohan. What will be the scale of the program if you 
continue it without Federal assistance as opposed to what scale 
it would be if you received additional Federal assistance?
    Chief Ramsey. Well, the Federal assistance would allow it 
to take some of the pressure off our overtime budget and 
various other things that we do in order to keep our numbers up 
primarily.

                         OPEN-AIR DRUG MARKETS

    It would also provide some additional support for the 
helicopter that we have that we are going to use very 
aggressively around our open-air drug markets.
    So it would provide a lot of assistance to us in a lot of 
different ways.
    But I am hoping that over time we need less and less of it 
because we have less and less of a problem with the drug 
trafficking.
    Mr. Mollohan. And are you? What does that trend line look 
like?
    Chief Ramsey. Well, it is improving, but we still have 
fartoo many neighborhoods where they just openly deal drugs. But we 
have had an impact by focusing our resources, particularly in our 4th 
and 5th Police Districts where we have had the most shootings.

                CLOSED DRUG MARKETS MOVE TO OTHER AREAS

    Mr. Mollohan. Some people say when you close down a market 
in one area it just moves to another area. Does that happen?
    Chief Ramsey. Yes, sir. That does happen. Displacement is 
one of the first things you see. You have to track that, follow 
it, and you have to really be flexible enough to go along with 
it.
    But when you start displacing a drug market, that is really 
a sign of success, because part of the problem is, when they 
get so deeply entrenched in a particular neighborhood, they 
become very difficult to get out.
    And they do not advertise on the Internet; people know 
where to go, and if they go to that corner, and if they are not 
there, it hurts their sales to the point where you can start to 
disrupt it.

                       COST OF NARCOTICS EFFORTS

    Mr. Mollohan. What is the number for this program? How much 
does this program cost on an annual basis, if you pulled that 
out----
    Chief Ramsey. I would have to get you that, sir, in terms 
of the actual number of people and so forth.
    But just to give you a quick example of how effective it 
was, in just a 60-day period the Narcotics Strike Force made 
more than 600 arrests, just in 60 days.

                  FUNDING SOURCE FOR NARCOTICS EFFORT

    Mr. Mollohan. Are you requesting any funding for this in 
2002? Let me ask you this first, I am sorry: Did you request 
any funding for it in 2001?
    Chief Ramsey. No, sir. We did not request it before. 
Chairman Istook, at the time, took it upon himself to look at 
the problem and decided that he wanted to provide some 
assistance.
    Mr. Mollohan. In 2000?
    Chief Ramsey. Yes.
    Mr. Mollohan. But he did not repeat that assistance in 
2001?
    Chief Ramsey. Right. We had some money left over that we 
were able to continue into 2001 and continue to use----
    Mr. Mollohan. But you knew you were going to run out of 
Federal money in 2001.
    Chief Ramsey. Yes, sir.
    Mr. Mollohan. And you did not request any money for----
    Chief Ramsey. That was not part of our budget request.
    Mr. Mollohan. Is it a part of your budget request for 2002?
    Chief Ramsey. No, sir.
    Mr. Mollohan. Would you like it to be a part of your 
request?
    Chief Ramsey. Yes, sir. [Laughter.]

                         POLICE BUDGET PROCESS

    Mr. Mollohan. Do you submit a budget to somebody and have 
them push it back and draw lines through things?
    Chief Ramsey. Well, we go through a budget process. Our 
City Council, of course, is in the process of reviewing it now. 
But we were very fortunate this year that the Mayor's office 
worked very hard, along with the Council, to give us a budget 
that we can work with. But extra programs like this are 
something that it is difficult because of all the other 
problems and issues we have in the District government.
    Mr. Mollohan. So it would be great to get discrete funding 
for this.
    Chief Ramsey. Specifically for drug fighting, and that 
would be something that we would put to use very quickly and 
very well.
    Mr. Mollohan. Mr. Chairman, does that blinking light mean--
--
    Mr. Knollenberg. It does indeed. But you have been very 
concise in your questions and I think we got a lot of 
information.
    We appreciate that, Chief Ramsey.
    I am going to inform everybody that I will complete a 5-
minute round of questioning myself, and then we will break 
because we have three votes coming up--with a recommittal 
motion, the substitute and final passage, there is no way we 
can shuffle back and forth. So this will conclude the first 
round, into the second round.

                         POLICE OVERTIME COSTS

    Overtime: I know this is the issue of police overtime costs 
affects a number of you, especially, Ms. Lewis, Judge King, and 
of course Chief Ramsey. It may also affect some of the rest of 
you.
    I was just reading through a publication from our hearing 
record for fiscal year 1983, and guess what? Police overtime 
for court appearances was a problem in 1983. Not a surprise to 
anybody, I am sure. It is still a problem. And I know it 
affects each of you, the three that I mentioned.
    So I would turn first to Judge King to get your opinion 
very quickly as to how is the majority of overtime incurred via 
your perspective in the court as it applies to police officers?

          SUPERIOR COURT INVOLVEMENT IN POLICE OVERTIME COSTS

    Judge King. What we see is two problems. We see two areas 
that overtime is incurred papering cases and scheduling trials.
    As the papering process works now, police officers who make 
an arrest after normal business hours, that means they are on 
some shift other than a normal business day, have to come back 
into court the following morning, which is, in most cases, on 
overtime, in order to confer with the prosecutor and get the 
case sworn and papered, as you heard earlier. The papering 
process that builds in a certain amount of overtime to get the 
casesbrought before the Court.
    And as the United States Attorney mentioned, there are a 
number of cost factors that you have to look at. One of the 
things that I think has bedeviled all of us is that the Court 
might realize a saving, but it would be at the prosecutor's 
expense. So you have got cost-benefit analyses that do not work 
within a single agency, but do work across two or more 
agencies.
    That is why, I think what, we are doing at the Criminal 
Justice Coordinating Council, CJCC, is so important. And my 
hope for the future is that we can come to a day when different 
agencies could come to you and say, ``We will incur the cost 
and the benefit will go to the U.S. Attorneys Office, but we 
come to you with a joint request that we get the funding in 
order to do whatever it is that needs to be done.
    The papering process is one area that needs to be worked 
out collaboratively.
    I think there is some help from technology that could 
eliminate the need for the police officer's coming back in the 
morning. I think there may be some other ways that we could 
break apart the process so that you did not have to have the 
officer coming back at all. We do not require officers to 
appear in court for arraignment.

                 670 OFFICERS IN COURT ON ANY GIVEN DAY

    Mr. Knollenberg. How many officers, Judge, do you estimate 
that appear in court on any given day?
    Judge King. I will have to get you that information. I can 
tell you that there are approximately 100 lockup cases every 
day, so it is going to be some relation to that number.
    Mr. Knollenberg. Chief Ramsey, would you respond to that 
question? How many on any given day?
    Chief Ramsey. On average, about 500, sir. And the Council 
for Court Excellence, during their study, they looked at a 2-
week period where there were about 670 officers a day that were 
actually in court during that period of time that they reviewed 
during their study.
    Judge King. Not just in papering, though,
    Chief Ramsey. No, no, just in court in some process, 
whether it is in court, whether it is papering, whether it is 
traffic court, whatever.
    Mr. Knollenberg. And you are working together, are you not, 
to try to bring about some resolution to the police overtime 
problem?
    Judge King. Yes, we are.
    Chief Ramsey. We are working together, Mr. Chairman, but it 
is obvious that the problems are systemic in nature. That is 
why in 1983 the same conversation was taking place.
    But we have had some conversations, and Judge King has 
really shown a lot of leadership and a willingness to take a 
look at the entire process and make the changes that need to be 
made.

              AREAS WHERE POLICE OVERTIME COMES INTO PLAY

    Mr. Knollenberg. Ms. Lewis, do you have any comments?
    Ms. Lewis. I would just add that, as you look at the police 
overtime issue, I think there are a few areas where it comes 
into play. As the chief judge has indicated, it comes into play 
with respect to papering. It comes into play with respect to 
court-related proceedings, like trials, preliminary hearings, 
detention hearings, motions hearings and the like.
    It also comes into play with respect to grand jury 
proceedings and witness conferences. And finally, it comes into 
play with respect to investigative work that we as the 
prosecutors need to have the police officers do in conjunction 
or in connection with various cases that we are handling.
    So I think those are the areas that you could potentially 
incur overtime costs, and I think that is where they are 
incurred, in varying amounts.

              U.S. ATTORNEY HANDLES ALL ADULT FELONY CASES

    Mr. Knollenberg. As the U.S. Attorney for the District of 
Columbia, you handle all adult felony cases, do you not?
    Ms. Lewis. Yes, we do.
    Mr. Knollenberg. And that takes up a considerable amount of 
time. Does that produce any numbers of police officers 
appearing in court over and above what it might in, say, some 
other city or community around the country?
    Ms. Lewis. Well, it certainly produces a fair amount of 
police overtime with respect to the court proceedings, 
certainly, and that is one of the areas that we need to be 
looking at.
    So as we come together, we are looking at a variety of 
areas. We are looking at court scheduling of cases and trying 
to make sure that we minimize the amount of overtime for 
officers. We are looking at overtime in the papering process, 
in the investigative process, as well as in the grand jury and 
witness conference areas.
    Mr. Knollenberg. I think, with that, we ought to declare a 
recess. We have these three votes on the House floor. We will 
be back just as soon as we can get those votes out of the way.
    I think we have about 4 minutes left on this vote. Well, 
let's do a little estimate of this. We have about 4 minutes 
left in this vote, and then we have debate time that is 
supposed to last 10 minutes, sometimes it goes longer. Then 
there is a 15-minute vote, and that may take, with some 
scrambling, between a couple, 3, 4 more minutes.
    So you are looking at close to a half an hour, so I would 
say you have time to do whatever you wish.
    We are in recess for approximately 30 minutes.
    [Recess.]
    Mr. Knollenberg. The Committee will come to order. We will 
give people time to get readjusted.
    I want to, at this time, recognize Mr. Fattah for 
additional questions.
    Mr. Fattah. Thank you very much.
    Let me direct my question to the U.S. attorney. As 
Iunderstand it, you prosecute all of the adult cases?
    Ms. Lewis. That is correct.

             Corporation Counsel Prosecutes Juvenile Cases

    Mr. Fattah. Who prosecutes juvenile cases?
    Ms. Lewis. Juvenile cases are prosecuted by the Corporation 
Counsel's Office, unless those juveniles are being prosecuted 
as adults.
    Mr. Fattah. Okay. I thought it was quite innovative, the 
effort you have made to decentralize and to connect with the 
community in terms of, as I understand it, in each ward of the 
city.
    Ms. Lewis. In each district of the city. It is basically 
dovetailing with community policing.
    Mr. Fattah. Okay.
    Ms. Lewis. We have assistants who are now assigned by 
district, and then further broken down by patrol service area--
--
    Mr. Fattah. Is this done anywhere else in the country?

                      Community Prosecution Model

    Ms. Lewis. There are a number of areas that are adopting 
the community prosecution model, yes. I think we are the only 
one that has gone district-wide, but there are a number of 
other similar initiatives.
    Mr. Fattah. How long have you been implementing this?
    Ms. Lewis. We had a pilot program that former U.S. Attorney 
Eric Holder started back in 1996, in the 5th District of the 
city. I came on board in 1998, and I expanded it city-wide in 
November of 1999. Now we have the same approach in each of the 
seven police districts.
    Mr. Fattah. And would you like to just put on the record 
any of the strengths of this type of effort?
    Ms. Lewis. There are a number of strengths. First of all, 
because we are focused geographically, and that is by district, 
and then we are further broken down by PSA or patrol service 
area, and we have specific assistants working the crimes in 
those specific PSAs.
    The result of that is that the assistants become much more 
familiar with the neighborhoods, with the community residents, 
and with the police officers with whom they are working on a 
regular basis. They are able to focus, together with the 
Metropolitan Police Department, on initiatives tailored to the 
particular crime problems in that area, as distinct from crime 
problems that might exist somewhere else.
    Our partnerships with the community have been enhanced. The 
assistants are regularly out at community meetings, together 
with members from the Metropolitan Police Department, talking 
about issues, talking about concerns. We have greater feedback 
from the community with respect to areas of concern to them, so 
we are able to look at those issues more carefully. We are able 
to make better prosecutive decisions because we know what is 
going on in the neighborhood. And that translates into our 
ability to make charging decisions and so forth more 
effectively.

               Drug-Related Nuisance abatement Task Force

    So there are a number of benefits to it. We are focusing as 
well on quality-of-life issues like nuisance properties. We 
developed a drug-related nuisance abatement task force within 
the office that is part of our community prosecution effort. 
That is focusing on bringing our federal and local laws to bear 
on nuisance properties in the District.
    So it is working very well.
    Mr. Fattah. Well, let me commend you for it.
    Ms. Lewis. Thank you.
    Mr. Fattah. I am quite impressed with it and would like to 
learn even more about it.
    Ms. Lewis. We would be happy to send you a brochure on it.
    Mr. Fattah. Yes, I am part of, I guess, the other two-
thirds of the city that leaves Washington after the work is 
done. And since I know all of us are interested in self-
government, it would be interesting to see how this works and 
how, at the community level, people are working to enhance 
public safety. Maybe it is something we can transport back to 
the places that we emanate from.
    It is interesting to me that people think that problems 
that have not been solved elsewhere could be solved here. But I 
think that there is innovation in a lot of places, and maybe we 
can borrow from each other.

                       Boston's Juvenile Program

    One of the innovations I would like to ask the young lady 
next to you about, in terms of juveniles, is in Boston, they 
have had a very intensive effort to deal with juveniles who are 
at risk of being involved in anti-social activity based on 
prior arrests. And it is a very intensive collaborative effort 
between prosecutors and the police and community entities. And 
it has reduced juvenile violence, and particularly juvenile 
homicides, very substantially over the last few years.
    Is there any type of effort like that taking place here?
    Ms. Teal. I am familiar with that program. There is not 
something specifically like the Boston program here. What we 
have done, as part of the Mayor's overall efforts, is that we 
have strengthened the ties that we have with our social service 
organizations through the leadership of the deputy mayor for 
children, youth and families, and the corporation counsel.

                    Neighborhood Services Initiative

    We are also engaging in the Neighborhood Services 
Initiative, which again deals with a lot of quality-of-life 
issues. Our attorneys are on the core teams that serve in every 
place where those programs are underway, and are intimately 
involved in dealing with the community on those matters, both 
on the civil side and on the criminal side.
    We have not had, quite honestly, the resources to do all 
that we want and need to do.
    Mr. Fattah. That is part of what this Committee's 
actualfunction is. We focus on resources.
    Ms. Teal. That is why I am mentioning it.
    I think, again in conjunction with a lot of the people that 
you are seeing here at the table and some who are not, we have 
really been working hard to be as creative as we can be within 
the resources that we have.
    But there are some very real constraints. I mean, 
obviously, when you have substantial caseloads and court 
calendars that require your presence, you need to make sure 
that those things are staffed, first and foremost. So that has 
somewhat limited us in terms of some of the other things that 
we would like to do and that we are doing on a more limited 
scale.

     PHILADELPHIA ``BORROWED'' SOME OF BOSTON'S SUCCESSFUL EFFORTS

    Mr. Fattah. Well, again, I would just say that we borrowed, 
in Philadelphia, some of the very successful efforts in Boston.

                      BOSTON'S JUVENILE HOMICIDES

    As I recall it, the initial effort had eliminated for an 
entire year any juvenile homicide in the city of Boston, which 
was remarkable. And what they did was they focused on the young 
people who they knew were prone to be involved in activities, 
and made sure they had from a probation standpoint, from a 
police standpoint, been involved in these juveniles' previous 
cases, that they, in a very intense way, made their presence 
known to the young people on a constant basis. And it worked 
quite well.
    So, part of the effort of the Congress here is to have our 
Nation's Capital be a shining city on a hill. And I would 
assume that many of my colleagues would be supportive of 
whatever efforts those of you who are on the front line think 
would be useful in helping to combat some of the problems.
    Ms. Teal. I do not want to leave you with the impression 
that the city as a whole is not making efforts in that regard.
    Mr. Fattah. I think the deputy mayor wants----
    Ms. Teal. Yes, she will describe some of the things that I 
was addressing as to what we in our office have been doing.

            EFFECTIVE PARTNERSHIP IN BOSTON AND OTHER CITIES

    Ms. Kellems. Thank you.
    I do want to say something, and Chief Ramsey may want to 
add to it as well.
    There have been a couple of very effective partnerships, 
aspects of which existed in Boston and some other cities. Ms. 
Teal was referring to the juvenile prosecutor's role in this. 
But juvenile probation, which is actually a function of 
Superior Court, has worked in close cooperation with MPD to 
target exactly that population of high-risk juvenile offenders 
or potential offenders.
    We have broadened it a little beyond just the very small 
group of youth who had been arrested, and included other youth 
who we believed were on the verge of getting in trouble. It is 
very community-based. It is a collaborative of faith-based 
organizations functioning very well right now east of the 
river, which is where we had the highest concentration of crime 
problems with youthful offenders.
    The success stories are numerous. It seems to really be 
getting into place. But it required us to be out on the 
streets, really understanding on a day-to-day basis the lives 
of these kids, the problems they were facing, having exactly 
what you described, the close relationship between police and 
their probation supervisors. The individuals who are under some 
form of supervision have additional levers or strings we use to 
keep them in line, and the impact has been significant. The 
chief may know the statistics.

                      DEALING WITH YOUTH VIOLENCE

    Chief Ramsey. We have done quite a bit, actually, in the 
area of dealing with youth violence. Last year, I created the 
youth intervention team headed by an assistant chief that 
actually is working full-time now with members of the clergy 
over in southeast DC, which is where it started, and we are 
expanding now to other parts of the city.
    The community-police partnership that we have established 
there has really had an impact. We, last year, had about a 50 
percent reduction in homicides of kids under the age of 18. And 
I am not saying that that is all due to that program, because 
it is not.
    But we are working very aggressively to really deal with 
the issue of youth violence in our city, and we have learned a 
lot from Boston. We have learned a lot from a lot of different 
cities that have come up with very, very innovative programs. 
And we do not believe you need to reinvent the wheel all the 
time. I mean, if there are some things that are effective and 
that work, then we need to look and see how to fit it into what 
we do here. And we certainly are in the process of doing that, 
and have done it.
    Mr. Fattah. Thank you very much.

            POLICE OVERTIME SITUATION CHAIRMAN NOT SATISFIED

    Mr. Knollenberg. Thank you, Mr. Fattah.
    Let me go back to the police overtime situation. I am not 
completely satisfied with all of the answers. I mean, you all 
have your views about this, and it would seem to me that if 
this has been around for two decades or even longer, it may 
never go away. So one of the reasons that I have to inquire 
again is, are the pertinent parties talking to each other? Do 
you continue to talk to each other? And, in fact, what comes 
out of those conversations?
    Judge?
    Judge King. Certainly. As you know, I came into the 
position where I have responsibility for this area in October. 
I have invited both Chief Ramsey and Ms. Lewis to a couple of 
meetings now to talk about the issue. As I outlined, some of it 
is just going to take pure collaboration across agencies 
responding to different funding authorities.
    I think the other part that we are looking at from the 
Court's side, and that is primarily a Court issue, is the issue 
of scheduling cases. To address that, we need to find some way 
to bring down the number of cases that are disposed of at the 
last minute, either by a plea of guilty or as a result of a 
continuance.
    That is going to take a collaboration with the prosecutor's 
office to work out some way of trying to encourage those cases 
which are going to end up in pleas of guilty, for example, to 
be disposed of earlier, so that the cases that go on the trial 
docket are fewer and we have some belief they are actually 
going to go.

                   POLICE OFFICERS APPEARING AT COURT

    Mr. Knollenberg. They tell me that 98 percent of the police 
officers that are called upon to show up, do show up. That 
means that there is not a problem there. They also say, and 
maybe this is not instructive of anything, but only about 25 
percent, or two out of eight, are actually called upon to 
testify.
    Is there any way that you can work that out?
    Judge King. There is an issue there. One part of it we are 
talking about is, finding a way to somehow get information to 
the police department when a case is not going to go to trial. 
If we know a day in advance, even, or two days in advance, then 
the officers can stand down for that appearance and they do not 
need to appear at all.
    When we have a case that we think may go to trial, the 
officers are required to be there. We at the Court are 
perfectly happy to have the officers on standby, but, as I 
understand it, that does not solve the problem, because they 
are still drawing overtime pay while on standby.
    Given that circumstance, of course we want them in the 
courthouse so that we can gain access to them quickly. If we 
could find a way around paying overtime for standby, we are 
perfectly happy to have officers on standby, subject say, to a 
one hour call or something.
    Mr. Knollenberg. But if they are on standby, then they have 
to be paid overtime under their contract. Is that true?
    Judge King. That is my understanding of it.
    Ms. Kellems. Currently.
    Mr. Knollenberg. Currently.
    Ms. Kellems. That is by contract. In some jurisdictions, 
they are not.
    Mr. Knollenberg. It is my understanding that in San 
Francisco and Washington, among others, they have a system that 
requires the presence of up to two officers for any case, 
which, I guess, places all other officers on standby status. Is 
that right? That does not help the situation here. Is that what 
you are saying?
    Judge King. As far as we are concerned, we would be content 
to work with that kind of approach. But if it does not solve 
the overtime pay problem, then we have not----
    Mr. Knollenberg. Well, that is right.
    Judge King. It would have benefits, but we----
    Mr. Knollenberg. You are moving paper, but you are not 
getting any savings through the process.
    Judge King. That is right.

   ELECTRONIC METHODS TO REDUCE POLICE OVERTIME FOR COURT APPEARANCES

    Mr. Knollenberg. What about electronic means? Does that fit 
into anybody's thinking at this time? Is there anything that 
can be done electronically?
    Judge King. For trials, probably not. For the papering 
process, we can certainly use teleconferencing, video-
conferencing to do some of the paperwork. From the Court's 
perspective, all we need is an affidavit and a charging 
document, either a complaint or an information. I support 
whatever could be done to get that paper to us in a more 
efficient way. I am very happy to work with, and am trying to 
work with, both the police and the prosecutors to see that we 
take advantage of that.

     POLICE OVERTIME--COUNCIL FOR COURT EXCELLENCE RECOMMENDATIONS

                    (See pages 423-632, this volume)

    Mr. Knollenberg. I know you are all familiar with the 
Council for Court Excellence. They have made some 
recommendations. In fact, I have a document in front of me 
where they----
    Judge King. Yes.
    Mr. Knollenberg [continuing]. Talk about some of the things 
that might be done. It would seem to me that--I am no judge as 
to whether these are totally confected in a way to make them 
totally effective--but I also think they ought to be 
considered. The Council for Court Excellence seem to have 
something that would be instructive or suggest movement that 
would bring the parties together and discuss these 
recommendations. I think we have to look at some way of 
bringing this to a satisfactory resolution, where there is some 
money saved, without affecting justice or the process of 
justice.
    So I would hope that you would all continue to work 
together in that direction.
    Did you have a comment, Ms. Kellems?

  POLICE OVERTIME PROBLEM GOES BACK 20 YEARS--WILL AND INCENTIVE NOT 
                                 THERE

    Ms. Kellems. I do. Actually, to get back to your original 
question, you are right. We have been talking about this for 
decades, and certainly the few years that I have been involved 
in it. I think that what it will require to crack this nut is 
the will to crack the nut, some very focused attention on it, 
and some incentives.
    And the will, I think, is there. I think there is a lot of 
commitment to doing this. I do not know if the will has been 
there for the last 20 years, but I can tell you I think it is 
now. The focused attention is one place that we have really 
lacked, and it is related to the incentive issue. And the 
reality is the incentive that does not exist for most of the 
people sitting at this table or in the justice system, except 
for the police department which bears the burden of this 
largely.
    When I say ``incentive,'' I mean very specific incentive. 
MPD is the one who has to foot the bill for this, and they have 
always. And as long as people keep putting more money in that 
pot and the officers keep showing up, the system seems to be 
going along.
    Now, I do not think that the individuals in the system want 
it to continue that way. But I am not sure that the incentive 
is there to get out of that cycle.
    Mr. Knollenberg. Let me ask you, is there anything that we 
in Congress can do to provide some incentive or flexibility to 
allow you to come closer to some solution?

         RE-CREATING THE CRIMINAL JUSTICE COORDINATING COUNCIL

    Ms. Kellems. One of the primary recommendations you find in 
that GAO report is the creation or the re-creation of the 
Criminal Justice Coordinating Council. Virtually everyone at 
this table, and I think the panel that you talked to yesterday 
from Court Services and Department of Corrections and all those 
folks, are all members of this organization. The organization 
existed for a couple of years. It was funded by the Control 
Board.
    The significance of having an independent organization with 
some dedicated resources is that it gives the luxury of having 
someone focus on the systemic problems. At any given moment, 
any one of these agency heads has to get back to the business 
of their individual mission. And having an organization 
dedicated to a problem that cuts across agencies provided an 
insulation, provided the luxury of time and energy to focus on 
these problems.
    Actually, they made significant progress. The pilot 
project, this papering reform that some of the people 
mentioned, was actually supported by the CJCC to incubate it 
and move it along, because at any given moment, the Corporation 
Counsel or MPD would lose sight of it because they are caught 
up in their e-mail scandals or they are caught up in their 
other issues.

           FUNDING FOR CRIMINAL JUSTICE COORDINATING COUNCIL

    The Mayor's office has put funding in the budget for some 
staff for next year. The GAO recommendation is the creation of 
a Federal agency. I think--and I am, sort of, going out on a 
limb a little bit--my preference as a city representative would 
be that the city try to do this itself. That does not mean that 
you want to look a gift horse of funding in the mouth.
    You really need funding, and that is what makes it work. 
And it is not a significant amount, actually. The budget for 
the CJCC was about $600,000 a year when it was operating.
    Mr. Knollenberg. You are talking about flexibility, not 
necessarily funding. I would hope that perhaps we could add 
some flexibility that would diminish the requirement for more 
police overtime. But that may be something, too, however that 
would be secondary.

              CONGRESSIONAL PRESSURE IMPORTANT FOR SUCCESS

    Ms. Kellems. If I could make one more point on that, I 
think one of the reasons the CJCC had some success and where it 
could stand some more was congressional pressure. The incentive 
was the third point that I mentioned. And having everyone who 
sits on the CJCC make their commitments known to each other and 
to their appropriators, that would probably make a difference 
as well.
    One of the recommendations that GAO had was reporting to 
Congress on the activities of these systemic projects and how 
they succeeded, and I think that may be a very strong lever.
    Mr. Knollenberg. Thank you very much.
    We will turn now to Mr. Fattah for a set of questions.
    Mr. Fattah. Well, Mr. Chairman, I would like us to bring 
this to a conclusion, but I do want to delve into this one 
issue. I will hazard a question or two.

            CONGRESSMAN FATTAH'S REMARKS ON POLICE OVERTIME

    As a very young person, I worked for the city of 
Philadelphia, and part of my responsibilities had to do with 
trying to figure out how to solve this type of problem in the 
city manager's office dealing with police overtime. That was a 
long time ago.
    I am not aware of a city that has solved this problem, in 
terms of what we do when we have a criminal justice system in 
which people's liberty is at stake and the arresting officers 
and the officers involved in the investigation have to be 
prepared to testify or the case is going to be rightfully 
damaged for lack of their testimony.
    So part of the problem is you cannot run government like a 
business. I mean, there are going to be costs associated with 
some of these processes.
    I guess my first question to the deputy mayor is, is there 
some model somewhere? Is there some city in which a man is 
not--they have police officers who have to wait and be at 
courtrooms for cases to go forward?

                       EXCESSIVE POLICE OVERTIME

    Ms. Kellems. No, there is no jurisdiction where they do not 
use overtime and officers do not have to be there. And I do not 
think that is what we are trying to get at. What we are trying 
to get at is excess----
    Mr. Fattah. There can be some limited improvement.
    Ms. Kellems. Yes. Exactly.
    Mr. Fattah. So at this point, the question is a question of 
where can the efficiencies be gathered, and at what rational 
point does one stop pursuing those efficiencies for the greater 
good of having a justice system that affords people, both the 
public, who have an interest in the prosecution of the case, 
which means that they need the police officers there to testify 
to what it is that they know, and the defendants, who have a 
right to face their accusers under our constitutional system.
    So I just wanted to be clear on the record, Mr. 
Chairman,and I think that, again, we should try to be of assistance. I 
agree with you that if there is flexibility that can be found. But I 
also think that we cannot put on the District expectations that no 
other city has been able to meet. At least in my own city, this 
problem--and I know it is the same for Detroit and other places--is a 
major problem.

         POLICE OFFICER WORK IN GENERAL VICINITY OF COURT HOUSE

    One of the small things that we did in Philadelphia was to 
assign the officers who had the beat at the courthouse to work 
in that general vicinity until they were called in for the 
case, so that they were at least a presence in our downtown 
area while they were waiting to be utilized in court.
    But I just do not think that we can soft-sell the fact that 
there is a cost to having the system of government that we have 
set up and the rights that we provide to people.
    Mr. Knollenberg. Thank you, Mr. Fattah, for those comments.
    I would agree that the pursuit here is to certainly 
continue to reduce excessive police overtime costs but at the 
same time keep justice in mind all along the way. I do not 
think anybody wants to short-change that end of it, but I do 
not think we have to look away from trying to reduce excessive 
costs in some fashion. That is why we are really asking these 
questions.
    Let me turn now to Chief Few. We met with both Chief Few 
and Chief Ramsey in terms of the turnaround in your 
departments. I think there is no question that there has been a 
turnaround in the Fire and Emergency Medical Services 
Department. There is a vision today that was not there some 
time back. And particularly in your case, Chief Few.

                     FIRE DEPARTMENT RESPONSE TIME

    We talked about response time at some length, and I know 
you have worked at that very hard, and I commend you for that 
effort. I also would like for you to tell me, on the record, 
what have you done in terms of bringing that response time 
down? Go back to the original date when you came into the 
picture, and also give us a little vision about how much 
further you believe you can reduce that response time, based 
upon certain attitudes that you have established.
    Chief Few. When I came here in July of 2000, we looked at a 
redeployment of the resources, and I thought it was horrible 
that we had a 20-minute response time for ALS. And that is 
critical for a community. With some good staff, we reduced----
    Mr. Knollenberg. How did that compare nationally, by the 
way, Chief?
    Chief Few. It was not very good at all. I do not even want 
to say how bad it is, but it was not good at all.
    But then, I have to say this, too. We actually do not 
calculate our times the same way the rest of the cities that 
are surrounding us. So it sounds a lot worse than it really is.

                      COMBINED EMS AND FIRE SYSTEM

    But in looking at that, if you are going to have a quality 
service in a municipality this size, EMS should have the same 
response time as the fire calls. And to do that, you have to 
have a combined system.
    Most small cities made the transition very quickly. It is 
the larger cities throughout these United States that are 
buried in some tradition and did not make the transition as 
quickly, because they have a lot of resources.
    But we find that we cannot meet some of those budget needs. 
People are now incorporating both services and unifying their 
departments, so that you get a better use out of an employee 
when he is dual-role cross-trained.

                  DUAL-ROLE CROSS-TRAINING LEGISLATION

    This is the key now to what we are trying to do with the 
dual-role cross-training legislation. I was telling some people 
that, they look at a fire engine that pulls up to a house, and 
they say, ``Well, you bring a big unit to the house.'' That is 
not the cost. The cost is the personnel.
    We are only going to get 7 years out of a fire engine no 
matter what you do. That is the average--no matter what you do 
to it, it just looks like they break down in 7 years.
    So what we have to do in that system is to reduce that 
overtime. This legislation is going to do a number of things 
for our city. We will have an excellent response time because 
it will reduce the number of personnel that we have to have in 
our fire service. And then the one-plus-one staffing is another 
incentive that we are putting in place to go along with that 
legislation to dual-role cross-train.
    Which feeds back to reducing the response time within our 
community. I do not want to be the fire chief of a city with a 
response time of those numbers. I am not proud of that at all. 
And I do not want my department to be proud of those response 
times.

      RESPONSE TIME REDUCED FROM 20 MINUTES TO 14 MINUTES FOR ALS

    Mr. Knollenberg. You are down to how many minutes now?
    Chief Few. Yes, 6.5 minutes on a basic life support; 14 on 
advanced life support. But I am looking for those numbers to 
come down even this week. They will come down some more. As we 
move into our new 911 center, I feel like that is going to 
knock some extra time off.
    Mr. Knollenberg. You are actually doing a lot of cross-
training. You want to bring your EMS folks up to par. How is 
that program coming along?

                         COST OF CROSS-TRAINING

    Chief Few. Well, that is where I now need help making sure 
we have this dual-role cross-training legislation go through in 
our department. We are looking at, it may cost us $100,000, but 
look what you get for $100,000.
    I feel like it is cost-neutral, but they have told me that 
it costs $100,000. That is not very much for the citizens to 
have a great response time and get some qualityEMTs and 
paramedics on the scene.
    Mr. Knollenberg. What about, when the phone rings? Tell me 
what happens. Actually, I know the call goes into Chief 
Ramsey's department, and maybe the chief should respond to 
that, then you can turn the mike back over to Chief Few.
    Chief Few. Okay.
    Mr. Knollenberg. Let's get a read on what is taking place.

             911 Calls Go to Metropolitan Police Department

    Chief Ramsey. All the 911 calls, Mr. Chairman, do come into 
MPD. On June 1, we will have a consolidated call center over on 
McMillan Drive where police and fire will be housed in the same 
facility. Right now, they do come up on the sixth floor of 300 
Indiana.
    If it is a fire call, we will fast-forward to fire, stay on 
the line until we know they have picked up that particular 
line, and then we disconnect and turn it over to fire that way.

                     Number of Rings Before Answer

    Mr. Knollenberg. How many rings does it take for you to----
    Chief Ramsey. Four and a half seconds is where we are right 
now. The national average is 5 seconds. We still are not 
consistent, however, in many instances, but that was our 
average last year.
    Mr. Knollenberg. Does a person answer the call or is it 
automated?
    Chief Ramsey. No. Well, we do have an automated system if 
the system is busy, but we have people there that actually 
answer the calls. We had some staffing issues at times, and 
there are still some problems with our system being old and 
operator behavior and so forth. But our answering time has come 
down to 4.5 seconds.
    Mr. Knollenberg. Thank you.
    Chief Few.

                 New 911 Center for Fire and EMS Calls

    Chief Few. As Chief Ramsey mentioned about the faulty 
equipment, our state-of-art 911 center now, as we get that call 
from MPD, the good thing about it, we will be in the same room 
now. And so if there is any question about any calls, it is 
just a matter of looking over their shoulder and asking the 
person about some additional information.
    We are benchmarking our system now to make sure that all 
calls are actually dispatched in a timely manner. What we are 
looking at with this new equipment, there is so much for us in 
our new CAD system that right now I do not have the exact time 
it takes to actually process the call. It is going to reduce 
tremendously after we move into the new 911 center, and we know 
we are going to knock some additional time off our response.

                  Procurement System for Fire and EMS

    Mr. Knollenberg. What about the procurement system, Chief 
Few, as it affects or impacts your department?
    Chief Few. Well, something must have happened years ago, 
because I got to tell you, I got one of the excellent 
procurement officers. He does a fine job.
    Mr. Knollenberg. Could we have his name, rank and serial 
number? [Laughter.]
    Chief Few. No, because I want to keep him, and I do not 
even want to even call his name, because Chief Ramsey may try 
to take him. [Laughter.]
    I do not trust this Chief Ramsey guy. [Laughter.]
    That is a joke. He is a nice guy. [Laughter.]

                  Training for Fire and EMS Employees

    Mr. Knollenberg. Let me just ask again, Chief Few, one of 
the criticisms of the DC bureaucracy is that there are people 
who are holding jobs that they are not qualified for. I know 
some of this is a matter that both you and Chief Ramsey 
inherited. They were there when you came on the scene. They are 
probably very good people, but they lack training. What are you 
doing about training those people that in your judgment, do not 
measure up, to the level where they should be in order to hold 
that position?
    Chief Few. Well, let me tell you, one of the things that I 
believe in is training individuals to do a job and giving them 
opportunity----
    Mr. Knollenberg. And just one other question: What are you 
doing to keep qualified people there?
    Chief Few. To keep qualified people there? Qualified people 
always do a good job, they stay. And sometimes they move on. I 
have had some assistant chiefs move on. But those were career 
moves, and you look for those type of people to go on to a 
different job.
    Mr. Knollenberg. But the good people are staying, you say?
    Chief Few. We have a number of good people who are still in 
this organization.
    Now, I have got to tell you, I have made some tremendous 
staff moves in the last couple of months, and I get the message 
out, and the message is that you have either got to do your job 
or you have got to move out.
    In fact, I share some of those things with the deputy mayor 
and Chief Ramsey. We talked a little bit about that: staffing, 
having good quality staff. And I have made some significant 
moves, even in my front office, so that I can get some good, 
competent, qualified people.

               Career Handbook for Fire and EMT Employees

    We have actually shut our training centers down in EMS and 
Fire, and we looked at our curriculums. Now we have put in 
place what we call a career handbook. Anybody in our 
organization now can chart their career, where they want to be 
at in the next 5, 10 or 15 or 20 years.

             Mandatory Training for Fire and EMS Employees

    There is going to be some mandatory training, and we are 
breaking out the training differently. One training does not 
fit all. We will have battalion chief, lieutenant, captain and 
deputy chief training. And what we will see is a quality of 
service now, with people who understand what they are 
accountable for every day.
    Mr. Knollenberg. What are you doing to make sure that the 
fire department is a friendly place, so they are customer 
friendly, we will say?

          Customer Service Training for Fire and EMS Employees

    Chief Few. Well, I am proud of our customer service 
training. We have put in place a new customer service training 
program. When we looked at the evaluations from the 
firefighters, they gave us high marks on their customer service 
training.
    We looked at what happened in the past to us as far as 
customer service, and we looked at where we needed to be at. We 
used some role-playing in those customer service programs.
    In fact, the persons who actually performed the customer 
service training for us went to a seminar in Atlanta, and I 
have been getting calls from everywhere, they want to actually 
send them to some other different locations so they can give 
customer service training to other municipalities. But I said 
we stay at home, we fix at home, and then we can go.
    Mr. Knollenberg. You feel pretty good about where this 
program, this attitude, this new vision, if you will, is taking 
the Department?
    Chief Few. No doubt. Now, along the way I am going to have 
some roughs and bumps, because I am telling you, I lay it right 
out on top of the table, I do not hide anything, and that is 
the way I manage, and you are going to hear some things. But I 
can tell you, at the end of the day, we are going to have an 
excellent fire department.

 Chairman Knollenberg's Remarks on Disciplinary Actions Taken by Fire 
                                 Chief

    Mr. Knollenberg. I just wanted to add--and I am not going 
to inquire about it because we are getting short on time but I 
recognize that you have been fairly forceful and direct in 
terms of the discipline that you instill or have put in place 
in the fire department in the District, and I will leave that 
judgment up to you.
    I think that is entirely your decision because you are the 
leader and you are the person that ought to make the decisions, 
the determinations, and, frankly, live by them. I recognize 
there is some sensitivity, perhaps, that some might have with 
respect to, shall I say, beards, et cetera. But I also know 
that there are reasons why you imposed those requirements, so I 
will let you lead on and work things out with your people.

                         Conclusion of Hearing

    I want to bring this to a close now and just thank all of 
you for your participation here today. We want to continue to 
work with you. I am particularly pleased with Chief Ramsey and 
Chief Few in terms of the public safety in this city.
    It is one of the things that is a benchmark with me. I 
think that is going to bring people back into the city, it is 
going to make this a brighter city, one that, in fact, the 20 
million Americans that come here do not get a chance to see 
sometimes. But we would like to make it possible for them to 
wander off into the rest of this city to see all of its many 
treasures. And all of you are participating and contributing to 
bringing that about.
    So with Mr. Fattah's concurrence, we will bring this 
hearing to a close. Thank you all very, very kindly.
    The Committee stands in adjournment until 9:30 a.m. April 
the 26th.
    Thank you.

                        Questions for the Record

    [Clerk's Note.--The following material includes questions 
submitted by the Committee and by Congressman John Sweeney of 
New York and the responses to those questions:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



                     PREPARED STATEMENT AND REPORT

                     POLICE OVERTIME FOR COURT DUTY

                      Council for Court Excellence

                  (See pages 383 and 406, this volume)

    [Clerk's note.--The following prepared statement of the Council for 
Court Excellence regarding police overtime, and the Final Report and 
Recommendations on Management of D.C. Criminal Justice Resources 
prepared by the Council for Court Excellence and the Justice Management 
Institute were submitted for the record:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



                                          Thursday, April 26, 2001.

                          ECONOMIC DEVELOPMENT

                      IN THE DISTRICT OF COLUMBIA

                               WITNESSES

ERIC PRICE, DEPUTY MAYOR FOR PLANNING AND ECONOMIC DEVELOPMENT
JOHN M. DERRICK, JR., CHAIRMAN, GREATER WASHINGTON BOARD OF TRADE
JOHN RODERICK HELLER, VICE CHAIR, NATIONAL CAPITAL REVITALIZATION 
    CORPORATION
ELINOR R. BACON, PRESIDENT AND CEO, NATIONAL CAPITAL REVITALIZATION 
    CORPORATION
RICHARD MONTEILH, PRESIDENT, DC CHAMBER OF COMMERCE
RUSSELL D. SIMMONS, CHAIR, DC PUBLIC HOUSING AUTHORITY, AND CHAIR, DC 
    CHAMBER OF COMMERCE ECONOMIC DEVELOPMENT COMMITTEE
    Mr. Knollenberg. The meeting is called to order. If 
everyone would take their respective seats, we will begin.

                Opening Remarks of Chairman Knollenberg

    We do have the ranking member still to come. He will be 
here shortly. But we thought, in the interest of time, that we 
could commence the meeting.
    There is a conference taking place that is keeping Mr. 
Fattah away momentarily, but he will be in here shortly. So we 
will get through some of the preliminary activity and then to 
the witnesses for their testimony.
    I want to welcome, to my right, Mr. Duke Cunningham, a 
member of the committee. In fact, Mr. Cunningham has the most 
tenure on either the Republican or Democrat side of any of our 
members, so we welcome him this morning.

                      ECONOMIC DEVELOPMENT IN D.C.

    Let me just get into an outline of the hearing. We are 
meeting this morning to hear from District officials and other 
important partners about an item that is very dear to me: 
economic development in the District of Columbia.
     This city is in the midst of a major economic 
revitalization that is occurring because of many factors, not 
the least of which is the national economy. You could argue 
that last point a little bit, it may be a bounce, but 
nonetheless there has been a strong national economy despite 
the fact that it is having some rough spots.
    A healthy business community and business environment are 
critical to restoring the luster of the Nation's Capital. This 
economic development will bring people and families and 
businesses back into the city and will raise the standard of 
living for everyone.

                     FEDERAL GOVERNMENT ASSISTANCE

    The Federal government has assisted in this renaissance by 
providing $50 million in additional Federal funds for the new 
Metrorail stations at the MCI Center as well as the New York 
Avenue location; $25 million to capitalize for the National 
Capital Revitalization Corporation, or NCRC; $17 million for 
the college tuition assistance program for DC high school 
graduates; and the relocation of thousands of Navy employees to 
the Navy Yard in the Southeast.
    And of course our new Mayor, Anthony A. Williams, has 
brought respect, integrity and a commitment to improve service 
delivery and the quality of life in the Nation's Capital.
    This morning, we have representatives from the Mayor's 
Planning and Economic Development Office, the Greater 
Washington Board of Trade, the DC Chamber of Commerce and the 
National Capital Revitalization Corporation.
    At this juncture, it would have been appropriate to yield 
to Mr. Fattah for an opening statement. He has not made it back 
from his conference, so I think we can proceed, if that is in 
line his with his staff persons suggestion.
    I do want to turn now to Mr. Cunningham to see if he has 
any opening remarks.
    Mr. Cunningham. No, I think we have delayed long enough.
    Mr. Knollenberg. Thank you, Mr. Cunningham.
    Specifically today, we have with us Eric Price, deputy 
mayor for planning and economic development; John Derrick, 
chairman of the Greater Washington Board of Trade; John Heller 
and Elinor Bacon from the National Capital Revitalization 
Corporation; and Richard Monteilh, president of DC's Chamber of 
Commerce.
    Glad to have you all with us.
    I realize the principal witnesses may have other people 
with them that might be called upon to respond to questions, 
and we welcome all of you here this morning and look forward to 
your testimony.

                        SWEARING IN OF WITNESSES

    At this point, with respect to the subcommittee's standard 
procedure in the swearing in of all witnesses, I refer to Rule 
XI, clause 2(m) of the Rules of the House and Section 1(b) of 
the Rules of the Committee, which authorize me, as Subcommittee 
Chairman, to administer the oath.
    I would ask all of you who will be testifying to please 
stand and raise your right hand.
    [Witnesses sworn.]
    If there is no objection, we will hear all of the opening 
statements before we go to anyquestions, and we will operate 
under the 5-minute rule. I do have a witness timer here, so I can check 
you out pretty closely.
    I recognize that you may have more to say, but please 
include that in your extended remarks, which will be placed in 
record. We have been asking all of our witnesses to just 
highlight their opening statements. We will place the entirety 
of your prepared statements into the record.
    First we will hear from Deputy Mayor Eric Price. He is the 
deputy mayor for planning and economic development for the 
District of Columbia.
    And again, Mr. Price, we would appreciate your highlighting 
your prepared statement. We welcome you and look forward to 
your testimony.
    Thank you. You are recognized.

                    PREPARED STATEMENT OF ERIC PRICE

    [The prepared statement of Eric Price follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
                    Opening Statement of Eric Price

    Mr. Price. Thank you. Good morning, Chairman Knollenberg, 
Congressman Cunningham, and other members of the subcommittee.
    My name is Eric Price, and I am the deputy mayor for 
planning and economic development for the District of Columbia. 
I am pleased to appear before you today to present testimony on 
current economic development activity in the District of 
Columbia.
    Let me begin by thanking you for convening this hearing. 
The event, coupled with your attendance at the Anacostia 
waterfront in March this year, sends a strong signal that you 
intend to be a focused and supportive partner in our 
significant economic development efforts, especially where the 
federal government has a major role to play in shaping and 
enhancing the prospects for success of a particular project.
    I also want to express my appreciation for the support that 
my office and other segments of the District government have 
received from our Delegate, Congresswoman Eleanor Holmes 
Norton.

             Role of Deputy Mayor for Economic Development

    In my testimony, I spend a couple of pages really talking 
about what my role is and some of the things I do. But just 
briefly, there are really three major areas that I focus on for 
the Mayor.
    One: I represent the Mayor to businesses, developers and 
other government agencies.
    The second thing is to manage the executive agencies 
responsible for economic development. That includes the 
Department of Consumer and Regulatory Affairs, the Department 
of Employment Services, the Office of Planning, Department of 
Housing and Community Development; those are all in my sector.
    And then finally, I run the District's primary economic 
development agency.
    Unlike many other large cities, the District does not have 
a separate agency with overall responsibility for economic 
development programs and projects. The Office of the Deputy 
Mayor sets development priorities and policies, coordinates how 
the District markets itself to businesses and developers, and 
recommends and implements financing packaging for District 
development, attraction and retention efforts.
    When I began my tenure as deputy mayor in October of 1999, 
the District was in the relatively early stages of economic 
resurgence, the likes of which we had not experienced in the 
preceding 10 years.

              Decline in Population Between 1990 and 1996

    Between 1990 and 1996, the District experienced a steady 
decline in population: 11 percent over this 6-year period. 
According to a 1999 Urban Institute study, the loss of 
population during this period was unusually high and resulted 
not so much from more people moving out of the District, but 
from significantly fewer people moving into the District.
    From outside the region, the report suggests that this drop 
may have occurred from the spate of negative publicity about 
the District that was quite widespread at that time. During the 
6-year period, the District also lost a number of businesses to 
the suburbs.

                    Loss of Residents and Businesses

    With the loss of residents and businesses, our tax base 
declined, which led to further reduction in tax revenue. 
Schools fell into decline, existing neighborhood housing 
deteriorated, new rental housing construction was sparse to 
nonexistent, especially in poor neighborhoods, and neighborhood 
retail establishments, such as grocery stores, were shuttered.
    In addition, those residents who remained in the District 
experienced a marked reduction in the availability and 
frequency of many city services.
    The 1999 study did offer some good news. By the late 1990s, 
the image of the District was gradually changing, thus creating 
the prospect for cessation of our population loss.
    In the preceding three years, crime and unemployment in the 
District have declined. In the same period, there has been 
significant growth in property values. Home sales in the 
District were 48 percent higher in the first 6 months of 1998 
than the first 6 months of 1997. The District's economic 
resurgence was in gear.

                Strategic Plan for Economic Development

    In July 2000, building on the recommendations of a wide 
range of stakeholders, including residents, business 
organizations, trade groups and government officials at the 
local and federal levels, our office produced a strategic plan 
for economic development in the District, one that would 
harness the economic development energy that already existed in 
the marketplace and expand it to include our neighborhoods and 
those areas of the District that have suffered from 
disinvestment.
    A copy of that plan is attached to this testimony (see 
pages 650-683.)
    What I would like to do for the remaining part of my 
testimony is just briefly talk about the main objectives of the 
office, and then I will highlight some of the things that we 
are working on currently.

                            Three Objectives

    There are really three objectives, broad objectives for the 
office.

                        Revitalize Neighborhoods

    One is to revitalize neighborhoods. We have focused on 
really three broad areas in which to do that. One is to 
increase retail in the District. The second is to develop a 
balanced housing strategy for the District of Columbia. And the 
third is having major coordinated public investment so that we 
can leverage private investment in many of our neighborhoods.

                       Increase Retail Businesses

    Briefly, on retail, we are beginning to have some success. 
I believe in the next seven to 10 days we willbreak ground for 
a Kmart, a Home Depot and a Giant at one of our Metro stations. It will 
be the first time Kmart has ever come to the District of Columbia, the 
first time Home Depot has ever been there.
    We anticipate about $100 million in sales for that site, 
about $5 million in tax revenue annually, and producing 
anywhere from 600 to 800 jobs for District residents.
    We also have been in discussions with other retailers and 
we are hopeful that we are able to bring some of them to our 
downtown area.

                            Housing Strategy

    In regard to housing, when I talk about a balanced housing 
strategy, probably like no other city, housing is actually a 
driver of economic development in the District. Given the fact 
that two-thirds of the people who work here do not pay personal 
income taxes in the District, and given the fact that so much 
of our land is tax exempt, it really is a driver.
    And in that regard, our agenda is to do three things: one, 
to make better use of the resources that we have; second, to 
expand the affordable housing that we have in the District; and 
third, to increase overall production in the District of 
Columbia for all income levels. And that is what we are 
focusing on now, and we actually have legislation going 
forward.

                           Public Investment

    The other thing that we are doing is major public 
investment. The Mayor announced Georgia Avenue, $111 million 
investment in that area. It is looking at streets, 
infrastructure, housing, commercial development. I think Elinor 
Bacon may talk a little bit about that more specifically.

                       Public-Private Investments

    We have announced $845 million's worth of public-private 
investment east of the river. That is over a 5-year period of 
time. And again, that includes infrastructure, housing, 
commercial development. We are going to be moving some 
government centers also to areas east of the river.

                     Attract and Retain Businesses

    A second major objective is to really attract and retain 
businesses in the District of Columbia. As you know, Mr. 
Chairman, probably the best way to attract businesses is to 
have the CEOs of those businesses that are currently there say 
this is a place to come and do business.

                       D.C. Business Connections

    So one of the first things we did, working with PEPCO and 
the DC Chamber and the DC Marketing Center, was work on putting 
together DC Business Connections, which surveys businesses, 
finds out what their needs are. They are linked to a number of 
different agencies throughout the city, and then we try to 
respond to many of the problems and concerns that they have.
    The other thing that we have done, again with the DC 
Chamber and our other partners here at the table, is to work on 
the DC Marketing Center and be much more aggressive about 
marketing the District of Columbia, letting people know about 
the $4 billion's worth of investment that has occurred downtown 
in the last 2 years, about the tremendous housing that we are 
producing right.
    So we are trying to get the word out much more aggressively 
than I think we have in the past.
    And then finally, working with organizations like NCRC, to 
finally move forward those projects that have been out there 
for a long time with great potential but never have really been 
implemented. I talked with Congressman Cunningham, of course, 
about the waterfront, but we have St. Elizabeth's and a number 
of other potential projects that we are working with, and 
Elinor can expand on that.
    And then finally--and I will conclude my testimony with 
this--is the third major objective is really to create jobs. We 
want to create jobs for District residents.

                   Create Jobs for District Residents

    And that involves training. And also, obviously, the 
schools are involved in that to a tremendous degree.
    But what we really want to do is, while we have this 
resurgence going on and this boom occurring, we, kind of, do 
have a vision of what the pipeline is. We know that there are 
about 2,000 hotel rooms that will be coming on-line, so we can 
begin to prepare District residents now for those jobs, so when 
that construction is done they are ready to go.
    So we are trying to do the same thing. I have alreadytalked 
with Home Depot. I have already talked to Kmart. And so we are going to 
try to get in front of that pipeline and make sure that, as much as 
possible, we can place District residents in those jobs.
    Mr. Knollenberg. Mr. Price, thank you very much.
    We will go on to Mr. John Derrick, chairman of the Greater 
Washington Board of Trade.
    Mr. Derrick, you are recognized. Thank you for being here 
this morning.

               PREPARED STATEMENT OF JOHN M. DERRICK, JR.

    [The prepared statement of John M. Derrick, Jr. follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
                 Opening Statement of John Derrick, Jr.

    Mr. Derrick. Good morning, Chairman Knollenberg, 
Congressman Cunningham, members of the Committee.
    I am John Derrick, chairman of the Greater Washington Board 
of Trade and chairman and CEO of the Potomac Electric Power 
Company, or PEPCO. Thank you for giving us the opportunity to 
speak this morning about strengthening economic development in 
the District of Columbia.
    Many things go into making a city attractive to business. 
Setting the policies to achieve the perfect mix is a tough 
balancing act.
    The District government must establish and sustain 
priorities designed to take advantage of its position in this 
region, which has been enjoying record growth.
    The District must send a positive message of cooperation 
and partnership with businesses, the District must stabilize 
its regulatory processes and, most importantly, demonstrate a 
consistent, predictable performance in providing services.

                ELEMENTS TO ENSURE ECONOMIC DEVELOPMENT

    Elements that can ensure economic development and its 
consequential benefits include a qualified and talented work 
force; reliable basic services; mobility; clean and safe 
downtown neighborhoods; good schools; decent, affordable 
housing; and a lively and attractive cultural life.

    BOARD'S THREE PRIORITIES FOR RESOLVING DISTRICT'S FISCAL CRISIS

    A few years ago, the Greater Washington Board of Trade 
supported three priorities for resolving the District's then 
fiscal crisis: first, the need for the city to get control of 
its expenditures and deliver basic services; second, to 
redefine the Federal government's role relative to the 
District; and finally, the development and implementation of a 
strong economic development program.
    Much to the credit of this Mayor and DC Council, along with 
the federally appointed Control Board, the first and second 
recommendations have been realized and progress has begun on 
the third.
    The District does not exist in a void, but rather operates 
in a community of communities that profoundly affect each 
others' fortunes.

               PARTNER WITH REGION IN GLOBAL COMPETITION

    In the global economy, the new economy, the new economic 
city-state is the region. Rivers, state lines and city 
boundaries are irrelevant to that market. The District's 
economic future will be defined by how well it can partner with 
the region in this global competition.
    The District is poised to profit from its regional 
opportunities, but it will require a sustained effort to open 
regular communications beyond its boundaries and to profitably 
tap the growing confidence and optimism that can be felt in the 
District of Columbia.

                     GREATER WASHINGTON INITIATIVE

    It is clear that the District can now take on a greater 
role in the region's success of attracting business. Critical 
to this effort is the full funding of the District's 
participation in the region's coordinated marketing 
programcalled the Greater Washington Initiative.
    Furthermore, the District's advantage in participating with 
other jurisdictions in the regional marketing enterprise will 
only be leveraged effectively if full funding for the DC 
Marketing Center is maintained. So we urge the committee to 
support continued funding for these marketing endeavors.

                    DISTRICT IS URBAN CORE OF REGION

    As the urban core of the region, the District has unique 
assets and opportunities to avail itself of new economic 
development strategies. Clearly, how DC readapts its existing 
and limited land resources is critical.
    It has an especially unique opportunity to enhance its 
competitive situation through initiatives such as brownfields 
redevelopment, development of Washington's waterfront, and the 
redevelopment of the crown jewel in District real estate, the 
old convention center site.

              NATIONAL CAPITAL REVITALIZATION CORPORATION

    To maximize such benefits, a coordinated strategy and 
coordinating entity seems to us to be a critical part of the 
District's policy. To deal with projects of scale and 
complexity, the city government created the National Capital 
Revitalization Corporation, with the support of this Committee, 
Mr. Chairman, and $25 million in initial Federal funding was 
made available. We suggest that NCRC should be fully tasked in 
its pursuit of those economic development projects consistent 
with its mission.
    We encourage the Committee to ensure that the District's 
incentives for new and expanding enterprises are fully funded. 
Mayor Williams recently signed into law smart legislation 
creating meaningful incentives to assist technology firms to 
grow in the District of Columbia.
    We understand that the Mayor's budget provides for $2 
million in funding for the incentives provided by the New 
Economy Transformation Act. We applaud that commitment and 
respectfully request that this committee support that funding.

                            ENTERPRISE ZONES

    Similarly, we have long supported the expansion of 
Enterprise Zone status to the entire District of Columbia as an 
opportunity to create fertile ground for economic growth. We 
hope that members of the committee will support such an 
expansion of the Enterprise Zone status throughout the city.
    Finally, Mr. Chairman, as the District negotiates the daily 
tension between regulatory and quality of life issues, its 
economic development strategy must take into account the 
sensitivity of market forces that are profoundly and 
immediately affected by the daily decisions made by the 
District government.

                 DATA COMPANIES--EMERGENCY LEGISLATION

    By way of illustration, recently several data companies who 
were planning major investments in the District were taken by 
surprise when the District government suddenly issued emergency 
regulations affecting their site selection process. The story 
has become well-known.
    In contrast, Prince William County managed to get building 
permits for a major data center approved within a 2-month 
timeframe.

                    DISTRICT'S REGULATING PROCESSES

    When regulatory processes are upended or when rules are 
changed in the middle of the game, the marketplace takes notice 
and a loss of commercial and retail opportunities is likely to 
follow. Just as damaging, but tougher to measure, is the 
message that is sent.

                 BUSINESS REGULATORY REFORM COMMISSION

    Some years ago, the District government formed the Business 
Regulatory Reform Commission. After hundreds of hours of 
interviews and hearings and deliberation, the commission made a 
broad range of recommendations, through which runs a common 
thread, and that is to make business regulation in the District 
predictable, simple and as competitive as possible.
    Some of those recommendations have been implemented. For 
example, the city has begun to improve the process for 
obtaining building permits, and the Office of Tax and Revenue 
has put technology to best use by providing a way for 
businesses to report and pay payroll and other taxes online.

                    MANY REFORMS EXIST ONLY ON PAPER

    But, Mr. Chairman, other reforms exist only on paper. The 
one-stop shop at the Department of Consumer and Regulatory 
Affairs, a service that would particularly benefit small 
business, has not yet reached its promise.
    Implementing the BRRC reforms to make the District's 
regulatory process transparent, certain and swift is essential, 
and we urge the committee to carefully scrutinize the 
District's level of funding to continue these reforms and 
ensure that the District will be permitted to compete in the 
regulatory climate of the region.

               AOL TIME WARNER STARTED AS A D.C. COMPANY

    While the world now recognizes what an economic powerhouse 
the Washington region is, few would probably recall that the 
flagship of the region's technology community, AOL Time Warner, 
started as a DC company. It is an interesting exercise to 
ponder whether AOL might have expanded in the city.
    But rather than ponder that question, my reason for raising 
the point is my sincere belief that the next generation of 
successful companies is already doing business on U Street and 
on Columbia Road and in the North of Massachusetts Avenue 
(NOMA) section of this city. We must ensure that they have 
every reason to locate and grow in the District of Columbia.
    They will stay if they see progress in the areas I have 
discussed this morning and if they see the District's strong, 
fully funded commitment to work with them.
    Again, I thank you for the opportunity to speak about these 
important issues.
    Mr. Knollenberg. Mr. Derrick, thank you very kindly for 
appearing here this morning and presenting your case.
    We next turn to Mr. John Heller, who I understand will 
inturn introduce Elinor Bacon.
    Mr. Heller, you are recognized.

           PREPARED STATEMENT OF JOHN HELLER AND ELINOR BACON

    [The prepared statement of John Heller and Elinor Bacon 
follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Mr. Heller. Yes. Good morning, Chairman Knollenberg and 
members of the House Subcommittee on DC Appropriations.
    I am Rod Heller, vice chairman of the National Capital 
Revitalization Corporation and chairman and CEO of a DC-based 
venture capital firm. Our chairman could not be here today and 
sends his regrets.
    This is the first time that the NCRC has testified before 
any committee of the House or the Senate. Thus, you have two 
representatives today.
    While my primary purpose is to introduce our very talented 
CEO, I wanted to provide some introductory information for you.

       Background of National Capital Revitalization Corporation

    NCRC came into being last July, and we are armed with 
certain resources and a broad mandate to stimulate the economic 
development of the city, working, obviously, with the Mayor and 
other groups, and to stimulate job creation.
    We received $25 million in Federal appropriations, and we 
have received a significant support commitment from Fannie Mae.
    In July, we will be succeeding to the powers and 
responsibilities of the Redevelopment Land Agency here in the 
District.
    In order to make use of these resources, we, obviously, are 
going to have to use the powers we have to operate as an 
independent and, we hope, flexible, nonbureaucratic entity.
    There are nine members of the board: the Mayor, the CFO and 
seven appointees. Several of us have been appointed from the 
private sector with the objective of bringing private sector 
skills and initiative to this endeavor.
    More importantly perhaps, we have been freed by legislation 
from the restrictions that typically are imposed on government 
entities.
    But none of these powers and resources will be meaningful 
unless we approach this in the spirit of entrepreneurial 
initiative.
    And I think it is fair to say that we all feel very 
fortunate that Elinor Bacon has joined us as the chief 
executive. Elinor has good genealogy for planning. Her father, 
Edward Bacon, was one of the famous city planners of the United 
States.
    But in her own right, Elinor has established a remarkable 
record of achievement in Baltimore in urban development and, 
most recently, as the very effective leader of the federal HOPE 
VI program, which has brought about significant revitalization 
of our nation's public housing.
    So it is with a great deal of pleasure that I introduce 
Elinor to you.
    Elinor?
    Ms. Bacon. Thank you, Mr. Heller.
    Mr. Knollenberg. Ms. Bacon, we welcome you here this 
morning

                    Opening Remarks of Elinor Bacon

    Ms. Bacon. Good morning, Chairman Knollenberg and members 
of the committee.
    My name is Elinor Bacon, and I am the president and CEO of 
the National Capital Revitalization Corporation.
    As Mr. Heller said, this is our first opportunity to 
testify in front of your committee, and we are thrilled with 
this opportunity, and we thank you for the chance to talk about 
economic development in the District and the role of NCRC.
    In my testimony today, I would like to summarize our 
mission, what we have accomplished to date, what we hope to 
accomplish during the remainder of this year, how our work 
strengthens and complements the work of my esteemed colleagues 
here today, and what we intend to do during this coming year.
    NCRC was established by act of the Council of the District 
of Columbia in 1998. It is an independent corporate 
instrumentality of the District of Columbia government.

             Mission of NCRC--Spurring Economic Development

    We are charged with a specific mission. The mission is 
spurring economic development throughout the District and 
creating jobs for District residents, through real estate 
development, business finance and business development.
    We will focus our resources on the District's 
neighborhoods, in particular those areas which have been 
traditionally underserved, such as the areas east of the 
Anacostia River and along the Georgia Avenue corridor.
    Our mission is to implement economic development 
revitalization. We were not chartered to, and do not expect to, 
act as a planning agency. We work in very close cooperation 
with the Mayor, the City Council and the two planning agencies, 
the National Capital Planning Commission and the District's 
Office of Planning.

            Work Closely With City Departments and Agencies

    We also work closely with city departments and independent 
organizations, including those represented today, to ensure 
that our efforts to promote job training, economic development 
and real estate development throughout the District are closely 
coordinated with the work of others.
    Since economic development and housing must go hand in 
hand, we also work closely with the city's key housing 
agencies, including the Department of Housing and Community 
Development, the Housing Finance Agency and the Housing 
Authority.
    We also will work on job development with the District's 
Department of Employment Services.
    As Mr. Heller said, NCRC was awarded $25 million in an 
appropriation from Congress. We consider this a seed 
investment. To help us become self-sustaining, NCRC has been 
given the authority to raise capital through the sale of bonds 
and other endeavors.
    We can also receive contributions of funds and assets, and 
we intend to earn fees through financing, developmentmanagement 
and service programs.

               Commitment of $75 Million from Fannie Mae

    We also have received a commitment of $75 million from 
Fannie Mae to be used for debt and equity in projects with a 
housing component.
    We are thrilled by the federal commitment, which 
demonstrates the strength of this unique federal-city 
partnership, and by the Fannie Mae commitment, which is the 
only one of its size in the nation.
    We want to thank you, Chairman Knollenberg, for the 
leadership that you have taken on in assuming the role of 
chairman of this committee and we look forward to driving in 
the District with you and showing you some of these projects on 
the ground.
    And we also want to thank the other members of the 
committee, Mr. Cunningham and the other members, and 
particularly Congressman Chaka Fattah, ranking minority member, 
who is such a leader in economic development and community 
revitalization.
    And finally, we want to extend a special thanks to Delegate 
Eleanor Holmes Norton, who has been a critical advocate for the 
city in promoting economic development here.
    We greatly value the support and the input of our federal 
partners in carrying out our mission of building our capital 
city.

                       NCRC Has Three Major Tasks

    Since installation in July of 2000, the board has had three 
major tasks. One is completing a revitalization plan. Two is 
completing a performance plan for this current year. And three 
is making the organization operable.

        Building Infrastructure To Implement Revitalization Plan

    We are building the infrastructure necessary to implement 
the revitalization plan by bringing on skilled staff with 
expertise from the private sector in business, finance, law and 
business development, and we expect to be fully staffed by 
summer.
    The revitalization plan was approved by the council, and 
the board approved the performance plan.
    In this year, we intend to do the following: to initiate 
and, where possible, on long-and short-range projects, to 
complete feasibility studies for the economic feasibility of 
moving ahead.
    Many of these developments will require close federal-city 
partnerships. We have boards around the room which we can talk 
about later to show you specific projects we are talking about.

                Redevelopment of Skyland Shopping Center

    But some of them would be redevelopment of the Skyland 
Shopping Center and other development opportunities east of the 
river, economic development of areas surrounding relocated 
municipal facilities, the Howard Theater-Shaw Cultural Area, 
the Southwest waterfront, St. Elizabeth's Hospital, et cetera.
    Second, as Mr. Heller said, to transfer the roles, 
responsibilities and assets of the RLA and the Economic 
Development Financing Corporation.
    Third, to develop a business development/business finance 
program to support existing businesses and attract new ones, 
with the goal of increasing the tax rolls and providing jobs 
and business opportunities to existing and new residents.

                   NCRC Self-Sufficient Organization

    And finally, since NCRC is charged with being self-
sufficient, our task for this year is to develop a strategic 
business plan that will allow us not only to be self-
sufficient, but to earn monies through our activities.
    We have an extremely ambitious agenda and we are eager to 
carry it out, in close cooperation with you and your committee.
    Thank you again for the opportunity to testify today. We 
will be glad to answer your questions.
    Mr. Knollenberg. Ms. Bacon, thank you very kindly. By the 
way, we do intend to get out with you and see some of these 
marvels that exist in the District.

                            HOPE VI Program

    I know HOPE VI is a program that apparently works pretty 
well here. That is not the case around the country, as you well 
know. I sit on the VA/HUD Committee and we have had some 
information that indicates others could learn a lesson from the 
District of Columbia.
    So thank you again, Ms. Bacon.
    I want to mention the fact that the ranking member, 
Mr.Fattah, is here.
    Mr. Fattah?
    Mr. Fattah. Thank you, Mr. Chairman.
    Let me apologize for being late. Let's proceed with the 
testimony and I will try to catch up when we get started with 
our round of questions.
    Mr. Knollenberg. Thank you.
    And I also want to mention that, from the State of New 
York, John Sweeney is here this morning.
    The next witness is Mr. Richard Monteilh, whom I have had 
the pleasure of meeting on a number of different occasions.
    It is nice to have you here today, and we look forward to 
your testimony. You are recognized.

                 prepared statement of richard monteilh

    [The prepared statement of Richard Monteilh follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mr. Monteilh. Thank you.

                 Opening Statement of Richard Monteilh

    Good morning, Chairman Knollenberg and Congressman Fattah 
and Congressman Cunningham.
    I am Richard Monteilh, president of the DC Chamber of 
Commerce. We represent 1,200 member District businesses. So we 
are happy to give testimony this morning.
    The District of Columbia has made some great strides in the 
last couple of years. Eric Price, a minute ago, referred to a 
survey that the chamber and the District has undertaken of 
1,500 businesses in the city.

                     Business Connections Projects

    Eighty-eight percent of the 300 CEOs interviewed to date 
through the Business Connections Projects are somewhat to very 
positive about doing business in the District today. And 79 
percent say that the District's business climate is somewhat to 
much better than it was 5 years ago.
    These attitudes show that a concerted effort of a 
determined Mayor and an energized council and an attentive 
federal partner can be successful in making Washington, DC, the 
city that we want it to be. The local problems are not 
intractable. The conditions here do respond to smart policy and 
consistent administration.
    In that regard, let me take a moment, Mr. Chairman, to say 
that your efforts to reach out to a variety of District 
constituencies to familiarize yourself with local conditions 
have been widely noticed and are much appreciated.
    The Chamber views the good news on local business attitudes 
with a sense of urgency. We have in place the conditions 
required to make rapid progress in DC's economic development, 
including a favorable regional economy, and we must seize the 
day. If we can address the problems in a couple of key areas, 
we will do much toward securing the District's long-term 
economic health.

                  Workforce, Transportation and Taxes

    As a former business person yourself, Mr. Chairman, the 
identity of the key areas will come as no surprise to you. We 
need to talk about the workforce, transportation and taxes. I 
will also say a few words about other areas that need 
improvement, such as land use and regionalism.
    I would like to direct the Committee's attention to two 
opportunities in this first area: first, the expansion of the 
college opportunities for District residents through the 
tuition assistance program; and second, efforts to implement an 
adequate facilities program for public education.

                           Tuition Assistance

    Tuition assistance: Unlike residents of all other states, 
District citizens do not have access to a university system. 
The DC College Access Act passed by Congress, with the 
leadership of Congresswoman Eleanor Norton, has successfully 
addressed this inequity. The Chamber works with the Washington 
Consortium of Universities on this issue. Together, we support 
the current effort to expand this program and to better tailor 
it to the city's workforce needs. We ask the committee to make 
special efforts to ensure that this program is fully funded at 
$17 million.

               School Facilities and School Construction

    School facilities and school construction are also issues. 
We are not getting the quick, high-quality, reasonably-priced 
work the system needs, nor are we spending local tax dollars 
which pay for this work with local companies. District school 
construction work should be done by District companies who not 
only would keep these dollars circulating in the local economy, 
but would also act with an enhanced sense of accountability to 
the local community in completing the job.
    As the Corps of Engineers phases out its District 
activities, the school facilities procedures must be 
restructured. The use of program managers and creation of a 
School Development Authority are options which should be 
reviewed.

                     Financing of School Facilities

    Regarding the financing of schools, city schools were in 
bad shape when the Federal government handed them over to our 
home rule government in 1975. They are in bad shape today. The 
job of putting them back into shape is a major public works 
project on the order of $2 billion over the next 20 years. Such 
a project requires Federal participation.

                         Public Charter Schools

    Regarding public charter schools: Congress enabled District 
charter schools in the DC School Reform Act of 1996. It is 
important that Congress stay involved to see that these schools 
are adequately resourced. We ask the committee first to enhance 
charter financing options by increasing the $5 million 
currently available to Washington, DC's pilot credit 
enhancement program established under the Federal Facilities 
Demonstration Program.

               Surplus School Facilities Charter Schools

    Second, we ask the committee to support District efforts to 
make surplus schools available for charter use.

                  Metrorail System and Transportation

    I will talk a little bit about transportation. The region 
is in the early phases of planning for expansion of the 
Metrorail system beyond its original 113 miles. Any funding of 
suburban connectors must be at least matched by funding to 
support additional circulation among communities within the 
District. This can be accomplished by construction of Metrorail 
connectors, by creation of light rail links or by use of buses 
in the downtown circulation system proposed by the DC Business 
Improvement District.
    A total of $3.7 billion is needed over the next 25 years to 
adequately maintain this key regional asset. Federal 
participation is important. The 2001 Metro maintenance bill was 
$200 million. Annual maintenance costs shared by the three 
localities are increasing at a rate of $25 million a year.
    The Chamber asks that the Committee pay special attention 
to funding the region's public transit system. We suggest that 
potential funding from the budget of other agencies, such as 
the Department of Interior, be examined.

                     Taxation and District Finances

    With regard to the issue of taxation and District finances, 
the District operates under a structural deficit. The city's 
Federal partner has chosen to constrain the city's revenue 
resources, prohibiting taxes on significant percentages of 
local real property and locally generated income to such an 
extent that the city cannot be financially self-sustained.
    In the past, Congress has been disinclined to provide 
additional funds to the District due to a lack of confidence in 
local management capabilities. The effective leadership of the 
last two years by the Williams administration and the DC 
Council have changed this picture.
    It is now time for the federal partner to work with the 
District government to establish a reasonable and equitable 
financial framework for the District. The nation's capital 
deserves no less.

                        Tax Incentive Proposals

    The Chamber asks this Committee to support tax and 
incentive proposals which will be introduced this year by 
Congresswoman Norton, including the District of Columbia Non-
Resident Tax Credit, the 2 percent tax that is being proposed 
by Congresswoman Norton; the District of Columbia Homebuyer 
Credit Act, which was very significant in energizing our 
homebuying community, the $5,000 tax credit; the District of 
Columbia Citywide Tax Benefit Act, which is the expansion of 
the Enterprise Zone.
    Again, in the area of sales tax, there are other 
opportunities for this Committee to regulate the financial 
relationship of Federal and local government partners in the 
District. The Chamber urges you to clarify that all the sales 
to the public, including those made on federal property, are to 
be subject to the District sales tax. There is no justification 
for permitting the purchase of a CD from the Smithsonian to be 
made tax-free, while the purchase of the same item from a 
Chamber of Commerce business is taxed.

                             Budget Process

    Finally, the Chamber joins the Federal City Council in 
asking this Committee to regularize the budget process under 
which the District's Federal and local government partners 
operate, by changing from Federal appropriation of the District 
budget to local appropriation, with congressional changes 
permitted only by the same procedure available for District 
legislation. The current process may be suitable for Federal 
agencies, but it is not suitable for a city the size of 
Washington, DC.

                        Land Use in the District

    Regarding land use in its physical structure, Washington, 
DC, is a beautiful 19th century city. The challenge we face is 
to rework these good old bones to 21st century needs.
    The fact that we are landlocked makes the situation more 
urgent. The majority of firms participating in our survey wish 
to expand in the near future. Small businesses cite 
availability of affordable space as a key determinate in their 
decision to stay in the District. Our seven District-based 
private colleges and universities, a critical asset in the 21st 
century knowledge-based economy, struggle to win modest growth 
here in the District.
    In this regard, a major challenge----
    Mr. Knollenberg. Mr. Monteilh, could I just interrupt? 
Could you close in the next few moments? We are running beyond 
the timeframe.
    Mr. Monteilh. I will close. You have my testimony, 
Congressman.
    Mr. Knollenberg. Thank you very much.
    Thanks to all of you for taking the time to appear here 
this morning.
    Let's now begin with the questions. We will operate under 
the 5-minute rule, which is customary. And I will begin the 
questioning.
    The first question, goes to Mr. Price. This has to do with 
tax code amendments.

                          Tax Code Amendments

    The District of Columbia Revitalization Act and tax code 
amendments have assisted in the economic development of the 
District. It is my understanding that the designation of 
certain areas in the District have allowed you to provide more 
than $40 million of tax-exempt financing to for-profit 
enterprises, have produced record levels of investment in 
ownership housing, and have provided businesses significant 
inducements to hire District residents.

                     Expansion of Enterprise Zones

    Is it still your request to expand the Enterprise Zones to 
include the entire city and to extend that designation period 
to 2008?
    Mr. Price. That is correct. We both want to expand it, and 
we want to extend it. I think it was for a 10-year period.
    Mr. Knollenberg. This 10-year period has been granted in 
other jurisdictions. Can you provide us with some examples of 
how these areas have done and what the economic impact has 
been?
    Mr. Price. I would be glad to provide something to the 
committee in writing. We will look at that and get that 
information to you.
    Mr. Knollenberg. All right. We would like to have that.
    [Clerk's Note.--Deputy Mayor Price failed to provide, as of 
March 11, 2002 (10 months after the date of this hearing), the 
information requested by Chairman Knollenberg.]

                  Impact of Enterprise Zone Extension

    Has any economic study or projection been made for the 
District if this extension is given?
    Mr. Price. No. I think, just anecdotally, on how effective 
we think it has been thus far, and as well as the developers 
and businesses that have come to us and said, ``If it was 
extended to this area, we would certainly utilize those 
incentives that are available.''

                  Columbia Heights Development Project

    Columbia Heights is a good example. It stops right in the 
middle of a development we are looking at right there, and 
right across the street, it is not extended to that area, and 
it would be very helpful to us in that development if it were.

                   Anacostia River in Enterprise Zone

    Mr. Knollenberg. Is the Anacostia River one of the areas 
within the Enterprise Zone?
    Mr. Price. Currently, yes.
    Mr. Knollenberg. It is.
    Mr. Price. Yes.

                Triennial Real Property Tax Assessments

    Mr. Knollenberg. Regarding tax assessment, I know that the 
District has a triennial assessment system for residential 
homes, instead of an annual system that every other city that I 
am aware of has. My understanding is the city could not handle 
the annual assessment work load, and the triennial system was 
necessary as a temporary measure.
    It is my understanding that the CFO, Dr. Ghandi, maintains 
that the District can now handle an annual system.
    Mr. Price. That is correct.
    Mr. Knollenberg. I know that Councilman Jack Evans had 
legislation which I believe passed recently.
    Mr. Price. Yes.
    Mr. Knollenberg. To move to an annual system.
    Mr. Price. That is correct.
    Mr. Knollenberg. Our estimates show that a triennialsystem 
will cost the District more than $100 million in lost revenues. That is 
on the residential side. But what is going on on the business side? 
Would you care to respond to how business taxes are being assessed?
    Mr. Price. I am really not the expert in that area. Dr. 
Ghandi is. I have talked to the businesses about the District 
going to annual assessments, and I have not heard any strong 
objections to that.
    But as to what we are actually bringing in, I do not have 
any information on that. But I can certainly ask Dr. Ghandi to 
get that information for you.
    Mr. Knollenberg. We would like to have that information.
    [Clerk's Note.--According to the Chief Financial Officer, 
Dr. Natwar Gandhi, lost revenue from commercial real estate due 
to the triennial assessments will be $158 million. See chart on 
page 864.]
    Is it really, truly an annual system?
    Mr. Price. That is my understanding, that we will be 
phasing in the annual system now, and that Dr. Ghandi has said 
that the District is prepared to handle that.
    Mr. Knollenberg. And the businesses will be taxed annually?
    Mr. Price. That is correct.
    Mr. Knollenberg. This phase-in will be over the next 3 
years?
    Mr. Price. That is my understanding.
    Mr. Knollenberg. All right. That may be a question, then, 
that should not be directed to you, but to Dr. Ghandi.
    Mr. Price. Yes. I will try to get the information for you 
on that.
    Mr. Knollenberg. Yes. Maybe one of the other panelists 
within the business community would have comments to offer on 
that question.

        CLARIFICATION OF FREQUENCY OF REAL PROPERTY ASSESSMENTS

    Mr. Derrick. Let me just make sure I understand the 
question. Is the issue out-of-phase phasing, or is it annual 
versus triennial?
    Mr. Knollenberg. Well, there are two things here. One is 
the fact that I understand, from the legislation that Mr. Evans 
recently introduced and that was passed, businesses are taxed 
annually. It is only in the residential community where there 
is this phase-in, which I just wanted to get to the bottom of 
as to exactly what it does do. It will be phased in, 
apparently, over 3 years, and I presume that in 3 years, all 
residential property will be assessed annually.
    And that is the question: Is it annually assessed? Or will 
it be annually assessed after that 3-year period?
    [Clerk's Note.--According to the Chief Financial Officer, 
Dr. Natwar Gandhi, Tax Year 2004 (October 1, 2003 through 
September 30, 2004) will be the first year that all properties 
in the District will have been reassessed in the same year. See 
further explanation on page 864.]
    Mr. Derrick. I certainly cannot speak for the entire 
business community, but as a business person and as a resident 
of the District of Columbia, by the way, my personal view is 
that more predictability and continuity of this kind of an 
activity is better than less. So therefore, if you have 
something that happens annually, you are not left hanging out 
surprised. You get fewer surprises if things are measured on a 
more frequent basis.
    Some of the issues that I have personally experienced in 
the past have been based on this gap that has taken place, 
something then happens after a period of a couple of years when 
nothing has happened, and you get more surprise than desirable. 
Businesses generally like predictability.
    Mr. Knollenberg. Would not annual assessments give you 
predictability?
    Mr. Derrick. I believe that the process is reasonable. It 
seems like to me the answer would be if the DC government is 
capable of assessing on an annual basis, then that would be 
preferable.
    Again, this is a personal opinion. I can speak for PEPCO on 
that one, because, again, taxes have to be paid. And if a more-
than-annual system represents a catchup, you get these bumps 
and irregularities, which is not the best thing for businesses 
to deal with.

             TRIENNIAL APPROACH COMPARED TO ANNUAL APPROACH

    Mr. Knollenberg. It has been estimated that some $100 
million is being lost by virtue of a system that allows for a 
triennial approach, as opposed to an annual approach. So it is 
revenue that belongs to the city, and we are interested, from a 
Federal perspective, in making sure that every effort is made 
to bring in as much revenue as possible, because that is one of 
the things that heightens, obviously, the kinds of things that 
you can champion or kinds of things you can do in the city.
    [Clerk's Note.--According to the Chief Financial Officer, 
Dr. Natwar Gandhi, lost revenue from commercial real estate due 
to the triennial assessments will be $158 million. See chart on 
page 864.]
    Mr. Monteilh. Congressman, I have one point to add to that. 
The shock of the property increases in the District is 
particularly noticeable to the residential owners. And the 
Council is very sensitive to the fact that if this assessment 
was done on an annual basis, the escalation in prices of homes 
in Washington, DC, would produce tax bills that would create 
some consternation. And therefore, at least a couple of 
Councilmen are looking to the business community to lower the 
tax rate----

              SUGGESTION TO LOWER REAL PROPERTY TAX RATES

    Mr. Knollenberg. Lower the property taxes.
    Mr. Monteilh [continuing]. Lower the property tax rate so 
that you do not pick up the hit on the property owner, and to 
either get that revenue back by not implementing the Tax Parity 
Act, which Councilman Evans has worked very hard to get through 
the District Council.
    Mr. Knollenberg. Well, we will look forward to seeing just 
how this does develop. But it would appear to me that we are on 
the road to where real property is going to be assessed 
annually, but it will not be this year. It will, very likely, 
be a couple of years out, and there may be a reduction in 
residential real estate taxes that would be an offset and would 
allow for some balance in bringing about some easing of the 
assessment.
    My time has expired. I am going to now turn to theranking 
member, Mr. Fattah.
    Mr. Fattah. Thank you very much.
    And let me thank the Chairman for convening this hearing.
    These are issues that every city in the country is 
grappling with, some more successfully than others. But it is 
obvious that, over the last couple of years, the District has, 
in the eyes of many of its critics, done a very good job in 
terms of focusing its resources on some of these critical 
questions.
    I guess my view of it is that the role of the Congress in 
all this is not to micromanage the District in setting its 
economic development priorities, but to see, at least in my 
view, where it is that we can be of any assistance to the 
District in pursuing economic development opportunities in our 
Nation's Capital.

                      TOURISM NUMBER ONE INDUSTRY

    And I guess the first thing I would say is that in 
reviewing all the testimony, I cannot find any discussion of 
what I would assume to be the number one industry in the city, 
which is tourism, and how it is that the District's 
relationship with that industry can be enhanced to any degree.

                     SALES TAX IN FEDERAL BUILDINGS

    I guess a somewhat related matter is the sales tax issue 
vis-a-vis Federal buildings. That was something that I was not 
aware of. I think that, on the surface, it makes a lot of sense 
to me that sales should be taxed wherever they take place in 
the District. There should not be a free lunch in a Federal 
building, in terms of avoiding taxes on sales.
    But just generally, maybe the deputy mayor could speak to 
it first, is the whole issue of tourism. I know in our home 
city, in Philadelphia, we have done a lot working with our 
state government--which is not an opportunity you have here in 
the District--to set up a hotel tax regimen that allows us to 
pump dollars back into tourism promotion and other types of 
economic development activities. So I would be interested in 
some comments on that.
    Mr. Price. Okay, just quickly. I am glad to hear you say 
that about the tax, because you are talking about anywhere from 
23 million to 24 million people who come to the District each 
year, who do go to the Mall. And if they do not cross 
Pennsylvania Avenue and go north, we do not receive the full 
benefit that I think we should, even if it is some minimal one, 
which I think would have no impact on the overall sales, but 
have a large impact on the District.

                 NEWSEUM MOVING TO PENNSYLVANIA AVENUE

    There are a number of things we are doing. We put together 
a downtown plan to try to do just that, to attract people off 
the Mall, to come into our downtown, to go to our restaurants, 
to stay at our hotels. And we are thinking that the new 
convention center is going to be a good pull for that. And so 
one of the things that we tried to do just recently, we 
negotiated and we brought the Newseum from Virginia to 
Pennsylvania Avenue, and it is going to have retail and 
housing.
    One of the ideas is, really, to have anchors. We have the 
convention center at one end, and you have the Newseum at the 
other, and then try to develop that core in between. And so we 
are aggressively trying to do that on the development side.

                          NEW MARKETING ENTITY

    On the marketing side, we have just formed a new marketing 
entity. There used to be two that were marketing: one for 
tourism and one for the convention center. And now they have 
come together with a broad range of representatives on that. 
And we are aggressively coming out with a marketing strategy, 
just as you said, to begin. And a number of hotels and 
restaurants are members of that marketing organization.
    I think Richard and several up here at the table have been 
involved in that.
    Mr. Fattah. Are there others who would like to comment on 
this tourism question?

         TOURISM--REDEVELOPMENT OF THE SHAW-HOWARD THEATER AREA

    Ms. Bacon. I would just like to mention that some of the 
work that we can do, and will be doing, can very strongly 
support tourism. For instance, the redevelopment of the Shaw-
Howard Theater Area, which will hopefully bring tourists again 
up into that area, U Street and the Shaw area, by redeveloping 
the theater and the properties surrounding that as well.
    So in our redevelopment efforts, we will work very closely 
with the tourism entities to bring people back to the 
communities.

                    FUNDING OF TOURISM ENHANCEMENTS

    Mr. Fattah. Deputy Mayor, can you tell me how you are 
funding the effort that you speak of in terms of the tourism 
enhancement?
    Mr. Price. Yes. I will have to get someone else to answer 
that question, but the majority of it does come from, I 
believe, the hotels to fund that new marketing effort. I am not 
sure if it was structured like it was in your home town or not, 
but I think that is what has been done.
    Mr. Fattah. All right. Let me recognize the presence of the 
Delegate from the District, Eleanor Holmes Norton, who has 
joined us.
    I see that my time is up, Mr. Chairman. I will come back 
around.
    Mr. Knollenberg. Thank you, Mr. Fattah.
    And thanks for coming, Congresswoman Norton. Glad to have 
you here.
    Next, I am going to turn to Duke Cunningham.

                      JACK KEMP--ENTERPRISE ZONES

    Mr. Cunningham. Thank you, Mr. Chairman.
    Sometimes we forget who really starts visions. One of our 
former colleagues, Jack Kemp was, I think, the first one I ever 
heard talk about Enterprise Zones and how the actual effect on 
small businesses stimulates growth in the economy, and the 
morepeople you have working as employees of those businesses, the more 
tax revenue you have. And it is called economic development. And I laud 
you for that.

      Government Policies That Have Negative Impact on Businesses

    There are things that also affect, I think, your business. 
Higher taxes decrease business. An exorbitant lease amount will 
drive a lot of people from businesses. But if you also have 1-
year leases instead of long-term leases, it is harder for that 
business to plan and/or even be willing to make the investment 
into property, because they would lose it and they are at risk.
    You mentioned the school systems. You hear all kinds of 
people say, ``Well, I am not moving to DC with my children in 
the school system.'' I think it has improved. We visited many 
of those schools, and you have some fine teachers out there. 
But overall, I agree with you. I think we have a problem with 
the schools, and this Committee is bent on helping with that as 
well.
    The energy crisis in California is like a big tax to my 
mom, to business, to everybody else. And that is something that 
you can look at as well.
    We have spoken, and I would say, Mr. Monteilh, my brother 
is the president of the Chamber of Commerce at St. Peters, 
outside St. Louis. I know some of the problems that you have. 
My father was the mayor of Shelbina, Missouri, where I grew up; 
a little town.

                          Southwest Waterfront

    But on the southwest waterfront, I have some 
recommendations for you. And I will start off by telling you 
that if you do not want these, I am not going to push them.
    Mr. Price. Okay.
    Mr. Cunningham. But I think they are good ideas. Just 
looking at the traffic and other things: Over there by the 
Capital Yacht Club and that area, the parking lot right next to 
the fish market, you know how gridlocked that becomes and the 
traffic and things, that whole area could be put into a 
commercial parking lot.

                       Parking Lot on Waterfront

    I would say 95 percent of the people that go down there are 
African-American. They are families. They are looking to buy 
fish. They are looking to walk along the waterfront and sit 
down with their families and have a meal. And to facilitate 
that, I would like to see a parking lot structure put in there 
at that point, but I also would like to have it not like the 
cost of a lot of parking lots, because those are families going 
down there and they cannot afford the high cost of parking down 
there.

                          Bridge on Waterfront

    I would like to see a bridge put across down there so 
people can walk down the promenade and walk clear over to the 
park across the way, instead of having to go all the way up on 
the highway and down that way. I think that would benefit the 
city as well.
    The eating areas, people are forced to sit on that seawall. 
The papers end up, and a lot of trash ends up in the river. We 
are trying locally to clean that up, even the garbage supply, 
because on the weekend those cans get full, and you know what 
happens: That all goes into the water, it goes into the parking 
lots and everything else as well.
    I would hope that, because the city has seen fit to give 
some long-term leases, that, for example, in the Federal 
government, when we had a gas tax, it went into the general 
fund. It did not go to transportation until we changed that.
    I would hope that there is some vision in the long run that 
the revenue that you receive from the waterfront, some of that 
is earmarked, because 5 years, 10 years from now, you are going 
to have a different City Council, you are going to have a 
different Mayor, different folks in there, and they may forget 
all the things that you have done. And we would like to keep 
that waterfront area vitalized as well.
    Mr. Price. Not a different Mayor 5 years from now, though. 
Make it more like 7 years from now.
    Mr. Cunningham. Okay. [Laughter.]
    I do not oppose that.

                   Sewage Dumps Into Anacostia River

    The sewage plant, if you can provide what kind of things 
you are working on in the long term on the sewage plant. I 
think it is a must to make DC one of the finest cities. Every 
time it rains, the sewage goes into the Anacostia River. I 
mean, you can spend $2 billion on the Anacostia River, but if 
that fecal stuff runs in there, it is not a clean river. It is 
like the Olongapo River right now in the Philippines. You know, 
it is not something that you want your children swimming in, or 
going down the Potomac.

                           Fish Wharf Leases

    I thank you, Deputy Mayor, for looking into those leases.
    Mr. Price. Yes.
    Mr. Cunningham. Nine months ago those things were signed 
and they still have not been acted on. I will be here. I may be 
your worst nightmare. I am not going home this weekend. I will 
be here for two weeks, and I will give you my home phone. And I 
would like to stay in contact with you and the Corps of 
Engineers. We can make some great strides over there and help.
    But like I said, if you do not want to do those other 
things, I am not going to push them. But I think they will 
actually benefit what you are talking about with the Chamber of 
Commerce in making this like Baltimore's waterfront has become, 
and San Diego's, and San Francisco's. And I go to San Francisco 
just to eat their cippino and walk along that waterfront. It is 
so good.
    That is what I would like for the residents of DC to have, 
and especially the families that come down, at low cost, so 
that it is a place that they can enjoy instead of not doing it.

                        Anacostia River Project

    So I would like to work with you on that, but I really need 
your help on this other. I mean, I started the Anacostia River 
project 6 years ago, and 3 years ago, just trying to help the 
waterfront because people came and said, ``Nobody will help 
us.''
    Mr. Price. I will call you today and follow up on that.
    Mr. Cunningham. Thank you.
    Thank you, Mr. Chairman.
    Mr. Knollenberg. Thank you, Mr. Cunningham.
    We will now recognize Mr. Sweeney.
    Mr. Sweeney. Thank you, Mr. Chairman.
    I will be very brief. I have to be on the floor in 10 
minutes to preside, so I only have a couple of questions. You 
get off pretty easily. Welcome and thank you for your 
testimony.
    In a past life, I was Secretary of Labor for the State of 
New York. So Mr. Derrick, when you started to talk about rules 
changing in the middle of the game and the regulatory process, 
that piqued my interest a little bit. I also served on the 
Committee on Small Business, so I understand, in some respects, 
the effect on small business.
    I am going to ask you, kind of a broad question, then ask 
you what, from the Federal point of view, we can do to possibly 
help.

                           Regulatory Process

    You said that the Board of Trade had made recommendations 
that regulations simply be predictable, simple and competitive 
as possible. You talked about the online payroll process and 
that reaching its completion. The one-stop shopping, what is 
left to be done on that? What can we do to help with that?
    Give us, if you will as well, some perspective on what 
kinds of emergency regulations you faced in the past, and their 
effect. And then what other reforms might be recommended by you 
in terms of the regulatory process?
    Mr. Derrick. As I think I said in my testimony, the city, 
under Mayor Williams and this administration, has made 
considerable strides forward in this regard. And they have used 
that blueprint I referenced as a guide and so forth.
    I think the important thing is for the Congress, in its 
oversight, to keep its eye on how well what the city said it is 
going to do is working, just the continuous oversight, and 
ensure that things that make sense continue to be funded at the 
levels that are appropriate.

                   Predictability for Business Owners

    Predictability, as you have just said, is the key thing 
from a business' point of view. I cited the example of those 
server farms. You could theoretically say that, ``Well, that is 
the wrong thing for the District of Columbia,'' but that is not 
what was said. What was said was, ``We want technology in the 
District of Columbia,'' and so forth, and so folks then start 
making plans that way and then all of a sudden, from their 
perspective, it looks like there is a change. So it is that 
steadiness over time.
    And what the Board has done through time, on a number of 
occasions, is the kind of thing I talked about earlier: 
participated in studies and helped lay out blueprints. If we 
continue to have the kind of leadership that we have now in the 
District of Columbia over the next number of years, then we are 
going to see great strides. We have seen a lot of great strides 
already and we are going to continue to see those strides.
    Our commitment is to stay engaged to try and help the city 
accomplish what it sets itself out to do and to stay engaged 
with the Congress to try to make sure that the city gets the 
support it needs and does not get hindered in what it is doing.

                Congress Has a Role in the Federal City

    But I think inevitably Congress has a role of taking a look 
from time to time, because this is the Federal City and 
administrations do change and conditions do change.
    And so I do not know if that is responsive or not, but 
there is no emergency that we are bringing here. As a matter of 
fact, like I said, we are very enthusiastic about what has been 
going on, but we have lived in other times here.
    Mr. Sweeney. Well, Mr. Derrick, I think it is important for 
us to get that kind of a statement on the record. Deputy Mayor 
Price is aware of that, and I congratulate the administration 
on their work. But I think, for continuity's sake, it is 
important that we make that point to the deputy mayor.

                       Underserved Neighborhoods

    I understand in your testimony you spoke of the hurdles and 
obstacles you are facing in retail growth in under-serviced 
neighborhoods in particular.
    Mr. Price. Yes.

                     Expansion of Enterprise Zones

    Mr. Sweeney. And you have spoken about expanding the 
Enterprise Zones, and I am assuming that is part and parcel to 
what the solution you are seeking is.
    Mr. Price. That is correct.
    Mr. Sweeney. What else can be done? What can we do to help?

                District's Relationship With Federal GSA

    Mr. Price. I think the last few years we have had a very 
good relationship working with GSA. Obviously, that has been 
very important. There are a lot of parcels of land that are 
either federally owned or District-owned which we could partner 
together on, I think, and really make some real gains in many 
neighborhoods.

                        St. Elizabeth's Property

    We have not talked today at all about St. Elizabeth's, for 
example, which is Federally-owned property and District-owned 
property, and how we can partner together there, both working 
with GSA cooperatively on the development and what will be 
developed there as well as financialresources at some point.
    So I think in those areas that is where we can come 
together and get some things done.
    Mr. Sweeney. I thank you.
    I see my time is up. I also have to run. I want to thank 
the panel. I would like to ask that if I could follow up with 
some questions, I would like to do that.
    Mr. Derrick. Yes.
    Mr. Price. Certainly.
    Mr. Sweeney. Thank you, Mr. Chairman.
    Mr. Knollenberg. Mr. Sweeney, thank you very much.

                       NCRC PUBLIC-PRIVATE ENTITY

    Let me go to a question for Ms. Bacon. The NCRC is a 
public-private entity, is it not?
    Ms. Bacon. Yes.
    Mr. Knollenberg. Created by the District to serve as an 
important manager of major development projects in the 
District. As I understand it, the NCRC's mandate, as enacted by 
the DC Council, includes incentives and other economic 
development tools that can be used to develop the city's 
downtown and neighborhoods. Those examples include tax-exempt 
financing, developer selection process, capital improvements 
and other initiatives.

              REDEVELOPMENT OF OLD CONVENTION CENTER SITE

    Is there anything in your judgment, that would prevent the 
NCRC from handling a project such as the redevelopment of the 
old convention center site?
    Ms. Bacon. Well, I think that will be a decision, Mr. 
Chairman, that would be made by the Mayor and his, obviously, 
top staff.
    Certainly, what we are trying to do, what we are doing in 
developing our staff and our resources is to have that kind of 
expertise that is critical to do major redevelopment projects.
    And so, you know, this is something our board has talked 
about. It is certainly something that Mr. Price and I have 
talked about a lot. I think that we would certainly, assuming 
board approval, be interested in pursuing if we are determined 
to be the correct agency to do something like that.
    But we will be prepared to take on large and very complex 
projects.
    Mr. Knollenberg. Would it be out of line for you to assume 
that responsibility?

                 NCRC INTENSE FOCUS IS ON NEIGHBORHOODS

    Ms. Bacon. No. We do not want to do anything, however, 
which would jeopardize our intense focus on the neighborhoods, 
because we do believe that our primary mission is to take the 
economic boom that is happening downtown in all of the Federal 
part of the city and get all of this benefit into the 
community. So, again, on tourism, for instance, we really want 
people to not stop at the Mall, but to go into the communities 
to see, you know, the joys of what is going on in the 
communities.
    But we also feel that we will have the expertise to do 
major downtown projects where we are essential and where we are 
needed.
    Mr. Knollenberg. Thank you.

         FUNDS TO FINISH STUDIES OF OLD CONVENTION CENTER SITE

    Mr. Price, it is my understanding that you have asked for 
an allocation to fund the creation of a new entity for the 
purpose of disposing of the old convention center site. Is that 
correct?
    Mr. Price. The only allocation that I have asked for is in 
pay-as-you-go funds. It is about $700,000, and I do not know if 
it is $745,000. And that has been to finish up studies that 
need to be done.
    Mr. Knollenberg. How much money was that?
    Mr. Price. I think it is $745,000, Mr. Chairman, but I will 
have to confirm that for you.
    And those monies are to finish--there was no parking study 
ever completed for that, there is no transportation----
    Mr. Knollenberg. Any private funds in those monies?
    Mr. Price. Pardon me?
    Mr. Knollenberg. Any private funds?
    Mr. Price. Those are all capital dollars. Yes, there are no 
private funds.
    Mr. Knollenberg. Okay.
    Mr. Price. And so to get the transportation study done, 
parking study done, continuation of uses. There is a number of 
multiple uses that can be below grade. So that is really just 
to get it really for an entity to go forward and put together 
the development team.
    Mr. Knollenberg. This appears to be a proper thing for the 
NCRC to get involved in. Do you disagree with that?
    Mr. Price. No, I do not disagree. As Elinor said, she and I 
have talked several times. For me, it is just a question of 
time and resources. We are behind the ball on moving. In 2003, 
we will have the new convention center built, and here we are 
in 2001 and we have not even gotten the plan yet for the 
existing convention center site.

               OCCUPANCY RATE FOR COMMERCIAL REAL ESTATE

    Mr. Knollenberg. Any member can respond to this, but it has 
to do with the occupancy rate in the District. My understanding 
is that it is between 95 and 98 percent. Is that correct?
    Mr. Monteilh. That is correct.
    Mr. Knollenberg. And you are already planning some 4 
million additional square feet of space downtown and 70 percent 
of that is already leased. Is that right?
    Mr. Price. I think 68 percent is preleased. Yes, that is 70 
percent.
    Mr. Knollenberg. Close enough.
    How does this compare to the national average? I am talking 
about the occupancy rate at the current time.
    Mr. Monteilh. It would be substantially above that.
    Mr. Knollenberg. According to a 2000 industry report, the 
District is in the top five real estate investment and 
development markets in the country. Do you believe this is 
correct?
    Mr. Monteilh. Yes.
    Mr. Knollenberg. Does anybody disagree?
    So things are pretty good in terms of that element, that 
corner.
    Mr. Monteilh. In terms of downtown, yes.
    Mr. Knollenberg. I am talking about downtown, yes.
    Mr. Monteilh. Yes.
    Mr. Knollenberg. You mentioned, I think, Mr. Monteilh, or 
maybe I heard this from somebody else, that there are 2,000 
hotel rooms that are----
    Mr. Price. I mentioned that.
    Mr. Knollenberg. Let me cover a couple of things. And my 
time has expired, but I will just finish off with this and turn 
it over.
    Mr. Fattah. I yield to you.
    Mr. Knollenberg. Thank you, Mr. Fattah.

                     NEW BUSINESSES COMING TO D.C.

    I just want to get into some of the things that are 
happening downtown that appear to be very good such as KMart, 
such as Home Depot. I heard something about Fresh Fields, but 
is that just a rumor?
    Mr. Price. Well, Fresh Fields has a store now on 14th and 
P.
    Mr. Knollenberg. Any expansion?
    Mr. Price. I do not know about that.
    Mr. Knollenberg. But then Safeway and Giant now? The Giant, 
did I hear, is----
    Mr. Price. Giant wants to add six more grocery stores to 
the District. And Safeway has 16, and they have started 
rehabbing a number of those stores already.
    Mr. Knollenberg. Has KMart talked about a second store?
    Mr. Price. Yes, KMart has. They are working with NCRC now 
on a project east of the river.
    Mr. Knollenberg. Home Depot?
    Mr. Price. They also have expressed that they would like to 
have more than one store in the District.
    Mr. Knollenberg. Well, thank you very much. I will yield at 
this time to Mr. Fattah.
    Mr. Fattah. Thank you very much.
    Let me just go back over a little bit of ground. In the 
District's budget that was approved by the Council, the capital 
part thereof is where this $700,000 is?
    Mr. Price. I believe so, yes.
    Mr. Fattah. Not in the Federal appropriations.
    Mr. Price. Not that I am aware of, no.

              FEASIBILITY PLANS FOR OLD CONVENTION CENTER

    Mr. Fattah. So it is what the District wants to do in terms 
of developing the last of the feasibility plans as to the 
disposal of the existing convention center?
    Mr. Price. That is correct.
    Mr. Fattah. Okay. There was a question that someone asked 
about what the Federal government could do. I guess it was 
Congressman Sweeney from New York. And you mentioned that there 
are opportunities where GSA and the District could cooperate in 
terms of disposal of sites, especially for economic development 
purposes.
    Mr. Price. Yes.

                       GSA SITES IN THE DISTRICT

    Mr. Fattah. I do not have a sense of how much or how many 
sites there are that GSA has in the District. Is there a 
quantity of land----
    Mr. Price. I do not know that number either, but, you know, 
along the waterfront it is sizable. There is a lot of 
Federally-owned property along the waterfront, and I do not 
know how many acres there are at St. Elizabeth's--300 or more. 
It is a lot of land.
    Mr. Fattah. Okay. And have there been instances thus far 
where there have been development plans and you have not been 
able to secure the cooperation of GSA?
    Mr. Price. Like I said, in the 18 months that I have been 
in this position, we have had a very good relationship. I had a 
very good relationship with Bob Peck and Tony Costa is still 
there. They have advised us of projects they are looking at, 
and they have asked us how those fit into our economic 
development plans for the District.

              DISTRICT HAS PROCEDURES FOR LAND ACQUISITION

    Mr. Fattah. Now, I would assume that the District has the 
normal vehicles for land acquisition for development purposes 
with the exception of the Federally owned land----
    Mr. Price. Yes, we do have----
    Mr. Fattah [continuing]. Eminent domain and other processes 
that you can utilize.
    Mr. Price. Yes. To a limited extent we do, yes.

                 TAX CREDIT FOR FIRST-TIME HOME BUYERS

    Mr. Fattah. Yes. And let me go to the neighborhood 
discussion. The Norton tax credit for first-time home buyers, 
would any of you like to comment on the success of that thus 
far? I know that there is some concern about how we move to 
make that a permanent fixture, so I would be interested in your 
comments. I guess we could say it is sometimes helpful to get 
these things on the record.
    Mr. Price. I do not know. I am looking at something that 
was handed to me and since I am sworn in to tell the truth, I 
am not going to quote it as a factual number or not. But it 
talks about the program, and it says that single family sales 
have risen by more than 5,500 units in 1999 alone, but I do not 
know the numbers or the impact. I only know anecdotally from 
talking to people that feel that it has had a significant 
impact on sales in the District.
    Mr. Monteilh. Congressman Fattah, there was a survey a year 
ago on the affects of the $5,000 tax credit with people who 
were buying for the first time, and I think roughly 68 to 70 
percent of the people buying homes said that the tax credit was 
an incentive in their buying a house in the District.
    But the problem is, there is not a big supply of housing 
available on which people can exercise this option, and that is 
the crisis we are faced with right now. We need to see a lot 
more housing stock before middle-class families can take 
advantage of the $5,000 tax credit. Otherwise, you would have 
much more use of it.
    Mr. Fattah. Thank you.
    And, Mr. Derrick, let me ask you a question which I know is 
a delicate issue, but I want to get your perspective on the 
record on it, nonetheless.

                 COMMUTER TAX--BOARD OF TRADE POSITION

    The District is in a unique situation among cities or 
regions that would be, you know, part of, I guess, your 
competitors for major development activities. Inasmuch as you 
have a host of people who work in the city, who benefit 
economically from the city, but do not pay any taxes here 
because, given the politics, you cannot get a commuter tax 
which then puts an additional burden.
    You know, taxes are much better as they are spread; the 
broader the tax, the lower the rate, obviously. And to the 
degree that you cannot spread it to others who are economically 
benefiting from the city, it puts a heavierburden on those who 
can politically be burdened with having to pay taxes.
    Does the Board of Trade have a view about, for instance, 
the Norton proposal on, you know, this 2 percent or anything 
related to this whole issue?
    Mr. Derrick. Councilwoman Norton had a proposal with 
several moving parts to it, and I cannot, off of the top of my 
head, recall all of them now. We weighed in in support of a 
number of them. As I recall, the $5,000 housing credit was one.
    Relative to the tax, we took an action to study that, and 
we have a study underway, basically for the reasons that you 
are touching on. This is not a simple issue, and we wanted to 
make sure that we had a thoughtful response as opposed to just 
a knee-jerk response. We cannot knee-jerk an organization like 
the Greater Washington Board of Trade in any event, we have too 
many members.
    So we are taking a look at that, and at some point will 
weigh in on that issue when we feel comfortable that we really 
have covered all of its parts.
    I think, as a general matter of principle, however, if the 
tax burden can be spread around, if the tax needs or the tax 
appetite of any jurisdiction can be spread around on a broader 
basis, then it helps people who are currently paying taxes when 
it is not that way. But that does not mean that that is the 
right answer for the District of Columbia because of the 
special status of the city and so forth.
    And so we are studying that, and we will, at a certain 
time, have a view that is more specific than what I have 
stated.
    Mr. Fattah. Well, I know my time is running out, Mr. 
Chairman.
    But yes, it is not just that taxes spread more broadly 
lower the rate on people. It is that people who are benefiting, 
perhaps, from services ought to help pay for them.
    So, you know, if someone is benefiting from police 
protection or fire protection or transportation systems and so 
on, that to the degree that they are contributing toward those 
services, then I think that that is pretty much an idea that 
most governments support.
    And so from a business community standpoint, I guess you 
recognize that. If you have two-thirds of the people who come 
into the city during the day, and then, like myself and most of 
my colleagues, we are going to leave and go some other place, 
but we are here for the entire duration of the work day, in my 
home city, you do not pay the same rate as a resident, but you 
have to pay a partial tax on the economic benefit that you 
accrue while you are in the city.
    Mr. Derrick. No argument with that, in principle, at all, 
Congressman. However, in this Federal City, the Congress and 
the Federal government take on certain responsibilities that in 
other cities would be the city's responsibility.
    So it is not a real simple issue, and we just want to take 
a new look, a fresh look, if you will, of the circumstances at 
this time and how we feel about it as the Board of Trade, 
before we actually come out and overtly support or not support.
    Mr. Fattah. Thank you, Mr. Chairman.

             NATIONAL CAMPAIGN TO BRING BUSINESSES TO D.C.

    Mr. Knollenberg. Thank you, Mr. Fattah.
    Just to add to the last series of questions I asked, let me 
go back to one that I did not ask relative to bringing 
businesses into the community. Is there a national campaign 
that the District is offering or making use of, to focus on 
incentives to bring businesses into the District?
    Mr. Price. There are a lot of things going on. It is not a 
national campaign of sorts, but we have been very aggressive 
about working with several of the economic development 
entities: the chamber, the Board of Trade, the Greater 
Washington Initiative, the Mayor.

              INTERNATIONAL CONFERENCE OF SHOPPING CENTERS

    In fact, we are going, in May, to the International 
Conference of Shopping Centers. This is the third time we have 
gone.
    Mr. Knollenberg. So you have been out there at least a 
couple of times now?
    Mr. Price. That is correct.
    Mr. Knollenberg. Is it paying off?
    Mr. Price. We have been successful. Home Depot----
    Mr. Knollenberg. As a result of that?
    Mr. Price. That is correct. So is Kmart, and we are 
negotiating with a major department store right now. And we 
started those discussions last year in Las Vegas.
    Mr. Knollenberg. I do not recommend people taking junkets 
to Las Vegas, but it seems to have paid off pretty well.
    Mr. Price. It has paid off, yes.
    Mr. Knollenberg. Mr. Monteilh, did you have a comment?

                  DIFFICULT FOR CITY TO GET BUSINESSES

    Mr. Monteilh. Yes, you know, this is a difficult city, 
Congressman, to get businesses into, because it is very small, 
and there is very little land available, and the land that is 
available is very expensive. Taxes are still higher.
    So we have now looked. To give you a case in point, we have 
a small computer manufacturing company that operates in the 
Bronx right now. We are trying to fit him into the District. He 
needs 75,000 square feet. There is only one warehouse available 
in the entire District of Columbia. There is nothing east of 
the river that can accommodate this operation.
    We are now looking at Prince George's County as a place to 
locate a company that can provide jobs to DC residents. It is 
now turning out that Prince George's is more approximate to 
people who live in Southeast than other parts of Washington, 
DC, and certainly parts of Virginia.
    So we are going to have to look a lot more expansive in 
terms of growing our economic base by fielding some development 
in some of our surrounding jurisdictions.
    Mr. Knollenberg. Mr. Derrick, did you have something to 
offer?
    Mr. Derrick. Yes, sir, if I might.

                     GREATER WASHINGTON INITIATIVE

    In my testimony, I mentioned the Greater Washington 
Initiative, which has again been mentioned here. Let me just 
quickly explain what that is. It is a regional marketing 
entity, because this is a special area.
    And what Richard Monteilh just said, I think, in part, 
responds to the deliberations we are having around the tax 
policy, Congressman Fattah, because the businesses can be in 
one place and the residents be in another, and the region 
benefits from that.
    But it is a region. We have DC, we have Maryland, and we 
have Virginia. So think of the Greater Washington Initiative as 
a pie. It represents the entire region, and the pieces of the 
pie are the members of GWI that come from all of those regions, 
both businesses and governments.
    And so my testimony was that the DC government, which is a 
member now, should be strongly encouraged to continue and be 
funded to do so. That is a relatively modest amount of funding.
    But the GWI is a crucible, if you will, or the place where 
we market the whole region against other places. And then once 
a prospect starts to zero in, then the GWI's job is done. That 
is when it gets the prospect interested in the region. And then 
there is a handing off to the various individual jurisdictions 
who then sell their individual areas.
    But the notion being: If they come here in the region, even 
though they may wind up in Prince George's County versus DC or 
vice-versa, that we all benefit from that over the longer haul 
by a more vibrant economy.
    Mr. Knollenberg. Do you coordinate with each other 
regularly?
    Mr. Derrick. Yes, sir, that is why it is important for the 
DC government to be a part of this on an ongoing basis, because 
the GWI has directors and an executive committee and a whole 
process that represents the whole group. And the DC government 
participates, and that forum is where a lot of regional 
cooperation takes place.

                        CENTER CITY PARTNERSHIP

    Mr. Knollenberg. Let me go to Mr. Price.
    I have heard mention today of the Center City Partnership.
    Mr. Price. Yes.
    Mr. Knollenberg. Is that incorporated?
    Mr. Price. It will be a 501(c)(3), I believe.
    Mr. Knollenberg. When was that done?
    Mr. Price. I do not know if it has been done yet. Rich 
Bradley has been taking the lead on that.
    Mr. Knollenberg. Are you the co-chair of that?
    Mr. Price. I am a co-chair of that with Greg Fazakerley, a 
major developer in the District.
    Mr. Knollenberg. Who was the other party?
    Mr. Price. Greg Fazakerley.
    Mr. Knollenberg. Is he in DC government?
    Mr. Price. No, he is not. He is a major developer in the 
District of Columbia; he used to head up DRI.
    But it is similar to downtown development organizations in 
most cities that I have worked in. We have put together a 
downtown plan with a lot of stakeholders, this includes the 
business community who wants to see downtown grow, and try to 
make sure that those things that the stakeholders spelled out 
that are needed in downtown actually occur and take place.
    It has helped with marketing in my negotiations that I have 
been having with the department stores. Several businessmen 
have also helped and done some of their own.
    Mr. Knollenberg. How is it funded?
    Mr. Price. Right now, I believe--and I do not know if this 
has changed, but I think they were going to businesses at 
$5,000 apiece, I believe, to belong, membership to it.
    And there is another allocation, I think a Federal 
allocation, that was made available to another group, another 
entity, under another name, several years ago, of $300,000.
    Mr. Knollenberg. But that was a Federal appropriation, 
correct?
    Mr. Price. That is correct.
    Mr. Knollenberg. Back in 2000?
    Mr. Price. No, that was some years ago, and I am not sure 
what the name of it is. It was another entity. It never really 
took off. It did not go forward. And my understanding was that 
they were going to try to access that money.
    Mr. Knollenberg. Do you believe this one will go forward?
    Mr. Price. Yes.
    Mr. Knollenberg. Do you have a vision about it?
    Mr. Price. Definitely. I definitely think it is already 
informally undertaking a number of things and a number of 
actions to this point.
    Mr. Knollenberg. Who will staff----
    Mr. Price. Right now, we have some members from the 
Downtown BID that are staffing it, Rich Bradley and Gerry 
Widdecombe are two people.
    Mr. Knollenberg. Thank you.
    I am going to defer now to Mr. Fattah for his round of 
questions.
    Mr. Fattah. Thank you. And this will be my last round.

               INTRA-REGION COMPETITION FOR NEW BUSINESS

    But this discussion of regionalism, part of what is going 
on in a number of regions with center cities at their core is 
that there is a competition--friendly competition, if you 
will--intra-region. That is to say that their businesses are 
shopping for tax benefits and various deals, so that they 
generally want to get into a particular area.
    But it really does not matter whether they are in the 
District, for instance, or whether they are in Prince George's 
County or whether they are somewhere else. And so they then hit 
up the various government entities for what is the best package 
that they can get.
    And I am just wondering how the District is faring, given 
the discussion in the last round about how much regional 
cooperation is going on, how the District is faring in this 
kind of friendly back and forth of attracting businesses to the 
area?

                         RENTAL COSTS IN REGION

    Mr. Price. Yes, it is a pretty difficult time right now 
because the average rents for a lot of the space in downtown is 
$10 or more higher than it is in Virginia or Maryland. So, 
obviously, for 100,000 square feet, it is $1 million difference 
in rent.
    And so when businesses come, that, coupled with the fact 
that we have such a high occupancy rate, you know, and 
businesses are coming and we have preleased so much office 
space, it is kind of hard to find that public policy objective 
to provide those types of incentives to bring an office user 
in.
    And then when you couple that with the fact that, if the 
employees of that office building are not District residents, 
then we do not get the income tax, personal income tax, from 
that business.
    So in some cases, rather than have an office user come into 
the District, it would be better for me to see a 200-unit, 300-
unit housing development on that site than an office building 
on that site.
    So competing with them is an apples and oranges thing. It 
is kind of hard. And then Richard, I think, referred to the 
scarcity of land that we have, and how we use that land is very 
important, and that also hinders, sort of, our ability to 
compete in that manner with other jurisdictions in the region.
    Mr. Fattah. Mr. Derrick, or anyone else who wants to 
comment on this question?
    Ms. Bacon?
    Ms. Bacon. I was just going to say that we believe that 
NCRC can play a role in bringing businesses here, which has not 
existed in the city before in the same kind of way, being 
focused on finding the land that we could possibly assemble and 
working very closely to actually make it happen.
    So that a business that is interested in coming to the 
District, we can work with to try and help them to locate into 
the community by putting together parcels of land, et cetera.

  BUSINESS DEAL COMPONENTS--DISTRICT VERSUS SURROUNDING JURISDICTIONS

    Mr. Fattah. I guess I am asking a slightly different 
question, which is that, assuming a business wants to come to 
this region and is not particularly concerned about whether it 
is in the District or in Virginia or in Maryland, just they 
want to be here, that when they come to the District, I assume 
they say, ``Well, you know, what kind of tax deal could we get, 
what kind of site can you help us put together, what can you do 
in terms of providing a trained workforce?''
    These are the central elements of the deal. And then they 
also shop that with your other partners in the region. And I 
was just wondering, in those negotiations, vis-a-vis other 
governmental entities in the region, how the District was 
faring.
    And obviously, I am looking for a generalization. I assume 
you win some, you lose some, but whether there were particular 
disadvantages, I guess, is what I am searching for.
    And I have already heard about the scarcity of land, but 
any other comments, I would be interested in hearing.
    Mr. Monteilh. For some types of industry, Congressman, we 
are not competitive at all. There are some industries that like 
campus-type settings in their office layouts, technology 
companies. We cannot provide that.
    We cannot do much of any industrial uses in the city at 
all.
    Businesses that have a low profit margin are probably not 
going to want to be here because the differential in taxes is 
their profits.
    But there are a number of companies and there are a lot of 
companies that would like to move into DC. It is trying to get 
them in here.
    As Eric has told you, Giant wants to open up more stores. A 
lot more retail wants to show up in the District.

              WORKFORCE SHORTCOMINGS--SCHOOL DROPOUT RATE

    That does not match up well with our workforce needs, 
because we have a workforce that really needs more industrial-
type jobs. We have a 40 percent, 50 percent dropout school 
rate. A lot of these folks are not going to come into the 
downtown offices except in the mailrooms.
    And so one of the things we are looking at now is what John 
Derrick has talked about, is the kind of industry we need, we 
can better locate in Prince George's, and we have to come to 
grips with that to employ DC residents.
    At the end of the day, the biggest economic benefactor to 
the District is residents who have a job, because that iswhere 
the city picks its money up.
    Mr. Fattah. Well, let me follow up on that if I could, Mr. 
Chairman, just for a quick second.

             REVERSE COMMUTE OPERATIONS FOR D.C. RESIDENTS

    So I assume that you have interest in setting up what I 
guess you would call reverse commute operations to move 
District residents out to other parts of the region where the 
jobs are?
    Mr. Monteilh. We have one at Dulles now, which is 
absolutely a fantastic program. We thought we would get 250 a 
day. We are getting 650 people a day now leaving at L'Enfant 
Plaza being trekked out to Dulles now. And the city is paying 
for that internally right now.
    So reverse commute, we need a lot more of that.
    Mr. Fattah. You need some more of that?
    Mr. Monteilh. Oh, absolutely.
    Mr. Fattah. You see, that is what I am searching for. I 
trying to understand what you need.
    Mr. Monteilh. The trains come in full. They go out empty. 
The jobs are out there.
    This is a pilot program the city initiated, that leaves 
from L'Enfant, goes out to Dulles to take people to these jobs.
    We need the same kind of connectors now. We do not have a 
bus system that treats DC and Prince George's as a single unit. 
So it is not easy for people to get back and forth in this 
regional job sharing.
    Mr. Fattah. I am going to see if I can help you with that.
    Thank you.

                  D.C. RESIDENTS WITH JOBS IN VIRGINIA

    Mr. Knollenberg. Mr. Monteilh, in that same vein, are these 
high-tech type jobs that they are leaving DC for, to go to 
Virginia?
    Mr. Monteilh. Yes, they are in the Dulles corridor. They 
are a range of types of jobs.

                    TECHNOLOGY INDUSTRY IN DISTRICT

    Mr. Knollenberg. How much of a presence does the technology 
industry have in the District?
    Mr. Monteilh. What kind of presence?
    I think Eric will tell you, there are 174 technology 
companies.
    Mr. Knollenberg. In the District?
    Mr. Monteilh. In the District, but that is only 1 percent 
of our employment base. We are not a big technology area.
    Mr. Knollenberg. Are you doing anything to promote 
technology within the District?

                            NEW ECONOMY ACT

    Mr. Monteilh. Well, there is the New Economy Act that the 
Council has passed, the Mayor has put forth. I mean, I think 
they are giving that top priority.
    Again, you know, it is hard for us to compete with Maryland 
and Virginia in terms of the cost of land and the 
construction----

          BUSINESS TAXES COMPARED TO SURROUNDING JURISDICTIONS

    Mr. Knollenberg. Well, let me just go to that question real 
quick. How do the business taxes in D.C. compare to surrounding 
jurisdictions?
    Mr. Monteilh. They are not good. For example, personal 
income taxes, we have double the personal income taxes for 
people in the top bracket.

                             TAX PARITY ACT

    Mr. Knollenberg. I am talking about business taxes?
    Mr. Monteilh. Well, there is the sliding scale that Jack 
Evans's act, the Tax Parity Act, is going to get us a much more 
level playing field.
    That is still taking effect. I think it goes to 2004.
    We will be fairly competitive. We are very competitive in 
our property tax rates right now, $0.96 per $100 of assessed 
valuation. We are going to be down to corporate income taxes, I 
think, just around 8 percent or 7--is it 8?
    Mr. Price. Eight.
    Mr. Monteilh. Eight percent, which is close to Virginia.
    So there are some great gains the city is making in terms 
of leveling the playing field that does not put us at a 
disadvantage.
    Mr. Knollenberg. Okay, thank you.

                            INDEPENDENT CFO

    Let me go to a question for Mr. Price. And by the way, not 
to limit it to Mr. Price, but first with Mr. Price. It is the 
independent Chief Financial Officer situation.
    Any business depends upon sound, objective and reliable 
numbers. That is something that was not supplied to this city 
some years back.
    But that has changed, and thanks to the Mayor and thanks to 
the Council and the efforts that they have made, and Dr. Gandhi 
as well, there has been a marvelous turnaround.
    And the question I have--and it is probably a pretty 
delicate one--but it has to do with after the sunset of the 
Control Board, which occurs here in September, we still have, 
obviously, a CFO and we have a Mayor, and I am sure that with 
the good news of the District government's fourth consecutive 
surplus there is reason to believe that the city deserves the 
removal, the sunset of the Control Board.
    But we still have, obviously, two individuals that remain. 
The question has to do with the CFO's position. We know the 
mayor wants to, obviously, chart and architect his leadership 
in certain ways.
    And certainly, Dr. Gandhi wants to keep the CFO position, I 
am sure, as independent as possible, but I would think the 
Mayor wants to have a measure of authority over the CFO.
    Next week, I think it is, or maybe in the next couple of 
weeks, Congresswoman Morella, will have a hearing that will be 
on this very subject.

                 DEGREE OF INDEPENDENCE CFO SHOULD HAVE

    But I wanted to ask this question of each of you, and 
starting with Mr. Price: What degree of independence, ifany, 
should the CFO have after the Control Board sunsets?
    Mr. Price. You are right, it is a delicate question for 
me.[Laughter.]

           MAYOR AND COUNCIL ELECTED BY CITY--CFO NOT ELECTED

    But the Mayor has not shared with me his thoughts on what 
he thinks the CFO role should be after. But I think what I can 
say is that the Mayor and the Council have been elected by the 
citizens of the District of Columbia to make decisions 
concerning policy and direction of vision for the District.
    And so however it is set up afterwards, I think protecting 
that and maintaining that is going to be very important. And as 
you know, the CFO has a little bit more of a role it has, sort 
of, played in policy and other things.
    So personally, I would hope that it would be clear that the 
elected representatives would take the lead on those issues.
    Mr. Knollenberg. Mr. Derrick?
    Mr. Derrick. I certainly agree. I am a resident of the 
District of Columbia and agree that the residents of the 
District of Columbia deserve the opportunity to have an elected 
government that works well.
    And I am optimistic that we will have that situation 
continue.
    I think I would just simply say, from the perspective of 
the Congress of the United States, let's never again get 
ourselves in the situation where we were, that required the 
Control Board and all of that.
    And I think that whether there is a CFO or whether it is 
just oversight in some fashion or regular checking in, in some 
fashion, I think it is very, very important to all of us that 
we never let the city get into the shape it got in prior to the 
Control Board being put in place by the Congress.
    Mr. Knollenberg. Do you recommend anything beyond?
    Mr. Derrick. I am confident that the city has the resources 
and has demonstrated at this point its ability to govern 
itself, and from the financial perspective.
    I am just saying that this is a city where the Congress 
sits, the Nation's Capital, and we would all not be well-served 
if something happened and stayed too long the wrong way.
    Presumably, that oversight is something that can be 
exercised through the elected government.
    Mr. Knollenberg. Ms. Bacon or Mr. Monteilh?
    Mr. Heller. Ms. Bacon has suggested that I respond.
    NCRC obviously has no position on the issue of the 
independence of the CFO.

               INTEGRITY OF FINANCIAL PROCESS IS CRITICAL

    Speaking as a resident of the District, as a venture 
capitalist and one who has had two companies dealing with the 
question Mr. Fattah dealt with most recently, where we had to 
confront the issue of staying in the District or otherwise, I 
think it is fair to say that the integrity of the financial 
process is critical.
    Equally, as one who as been in business, so I can well 
understand the importance of the CFO's office as a source of 
the kind analysis and data necessary for informed judgment.
    And I think, ultimately, balancing those kinds of 
considerations is appropriate for the elected representatives 
of the District responsible for carrying that forward.
    Mr. Knollenberg. Thank you, Mr. Heller.
    Mr. Monteilh?
    Mr. Monteilh. You can always put it back again. Congress 
has done that since home rule, Mr. Knollenberg. [Laughter.]
    So we certainly would like to have the Mayor and the 
Council have control over this government for a while.
    I think Mr. Derrick said, they are showing great 
responsibility. We are on a great move now.
    It would harmful to us to market the city knowing that we 
still have this control over the decisionmaking process.
    Mr. Knollenberg. I appreciate all of your comments. It is a 
little sensitive, but we are at a point where, obviously, there 
has to be some common sense applied here, and I think it 
deserves to be brought up.

                          2000 STRATEGIC PLAN

    Mr. Price, regarding your 2000 strategic plan, you 
mentioned there were three major objectives. That being to 
revitalize neighborhoods; to expand and diversify the economy; 
and to provide economic opportunity for District residents.

   COORDINATION OF LOCAL ECONOMIC OPPORTUNITIES WITH FEDERAL AGENCIES

    Has a coordinated effort been developed by the several 
different District housing agencies on the matter of economic 
opportunity for District residents?
    Mr. Price. I am sorry----
    Mr. Knollenberg. Well, for example, in regard to number 
three, providing economic opportunity for District residents--
--
    Mr. Price. Right.
    Mr. Knollenberg [continuing]. Has a coordinated effort been 
made or been developed by the different housing agencies, 
District housing agencies, on the matter of providing economic 
opportunity to those residents?
    Mr. Price. The housing agencies, I do not know if they have 
made a----
    Mr. Knollenberg. Maybe I could ask it this way: Is there 
any coordination between them and the federal Department of 
Housing and Urban Development?
    Mr. Price. I am not sure that I have the answer to that 
question.
    Mr. Monteilh. Let me help you with that, Mr. Chairman.
    Russ Simmons, who is the chair of the Public Housing 
Authority here, is also chair of the chamber's Economic 
Development Committee. He was prepared to give some testimony 
on these issues.
    And I do not know if he has been keeping up, but he could 
answer.
    Mr. Knollenberg. I would be happy to have his name for the 
record, and his title, and he could respond if that would be in 
order.
    It is appropriate as far as I am concerned.
    Mr. Monteilh. Would you want to respond to that?
    Mr. Knollenberg. Cite your name and your title if you 
would, sir?
    Mr. Simmons. I am the chair of the chamber's Economic 
Development Committee.
    Would you mind restating the question a bit, and then I 
will respond.
    Mr. Knollenberg. In regard to the strategic plan, how well 
does everybody work together? For example, is there 
coordination between the federal Housing and Urban Development 
Department and what you are doing? Are you on the same page? Do 
you communicate? Do you talk? Do you have conversations? Do you 
have meetings?
    Mr. Simmons. Absolutely.

            HOUSING AND ECONOMIC DEVELOPMENT IN THE DISTRICT

    Let me say three things. There are three major agencies in 
the District that impact housing and economic development. One 
is the Department of Housing and Community Development, which 
falls under Eric's cluster.
    The other is the Housing Authority. I am chairman of the 
board. Eric is a board member.
    And the other is the Housing Finance Agency.
    There are regular meetings between the executive directors 
of those agencies. Many of the projects, like the HOPE VI 
projects that Elinor just left, involve not only the federal 
government, but several District agencies, most of them being 
coordinated by Eric Price.
    There is a great deal of coordination, much more than I am 
aware of that was ever in the past, under Mayor Williams and 
Eric Price's leadership, a great deal of coordination, not only 
between the staffs, but even the boards have met from time to 
time to talk about policy issues and how we can make the best 
use of resources within the District government and also how 
those agencies within the District government can best go after 
federal resources.
    So I would say, we have great coordination at this point.
    Mr. Knollenberg. Thank you.
    I am going to go back now to the regular panel.
    Thank you very much.

          RELOCATION OF AGENCIES TO CREATE GOVERNMENT CENTERS

    What is the current status of relocating government 
agencies to create government centers in neighborhoods?
    Mr. Price. We intend to place five to six agencies in 
probably four different sites in neighborhoods. We have made 
announcements about two, on Georgia Avenue, Georgia Avenue-
Petworth, that Metro station, and at the Benning Road.
    It has been slowed down a little bit. The next step in the 
process was to have a program manager that would come and then 
help us select developers and finish the projects.
    But we did it through the Control Board, was doing the 
procurement, and they have been totally consumed with DC 
General, and now they are resuming their efforts, and we are 
down to short strokes on that.
    I would hope within the next two to three weeks we would 
have that program manager.

                  STREAMLINING THE REGULATORY PROCESS

    Mr. Knollenberg. Has there been any progress when it comes 
to streamlining the regulatory process to make zoning and the 
issuing of permits, licenses and so on, more efficient and 
timely?
    Mr. Price. Yes, I think there has been progress, and I 
think there is some evidence that we have and that we can share 
with the committee, that can show the difference in over the 
last 3 years in terms of turnaround time.
    And when that question was sort of referred to earlier, 
none of our agencies or departments are going to be any better 
than the people in them. And you know, over the last 2.5 years, 
the Mayor has named between 35 and 40 new directors of 
agencies, and we still have a long way to go to bring the 
people in.
    I know there has been a lot of studies that say, ``You 
know, you need to take your process from 180 days to 30 days,'' 
but we really have to build up the talent within our agencies 
to carry out those kinds of things.
    And we are trying to do that. We just brought a new 
director for DCRA, just started this past week.

                DECLINE OF FAMILIES ON PUBLIC ASSISTANCE

    Mr. Knollenberg. I believe it is your office, Mr. Price--
that has stated that the proportion of families on public 
assistance has declined in the District.

     DISTRICT SERVES DISPROPORTIONATE SHARE OF REGION'S LOW-INCOME 
                               HOUSEHOLDS

    However, the District continues to serve a 
disproportionately large share, two thirds they say, of all the 
low-income households in the region. Can you explain this, and 
what are you considering as the region?
    Mr. Price. I do not know the boundaries of what I am 
considering as the region. I know the number that I hear is a 
boundary that contains about 5.4 million people. But I do not 
know geographically what that boundary is, but that is the 
number that I hear all of the time.
    What I do know is that you are right, when it comes to very 
low-income housing, about 50 percent of the region's low-income 
housing is in the District of Columbia. And of our rental 
housing stock, it is about 50 percent of it. At the same time, 
of rental housing, the District is only 23 percent of the 
rental housing in that particular region.
    So even if you look at public housing, just to give you 
another good illustration of this, we have anywhere between 
10,000 to 15,000 units. Russ would know the exact number.
    Mr. Simmons. About 10,000.
    Mr. Price. About 10,000 and about 15,000 vouchers. You look 
at Prince George's County, which has a greater population than 
the District, they have 500 public housing units.
    And so we really do need a regional approach to our 
housing. We talked about employment, but we really need a 
regional housing strategy as well.
    Mr. Knollenberg. Mr. Fattah, do you have any final 
questions?
    I may have a couple more, but that is all.

     Disproportionate Share of Low-Income Families Served by Cities

    Mr. Fattah. Well, if we are going to go forward. Let me 
just say, just to put a few things, perhaps, on the record. The 
numbers that the chairman referred in terms of a 
disproportionate share of low-income families is not unique to 
the District.
    Mr. Price. That is correct.
    Mr. Fattah. You can find that in any of the nation's top 
100 cities.
    Mr. Price. That is right.
    Mr. Fattah. Cities, by their nature, have a tendency to 
attract lower-income families because they are in search of 
economic opportunity. That is why they move to cities. And they 
are also in need of services that are generally available in 
cities.
    And conversely, suburbs usually fight against lower-income 
housing development, making sure that there are not what might 
appear to be adequate services to people who need them, so that 
they are funneled into cities like DC.

                     Control Boards in other cities

    So it is not a unique circumstance to the District. And 
just in terms of Mr. Derrick's comment about the Control Board, 
you know, DC is not the only city that has to face this 
problem. New York City, Philadelphia, East St. Louis, we could 
go through the country on into Orange County, California, 
cities and other governmental entities have had difficulties at 
times and needed assistance.
    I think that it is remarkable that the District has had 
this run of surpluses. It has gotten its feet solidly planted.
    And I think that even though any of us could find something 
to criticize, I am not sure that the Federal government is in a 
great position, given all of the management flaws and problems 
that are associated with many of our federal departments, 
ranging from the Defense Department on through, there are 
always going to be issues that need to be resolved.
    And I think that the role that we should take is to try to 
be of whatever assistance we can be to the nation's capital, as 
I would hope at some point the government might even be of 
assistance to other cities in our country that face more than 
their fair share of burdens. And perhaps we could have a policy 
at the national level that could be more responsive. Maybe 
Washington will be a part of the reason that that all will come 
about.
    Thank you.
    Mr. Knollenberg. Apparently, that did not require a 
response, right?
    Mr. Fattah. No. [Laughter.]
    Mr. Knollenberg. Okay. Thank you.
    Chaka, thank you very much.

                Plan for Spending of $25 Million by NCRC

    I want to close with a couple of questions. I have one for 
Ms. Bacon. In the conference report for fiscal year 1999--it 
goes back a bit--I just want to point out that the language 
accompanying the appropriation of $25 million in Federal funds 
for the NCRC required that no funds be obligated or expended 
until at least 30 days after the control board submited a 
spending plan to Congress. Has a spending plan been submitted, 
to your knowledge?
    Ms. Bacon. Mr. Chairman, I spoke to Mr. Miconi about that 
yesterday, and I have referred that to our legal counsel to be 
looking into to investigate. I am afraid I do not have the 
answer, but it was my understanding, as you have said, that it 
was the Control Board that was to submit that to the Congress. 
I will get you that answer, hopefully by the endof today.
    Mr. Knollenberg. Could you?
    Ms. Bacon. Yes, sir.
    Mr. Knollenberg. Or you can respond in writing in some 
fashion, too.
    Ms. Bacon. Yes.
    Mr. Knollenberg. But we would like to have an answer to 
that, because our understanding is that it has not been, and 
that is as much as we know, too.
    Ms. Bacon. I will definitely get you an answer today.
    Mr. Knollenberg. Thank you.
    (The following material was submitted for the record:)


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
                      ANACOSTIA WATERFRONT PROJECT

    Mr. Knollenberg. Mr. Price, and others that may want to 
join in on this, one of the cornerstones of Mayor Williams' 
plan to revitalize the District, of course, is the Anacostia 
Waterfront Project.
    Mr. Price. Yes.
    Mr. Knollenberg. Which Mr. Cunningham is very close to and 
very supportive of, as am I and this Committee.
    Mr. Price. As am I.
    Mr. Knollenberg. As is the ranking member as well. As you 
know, I was there when they unveiled that plan at the Van Ness 
Elementary School a couple of months ago. It has generated 
quite a buzz of excitement in the city, and I think that is all 
very good; the plan reflects a vision for restaurants and shops 
and, most importantly, a clean river.
    Mr. Price. Yes.
    Mr. Knollenberg. And incidentally, I do not think you are 
unaware that I sit on the VA/HUD Appropriations Committee, as 
does Mr. Fattah, and we welcomed the Mayor when he made his 
presentation about funds through the EPA section of that bill 
obviously, for the cleanup of the Anacostia River. I think we 
all feel very strongly about bringing that about because we 
want to bring that to fulfillment.
    What is the current status of the project's development? It 
has only been a few short weeks, but could you relate where you 
stand now?
    Mr. Price. Yes. I will be very brief, and I think I will 
then turn it over to Elinor.
    But the Office of Planning which is headed up by Andy 
Altman has met with a number of stakeholders and they have held 
workshops. I do not have their schedule, their timeframe, for 
where they are at until we get to the development process, and 
maybe Elinor might be able to speak to that.
    But you had asked earlier, you had, sort of, described NCRC 
and the kind of things that it can get involved in, and this is 
one of those things that we do want NCRC to get involved in.
    Mr. Knollenberg. Ms. Bacon.
    Ms. Bacon. Yes. The Department of Planning is taking the 
lead on this and it is, as you say, a very, very exciting 
initiative.
    Four or five of the areas are certainly areas which NCRC 
has targeted for its focus; for instance, Buzzard Point, 
Waterside Mall, the Southwest Waterfront and Poplar Point. We 
are particularly involved at this point with regard to the 
Southwest Waterfront and have an excellent designer from 
Vancouver, who is taking the lead there.
    And we are going to be working on this, not as a plan that 
is, sort of, an indefinite plan in the future, but is a real 
development plan, so that we will then, being totally integral 
to the planning process, be able to take the plan, work with 
the businesses from the beginning and make it happen in an 
expeditious manner.
    Mr. Knollenberg. Do you speak to the resources that the 
city is bringing to the table?
    Ms. Bacon. I am afraid Andy would----
    Mr. Knollenberg. Andy would----
    Ms. Bacon. I mean Andy would have to--

                 Funds for Anacostia Waterfront Project

    Mr. Price. All I am aware of right now is the $1.5 million 
that comes from a number of a different sources to get the 
planning process started. But, you know, we have leases that we 
own which Elinor is working on now: How they contribute, do we 
need to renegotiate them, are we taking those back? I think all 
of that is being reviewed right now in terms of other sources 
that can go toward the redevelopment of the waterfront.
    Mr. Knollenberg. This may be out in front of the curve, but 
do you have any forecast as to how many jobs that might be 
created by this project?
    Mr. Price. I do not.
    Mr. Knollenberg. All right. Well, we are a little early. Or 
how much revenue might be generated by that? Those are 
questions that are long range, I am sure.
    Mr. Price. Yes.
    Mr. Knollenberg. Well, we wish you continued progress and 
success in that area because it does appear to many of us to 
be, as George Washington said some 200-plus years ago, it is a 
beautiful harbor----
    Mr. Price. Yes.
    Mr. Knollenberg [continuing]. And it should be more 
beautiful than it is today because the beauty of the Earth has 
not changed. So we hope that all that comes about.
    Mr. Fattah, do you have any further questions?
    Mr. Fattah. No, I do not.
    Mr. Knollenberg. Thank you. Nor do I.

      Committee is strong supporter of city's economic development

    I want to thank all the panel. The primary reasons that we 
came here today, obviously, were to bring your expertise and 
your savvy to the table, to this hearing. I know that I do not 
need to remind you of the fragile status of the city's economic 
revitalization. We want to make sure that it solidifies, is 
durable and continues and grows, so we can all be very, very 
proud of what this city becomes.
    I continue to want to listen to you to get your 
suggestions. We have an open door. I am sure I speak for Mr. 
Fattah as well, that we are in concert, he and I, as chair and 
ranking member, to bring about fulfillment of, hopefully, your 
dreams and ours, too. And I will ask you to be realistic with 
your suggestions. I do not know that we can grant every favor 
you look toward, but we will certainly entertain listening to 
you on all of those.
    Whatever you can do or whatever you can suggest to 
strengthen the economic development of the District is what we 
are after, and I am sure that we are all on the same page on 
that.

                         Conclusion of hearing

    Before we conclude the hearing, I want to mention that we 
have a scheduling change for those that have an interest. Our 
next hearing was going to be on housing and environmental 
issues and was scheduled for May 10th from 1:30 to 4:30. The 
hearing is being rescheduled from that date to the 17th of May 
from 1:30 to 4:30--it is being delayed a week. We apologize for 
that inconvenience.
    So instead of May 10th, our next hearing will be on May 16 
when we will receive testimony on management reform in the 
District of Columbia.
    The committee is adjourned until 1:30 on Wednesday, May 
16th.
    Thank you.
    [Clerk's Note.--The following information was supplied for 
the record in response to Chairman Knollenberg's questions 
during the hearing.]

              [See ``Clerk's Note'' on pages 822 and 824.]

              Estimated Revenue Foregone Due to Triennial Assessment by Tax Type: FY 1999--FY 2003
                                              (Dollars in millions)
----------------------------------------------------------------------------------------------------------------
                                                              Fiscal year
                                   -----------------------------------------------------------------    Total
                                        1999         2000         2001         2002         2003
----------------------------------------------------------------------------------------------------------------
Residential.......................          9.5         23.0         31.0         25.6         16.0        105.1
Commercial........................         14.3         34.5         46.5         38.3         24.0        157.6
                                   =============================================================================
    Total.........................         23.8         57.5         77.5         63.9         40.0        262.7
----------------------------------------------------------------------------------------------------------------

                  [See ``Clerk's Note'' on page 823.]

    The phase-out of triennial assessments will be complete with the 
close of Tax Year 2003, which ends September 30, 2003.
    Tax Year 2004 [October 1, 2003 through September 30, 2004] will be 
the first year that all properties in the District will have been 
reassessed in the same year.
    The actual valuation dates for all properties in the District will 
start January 1, 2003, and these values will be used for billing 
purposes in TY 2004.
    The authority for the phase-in to full annual assessments is the 
amendment to D.C. Official Code Sec. 47-820 creating a new subsection 
(b-2) therein. The same amendment was passed on emergency, temporary 
and permanent basis. The permanent version was incorporated into the 
Fiscal Year 2002 Budget Support Act of 2001, D.C. Law 14-28, effective 
October 3, 2001. The temporary (D.C. Law 14-23) became effective 
September 6, 2001. The second emergency (D.C. Act 14-116) became 
effective August 3, 2001. The first emergency (D.C. Act 14-44) became 
effective April 18, 2001.
                                           Wednesday, May 16, 2001.

                     MANAGEMENT REFORM INITIATIVES

                UNITED STATES GENERAL ACCOUNTING OFFICE

                               WITNESSES

J. CHRISTOPHER MIHM, DIRECTOR, STRATEGIC ISSUES
CURTIS COPELAND, ASSISTANT DIRECTOR, STRATEGIC ISSUES
JEANETTE FRANZEL, ASSISTANT DIRECTOR, FINANCIAL MANAGEMENT AND 
    ASSURANCE

                    DISTRICT OF COLUMBIA GOVERNMENT

JOHN A. KOSKINEN, DEPUTY MAYOR/CITY ADMINISTRATOR
NATWAR GANDHI, CHIEF FINANCIAL OFFICER
SUZANNE PECK, CHIEF TECHNOLOGY OFFICER
MILOU CAROLAN, DIRECTOR OF PERSONNEL
JACQUES ABADIE III, ACTING CHIEF PROCUREMENT OFFICER

                Chairman Knollenberg's Opening Statement

    Mr. Knollenberg. This meeting will come to order. I 
appreciate that everybody who came to testify today is here on 
time. That means we can get underway on time.
    We are meeting this afternoon to hear from District 
government administrators and officials from the U.S. General 
Accounting Office regarding the management reform initiatives 
occurring in the District of Columbia.
    The city is in the midst of a major revitalization that 
will continue to demand solid leadership and a strong 
infrastructure. I believe the Mayor has brought respect, 
integrity and a commitment to improve service delivery and the 
quality of life to the Nation's Capital.
    The Executive Office of the Mayor and the Office of the 
City Administrator developed a city-wide strategic plan to 
identify priorities and set specific goals to achieve the 
necessary changes.
    I know we will hear more about the plan today, as well as 
perspectives from GAO, to discover what new challenges the city 
currently faces in their reform efforts.
    In addition to our subcommittee members, we are delighted 
to have with us today Chairwoman Connie Morella of the House 
authorizing committee. I was honored to attend a March 21 
hearing when she gave me an opportunity to speak. That hearing 
was on the reopening of Pennsylvania Avenue.
    I ask unanimous consent that both Congresswoman Connie 
Morella and also Delegate Eleanor Norton be recognized for five 
minutes each after we hear from Mr. Fattah. It may be that they 
are going to be the only members here other than Mr. Fattah and 
myself.
    So I ask unanimous consent that those two individuals be 
recognized for five minutes each. Hearing no objection it is so 
ordered.
    Today we have with us representatives from the U.S. General 
Accounting Office, the Office of the City Administrator, the 
Office of the Chief Financial Officer, the Office of the Chief 
Technology Officer, the DC Office of Personnel and the Office 
of Contracting and Procurement.
    At this point, I would be happy to yield to my ranking 
member, Mr. Fattah.

                 Congressman Fattah's Opening Statement

    Mr. Fattah. Well, I am anxious to hear from our witnesses, 
so I will not belabor the point.
    I would like to thank the chairman for convening this 
hearing and especially for inviting both Congresswomen Eleanor 
Holmes Norton and Connie Morella, who is chair of the 
authorizing committee. I think it is important that efforts be 
collaborative.
    And I think most importantly, since we know that 
thoseclosest to the circumstances obviously care the most and have the 
most knowledge, I think it is critically important that we hear from 
the delegate, and I appreciate the chairman's invitation to both our 
guests. I look forward to hearing from them.
    Mr. Knollenberg. Thank you, Mr. Fattah.
    I will, at this point, for the period of time of five 
minutes, recognize Ms. Morella.

               Congresswoman Morella's Opening Statement

    Mrs. Morella. Thank you very much, Chairman Knollenberg, 
and thank you, Ranking Member Fattah, for the courtesy of 
allowing me to participate in today's hearing on management 
reform in the District of Columbia.
    Chairman Knollenberg and Ranking Member Fattah, I very much 
appreciate your leadership and interest in the topic as the 
District continues to improve services within its budgeted 
resources.
    And I, too, share a keen interest in ensuring that the 
Congress, given its oversight responsibilities, understand 
fully what all District government agencies are doing to 
improve services and what they are going to achieve with the 
level of budgeted resources.
    We all seek a District of Columbia that is financially 
healthy and provides quality education, effective public safety 
and other services, laying a foundation for sustained economic 
growth and an expanding tax base.

              Performance Plans and Accountability Reports

    The Mayor has developed a quality performance and 
improvement strategy for his principal agencies. And while 
great progress is being made in developing performance plans 
for agencies under the purview of the Mayor, I strongly believe 
that performance plans and accountability reports should and 
must be prepared by all agencies and offices of the District 
government, including the District of Columbia Public Schools 
and the University of the District of Columbia.
    I seriously believe that if these two agencies do not meet 
their performance goals, then the District government will not 
achieve its goals in other areas.

                      Financial Management Systems

    Of particular concern to me is the continuing failure of 
the District to fully integrate its financial management 
systems. As you know, we have Mr. John Koskinen here who was 
our Y2K czar, so to speak. And I co-chaired the House Y2K task 
force. And in that role, I spent a lot of time talking with 
District officials about the city's computer infrastructure.

                       Computer Promises not met

    We were told time and time again that the District's Y2K 
preparations would be a springboard for bringing all of its 
computer networks up to speed. And I would be curious in your 
responses to know about what happened. Why didn't that happen? 
Because this GAO report clearly shows that more progress needs 
to be made in that area.
    So I thank you again, Mr. Chairman, for this opportunity, 
and look forward to hearing from our very distinguished 
witnesses here today. And I yield back.
    Mr. Knollenberg. Thank you, Ms. Morella. Thank you very 
much.
    Now we turn to Eleanor Holmes Norton, the Delegate from the 
District of Columbia.

                  Delegate Norton's Opening Statement

    Ms. Norton. Thank you very much, Chairman Knollenberg. And 
may I thank you and I thank our ranking member, Mr. Fattah, for 
your courtesy and your kindness in inviting me to sit with you 
and inviting our chair to sit with you today on a subject that, 
as it turns out, really does merge both of our committees, 
because you are talking about financial management and you are 
talking about management. In a very real sense, it is difficult 
to separate the two, and if we do separate the two, I suppose 
we will be in trouble.
    I want to welcome our financial team and our management 
team. And if I may, Mr. Chairman, I would just like to give you 
a little backdrop based on my own 10 years in the Congress, so 
as to provide some perspective for these District officials.

                Control Board When City Became Bankrupt

    They know that I stay on them because I cannot defend poor 
practices here. It is I who had to rise in the Congress--no 
other member--and ask that the District have a control board. I 
thought that was my obligation when the District went down. I 
did not think it was the obligation of people outside of the 
District of Columbia to do the hard work of standing up and 
saying you have to have a control board when you are bankrupt.
    And my folks know that when, in fact, the District does not 
respond quickly to problems, that there is simply no defense I 
am willing to make in the Congress. I defend their home rule. I 
defend them when they go about doing their work and somebody 
tries to interfere. But if you are just not doing your work, do 
not expect me to stand up in the Congress and become an 
apologist for that.

                           Financial Systems

    At the same time, Mr. Chairman, when I look, even with some 
frustration, at where the city has come on finances, I do note 
that in a real sense the District of Columbia had no systems. 
That is not to say the city did not run well. It often ran 
pretty well. And if I may explain that, actually, it ran worse 
during the financial crisis because the jerry-built systems 
that were in place, of course, had to go because the city was 
in a transformation period.

                              Overspending

    When I say the city had no financial management system, let 
me be clear. And this, perhaps, is not unusual for lots of big 
cities. The District experienced, in the 1980s, a building 
boom. It should have used that money to strengthen its 
financial management systems and its management systems, but it 
did not do that; it built its work force. The District was 
probably over-spending each year.
    The reason that the subcommittee had no notice of that is 
that the District had money coming in from the building boom so 
that it was able to reconcile its books at the end of the year, 
so that the auditor could say that the District has good books. 
It was not until the early 1990s, when a recession set in, that 
the District could not do that anymore, and it was revealed 
that the District really had jackleg systems, but no systems 
that anybody would like to attach that to.
    So much for the financial management system.\1\
---------------------------------------------------------------------------
    \1\ [Clerk's note.--See ``Clerk's Notes'' on pages 891-892, 1160, 
and 1212 of part 2 of FY 1996 House DC Appropriations hearings 
concerning the District government's financial management system and 
financial problems. For convenience, see pages 1084-1092, this volume, 
for reprints of those pages.]
---------------------------------------------------------------------------

                           MANAGEMENT SYSTEM

    Let's go to the management system.
    I often wondered why it is that people were not up in arms 
all along. As I, myself, tried to figure out how the District 
did it, I think, Mr. Chairman, that what the District did was 
what, again, big cities used to be able to do. I know that the 
city had a very widespread constituent services system. So that 
if you had a problem in an agency, instead of dealing with it 
systematically, the Mayor's office would send out somebody to 
respond to that problem or that constituent or that 
neighborhood.
    This is not a system. This is whoever complains, whoever 
knows how to get to the central office may get some response. 
But, frankly, it must have worked pretty well because the same 
people kept being elected. I am sure the people in the 
constituent services part must have been run to death.
    So when all of this collapsed, all of this was revealed, 
not only that the District was bankrupt, but it had no 
financial systems that deserved the name and it had no 
management systems that deserved the name. So these folks, our 
Mayor and our City Council, have had to start from scratch.
    If I may say so, the way in which the District first 
balanced its books, stopped the over-spending, had nothing to 
do with management. Of course, that was before this 
administration came into power. It had to do with extraordinary 
sacrifices--furloughs by employees. Mr. Chairman, I have never 
seen anything like this in my lifetime. You would have to have 
been living during the Depression to see people report to work 
only a certain number of days per week, to see give-backs by 
unions that they have not even begun to make up for yet.
    After the District stopped over-spending on the backs 
entirely of employees, without any management reform, then the 
control board got in place. The control board began to help the 
District deal with management plays, and now we have a team 
that, of course, is trying to build on what they have done in 
conjunction with the control board.
    Thank you, Mr. Chairman.
    Mr. Knollenberg. Thank you very much, Ms. Norton. I think, 
obviously, your background is one that we all lean ona good 
bit, and I am delighted that you showed today. I am glad you and Ms. 
Morella are here.
    At this point we will introduce the individual witnesses 
that are testifying: J. Christopher Mihm, director of strategic 
issues, U.S. General Accounting Office; John A. Koskinen, 
deputy mayor and city administrator; Natwar Gandhi, chief 
financial officer; Suzanne Peck, chief technology officer; 
Milou Carolan, director of personnel; and Jacques Abadie III, 
acting chief procurement officer.

                           WITNESSES SWORN IN

    I realize the principal witnesses have people with them 
that may be called upon to respond or answer a question, and we 
welcome all of you this afternoon. I want to resort to a, kind 
of, formal section now, which is the swearing in of witnesses, 
and I do not want any one of you to get the impression that you 
are not going to tell the truth, but it is a matter that we 
take seriously and it is a part of the Committee's standard 
procedures here, which I think you all know.
    So Rule XI, clause 2(m) of the Rules of the House, and 
Section 1(b) of the Rules of the Committee authorize me, as the 
chairman of this particular subcommittee, to administer the 
oath. So I would ask all of you that are testifying today to 
rise, raise your right hand and respond at the end of my 
recitation.
    [Witnesses sworn.]
    Mr. Knollenberg. Thank you very much.
    We are going to hear the statements by all of the witnesses 
in their entirety before we go to any questions. So if there is 
no objection, we will proceed in that manner. The order is 
going to be, first, Mr. Christopher Mihm, who is director of 
strategic issues at the General Accounting Office. We would 
appreciate if each witness would keep their oral statements 
within a five-minute range. You can highlight what is your 
longer statement, and that will be, of course, accepted into 
the record without any objection.
    We will start with you, Mr. Mihm, and we ask that you 
highlight your statement to keep within that five-minute time 
frame.
    Mr. Mihm. Of course, Mr. Chairman.
    Mr. Knollenberg. You are recognized.

             PREPARED STATEMENT OF J. CHRISTOPHER MIHM, GAO

    Mr. Mihm. Thank you, Mr. Chairman.
    [The prepared statement of J. Christopher Mihm follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
              Opening Remarks of J. Christopher Mihm, GAO

    Mr. Mihm. Mr. Knollenberg, Mr. Fattah, Ms. Morella, Ms. 
Holmes Norton, it is an honor to be here with you today.
    It is also quite a pleasure to be appearing with my good 
friends from the DC government to discuss our recently 
completed work on the District of Columbia and the management 
of its government.

                         SCOPE OF GAO TESTIMONY

    You asked us to specifically discuss three things: first, 
our ongoing review of the District's fiscal year 2000 
performance report; second, our recent report on the 
implementation of the District's new financial management 
system; and third, our report being issued today on the 
District's decision not to use money that Congress provided to 
help simplify the District's personnel compensation systems.
    I am fortunate to be joined today by two of my colleagues 
who have leadership responsibility for the work we are 
discussing. Jeanette Franzel led our work on the review of the 
District's financial management system and Curtis Copeland 
reviewed the District's decision regarding its compensation 
system.
    As you requested, sir, in the interest of brevity, I will 
just hit the highlights of the detailed information in my 
written statement and related reports.

            REVIEW OF DISTRICT'S FY 2000 PERFORMANCE REPORT

    First, in regard to our review of the District's fiscal 
year 2000 performance report, it underscores that while the 
report more fully met statutory requirements than the report 
issued in 1999, performance planning measurement reporting is 
still very much a work in progress in the District.
    The District changed its performance goals and measures 
throughout fiscal year 2000, and the resulting performance 
report did not indicate why or when those changes were made or 
whether the resulting performance data were valid or complete.
    District officials recognized the limitations of the 
performance report and are committed to improving the 
usefulness of future reports for District citizens, Congress 
and other decision-makers.

                DISTRICT NEEDS TO SETTLE ON SET OF GOALS

    As part of its ongoing efforts, we believe that the 
District needs to accelerate its efforts to settle upon a set 
of results-oriented goals that are more consistently reflected 
in the various planning, reporting and accountability efforts 
that are discussed, I believe, in Mr. Koskinen's prepared 
statement that was out here on the table.

                 CLEAN OPINION ON FINANCIAL STATEMENTS

    Second, in regard to financial management at the District, 
as we note in the report, the District recently received its 
fourth consecutive unqualified or clean opinion on its 
financial statements for fiscal year 2000.
    These clean opinions represent real and major achievements 
on the part of the District and its leadership, because clean 
financial audits are essential building blocks toward financial 
accountability. These clean opinions are one part of a very 
important progress that the District has made in restoring its 
financial stability since 1995, as Ms. Holmes Norton alluded to 
in her opening statement.

            CLEAN FINANCIAL OPINIONS NOT ENDS IN THEMSELVES

    But as building blocks, clean opinions are not ends in 
themselves, but rather are means to an end, that end being the 
routine generation of financial and program cost information 
for managers and other decision-makers when they need it and in 
the format that best meets their needs.

             FINANCIAL MANAGEMENT SYSTEM FAILING TO DELIVER

    The purpose of our recently completed report was to provide 
a point-in-time status of the District's implementation of 
important components of its financial management system. [See 
pages 1040-1083 for GAO report referred to.] We found that 
producing the District's financial statements is primarily the 
result of tremendous effort expended by a few key individuals 
who are able to accomplish this task despite the weaknesses in 
the city's financial management system. Such a situation 
clearly cannot be sustained over the long haul, as the 
leadership of the District recognizes.
    Moreover, the District continues to face significant 
challenges in its effort to put in place a financial management 
framework that ensures the timely and reliablefinancial data on 
the cost of the District's operations. The current mix of components 
involves duplication of effort and in some cases requires cumbersome 
manual processing.
    To help the District in this regard, our report contains 
specific recommendations along a number of lines, including the 
need to employ the necessary system development processes to 
develop and implement its financial management system. In 
addition, we also recommended that the District conduct a 
comprehensive assessment of its human capital needs for 
financial management functions.
    The District realizes that it needs to build on its 
progress to date and address the difficult challenges that 
remain. We were gratified to see that the actions are already 
being taken on some of our recommendations and that the 
District is committed to making progress on the remaining ones 
as well.

                      EMPLOYEE COMPENSATION SYSTEM

    Finally, to touch on the third issue that you asked about, 
District officials said they do not plan to use the $250,000 in 
Federal funds that Congress appropriated to help the District 
contract for a study to determine how best to simplify its 
employee compensation system. The District believes that 
meeting the contracting and review requirements of the 
Appropriations Act would delay an ongoing review effort.
    As appropriate, therefore, we understand that the District 
has requested that Congress rescind the appropriation.

                      CONCLUSION OF GAO TESTIMONY

    In summary, Mr. Chairman and members of the subcommittee, 
the central theme running through the work that I have 
discussed today is that the District has made and is making 
important progress in addressing a series of long-term and 
difficult management challenges.
    Very importantly, however, much more work remains to be 
done. The effective implementation of the various initiatives 
underway in the District is vital to the success of the city's 
efforts to create a more results-oriented approach to 
management decision-making, an approach that is based on clear 
goals, sound performance and cost information, and a budget 
process that uses this information in allocating resources.
    We look forward to continuing to work with Congress and the 
District as the city strives to provide the services that DC 
residents expect and deserve.
    This concludes my statement. I would be pleased to answer 
any questions.
    Mr. Knollenberg. Mr. Mihm, thank you very kindly, and you 
were concise. You delivered on time, and we appreciate that, 
and you gave a pretty conclusive and complete report.
    We are next going to hear from Mr. John Koskinen, Deputy 
Mayor and City Administrator.
    Mr. Koskinen, you are recognized for the standard five 
minutes.
    Thank you.

prepared statement of john a. koskinen, deputy mayor/city administrator

    [The prepared statement of Mr. Koskinen follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
  Opening Remarks of John A. Koskinen, Deputy Mayor/City Administrator

    Mr. Koskinen. Thank you, Mr. Chairman, Congressman Fattah, 
Congresswoman Morella, Congresswoman Norton. We appreciate the 
opportunity to testify today about the District of Columbia's 
approach to improving performance management and government 
performance.
    As noted, I am pleased to submit my full testimony for the 
record and will summarize here the highlights, as you put it.

                DISTRICT'S PERFORMANCE MANAGEMENT SYSTEM

    Mr. Koskinen. When fully realized, the District of 
Columbia's performance management system will allow the 
District government to set priorities that reflect the input of 
all relevant stakeholders, including citizens, local 
businesses, nonprofit organizations, the faith community, 
Council and the Congress; to establish goals and measures for 
improved performance that we will track over an extended period 
of time; to link these priorities, goals and measures into 
performance contracts between the Mayor and his cabinet 
directors; to manage against these priorities, goals and 
measures; and to measure and report performance to the public, 
the Council and the Congress on a regular basis.

                            STRATEGIC PLANS

    During fiscal year 2000, the District completed its first 
full strategic management cycle, including developing city-wide 
and individual agency strategic plans, implementing the first 
year of the plans, formulating the fiscal year 2001 budget and 
reporting fiscal year 2000 results. During this coming summer, 
cabinet-level agencies will update their strategic plans to 
address priorities and goals for fiscal years 2002 to 2004.
    In addition, the Mayor's Neighborhood Action initiative is 
working with all 39 neighborhood clusters across the city to 
develop strategic neighborhood action plans. The District will 
incorporate the neighborhood plans and the agency plans into a 
draft city-wide strategic plan for the years 2002 to 2004, and 
approximately 3,000 to 4,000 residents will gather to review 
the draft plan at the October 2001 Citizens' Summit. And the 
District will incorporate their feedback into the final city-
wide strategic plan by December of this year.

      EFFORTS TO IMPROVE DISTRICT'S PERFORMANCE MANAGEMENT SYSTEM

    We are pleased to continue to work with GAO and our own 
inspector general to improve upon the process. As Mr. Mihm 
noted, it is an evolutionary one. However, the success of the 
District's performance management system will not be measured 
primarily by compliance with reporting requirements but in the 
real improvements we make in service delivery and quality of 
life for District residents, businesses and visitors.

      PROBLEMS WITH MANAGEMENT REFORM INITIATIVES OF 1998 AND 1999

    The subcommittee has asked about the status of the 
Management Reform initiative of 1998 and 1999. A critical 
difference between the District's present approach to 
performance management and the 1998-1999 management reform 
agenda is the alignment of individual agency strategic plans to 
an overall city plan. However, agencies incorporated selected 
management reform initiatives into their strategic plans, and 
more importantly, agency strategic plans address many of the 
goals of the management reform agenda.
    Many of the ongoing initiatives that my colleagues will 
discuss with you today grew out of the fiscal year 1998 
management reform agenda.
    For example, Mr. Abadie will talk about the development of 
a procurement tracking system and additional procurement 
reforms that have been implemented.
    Ms. Carolan will talk about the implementation of a 
performance management program for nearly 1,250 District senior 
managers and employees, as well as our move toward compensation 
and class reform which began, actually, before we could take 
advantage of the money that the Congress provided.
    We also established the Office of the Chief Technology 
Officer as recommended, as well as a separate Department of 
Motor Vehicles.

                      DEPARTMENT OF MOTOR VEHICLES

    The Motor Vehicles Department's separation is a classic 
example of how we have been able to improve performance. The 
department was created, again, as recommended by the Management 
Reform initiative, to provide a greater focus on improved 
customer service, a significant goal of the Mayor's city-wide 
strategic plan.
    DMV established the goal of reducing wait times to 30 
minutes for 80 percent of license and registration transactions 
by October 2000. As a result of management improvements, the 
percentage of customers served within 30 minutes increased 
significantly from just over 40 percent inMarch, 2000, to 
almost 80 percent in July-September, 2000, time period.

             FINANCIAL MANAGEMENT SYSTEM--RATE OF PROGRESS

    As Mr. Mihm noted, the GAO has recently questioned the rate 
of progress in implementing the District's financial management 
system, also known as SOAR, which is an acronym for the System 
of Accounting and Records.
    Dr. Gandhi will respond in more detail to the GAO report. 
However, let me simply note that the District has been making 
continual improvements in the operation of the SOAR system, 
such that the closing of our books this year went smoothly and 
our clean audit was delivered on time without the expenditure 
this year of extraordinary effort on the part of the CFO's 
staff.

             FIXED ASSET AND INTEGRATED TAX SYSTEM MODULES

    As Dr. Gandhi will provide in greater detail, we are moving 
toward implementation of the fixed asset accounting module and 
the integrated tax system module. While the GAO report 
questions the fact that those modules had not been implemented, 
this is consistent with the rules for implementing complicated 
information technology systems that we developed at the GAO 
while I was at OMB from 1994 to 1997. We noted then that 
agencies should concentrate on buying off-the-shelf systems, 
which SOAR was, and implement systems in stages rather than all 
at once, which is what we are doing.

                      PERFORMANCE BASED BUDGETING

    I would like to provide more details about our move to 
performance-based budgeting, which will be a major improvement 
to our financial systems. The District included a special 
chapter on performance-based budgeting in its fiscal year 2002 
budget, which will shortly be before you for review. It is a 
preview of the new approach to presenting budget information.
    The new approach in presentation provides information on 
each program in terms of services provided to District 
residents and the cost of resources allocated to provide those 
services. We will also provide performance measures related to 
the program as well as benchmark data from other jurisdictions 
in an effort to provide for a basis of comparison.
    Implementing a complete performance management and 
reporting system is an evolutionary process, and we expect that 
additional improvements will need to be made over the next two 
years. Nonetheless, especially judged against my experience at 
the Office of Management and Budget at the federal level for 
three years overseeing the implementation of the Government 
Performance and Results Act, I think the District government 
has achieved significant success thus far in its efforts to 
establish a performance management system.
    Thank you, Mr. Chairman. I look forward to answering your 
questions at the end of the formal presentations.
    Mr. Knollenberg. Thank you, Mr. Koskinen, we appreciate 
that testimony.
    Next in line, of course, we have Dr. Natwar Gandhi. Dr. 
Gandhi is the chief financial officer.
    You are recognized, Dr. Gandhi, to highlight your prepared 
statement which will be placed in the hearing record at this 
point.

  PREPARED STATEMENT OF DR. NATWAR M. GANDHI, CHIEF FINANCIAL OFFICER

    [The prepared statement of Dr. Gandhi follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
     Opening Statement of Natwar M. Gandhi, Chief Financial Officer

    Dr. Gandhi. Well, thank you, Mr. Chairman. Good afternoon, 
Mr. Chairman, Mr. Fattah, Ms. Morella, Ms. Norton.
    As you pointed out, I am Natwar Gandhi, chief financial 
officer for the District of Columbia. As you are aware, Mr. 
Chairman, the District of Columbia has made great strides over 
the last several years in improving its financial management 
processes.

                   Progress Made Over Last Five Years

    When you stop and reflect on just how far this city has 
come over the last five years, the progress is really quite 
amazing. The fiscal year 2000 Comprehensive Annual Financial 
Report, the so-called CAFR, was the fourth consecutive clean 
opinion from independent auditors. The city's bond ratings were 
recently upgraded by all three bond-rating services, and we 
completed the securitization of tobacco settlement funds.
    We also worked closely with the Mayor and the Council on 
the successful development of the fiscal year 2002 budget about 
to come to the Congress. None of these achievements would have 
been possible without a functioning financial management 
system.\1\
---------------------------------------------------------------------------
    \1\ [Clerk's note.--Regarding the statement ``None of these 
achievements would have been possible without a functioning financial 
management system'', the District government has always had a 
``functioning'' financial management system as far as hardware and 
software were concerned. The issue is, at what level is the District's 
new $50,000,000 financial management system functioning and is it 
functioning at the intended level at this point in time. To provide 
some perspective, $38,000,000 was appropriated under PL 94-399, 
approved September 4, 1976, to upgrade the District's existing system 
at the time with a ``state of the art'' financial management system. It 
should be noted that the District government has submitted budgets 
every year for at least the last 100 years and until FY 1996, the 
District's budgets were submitted much earlier than the present 
budgets. In addition, the budgets submitted prior to FY 1997 were much 
more reliable and useful than the more recently submitted budgets.]
---------------------------------------------------------------------------
    We agree with GAO recommendations and are currently busy 
implementing them. However, we do not agree with many of the 
characterizations made about certain programs. In fact, I was 
dismayed at the extent to which the GAO report focused on the 
problems and difficulties of the past, rather than on how the 
financial systems are functioning today and the plans we have 
for future improvements.
    For example, the report states that the Integrated Tax 
System is not fully implemented. This is misleading, because 
ITS is not scheduled to be fully implemented until the year 
2002. The report fails to point out that the project is on 
schedule and under-budget.
    It represents the first major overhaul of the tax 
administration system and its underlying technology. Business 
tax returns are already being processed using ITS, and as a 
result businesses can now file their DC taxes free on the 
Internet.

            Shortcomings of New Financial Management System

    As another example, it is not accurate to say that the 
System of Accounting and Records, the so-called SOAR, is 
incapable of capturing the cost of specific agency programs or 
activities. SOAR has these capacities and capabilities, and 
some agencies have been using them. SOAR is a standard vendor-
supplied product that operates in 23 other states and local 
governments.
    It's core accounting components are now operating 
effectively. They not only contributed directly to the success 
of the fourth clean CAFR earlier this year, but also improved 
the overall CAFR process.
    SOAR also performs budget executions and controls funds,and 
it has allowed us to perform monthly closes since June 2000.
    Full implementation of SOAR in other jurisdictions has 
taken from two to five years to complete, even without a Y2K-
size issue to address. An effective accounting function was the 
first priority, since it was needed to obtain clean audit 
opinions and bring an end to the District's control period.
    With this capability now in place, management can focus on 
other aspects of the system, such as the fixed assets module, 
which will be operational by the end of this fiscal year and 
fully implemented in support of fiscal year 2001 CAFR, and the 
implementation of performance-based budgeting for the fiscal 
year 2003 budget formulation cycle, as Mr. Koskinen just 
pointed out.
    It is important to remember as a part of this discussion 
that the financial improvements do not exist in a vacuum. In 
many instances, business processes elsewhere in the District 
must be improved in order to improve financial systems.
    For example, to effectively interface the procurement 
actions with SOAR, the procurement controls need to be 
automated. To acquire a new payroll system at a reasonable 
cost, the personnel systems need to be streamlined. To 
implement performance-based budgeting, program managers must 
institute a planning process that identifies cost centers and 
related measures. These are all areas that we are currently 
addressing.
    In conclusion, Mr. Chairman, I believe it is clear there 
has been a great deal accomplished in improving the District's 
overall financial management process. We only have to think 
back to the conditions in 1995, which Ms. Norton just 
identified--mounting cash deficits, a plummeting bond rating, 
no effective plan for balancing the city's expenditures with 
its revenues--to see how far we have come.

                              Cash Surplus

    At the end of fiscal year 2000, the District had $221 
million of cash surplus, equally nearly a $500 million 
turnaround. The accumulated fund balance improved by about $1 
billion since 1996.
    As I noted earlier, we also received the fourth consecutive 
unqualified opinion in the fiscal year 2000 CAFR and earned 
bond rating upgrades from all three bond-rating services.

              District's Financial Management Has Improved

    The single most important message I would leave with you 
today, sir, is that the District financial management has 
improved each year for the last six years. It continues to 
improve and we will see that more improvements are made in the 
future.
    This concludes my oral comments, sir. I request my prepared 
comments be made part of the record. I would be delighted to 
answer the questions you may have.
    Thank you.
    Mr. Knollenberg. Your entire statement has been included in 
the record, Dr. Gandhi.
    Dr. Gandhi. Thank you.
    Mr. Knollenberg. Next in line, we have Suzanne Peck who is 
the chief technology officer.
    Ms. Peck, you are recognized.

      Opening Statement of Suzanne Peck, Chief Technology Officer

    Ms. Peck. Chairman Knollenberg, Mr. Fattah, Mrs. Norton, 
Mrs. Morella, Mr. Miconi, I am the chief technology officer for 
the District of Columbia, and my purpose here today is to thank 
the Congress for the management reform funding that permitted 
the District to begin the information technology restructuring 
that has been so essential to the city's recovery.

        $63.5 Million On Management Reform Funds Received by CTO

    The Office of the Chief Technology Officer received $63.5 
million in management reform funds. We have spent every penny, 
and I think we have spent it wisely and well. Let me give you 
some background.

                Establishment of Chief Technology Office

    OCTO was established in early 1998 to centralize the 
development and coordination of information technology in the 
District of Columbia. At that time, the District had suffered 
over a decade of technology disinvestment and the state of 
technology support, as Mrs. Norton just pointed out, in all of 
the District's 68 agencies was poor.

                             Strategic Plan

    OCTO's strategic plan to repair the situation was simple 
and four-fold. First, the District's existing IT infrastructure 
needed to be stabilized. The bleeding of obsolete technology 
and Y2K needs had to be dealt with.
    Second, the District's telecommunications and data access 
infrastructures needed to be brought to current technology 
levels. There were still 8,000 rotary phones and very outdated 
PBX equipment, for example, in District offices.
    Third, city-wide applications to support agencies like DMV, 
the Medical Examiner, the Department of Human Services, the 
Department of Health, the Police Department and the Department 
of Consumer and Regulatory Affairs needed to be organized and 
implemented.
    And fourth, city-wide integration of IT support needed to 
take place: activities like city-wide IT budget planning, city-
wide IT strategic planning, and city-wide electronic government 
activities on the District's web portal.
    Our plan was and continues to be to execute each of these 
four phased activities somewhat concurrently, concentrating on 
the foundation activities first.

                     Fourth Year of CTO Operations

    We are now beginning our fourth year of successfully 
executing this strategy. We have completed our first activity, 
stabilizing the District's IT infrastructure. We are about 80 
percent through our second activity, installing current 
technology, telecom and data access infrastructures. We are now 
concentrating on the third activity, implementing city-wide 
applications. This will also be our main focus in fiscal year 
2002.
    Our fourth activity, city-wide integration, is also 
progressing well and is especially visible in the sophisticated 
web portal we are building to provide resident and business 
services online in the District.

                $63.5 Million on Management Reform Funds

    We could not have begun nor continued this strategy without 
the infusion of congressional management reform dollars in 
fiscal year 1998. The $63.5 million of management reform funds 
allocated to OCTO allowed us to establish the Office of the 
Chief Technology Officer, to install a new generation of 30,000 
District telephones, to expand the DC wide area network so that 
all 461 District government locations could communicate with 
each other, to re-engineer key processes and install a new 
computer network at DCRA, and to make short-term customer 
service improvements at the Department of Motor Vehicles while 
we planned and are implementing state-of-the-art DMV support 
systems.
    These funds also made a $10 million contribution to the 
$170 million spent on successfully readying the District for 
Y2K.

                   16 Information Technology Projects

    Of the 16 IT projects which the District suggested for 
management reform funding, eight were accepted and completed 
under management reform funding. The remaining eight, equally 
important to the District's IT strategy, have been completed 
under District funding. Details of all 16 project 
accomplishments are attached to this testimony.
    Again, my sincere thanks to this Committee for being there 
and for providing substantial seed funding for the District's 
information technology needs.
    Mr. Knollenberg. Ms. Peck, thank you very kindly for that 
summary. We will include your complete prepared statement along 
with any additional commentary that you would like to include 
in the hearing record.

                   Prepared Statement of Suzanne Peck

    [Ms. Peck's prepared statement follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mr. Knollenberg. Next we have Milou Carolan, the director 
of personnel.
    You are recognized, Ms. Carolan.

       Opening Statement of Milou Carolan, Director of Personnel

    Ms. Carolan. Thank you.
    Good afternoon, Chairman Knollenberg, Congressman Fattah, 
Congresswoman Norton and Congresswoman Morella.
    Before I start my summary remarks, I just wanted to marvel 
at how small the world is. Three of the four legislators in 
this room have represented me: Mr. Fattah in center city 
Philadelphia, where I worked for the city right before moving 
here; Congresswoman Morella in the late 1980s when I lived in 
Montgomery County; and, obviously, Ms. Norton represents me now 
as a homeowner in the District. So it is an awfully small 
world.
    Mr. Knollenberg. You could come to Michigan and you will 
have four. [Laughter.]
    Ms. Carolan. Yes. I have never even been to Michigan. 
Obviously, that is a big gap. [Laughter.]

                  Personnel Management Reform Projects

    Mr. Knollenberg. We should not charge her time for this.
    Ms. Carolan. Okay, I will get on with my remarks.
    Thank you for the opportunity to testify on the DC Office 
of Personnel's management reform projects for fiscal years 1998 
and 1999, as well as the more recent accomplishments of fiscal 
years 2000 and 2001.
    And I respectfully request that my full written testimony 
be included in the record, since I will be summarizing today.
    Mr. Knollenberg. Without objection it will be included 
following your oral remarks.
    Ms. Carolan. When I joined the District government in 
October 1999, it was apparent to me that the Office of 
Personnel did not have the processes, technology or staff 
expertise necessary to effectively support the reforms promised 
in the past or proposed for the future.
    I am pleased to report that since that time, we have begun 
to re-engineer our processes, expand our technological 
capabilities and bolster our staff with experienced managers to 
lead us through the transitional period, although we still have 
a very long way to go. Building a strong foundation to support 
personnel reform remains our top priority in order to support 
the Mayor and the Council's commitment to a strong and 
productive work force.

                  Responsibilities of Personnel Office

    My agency has a significant mission that impacts most every 
DC government agency and employee. We provide a full range of 
human resource management services to approximately 19,000 
employees in the agencies that are under the full authority of 
the Mayor. And we also provide partial service, such as health 
benefits, life insurance, retirement assistance, to most 
independent and quasi-independent agencies. In October 2001, we 
will take responsibility for the District's $33 million 
disability compensation system for government employees who are 
injured on the job.

           Management Reform Initiatives In Fy 1998 and 1999

    I attached to my longer testimony a list of the management 
reform initiatives that were begun in 1998 and 1999 before my 
tenure. The total expenditures for these initiatives were $2.5 
million. Several of these initiatives provided a foundation for 
the improvements we have made in fiscal years 2000 and 2001, 
particularly in the areas of facility and equipment 
modernization and the classification of compensation and 
performance management projects.

                         Upgrades of Facilities

    Three management reform projects resulted in significant 
upgrades of DCOP facilities during that time. In 1998 and 1999, 
the agency spent $1.2 million to consolidate our staff into 
three locations, modernize employee work stations, update phone 
equipment, provide personal computers to each employee and 
develop the agency's first web site.
    Three other reform projects for that period focused on 
changes to the core of the District's personnel system, the 
classification, compensation and performance and management 
processes.
    Expenditures over this two-year period totaled $1 million, 
which was used to do a whole series of things, including 
conducting studies of best practices in those areas, conducting 
a regional and a national salary survey, reviewing sample job 
descriptions, auditing managerial positions to be included in 
our new Management Supervisory Service, developing a new 
performance management system, proposing a new formula for pay 
determination, customizing a database for use in that pay 
determination, and recommending a conceptual plan for changes 
in the District's class and comp system.

                 Accomplishments In FY 2000 and FY 2001

    Our accomplishments in fiscal years 2000 and 2001, during 
my tenure, focused on three critical themes of our agency's 
strategic plan: first, attracting, selecting and retaining a 
well-qualified and diverse work force; second, consistently 
supporting top-quality performance throughout the government; 
and third, building a professional and effective human resource 
management infrastructure.

                               Work Force

    Within the theme of attracting, selecting and retaining a 
well-qualified, diverse work force, I would like to highlight 
four accomplishments. We implemented the TransTrak system, 
which enables us to report on the status of every personnel 
transaction, and it is also available to our client agencies 
via the web. Sounds like a little thing, it is actually a huge 
thing. Just to know what we are working on and where it is in 
the process.

                             Job Applicants

    We also improved the caliber of job applicants by 
establishing a dedicated recruitment team, revamping our web 
site, expanding the use of advertising, created a databank of 
senior recruits and pre-qualifying several executive search 
firms to help us on senior searches.

                      Capital City Fellows Program

    We created a new Capital City Fellows Program which is not 
that dissimilar from the Federal government's 
internshipprogram, PMI program, which brings talented graduate students 
into the government. And we improved our benefits offerings by offering 
pre-tax benefits as well as greater choice of health care providers.

                 At-Will Management Supervisory Service

    To support high-quality performance, we have accomplished 
the following. We implemented the Management Supervisory 
Service, which is an at-will, merit-based senior service that 
has increased accountability, pay and training opportunities 
for approximately 1,000 managers and supervisors under the 
authority of the Mayor. We also implemented the new performance 
management system and we expanded training and development 
opportunities to the Center For Work Force Development, which 
provides training for front-line employees as well as managers 
and supervisors.

                         Human Resource Council

    And finally, under the theme of building a professional, 
effective human resource management infrastructure, we 
implemented the Human Resource Council. We implemented 1998 
personnel reform legislation, which was landmark legislation 
that the Council passed and the Mayor signed, but had not been 
implemented when I arrived, so we implemented it through rule-
making and training.
    And we are developing currently a realistic and 
collaborative solution to our complex comp and class situation 
by engaging labor representatives in the process, gathering 
critical cost data to better inform our decision making, and 
recognizing that pay schedule simplification must occur in 
order for the District to successfully modernize its automated 
pay system.

           Modernization and Automation of Business Processes

    And we are also beginning the modernization and automation 
of all our business processes in my agency. Virtually 
everything in my agency is paper-based right now.
    Despite these challenges, modernizing our infrastructure is 
a process filled with enormous challenges. There is not a 
single personnel system for the entire District Government, and 
many District agencies have independent personnel authority.

          Lack of Single Set of Rules Results In Many Problems

    Without a single set of rules, it is difficult both to 
govern and to change our processes and our policies. Our 
functions are fragmented and decentralized, especially as they 
pertain to personnel administration and labor relations, which 
leads to a lack of clarity concerning both accountability and 
authority. This situation has led to very complex personnel, 
labor relations, benefits, pay, pension and other business 
rules, and the lack of modern, automated systems exacerbates an 
already difficult environment.
    In response to the situation, the City Administrator has 
convened the Human Resources Reform and Decision Group, which 
consists of key representatives from the Mayor's agencies as 
well as independent agencies, as well as labor representatives 
to guide decision-making on a city-wide, District-wide basis. 
And this group is forcing us to make decisions as a group, 
particularly those decisions that involve major system change 
or automation. And it provides a broader perspective to our 
human resource challenges that is long, long overdue.
    So thank you very much for the opportunity to give you an 
update and I would be happy to answer any questions that you 
might have.

                  Prepared Statement of Milou Carolan

    [The prepared statement of Ms. Carolan follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mr. Knollenberg. Thank you, Ms. Carolan. Thank you very 
much.
    We will continue now with our final witness Jacques Abadie, 
the acting chief procurement officer.
    Does that mean there is no procurement officer?
    Mr. Abadie. I believe there is a procurement officer, and I 
am proud to be the procurement officer. What I think it means 
is I am kind of like the new guy on the block right now. And I 
have some things that I would like to speak to you about.
    Good afternoon, Chairman Knollenberg.
    Mr. Knollenberg. You are recognized.

 Opening Statement of Jacques Abadie, Acting Chief Procurement Officer

    Mr. Abadie. Mr. Fattah, Congresswoman Norton and 
Congresswoman Morella.
    As with the rest of my colleagues, I am going to highlight 
my testimony because it is a little longer than five minutes. 
And I apologize up front if I do not speak to something that is 
particularly important. But I want to get over some of the 
points that I think are particularly important to this 
subcommittee.

                  Mission of Chief Procurement Officer

    As you all know, OCP's mission is to provide cost 
effective, quality acquisition services as expeditiously as 
possible to our customers. And although we are making great 
strides to improve the overall performance of OCP, I am the 
first to recognize that we are not there yet, but we are well 
on our way.
    I would like to provide you with a progress report of our 
management reforms and initiatives.
    Let me say that I understand that procurement in the 
District is the most critical, cross-cutting support function 
directly impacting the most fundamental service delivery 
capabilities in every agency. As such, there are three process 
partners involved in the procurement life cycle: agency program 
personnel, our office, OCP, and the Office of the Chief 
Financial Officer.
    The roles and responsibilities of each partner in the 
procurement life cycle profoundly affect our ability to achieve 
our mission of providing quality goods and services to 
customers, faster, cheaper and better. That is why we are 
working hard every day to strengthen our relationships with our 
process partners. This has enabled us to better use taxpayer 
dollars to improve operational efficiency and deliver quality 
goods and services to the deserving citizens of the District.

               Commodity-Based Structure For Procurement

    It is precisely this reason why, by the end of the current 
fiscal year, I intend to begin the transition of the Office of 
Contracting and Procurement to a commodity-based structure 
supported by matrix teams for complex procurements. The first 
transition has already begun with the establishment of an 
integrated product team to support the procurement of capital 
projects and services, as depicted in the organizational chart 
which is part of my testimony.
    Having used this approach recently to contract successfully 
for a District-wide health benefits program, I am confident 
that it will be most effective.
    More importantly, most municipal procurement organizations 
are commodity-based. This management reform effort allows OCP 
staff to become experts in various commodity areas, which 
serves the customer better and will enable the District to 
better use taxpayers dollars to improve operational efficiency 
and deliver quality goods and services to the District's 
citizens.

                    Regional Procurement Initiative

    I am delighted to report that, as well as other things we 
are doing, we are introducing a new procurement initiative that 
has been launched by the Washington Metropolitan Council of 
Governments, better known as COG. Working in partnership with 
OCP, COGbuy.com, OCP has been an integral part in a component 
in planning and designing and the evaluation, source selection 
and contract awards of this important initiative. The District 
will participate in COGbuy.com at no cost to the District.
    The initiative will allow the District to post all of our 
contracts on the site, free of charge, and will also boost 
local economic development by permitting District-based vendors 
to expand their commercial range to the 42 agencies associated 
with COG, member jurisdictions that collectively purchase over 
$2 billion annually in goods and services.
    Initially, we will list the 100 vendors of the District 
supply schedule that will be on COGbuy.com to be started. As 
you know, and the cogbuy.com initiative clearly demonstrates, 
technology is influencing how we acquire goods and services 
today.

                     Electronic Procurement System

    Recognizing the importance of electronic commerce, OCP is 
engaged in several other initiatives that will permit us 
totransition to an enhanced electronic procurement system that will 
expedite the procurement of goods and services more efficiently, as 
well as to develop and execute contracts more responsibly and 
effectively. This will ensure that we are on the cutting edge of 
electronic commerce while still honoring our commitment to fulfilling 
our socio-economic goals and responsibilities to the District's LSDBE 
program.
    Further, this effort will also allow the District to track 
its procurement and to identify in real time where in the life 
cycle the status of the procurements really reside.
    Through our joint partnership on this project, with the 
chief technology officer and the chief financial officer, the 
enhanced electronic procurement system will interface with the 
District's SOAR financial system.

                  PRISM-SOAR (FMS) Automated Interface

    With the assistance of a consultant, we fully reexamined 
the PRISM system and have determined that it is viable, but 
needs considerable software and hardware upgrading, and more 
importantly the interface remediation with SOAR. We are 
preparing to initiate testing within the next three weeks of 
our PRISM-SOAR automated interface using a controlled 
environment in the Department of Corrections, which can fully 
utilize the system.

                         Purchase Card Program

    OCP has developed and implemented a District-wide purchase 
card program to empower agencies to obtain goods and services 
more expeditiously; 520 purchase cards have been deployed 
through 27 agencies, and the use of the cards has generated a 
sales volume of $3.5 million to date. The purchase cards allow 
program managers to expedite their procurement needs for 
purchases under $2,500, and provide enhanced local, economic 
development opportunities especially for local, small, 
disadvantaged business certified by the Office of Local 
Business Development.
    Not only have we served our customers by empowering them to 
make their purchases, but we have also freed up contracting 
staff to focus on the more complex procurement actions. Also, 
the processing time for our simplified purchases has been 
reduced from more than 15 days to an average of 12.38 days.
    One of the last things I would like to point out is that in 
the next few weeks, the Mayor will forward to the Council a 
legislative performance package that we have prepared.

                          Legislative Reforms

    Included in this legislative reform package is legislation 
to increase the small purchase threshold from $25,000 to 
$100,000. This action will be consistent with the small 
purchase authority in the Federal government, and this change 
will enable OCP to focus personnel resources on high-dollar-
value complex procurement actions involving the greatest 
expenditure of the $1.5 billion spent on procurement activities 
in the fiscal year.
    In addition, other proposed legislative changes include 
authorizing OCP to utilize task order contracts similar to that 
of the federal government; increasing the monetary threshold 
from $100,000 to $500,000 for cost and pricing data; and giving 
OCP more flexibility to do business with companies with 
existing contracts with state, local and Federal government.
    In conclusion, to reiterate, each of our management reform 
initiatives is designed to streamline and expedite the 
procurement process, maintain and ensure quality review, speed 
the execution of contracts, improve staffing capability, ensure 
cost-effective contracts, reduce or eliminate process, enhance 
the District's vendor base and ensure accountability by each of 
our contracting professionals for the services they provide to 
our customers.
    Thank you very much for this time to deliver this testimony 
in the subcommittee. I am prepared to take any questions that 
you may have.

Prepared Statement of Jacques Abadie, Acting Chief Procurement Officer 
                      of the District of Columbia

    [Mr. Adabie's prepared statement follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mr. Knollenberg. Mr. Abadie, thank you.
    Thanks to all of the panel for your testimony and, 
obviously, your presence here today.
    We will proceed with questions under the five-minute rule. 
First I will ask questions and then Mr. Fattah. And we will 
recognize members in the order of their appearance here today. 
As I mentioned earlier we have two individuals that are not on 
the Committee, but they will have an opportunity to ask 
questions as well. I may extend my opening questions just a 
little.

  GAO Report on Weaknesses in Financial Management System (see pages 
                       1040-1083 for this report)

    I want to talk to all of you about the April 2001 GAO 
report on weaknesses in the financial management system and the 
implementation of that in the District. This report was 
commissioned initially by my predecessors, and was recently 
released, as you all know. The GAO states that after six years 
of reviewing and making recommendations, ``the District's 
financial management system now serves as yet another 
cautionary example of the risks entities run when they choose 
to short cut a structured, disciplined approach to the 
planning, acquisition and management of a new financial 
management system. The District has completed action on very 
few of the recommendations we have made in reports dating back 
to 1995.'' I heard a number of comments that, kind of, echoed 
each other. I think Dr.Gandhi mentioned that we have come a 
long way, we have come a great distance, and we have improved each 
year, but there are still some things we can do to greatly improve the 
situation.
    And Ms. Carolan, a year and a half, I believe, on the job, 
who came into that position after it was previously in the 
hands of somebody else, states that we have a long way to go. I 
think those were your words. You also said that we have some 
enormous challenges.
    And Mr. Abadie mentioned that we are not there yet; that 
although you are making great strides to improve overall 
performance, you are the first to recognize you are not there 
yet.
    So I think there is recognition by all of you that, yes, 
some things have been done, but some things have not been done, 
and so we are not there yet, to borrow on your phrase.

               RECOMMENDATIONS MADE IN FY 1995 STILL OPEN

    What I would like to do initially is to ask the question: 
Now that the District has completed action on very few of these 
recommendations included in reports going back to 1995, how do 
you respond, what comment would you make? First, Mr. Mihm.
    Mr. Mihm. Well, Mr. Chairman, as you mentioned, there are 
still quite a number of open recommendations that we have made 
going back over a number of years. The good news from our 
perspective is that the District government is continuing to 
take action on those; they are continuing to work toward their 
implementation.

              SEVEN SPECIFIC RECOMMENDATIONS IN GAO REPORT

    I think that perhaps the best news, though, is that we have 
made seven very specific recommendations in the most recent 
report. They have committed in both their public statements and 
to us in private conversation that action is underway, they are 
going to take aggressive action on those.
    We are certainly going to be monitoring those very closely 
on behalf, obviously, of the subcommittee and others in 
Congress to make sure that we are actually moving forward on 
these and that the promised implementation is actually taking 
place.
    And so, in summary, you are quite right, there is still a 
lot that has been promised that has not been completed. What 
makes us feel good, though, is that there is action underway 
and that we are going to continue to monitor that closely on 
behalf of the subcommittee.
    Mr. Knollenberg. Could you respond to that question?
    Mr. Koskinen. Well, I think we are, with Mr. Mihm, all on 
the same page here. And it goes back to Congresswoman Norton's 
original introduction. You have to remember where we started. 
The city was facing, as Dr. Gandhi remembered, the Y2K problem 
where they were about to go from a relatively dysfunctional 
system to a system that did not operate at all, because it was 
clearly not going to make it through the Y2K time frame.
    So I think everyone agrees that there was a much shorter 
time frame to implement this system and plan and get it up and 
running than you normally would like to have had.\1\
---------------------------------------------------------------------------
    \1\ [Clerk's note.--Regarding the statement by Mr. Koskinen ``So I 
think everyone agrees that there was a much shorter time frame to 
implement this system and plan and get it up and running than you 
normally would like to have had'', is contrary to the control board's 
report on the District's FY 1995 budget and testimony received July 12, 
1995 by the Committee from control board officials Dr. Andrew Brimmer 
and John Hill. The control board's report (page 1620D, FY 1996 House DC 
Appropriations hearings, part 2) shows: ``Phase 4 (fourth quarter of 
fiscal year 1996 and first quarter of fiscal year 1997) will be data 
conversion, system testing, and training. Phase 5 (first quarter of 
fiscal year 1997) will be full on-line implementations.''. In response 
to Committee Chairman James Walsh asking during that hearing (page 
1589, FY 1996 House DC Appropriations hearings, part 2) if `` . . . 
this Committee in the next cycle . . . will have the benefit of data 
from that new system?'', Mr. Hill responded ``I would hope so.'', and 
Dr. Brimmer responded ``So I am confident that we will get this 
done.''. The new FMS was scheduled for ``full on-line implementation'' 
by December 1997, which is more than 40 months or almost three and one-
half years ago. See chart on page 989 showing implementation time for 
other jurisdictions.]
---------------------------------------------------------------------------
    It has meant that it has taken longer to get some parts of 
it up and running and in place than people would like.
    But the bottom line is, as Mr. Mihm noted, we have not 
disagreed with the findings and the recommendations in the GAO 
report. If we have a disagreement only, it is about what the 
extrapolations are from that data.
    I think Mr. Mihm's testimony is what we would strongly 
agree with, which is this is an evolutionary process; we have 
actually made significant gains.
    Dr. Gandhi talked about the fact that we actually closed 
the books this year, as opposed to 1999 when there were a lot 
of extraordinary efforts needed, manually, to do it. For the 
fiscal year 2000 audit, we closed basically without any 
adjustments to SOAR at all, and without any of those same 
extraordinary efforts.

                    MANAGEMENT REPORT FROM AUDITORS

    So if you go back and look four years ago, my favorite prop 
is the management report four years ago was a three-ring binder 
that was about 12 inches or 15 inches high. The management 
report from the auditors this year still is longer than we 
would like, but it is about 20 pages. And that, by itself, 
signifies substantially the significant improvement already 
made in the management systems.
    We are confident that the system works now effectively and 
can be significantly improved, and that is the direction in 
which we are headed.
    Mr. Knollenberg. Thank you.
    Ms. Peck, could you respond as well?

                  TECHNOLOGY--STATUS OF CITY'S EFFORTS

    Ms. Peck. Technology in the city really takes a larger 
view. The view of Technology is that our goal is that all basic 
business processes in the city need to work. For that to happen 
and for us, as I said, to spend wisely and well, really take 
four things: It takes leadership, it takes understanding 
priorities, it takes putting in place standards and 
infrastructure, and it takes staying the course.
    So within that context, when you look at one of the city-
wide administrative systems, which the city-wide financial 
system is, it is, as Dr. Gandhi said, a work in progress, and 
it is a work which is marching to its conclusion.
    And behind it comes the exact same work, as GAO points out, 
that needs to be done under a very definitive methodology to 
put in place the next generation of city-wide HR system; and as 
Mr. Abadie has pointed out, the next generation of procurement 
system.

                         FOUR STRUCTURES NEEDED

    And what we have now is the four structures that we need: 
the leadership structure, the priority structure, the 
standards, the infrastructure. And, as I mentioned, we are now 
in the fourth year of staying the course.
    So in my view, the elements that GAO has pointed out, the 
recommendations which they have given us and which we are very 
acceptive of and very much in league with, are elements, 
absolutely, definitively, that will be completed in this, kind 
of, inexorable march to the sea that is the whole context of 
all business processes in the District.

               FMS--NO TIMETABLE FOR FULL IMPLEMENTATION

    Mr. Knollenberg. GAO also reports that their experience 
studying the success and failure of hundreds of information 
systems has shown that hardware and software do little to 
improve financial management unless they are a part of an 
overall assessment of the processes, the personnel and the 
equipment that make up the entire system.
    The question raised is, currently, as I understand it, the 
District has no timetable or comprehensive plan for fully 
implementing its financial management system.
    I would ask Mr. Mihm to respond to that, and Ms. Peck.
    Mr. Mihm. Well, yes, Mr. Chairman, that was certainly one 
of our findings. And one of the recommendations that we had and 
we are pleased to see the District accepted, was that they do 
exactly this type of comprehensive planning and put in place 
timetables that can be tracked in order to measure their 
progress.
    In the absence of a disciplined system development process, 
you basically have, as you mentioned, programs and projects, as 
we have seen at the federal level, consistently going over-
budget, under-performance, and not meeting user needs.
    And so the key to success is thinking upfront about what do 
we want to achieve. Let's talk to the users, make sure that we 
understand their needs, and then let's get a disciplined 
approach to getting that all in place.
    We think there are some ample opportunities for the 
District to make more progress in that regard.
    Mr. Knollenberg. This would be a comprehensive plan that 
would involve the complete financial management system?
    Mr. Mihm. For the financial management system, which is the 
part that we have looked at; SOAR in particular.
    Mr. Knollenberg. Let me ask Ms. Peck to respond to that as 
well.

                    CITY-WIDE ADMINISTRATIVE SYSTEMS

    Ms. Peck. And again, I am in full agreement with Mr. Mihm. 
And our view is larger than simply the financial management 
system. The financial management system is simply one of the 
city-wide administrative systems that is required.
    Term of art for all of those administrative city-wide 
systems is ERP: enterprise resources planning. We have in 
progress right now the very strategic and then implementation 
planning process going on not just for the financial systems, 
but for the entire administrative suite of systems.
    Mr. Knollenberg. But let me interrupt. What is the 
timetable for all this?

             TIMETABLE FOR CITY-WIDE ADMINISTRATIVE SYSTEMS

    Ms. Peck. The timetable is four years.
    Mr. Knollenberg. Which would be----
    Mr. Koskinen. Well, let me respond, because I think there 
are timetables within those timetables.
    As Dr. Gandhi noted, the integrated tax system will be done 
in 2002. The fixed asset system module of SOAR will be done 
this year.
    The performance budgeting module, we have done the pilot of 
it in the fiscal year 2002 budget you will see in the next few 
weeks. We will take half the District's budget, eight major 
agencies, and have them fully utilizing the performance budget 
system by the fall.

            COMPENSATION, CLASSIFICATION, AND PAYROLL SYSTEM

    What we do not have a timetable for yet, and this larger 
Human Resources Reform and Decision Group is looking at it, is 
the restructuring of the compensation and classification and 
payroll system before we automate it.
    Dr. Gandhi stopped fully any work on CAPPS because it is a 
classic example of what Mr. Mihm noted and what we worked on a 
long time together for the federal government, which is, if you 
simply impose an information technology solution on an 
otherwise somewhat idiosyncratic process, what you are going to 
end up with is a very complicated customized system.
    And one of the rules of the road that we jointly discovered 
is, before we buy an IT system, what you need to do is re-
engineer your operating system. And the goal in life is not to 
customize an off-the-shelf system. It is, in fact, to re-
engineer your operating mode so it will fit an off-the-shelf 
system.

            OVER 200 DIFFERENT PAY SCALES IN D.C. GOVERNMENT

    The District, as noted, has over 200 different pay scales. 
There is not a financial system, payroll system, in the United 
States that will process that system without a tremendous 
amount of----
    Mr. Knollenberg. And as you know, Mr. Koskinen, the Federal 
government has nine. Compared to the District of Columbia's 200 
plus.
    Mr. Koskinen. Exactly.
    Mr. Knollenberg. That is what has to change, obviously. I 
am sure that is what you are saying.
    Mr. Koskinen. And that is what we are doing.
    So that time line is going to be longer, we think. To get 
the comp and class reform that we are discussing with our 
unions and to collapse the pay schedule is another year's worth 
of work. Although we have a time line, our goal is to finish 
that in a year. And in that time frame, then, evaluate what the 
off-the-shelf information technology solutions are for that 
aspect of it.

               REQUEST TO RESCIND $250,000 FEDERAL FUNDS

    [Clerk's note.--The following letter from Natwar Gandhi, 
Chief Financial Officer concerning the rescission of the 
$250,000 appropriated in the FY 2001 DC Appropriations Act 
(P.L. 106-522; 114 Stat. 2444, for a plan to simplify the 
District's employee compensation systems was submitted for the 
record along with a letter from Milou Carolan, Director of 
Personnel concerning the classification and compensation 
project:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



                           PROCUREMENT SYSTEM

    Mr. Koskinen. Now, Mr. Abadie is working on the procurement 
side. He thinks, with Suzanne's help, he can get an interim 
development of a technology solution. Although, in the longer 
run, as you know from his testimony, he is re-engineering the 
way the procurement system operates, so that we, when we get 
done with that, should have a more simple, straight-forward 
system.
    Part of the problem in the past was, taking this very 
complicated procurement system and saying, ``Let's find an IT 
solution.'' The solution was not IT. The solution was re-
engineering the way the work was done and then finding an IT 
solution.
    Mr. Knollenberg. Thank you.
    Mr. Fattah.
    Mr. Fattah. Thank you, Mr. Chairman.
    It is good to note that the Federal government is ahead of 
the District in one or two matters. [Laughter.]

                              CLEAN AUDITS

    But let me ask the deputy mayor, since he spent some time 
at OMB, you do note that a number of our Federal agencies have 
not come with clean audits yet, something the District has been 
able to do, including the Department of Defense. The Congress, 
we just got, the first time ever, a clean audit. So we are kind 
of happy that we are able to pat ourselves on the back.

         MANAGEMENT INFORMATION SYSTEMS ARE CHALLENGING ISSUES

    These management information systems, from a financial 
standpoint, are challenging issues. I wanted to ask a couple of 
questions. And I really want to thank the chairman for holding 
this hearing.
    The GAO report, when was the work completed that is 
referenced by these comments that have been made?
    Mr. Mihm. Leafing through this right now, I am going to 
tell you the exact dates, Mr. Fattah. If you want to ask or go 
on to a different question, then I can interject in just a 
second.
    I am sorry. September 2000 to February 2001, were the 
dates. And then Dr. Gandhi, on behalf of the city, responded to 
us by letter on April 3, 2001.

                 TIME FRAME FOR IMPLEMENTATION OF SOAR

                     (See Clerk's note on page 974)

    Mr. Fattah. Okay, so when you talk about, for instance, the 
SOAR system and its implementation and the fact that it is not 
yet fully completed, you do or do not agree that, in most 
jurisdictions, it takes upwards of five years for the full 
implementation?
    Mr. Mihm. The five-year number, I am not particularly 
familiar with, but I would agree with the thesis behind your 
question, sir, that major change initiatives such as this isnot 
something that is a matter of flipping a switch. There are technology 
issues involved. There are human capital issues involved. There are 
reorganization issues involved. It is an enormous, time-consuming 
undertaking.
    We did not get into a bad situation, overnight. We do not 
get out of a bad situation overnight.
    Mr. Fattah. Well, I appreciate those comments. I was trying 
to find in your report, however, that kind of context for your 
comments about where the District was.
    Mr. Mihm. Well, I would hope that it was in there, but 
obviously, if you did not see it, then I will defer to your 
judgment on that.
    Mr. Fattah. I am imperfect, so it may be in there. And at 
some point, you would want to point it out. Because I think it 
is useful for the Committee to have perspective.
    So if GAO says, ``Well, look, they are not getting this 
done,'' you know, then that brings a level of criticism and 
concern from those of us who have some responsibility in this 
matter, desired or otherwise. And I would not want to have that 
if, in fact, what the District is going through, in terms of 
its implementation, is normal and on schedule and on par with 
about three dozen other jurisdictions that utilize this system.
    Mr. Mihm. I need to be careful, sir, in responding to that. 
I mean, we did try, and I think or hope successfully, in a 
variety of places in the report, to acknowledge the efforts 
that are underway in the District.
    Mr. Fattah. And indeed you did. You said that they had made 
significant progress and so on. But when you got to the 
discussion of this particular system, you made comments.
    And I appreciate your response. I just want to make sure 
that we can put on the record that you agree that this is a 
multi-year implementation in any jurisdiction.
    Mr. Mihm. Yes, sir, that is without question.
    Mr. Fattah. And so that the District's efforts in this 
regard, in that context, they are moving along a continuum that 
is an aggressive implementation of this system.
    Mr. Mihm. I would certainly agree that it is a multi-year 
effort, that they have the leadership team in place, that they 
have a vision on where they want to go.

               SEVEN RECOMMENDATIONS ON FMS IN GAO REPORT

    However, as the report pointed out, there are a number of 
areas in which we think they need to take some aggressive 
action. And we pointed out seven, in particular, where we had 
recommendations in regard to that: doing a better job in terms 
of getting the so-called disciplined approach in place that 
defines user needs and the time line and the various projects 
that are going to take us to an end state; dealing with some of 
the human capital challenges that they have with financial 
management. These are things that are still concerns for us and 
which led us to identify these as weaknesses in the current 
approach.
    What is good about that, as I mentioned in response to the 
chairman's initial questions, is that we are quite certain we 
have agreement with the District with those recommendations and 
a course of action, and now it is up to them to implement and 
to us to follow up.
    Mr. Fattah. Well, I understand that there is a consensus 
about outcome between the District and GAO relative to your 
recommendations.

          Implementation Time Required By Other Jurisdictions

    I guess, let me ask this: If you could and if you would 
supply to the chairman, and therefore to me, a list of the 
other jurisdictions that have used this off-the-shelf system, 
SOAR, and the time line for their implementations.
    Mr. Mihm. I am sure we could----
    Mr. Fattah. That would be useful, because I think that the 
District has an unusual set of constraints, unlike any other 
jurisdictions, and we seem to encourage the District to do 
things that others have not yet accomplished. Which may mean 
that we expect more than is possible or may mean that our high 
expectations might lead to the District being able to set the 
example, as they have done with these four years of clean 
audits and surpluses.
    [The list of other jurisdictions that have used this off-
the-shelf system (SOAR) and the timeline for their 
implementations follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



                        BOND-RATING IMPROVEMENTS

    Mr. Fattah. Let me ask the deputy mayor, the bond-rating 
improvements by all three bond-rating agencies for the 
District, could you both comment on that and supply to the 
Committee, formallyfor the record, those upgrades, the cover 
letters and the analyses that accompanied them?
    Mr. Koskinen. We would be delighted to. Our bond rating 
expert is Dr. Gandhi and his staff.
    Mr. Fattah. Well, if Dr. Gandhi would like to----
    Mr. Koskinen. And we will get you those.
    Clearly, as Dr. Gandhi noted, the fact that we have had 
three upgrades since we reached the nadir in the middle of our 
financial difficulties is the market's judgment of the 
magnitude of the improvement of the District's financial 
management.
    [Copies of the bond rating upgrade letters follow:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
                     IMPACT OF IMPROVED BOND RATING

    Mr. Fattah. So this is the for-profit market? These are 
companies that come in, and they are advising investors and 
prospective investors, and they are making a judgment about the 
procurements and the financial management of the District for 
the street, I mean, for Wall Street.
    Mr. Koskinen. Not only are they advising investors about 
the desirability of the investment, they are advising 
investors, with those bond-rating improvements, that we are a 
safe investment, and, therefore, our interest costs go down.
    So that the risk-reward is, as they increase and upgrade 
the ratings, reflecting the improvements we have made, 
investors, then, are more willing to invest in the District at 
a lower cost. And so not only does our bond rating go up, our 
debt service costs are going down proportionately.
    Mr. Fattah. Well, thank you.
    And I saw the light come on, Mr. Chairman, but I wanted to 
give Dr. Gandhi a chance to make any comment he might want on 
that matter.
    Dr. Gandhi. Well, Mr. Fattah, I think Mr. Koskinen is 
absolutely correct in terms of the implications of improvement 
in the bond ratings. It has substantially reduced our costs.
    I think anyone who has gone through that process on Wall 
Street knows how carefully all these agencies evaluate the 
District's financial viability and its ability to continue to 
remain fiscally viable, not only on a day-to-day, week-to-week 
basis, but also a long-term basis.

    [Clerk's note.--See ``Clerk's Note'', in response to former 
Mayor Sharon Pratt Kelly's testimony, on pages 111 and 112 of 
part 1 of FY 1995 House DC Appropriations hearings concerning 
the ``Questionable Scrutiny by Investment Community''. For 
convenience, see pages 1093-1095, this volume, for reprint of 
those pages.

    All of the systems that support that viability are also 
examined very closely. They have studied this report very 
carefully and long before I saw the reports in The Washington 
Post, or before I appeared before this Committee.
    So I think it is important to note here, as the Chairman 
has noted, that where we came from is extremely important.
    And just to give you some dates, we signed this contract in 
September of 1997. We had a pilot in February of 1998 for13 
main agencies. We went live in October 1998, and we had to do that 
primarily because the Y2K crisis was upon us.
    I requested my good friend, John Koskinen, to extend the 
deadline. He said, ``No way; you have got to meet that 
deadline.'' [Laughter.]
    Mr. Fattah. Well, let me just say, because we need to 
conclude this because my time is up. There are a number of 
jurisdictions around the country, Orange County, East St. 
Louis, Philadelphia, New York City and other places, that have 
experienced financial difficulty. I cannot think of one in 
which the rebound has been as quick and for which there is 
consensus among the bond agencies, Moody's and Fitch and 
others, about an improvement in the bond rating. So I think the 
District should be commended.
    I thank the chairman.
    Mr. Knollenberg. Ms. Morella.
    Mrs. Morella. Thank you. I appreciate hearing the testimony 
from our experts, and I am encouraged to know that they all 
agree with the GAO findings and recommendations; they are all 
working toward implementing management reform.

                        FMS--INCOMPLETE MODULES

    Obviously, in going through the testimony that you have 
also submitted, there are some barriers and impediments that 
you are going to be facing and have faced. And I was just 
curious about what they are.
    As I look at, for instance, the GAO recommendations, 
mention is made of the SOAR budget modules on hold and the 
fixed assets module incomplete and then the implementation of 
personnel and payroll procurement tax systems are incomplete.
    So you have a lot that is not completed. You have a way to 
go. And the electronic interfaces with SOAR. And the payroll 
system may be abandoned, and you mentioned the 200 different 
pay scales.

                   QUESTION OF TRAINING OF EMPLOYEES

    But I am curious about the people challenge, personnel. I 
mean, do you have your work force out there trained to help 
you? Is that something that you see as a challenge? If it is, 
in fact, how are you training them in terms of technology, in 
terms of getting the right people?

                        CAPITAL FELLOWS PROGRAM

    I know you have a program, the Capital Fellows program, and 
I very much enjoy having them come to my office and talk about 
what they are doing in the District government, and what they 
are learning. The hope is that you are recruiting people who 
are going to spread the word. The trouble is, a few of them 
will probably go back to their own states and get good jobs 
with the training they have had. But I think that it is a good 
program.
    So my first question would be about personnel training; is 
this something that you have faced that is unique?
    Dr. Gandhi. That is absolutely right, Ms. Morella. I think 
GAO is entirely correct in saying that it takes more than the 
hardware and software. You need to have people. You need to 
have processes in place. You need to have a structured 
approach. And you have to have training.
    We fully understand that. We agree with them. And over the 
last few years, since I have been there, our fundamental 
emphasis has been to make sure that we have the right people 
doing the right job, and that the people whom we have 
inherited, we train them properly, so they can use the 
sophisticated financial management system.

                HIRING OF 20 ACCOUNTING SYSTEMS MANAGERS

    In addition, what we have done is to hire some ``super SOAR 
users'', people who are expert at the system, so they can then 
become, in each of these agencies, experts to go to. Not only 
will they be able to teach people how to use it if there is a 
problem, but they are always there as a resource any time 
anyone needs them.
    These are the 20 accounting systems managers that we have 
hired. They are not only experts at systems, but they are also 
experts at accounting. So they would know not only what we do, 
but why we do it. They would be able to provide a context.

                          EMPHASIS ON TRAINING

    So training is very much emphasized here. We want to make 
sure that all of the people who need to use the system, must be 
trained properly on that front.
    I do take exception about the emphasis that was made that 
the performance-based budgeting is on hold. Of course it is on 
hold, because we put it on hold.

                   FIRST PRIORITY--ACCOUNTING MODULES

    Our first priority was to make sure that the accounting 
module worked. It has to work, because we have to produce our 
annual report on time with a clean opinion. That was the first 
priority. In other words, I need to walk before I run.

                      PERFORMANCE-BASED BUDGETING

    Performance-based budgeting is running. And as Mr. Koskinen 
tells us, even the federal government does not yet have the 
performance-based budgeting. That is on hold over there.
    So the issue for us is that we have a project ongoing, 
developing the fiscal year 2003 budget, in which we will have 
eight major agencies of the government on performance-based 
budgeting. That is a project ongoing right now.

                         INTEGRATED TAX SYSTEM

    On the Integrated Tax System, I will just take half a 
minute on that. That is not done yet, but we are not late on 
that. We are exactly on schedule. And just to tell you how far 
we have come on that, in February 1997, when I joined the city, 
our filing system was to throw returns on the floor. We had 2.6 
million returns from floor to ceiling piled up in one room. It 
was that condition that I faced.
    Today, we are imaging our returns. We are so far advanced 
that, believe me this, that in early March, we had people from 
IRS coming to the District to see how well we aredoing it. We 
have succeeded to that extent; people from New York and New Jersey are 
coming to learn from us.
    So we have not been late on ITS, because it is coming on 
schedule, and under-budget. We already have a module in which 
large businesses in the District are filing their tax returns 
on the web. Electronic filing is happening right now.
    Mrs. Morella. I know you are very proud, and you took four 
minutes of my five minutes. [Laughter.]
    Dr. Gandhi. I like to brag where I can brag.

           CURRENT IMPEDIMENT--PROVIDING APPROPRIATE TRAINING

    Mrs. Morella. I just wondered if any of you would tell me 
what you see your barriers now? What are the impediments that 
are facing you?
    Mr. Koskinen. I think our barrier, to some extent, is the 
scope of the issue. I mean as I put it, you know, for some 
years the District was undermanaged, and we are now turning 
that around with, I think, very noticeable results.
    We have a very good work force who, notwithstanding all of 
the rumors to the contrary, are dedicated and willing to do the 
work. Our challenge is that when they have failed, they have 
failed because we have not given them support, we have not 
given them training and we have not given them leadership.
    And so what we are doing, when people ask me, ``Well, don't 
you need to just clean house?'' The answer is, ``Absolutely 
not.'' What we need to do is what Dr. Gandhi said for SOAR, but 
it applies across the District. Our biggest obstacle is to, in 
fact, provide the appropriate training and resources and 
structure for our work force, because the vast majority of 
them, over 90 percent, are, in fact, dedicated to making the 
system work.

   90 PERCENT OF MANAGERS TOOK MANAGEMENT SUPERVISORY SERVICE OPTION

    My favorite example of that is when we went to create, with 
the Mayor, the Management Supervisory Service, that took 1,000 
managers and said, ``You can go at will, lose your civil 
service protections and be held accountable for performance but 
he paid performance bonuses.'' Over 90 percent of the managers 
took that option, excited about the fact that they could 
actually become part of a management performance system. It's 
stunned everyone. Everybody assumed, well, half the people 
would not want to take that risk; they would not shift to at 
will.

                EMPLOYEES GENERALLY ARE NOT THE PROBLEM

    To me, I was not that surprised, though. My experience has 
been, in turnarounds in the private sector for 20 years, and 
working in the Federal government for seven years, people are 
never the problem. It is the leadership, the training and the 
structure you are giving them. And that is what we are now 
doing across the board.
    But it is a barrier, it is going to take time. But it is 
not their problem. It is our problem: Can we get their systems 
in place? Can we provide them the support?
    Mr. Knollenberg. Thank you, Ms. Morella.
    Thank you, Mr. Koskinen.
    Mr. Olver, you are recognized.
    Mr. Olver. Mr. Chairman, I will defer back to----
    Mr. Knollenberg. You will yield to Ms. Norton?
    Very good, thank you.
    Ms. Norton, you are recognized.
    Ms. Norton. I thank the gentleman for yielding.

 DISTRICT RECOVERED QUICKER THAN OTHER CITIES FROM FINANCIAL INSOLVENCY

    First, I want to say, I listened attentively to Mr. Fattah 
and especially to his analysis, because he, I think, is the 
only member who played a leading role as a state senator in a 
city that went through the exact same control board process 
that the District went through. We are very fortunate to have a 
member of the committee who has gone through that process.
    Mr. Fattah was the leader in Philadelphia that had to go to 
his state and get a control board and all that went along with 
it. And when he says that the District has come back faster 
than any city he has seen, I listen carefully to that.

    [Clerk's note.--See ``Clerk's Note'' on page 2 of part 1 of 
FY 2000 House DC Appropriations hearings concerning the 
District government's improved financial situation. For 
convenience, see page 1097, this volume, for reprint of that 
page.]

    I would like to ask Mr. Mihm of the GAO a question.
    Mr. Mihm, I appreciate the balance of your testimony here 
today. You gave us good news. You gave us the challenges. But I 
think the GAO may be a victim of the press.
    I note that the District more than once has had a press 
conference to respond to the GAO report. Normally, you know, 
you expect a GAO report not to be favorable, and you say what 
you have to say, you say it in the end, and you respond. That 
is it. The Mayor has had a press conference, Dr. Gandhi, more 
than one of our financial experts has responded.
    We note, as has already been said here, that the 
recommendations have not only been accepted, but we learn that 
many of the recommendations were in progress. In any case, of 
course, they would have to be accepted.

                     FINANCIAL MANAGEMENT PROBLEMS

    I want to see if I understand the gravamen in, kind of, lay 
language of what the GAO has to say about the District's 
financial management problems. I hear you saying that the 
District is over-reliant on, if I may borrow a phrase from one 
of my favorite movies, ``A Few Good Men,'' women and whoever 
else the District can pull in, to manage its finances; that the 
system is labor-intensive and far too dependent on a few 
experts, rather than the broad range that one would expect in 
such a complicated system.
    I wonder if the GAO meant to leave the impression that the 
recovery of the District of Columbia is in jeopardy because the 
systems are in transition and not yet fixed? Or whether GAO 
expected these financial management systems to be fixed by the 
time the control board left?
    Mr. Mihm. The question of whether or not the recovery is in 
jeopardy was well beyond the scope of the work that we did 
here, ma'am, and so someone should not take away either a 
positive or negative lesson from that.
    We were looking at, at the request of the chairman, a 
specific, but very important aspect of the financial management 
system, and in particular the SOAR here at the District. We had 
some concerns in that regard, which we have all been discussing 
here this afternoon. We did not make and do not make a claim, 
again either in a positive or a negative way, that that is 
related to the ultimate financial success or the long-term 
viability of the city's financial management structure.
    The point that I would make, though, as I tried to in my 
initial statement, is that the four years of clean audit 
opinions is a substantial and real achievement on the part of 
the city, but that these opinions fundamentally are building 
blocks to a broader end, which is making sure that managers and 
Congress routinely have available to them sound cost 
information on the programs. And that is still what is a work 
in progress.
    Ms. Norton. Do you see a process in place that will get the 
District where it needs to be?
    Mr. Mihm. We are confident that, with the continued work on 
our recommendations, the District can make progress in that 
regard. We will be monitoring the implementation on behalf of 
the Congress.

                        TWO PROCUREMENT SYSTEMS

    Ms. Norton. I think I should ask Mr. Koskinen this 
question. We have heard that there are two procurement systems 
here. We know that this is a work in process, and, of course, 
nobody expected you to say, ``That is done, now let's find 
another city to fix,'' by now.

                     D.C. GENERAL HOSPITAL PROBLEM

    But new problems arise all the time, and I would like to 
ask you about a huge problem that would challenge any 
procurement system, even if it were already fixed, that is now 
on your plate, and that is DC General Hospital. No one has ever 
seen anything like this, so you do not have any formula for how 
to do this. This is another instance where you are beginning 
from scratch.
    Among the things that the critics have raised--they do not 
know any more than you know because we have never done it 
before. But one thing we do know is that the District has never 
done a good job monitoring contracts, even itsy-bitsy contracts 
that it had put out. Now you have a humongous contract, 
relatively so, from the District's terms. And it is a 
complicated contract, because you are monitoring clinics and 
doctors and a hospital and several hospitals, and it is a, kind 
of, partial privatization and probably no city has ever done it 
before. And it is a giant experiment.
    Questions have been raised because we are told that the 
Health Department will monitor this contract. Recently, there 
was the embarrassment in the paper that the Health Department 
had not even put out in a timely fashion itscontract for dogs, 
much less people.

                SPECIAL STAFF TO MONITOR HEALTH CONTRACT

    I wonder, given the fact that you are in the process of 
trying to monitor ordinary contracts, if the city has 
considered setting up a special staff whose sole job--an 
independent staff that would not be subject to people saying, 
``Oh, somebody told them a lie; that really is not the 
truth''--setting up an independent special staff to monitor and 
help implement the large contract that you have just made to 
deal with what was formally PBC, otherwise known as DC General 
Hospital, health matters?
    Mr. Koskinen. Well, it is a very good suggestion that we 
are pursuing. Let me put it into context. We have had, 
historically, a question, again, from the Federal Government 
and other government agencies, of contract monitoring.
    In the health care area, though, we have been doing 
Medicaid HMO contracts for the last several years and have 
actually done that without any dispute. We have been spending 
and dispersing health care through Medicaid HMOs under a 
contract that the Department of Health manages, and there have 
been no issues about that. So we have a background in this 
area.
    But beyond that, because this is a complicated issue, part 
of the procurement process and part of our plan is to do just 
what you said. We first are setting up a team in the Department 
of Health who will only be responsible for looking at this.

                    NATIONAL EXPERT/MONTHLY REPORTS

    But beyond that, because we think this is important, we are 
retaining a national expert under a separate contract who will 
be responsible for providing monthly reports on both the 
utilization of the health care system, as well as the cost of 
the system.
    As bills come in every month, they will monitor and audit 
those as we pay them. In addition to the specialized staff at 
the Department of Health, they will have available, on an 
ongoing, regularized basis, a contract monitoring contract with 
a nationally known health care monitoring firm who will give us 
reports on both sides.
    Because we are concerned not only about contract 
implementation and execution in terms of cost, we are very 
concerned about monitoring health care utilization and the 
actual quality of the health care under the contract.
    Ms. Norton. I have heard the term ombudsman used. That term 
would seem to cover both use by people as well as----

                         HEALTH CARE COMMISSION

    Mr. Koskinen. Right.
    And also the Mayor will announce shortly a health care 
commission, an advisory group of people from the community as 
well as health care experts, independent of the city, who will 
provide us their own monitoring and input in terms of how 
health care generally is going, as well as the implementation 
of this contract.
    So we will have, we think, a reasonable amount of direct 
monitoring, but also external feedback, as it were, from the 
community and from this advisory group, that will provide us an 
effective way to make sure that we achieve the goal we have, 
which is we will improve the quality of health care for the 
uninsured in the District of Columbia with this system.
    Ms. Norton. Thank you, Mr. Chairman.
    Mr. Knollenberg. Thank you.
    Let me go to an area that has to do with training. I know 
that Mr. Koskinen, Mr. Mihm and also Dr. Gandhi would likely 
have some information and some interest in this and actually 
something to do with implementing, architecting it.

                      ADEQUATE TRAINING ESSENTIAL

    Dr. Gandhi, I believe you said that appropriate training 
has to be developed and also fully enforced. And for the 
District to continue its successful management reform efforts, 
it is going to be necessary to look at how that training has 
measured up to what the outlined goals were. Appropriate 
training has to be developed and there has to be attendance by 
the employees.

             42 PERCENT ABSENTEE RATE FOR TRAINING PROGRAMS

    There is a report which I would like for you to respond to. 
This is June of 1999, there is one in 2000 that, again, tends 
to support the same situation, that you have agencies that do 
not participate--do not send their employees to get the 
training.
    And what I gathered from this report, and I think those 
numbers may still be fairly reflective in terms of accuracy, 42 
percent of the people did not even show for the training 
sessions. That is glaring. That is not acceptable anywhere. The 
question is, why didn't they show?

    [Clerk's note.--see chart on page 1010 that shows 42.4 
percent absentee rate.]

    My understanding also, and you can confirm or deny this, or 
you can elaborate, my understanding is that it was all paid 
for, 100 percent of the training was paid for. That is to say, 
we had 42 out of 100 that did not show, but yet the city paid 
for 100 to receive training.
    How do you expect any growth when it comes to employees not 
participating in training? That is a must here in the District.
    So please help me out with some answers. I am going to ask, 
first of all, my understanding is that 37 agencies did not 
participate in this training. And that is something I would 
like to know, Dr. Gandhi, if you would start with that, and 
then I will go to----
    Dr. Gandhi. That report alarmed us enormously and greatly, 
and we are very much concerned about that.
    Since that earlier report was issued, we have been very 
vigilant about training. As I indicated earlier, we have 
identified each of the persons who should be trained and needed 
to be trained in major agencies of the government, in terms of 
using the SOAR system. They have been identified and they have 
been trained.
    Mr. Knollenberg. They have been trained?
    Dr. Gandhi. They have been trained in terms of the number 
of the modules that they have to be trained about immediately. 
That has been done.
    Mr. Knollenberg. They have been informed that they have to 
be trained.
    Dr. Gandhi. Exactly right.
    And we have reduced the absentee rate to about 10 percent 
now. And again, that is not acceptable to us. We are 
identifying people who are not attending the training and then 
we are following up with our agency directors and agency 
coordinators to make sure that all of them are trained.
    In addition to that, we are training to assure ourselves 
that they have learned something, so there is testing that goes 
after the training, before a certificate is issued. And there 
is online training, so they would have to show us that they 
have learned these things.
    So we have paid a great deal of attention to that GAO 
report and have taken great measures to assure ourselves that 
we do proper training.
    Mr. Knollenberg. Dr. Gandhi, could you do this for me, 
could you give me something that would reinforce your statement 
that you are down to 10 percent?
    Dr. Gandhi. Yes, sir. We will.
    Mr. Knollenberg. Could you do that?
    Dr. Gandhi. Yes, sir.

    [Clerk's note--A copy of the GAO transmittal letter dated 
June 18, 1999 and chart showing an absentee rate of 42.4 
percent at SOAR training classes and a copy of a memorandum 
forwarded by Dr. Gandhi in response to the Chairman's request 
follow:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Mr. Knollenberg. Mr. Koskinen.

               Encouraging Attendance at Training Classes

    Mr. Koskinen. Dr. Gandhi is talking about the training in 
the SOAR system, and over the last year, year and a half, that 
has been a major focus because of the concern.
    It is a broader issue, and organizations generally have 
that issue. You can provide people with training; the question 
is, can you make them go. And particularly if they are busy, 
unless it is assigned a high priority, training courses will be 
given, employees may or may not show unless you make it a 
priority.
    So now, for the MSS training, where we have a block of 
training and, in fact, a catalogue of training. Participation 
is monitored and marshaled by Ms. Carolan and the Office of 
Personnel. Participation is reported at cabinet meetings, and 
in agency performance measures, in terms of the amount of 
training completed or missed.
    And in this year's performance contract between the agency 
director and the Mayor, their participation and their agency's 
participation in training is now a performance measure for each 
agency director. Because we think the only way we can actually 
make sure that we get down to 98 percent participation is to 
make people understand it is indeed a priority.
    And, in fact, if people do not show, the agency is charged 
for no-shows. Because I think it is intolerable to run training 
and have only 50 or 60 percent of the people show up.
    Mr. Knollenberg. That direction has got to come from the 
top down. Would you agree?
    Mr. Koskinen. It comes from the top down. We talk about it 
at cabinet meetings the Mayor and I run. On a regular basis, we 
provide reports of what is the agency participation in 
training.
    Mr. Mihm. Mr. Chairman, may I add something very quickly on 
that?
    Mr. Knollenberg. Very good. Go ahead, Mr. Mihm.
    Mr. Mihm. I think it is important that we be very clear 
about the numbers that we are talking about here. The numbers 
that you were quoting were from a report that talked about 42 
percent of the people were not attending scheduled training. 
And it is indeed good to hear that that number is down to 10 
percent.

              50 Percent Of SOAR Users Still Not Attending

    However, at the time we were doing our work for this 
report, we talked to the SOAR project management office--the 
people that are actually doing the heavy lifting for the 
implementation of SOAR. They were still telling us that 
50percent of the user community for SOAR had not attended the core 
curriculum.
    The most egregious cases involve those people who are 
scheduled for training and do not show. But even accounting for 
that, we still have according to the project management office 
for SOAR, about half of the people that need the training have 
not been in there yet. So that is a separate issue.
    Mr. Knollenberg. Tell me this: Is it true that the city 
paid for everybody, even those who did not attend? I am talking 
the 100 percent total.
    Mr. Koskinen. Well, I do not know what happened in the 
past, but what happens now is the training comes in modules 
where people are trained in a classroom. Now, if you get half 
the people who are there, you are paying for the full classroom 
activity.
    Again, now, what we are doing is we are telling agencies: 
We are providing this training primarily through DCOP, and we 
are monitoring now who signs up for the training and whether 
they show or not. If they do not show the agencies are charged 
for that, as a charge to their budget.
    But again, our goal is not to collect the money from the 
agencies, our goal is to make sure we monitor that as a 
performance measure and that people actually take the training.
    So there are two issues. One is, are people who register 
for the training showing up? Which is what your number is. The 
second issue is Mr. Mihm's point of, are the people who should 
be registering for training in the training pool?

                Management Supervisory Service Training

    In fact, at MSS, we have got 1,000 people, in that program. 
All 1000 of them have management courses that they are required 
to take. And so the question is, how many who should have 
signed up for courses are actually, taking those courses?
    And that is the broader issue we are focused on, and that 
is not only do people who sign up show up, but that everybody 
signs up and everybody gets the training they need.
    Mr. Knollenberg. Well, it is still a problem, though, you 
would agree?
    Mr. Koskinen. Pardon?
    Mr. Knollenberg. It is still a problem today.
    Mr. Koskinen. It is a problem. And it will be.
    In fact, it is not a one-stop shop, that once you get 
people to show up one time then you can forget about it. The 
only way you are going to get people into training going 
forward is to make it an ongoing, continuous priority, and it 
is something that they get reinforced positively about, but 
also the agency directors are held accountable for it. They 
have got responsibility, just as Dr. Gandhi and Ms. Carolan. It 
has to be the responsibility of the agency directors.
    Mr. Knollenberg. Right. It has to come from the top. But it 
would seem to me that that is easily enough done, the tools are 
there for management to impose that.
    Mr. Koskinen. Yes. And as I say, for 2001 it is in 
everybody's performance contract.
    Mr. Knollenberg. Thank you.
    Mr. Fattah.
    Mr. Fattah. Thank you, Mr. Chairman.

                  Manual Efforts For Year-End Closing

    [Clerk's note.--See also pages 1030-1033 for GAO's response 
to the Committee's question for the record on this issue.]

    Let me go back to the GAO report and Mr. Mihm for one 
second.
    On page 6, in the second paragraph, there is a slight 
contradiction on the record, and even though another one is on 
the same page, it is still incumbent upon me to try to clear up 
the contradiction.
    You state----
    Mr. Mihm. I think you----
    Mr. Fattah. Your testimony, page 6.
    Mr. Mihm. Okay. Thank you.
    Mr. Fattah. Second paragraph, second sentence, you say, 
``However, the District's unqualified opinions are primarily 
the result of tremendous amount of effort expended by a few key 
individuals.''
    Mr. Mihm. Yes, sir.
    Mr. Fattah. The deputy mayor agrees that that was the case 
in the earlier clean audits, but stated in his testimony today 
that was not the case. And Dr. Gandhi also said it is not the 
case in the closing of this year's books.
    And you said you completed this, date-wise, up through 
February 2001. Can we clear up this point as to whether or not 
it is GAO's opinion that the only way that they got a clean 
audit was that, people had to stay up until 2 in the morning 
versus what the District officials are saying, that the systems 
in place accomplished this in an efficient and effective way?
    Mr. Mihm. I am going to just answer briefly and then ask my 
colleague, Jeanette Franzel, who is most knowledgeable on this, 
to also give you her perspective.
    We cannot go so far as to say that is the only way they did 
it. Certainly they had less of this tremendous effort this year 
than last year.
    Nevertheless, I think, if their comments are understood as 
being that there was not a huge manual labor intensive effort 
this year, we would have a different view on that. I mean, our 
perspective was that it was quite an enormous effort this year.
    Mr. Fattah. I just want to clear this up. So, 
notwithstanding your testimony today, what you are really 
saying is that in the past it took this tremendous effort,and 
less so this year, except the less so this year is not in your 
statement until your last response.
    Mr. Mihm. Well, I would still characterize what they had to 
do this year as a tremendous effort.
    Mr. Fattah. But you just said that there was a substantial 
difference between the effort from previous years until this 
year. I am trying to get you to be clear with me about the 
progress that the District has made.
    And so you just said that you thought that there still was 
some significant effort, but it was less so and less 
substantially so than in the past. Is that correct?
    Mr. Mihm. Yes, sir.
    Mr. Fattah. And you would agree with me that your statement 
up until that point was that seemingly it was the same in all 
of these years of the clean audits.
    Mr. Mihm. I guess I would take a different reading to it, 
sir. We believe that it did take a tremendous effort this year 
for the District to get its clean financial audit. And, you 
know, it often happens that way with Federal agencies.
    Mr. Fattah. Happens that way with a lot of people who are 
trying to get a clean audit.
    Mr. Mihm. Oh, it happens to a lot of us doing our personal 
taxes.
    Mr. Fattah. And I want to let the District officials 
comment.
    Mr. Koskinen. Let me just say, the report is a SOAR report 
and does the financial system work? And what we are saying is 
the SOAR financial system did its job for the closing this year 
without Herculean efforts.

                      AUDIT REQUIRED A LOT OF TIME

    [Clerk's note.--See also pages 1030-1033 for GAO's response 
to the Committee's question for the record.]

    Now, we spent a lot of time in the audit, as you know; 
everybody does that. And primarily we had two agencies where we 
had to spend a lot of individual time. One was the Public 
Benefit Corporation, which had books which were in a reasonable 
amount of disarray. And the other was UDC, the District of 
Columbia, which also had significant problems in its books.
    Neither of those problems were SOAR problems. Neither of 
them are, in fact, problems of the financial systems. They are 
problems of, in fact, the accounting and the personnel 
operations in two independent agencies. There may be a story in 
here about whether or not you should have independent agencies. 
But in any event, they spent a lot of time doing that.
    But in terms of the time it took to run SOAR, the time it 
took for the financial system to run, there was not a 
significant amount or a Herculean effort necessary tied to the 
financial system operation.
    But I would let Dr. Gandhi----
    Dr. Gandhi. And I entirely agree with that.
    And, Mr. Fattah, I would just ask another moment to really 
reinforce another point that was addressed earlier, that Ms. 
Norton alluded, to that, the press has kept on repeating this--
which is to say--that does this all pose a problem for the 
financial viability of the District going forward?
    And I think it is very important that we make that point 
very clear, because people on Wall Street will follow this 
hearing. Just before I came here, I talked with a reporter from 
the Bond Buyer.

                 ACCOUNTING MODEL--TRACKS EXPENDITURES

    I think what really matters is to make sure that the 
accounting model works, it tracks costs, it assures that there 
are no anti-deficiency violations and that we do not spend over 
the budget.
    Fiscal year 2000 was proof that that did not happen. And in 
2001, you know, we were able to alert District's elected 
leaders in November/December that we had some spending 
pressures.
    Now, how did we do that? It was done through the system.
    Mr. Fattah. You had to have the information to be able to 
do that.
    Dr. Gandhi. Yes. It was done through the system. So I want 
to assure this Committee and the elected leaders of the 
District, as well as people on Wall Street, that we have a 
system that works well in terms of tracking our expenditures, 
that we will not commit any anti-deficiency violations, that we 
will not incur any deficits.
    So the District's financial viability is properly measured 
and monitored through this system and we are all committed to 
making sure that that stays that way.

       DISTRICT HAS MADE IMPROVEMENTS BUT STILL HAS INADEQUACIES

    Mr. Fattah. Let me go back to Mr. Mihm from GAO, because I 
want to see if the two of us can get on the same page here.
    The District was at a particular point in its financial 
management capability years ago.
    Mr. Mihm. Crisis, yes, sir.
    Mr. Fattah. And now it is where it is now.
    Mr. Mihm. Yes, sir.
    Mr. Fattah. Would you like to characterize the distance 
that the District has traveled, in your judgment?
    Mr. Mihm. Well, as I said in my opening statement, we think 
that they have made enormous progress. I mean, the four years 
of clean audit opinions. And in this sense, I would agree 
certainly with the point that I think Dr. Gandhi was making, 
which is the focus needs to be fundamentally, for the external 
markets and the rest, is the fact that the District has had 
four years of clean opinions. I mean, that is the story.
    Now, for those of us who are interested in day-to-day 
management and how we achieve it, there was a second story, 
though.
    Mr. Fattah. I understand. And I am with you.
    Mr. Mihm. Okay.
    Mr. Fattah. And we are going to get to all of that in a 
minute.
    So in terms of characterizing the District from the point 
of crisis to now, you would agree that they have made 
substantial progress?
    Mr. Mihm. Yes, sir. Unquestionably.
    Mr. Fattah. Would you agree that that progress is 
continuing, that if you look at it in time sequences, that 
there is no letup in the District's effort to be a self-
correcting entity in terms of addressing these problems?
    Mr. Mihm. I would certainly agree, sir, that there is 
overwhelming commitment at the leadership level within the 
District and that we would certainly have confidence that with 
the implementation of our recommendations, as they have 
committed to, you know, several times, including today, that 
they are going to continue to make progress.
    Mr. Fattah. So your report then is a helpful aid in 
continuing to point out, in which the District is in total 
agreement with you, about the substantive matters that need to 
be addressed, but it is not some type of red flag that suggests 
that somehow the commitment of the leadership of the District 
to making these improvements has lessened in any way.
    Mr. Mihm. As I mentioned in response to Ms. Norton's 
question, sir, I mean, what we were focusing on was a very 
particular but nonetheless very important aspect, and in that 
sense it is a status report at a point in time. There are some 
red flags that we think we raised in regard to the SOAR system 
at that point, but it does not make any claim to be larger than 
that.
    Mr. Fattah. Thank you very much, Mr. Chairman.
    Mr. Knollenberg. Well, Mr. Olver, we are back to you again.
    Mr. Olver. I will pass.
    Mr. Knollenberg. You will pass. Thank you.
    Ms. Norton.
    Ms. Norton. Thank you very much, Mr. Chairman. I appreciate 
your indulgence. I do have a question. I want to note, however, 
I feel I ought to note for the record that I get my refund from 
the District of Columbia faster than I do from the IRS, for 
what it is worth, and it is worth something to me.[Laughter.]
    Dr. Gandhi. And that is why, Ms. Norton, they are coming to 
us to learn now. [Laughter.]
    Ms. Norton. I do have a question about how Tax and Revenue 
was able to get up and running so fast so that the revenues of 
the District began to come in much faster. But before I ask 
that, I am going to ask a harder question.

                EARLY WARNING OF POTENTIAL OVERSPENDING

    District of Columbia residents have been very confused in 
the last I think couple of years when, almost at the beginning 
of the fiscal year--again, people who are not financial 
experts--I think it was you, Dr. Gandhi, who announced there 
has been overspending in these many agencies.
    Now, of course, the District of Columbia ought to receive 
that and say, ``Thank you,'' because coming this early it must 
mean that this is going to be taken care of. And, of course, to 
me that is unheard of in the District of Columbia. Overspending 
is how the District went down into financial insolvency and we 
did not know about it.
    But it also points up a problem. First of all, it sends the 
wrong message to people because they remember what overspending 
meant, and it ultimately meant insolvency for the District of 
Columbia.
    What it raises to me is on what real-time information you 
are relying? I do not know if it is unusual. Maybe this is the 
way it always occurs, only people do not usually announce it.
    But when it is announced in the District of Columbia--and I 
commend your transparency--what also happens is that agencies 
are told to go back and cut the number of fire trucks, cut the 
number of personnel in the police department, cut the number of 
people in the personnel department, cut the number of trucks 
going out in DPW. So that it rings the people like we are 
sliding back, rather than correcting a system of not reporting 
when overspending was occurring.
    So my first question is, what kind of real-time information 
are you depending on, since these systems are not working as 
you desire them to work, the SOAR system in particular? And 
secondly, shouldn't there be in place controls to keep any 
overspending from occurring so that you would not have to make 
these announcements in the first place?
    Dr. Gandhi. Thank you. Those are indeed appropriate 
questions that we are addressing ourselves.

         EXECUTIVE INFORMATION SYSTEM FOR FINANCIAL MANAGEMENT

    SOAR has a function called the Executive Information 
System, which is what really provides information to agency 
directors and program directors of how much spending is being 
done. We are currently updating that information on a weekly 
basis. In August, we will do it on a daily basis. So on a daily 
basis, an agency director, a program manager would be able to 
tell how much money has been spent against the amount that he 
or she has been allocated.
    Ms. Norton. That would eliminate, then, the overspending 
that occurs in the agencies?
    Dr. Gandhi. Well, that is where John Koskinen comes into 
the picture. I report to him and tell him that, ``Look, this is 
what is happening.'' We go to the Mayor and say, ``This is what 
is happening.''
    Mr. Koskinen. Right. That is very helpful. Let's talk about 
what happened last fall.
    One of the things that happened, and this Committee is 
committed--which we appreciate--to getting our budget done 
earlier rather than later, last fall, and this is often the 
case, we were talking about the District's budget with the Hill 
after the start of our fiscal year. And in the course of that 
discussion in October and November, we were suddenly advised 
one day that we were going to get $75 million less than had 
been approved thus far. There was a complicated issue with 
reserves and where they were going to go, but $75 million was a 
lot of money.
    In addition to that, we were starting to deal with DC 
General, where the question was, where would we find and 
reprogram the $90 million that was necessary to adjust this? 
Plus, the budget formulation process was still improving for 
fiscal 2001, and had created some anomalies in and of itself.

                            Baseline Budget

    So several things have happened. One is we do not have 
those kind of issues in the budget you are about to see. But 
more importantly, we have formulated with the chief financial 
officers and with the Office of Budget and Planning, under Mr. 
Upshaw, a process for actually scrubbing what we call the 
baseline, to make sure that the budget has in the baseline the 
money agencies need to function. So that when we start on 
October 1, we do not have an agency director or their CFO 
saying, ``Wait a minute. I am running at a level higher than 
the budget assumed.''
    So we are confident, with the Council's great cooperation 
and with good work, that the 2002 budget has as a baseline a 
commitment that we will not have spending pressures in any 
agency at the start of next year the way we did this year.
    The second thing is, we are hoping that we do not have any 
last-minute adjustments after we are into the fiscal year from 
the congressional budget process that says, ``Well, you do not 
need as much money,'' because that is obviously a spending 
pressure.

                          FY 2001 Supplemental

    But the final resolution of all this, and we have worked, 
as you say, very carefully and collegially, as a final piece in 
resolving the spending pressures for 2001, is a supplemental of 
$89 million, approved by the Council and the control board, for 
this year for clearly delineated items that will close the gap 
for us, that we are hoping we get favorable consideration from 
the Congress on as quickly as possible.
    Because, again, we now have a very accurate system. The CFO 
is monitoring it. We know month to month where we are going. If 
we do not get the supplemental, for the last quarter of this 
year we will have an $89 million problem.

                   FY 2002 Budget Formulation Process

    But I think our budget formulation process for 2002 is much 
improved and our budget execution process therefore will follow 
and be much more improved.

             Reasons For Success of Tax and Revenue Office

    Ms. Norton. I did want to let him answer my question about 
how Tax and Revenue was able to get up and running fast.
    Dr. Gandhi. And I am eager to answer that question----
    [Laughter.]

                               Tax System

    Dr.  Gandhi. Primarily because, Mr. Chairman, this is 
really a success story, and Mr. Miconi knows this. When I 
joined the District government from the General Accounting 
Office--after all, GAO people are my friends--the District had 
a tax system that was dysfunctional and in disarray in 1996.
    In the last five years, we have collected $700 million more 
in taxes. And at the same time, we also provided tax relief, 
which annually would amount to about $355 million. How was that 
possible?
    Several things account for it. One is, of course, as Mr. 
Koskinen pointed out, we provided leadership to the hardworking 
employees of the District who were really hungering for the 
right kind of leadership, management support, systems and 
training that you have properly emphasized. You know, Herb 
Huff, who is the head of the Office of Tax and Revenue, is a 
great leader, with great experience. He knows how to do things 
and has done them.
    Now, some of our critics say that, ``Look, that was the 
economy. The economy out there was the best in years; that is 
why you got that money.'' Now, that is not entirely so. The 
economy, of course, helped us, but had not our tax system been 
in the proper place and properly administered, we would not 
have been able to capitalize on that economy out there. It 
provided wind on our back, but we had to run the race, and we 
did.

                 Commendation of Dr. Natwar Gandhi, CFO

    Mr. Knollenberg. Well, Dr. Gandhi, I do not disagree with 
you at all. I think that you did it ignoring the economy. I 
think you can be saluted--you and many others--for the work 
that you have done to bring in that revenue. That should have 
been done a long time ago by your predecessors. You have 
brought it up to a point where it is now, I think, close to 
achieving the success that you anticipated.
    Dr. Gandhi. We appreciate your support and Ms. Norton's 
support on that front.
    Mr. Knollenberg. I am going to ask you to work with us for 
a few moments here. We have a vote. I am going to recess the 
committee. We will come back and will conclude shortly 
thereafter because then, after about a 15-minute lull, we have 
a series of votes. So I promise you, you will not be here much 
longer. But if you will just wait for a while, we will recess 
for just a few moments, and we will be back.
    [Recess.]
    Mr. Knollenberg. The meeting will come to order.
    We just had another change in plan. That is typical around 
here. They just decided we are not going to do one of those 
votes, but we are going to do one a little sooner. So what we 
will try to do here, and Mr. Fattah and I have discussed this, 
I will try to conclude my questions shortly, and then, 
obviously, if you have questions, Mr. Fattah, you can ask your 
questions.
    We hope to then wrap it up before the----
    Mr. Fattah. And we will shorten our filibuster answers.
    Mr. Knollenberg. Well, that is a possibility, too. 
[Laughter.]
    I did not know that we did filibustering. I thought that 
was reserved for the other body, but we do it here, too.

                 City's Procurement Totals $1.6 Billion

    Let me direct a question at this point to Mr. Abadie. We 
hear a lot about procurement, and I am sure you do too, as do 
the rest of you in dealing with the District matters. I 
understand that each year the District procures somewhere in 
excess of $1 billion. I have heard $1.3 billion, $1.4 billion. 
What is it?
    Mr. Abadie. Well, sir, it is sometimes difficult to 
identify one number due to the unique structure of the District 
and the fact that OCP does not do all of the procurement for 
the city.
    Mr. Knollenberg. Well, it is over $1 billion, right?
    Mr. Abadie. Yes, it is over that.
    Mr. Knollenberg. That is all.
    Mr. Abadie. It is about $1.6 billion the last time I looked 
at the end of last fiscal year.

Procurement Officer's Relationship With Public Schools and Public Works

    Mr. Knollenberg. Okay. Now, you do not deal with the public 
schools or the public works department, right?
    Mr. Abadie. That is correct.
    Mr. Knollenberg. Do you have any oversight responsibilities 
over those agencies?
    Mr. Abadie. I have a relationship. It is a dotted-line 
relationship. It is an advisory relationship to both the DC 
public schools and the public works. And yes, I have parts of 
my staff that inter-react with them in terms of trying to make 
sure that we are on the same page when we do procurements and 
how we do the business.

           Tracking and Automation Major Procurement Problems

    Mr. Knollenberg. The process reviews that I have read state 
that tracking procurements and automation are still the main 
problems. Is that true?
    Mr. Abadie. Well, I have changed the process reviews 
somewhat. In the past the process reviews used to go through a 
number of levels of authority, so what I have done is to bring 
together the agency folks, along with the procurement folks, to 
actually conduct a joint process review. This collaboration 
during the process reviews, has cut down significantly on the 
amount of time that takes.
    I would like to refer to part of my testimony. I think it 
is not viewing procurement in terms of just that black hole 
that we once thought it was, but it is the life cycle of 
procurement that we have to integrate with not only the 
agencies, but the procurement personnel on the front and the 
back end of the deal, to get the best business case.
    That is where I am, kind of, going, and that is why I think 
it is more important to us to focus on necessarily the 
commodities of what we buy versus how we buy them internally in 
the process.

        Chief Technology Officer's role In Tracking Procurements

    Mr. Knollenberg. Ms. Peck, you may want to respond to this, 
too, regarding the efforts that are being made to track this 
whole procurement system and to stay on top of it.

                        Two Kinds of Procurement

    Ms. Peck. There are really two basic kinds of procurement. 
There is, as Mr. Abadie said, commodity procurement and then 
there is a more complex sealed bid procurement.
    Mr. Abadie is well on his way in the commodity area to 
systemization. And as many people have said to you today, 
``systemization'' often is a lower-level function, including 
things that Mr. Abadie has provided, that allows you to buy in 
the same way you buy as a private economy citizen. Things like 
providing credit cards, providing air travel cards, providing 
the ability to come on line and in real-time procure things. 
And with all of these commodity things, he is very far down the 
road.
    On systematic support for the more complex types of 
activity, again in terms of beginning with the simpler 
activities and moving to the more complex, together we are 
moving to those more complex systematic supports as well.

                        Small Purchase Threshold

    Mr. Knollenberg. Mr. Abadie, I believe you have tried to 
raise the minimum small purchase from $25,000 to $100,000. Can 
you tell me a little bit about that and if it has been 
successful?
    Mr. Abadie. Yes, sir. What this effort attempts to do is 
raise the small purchase threshold, as the federal government 
did back in 1994, it raised its small purchase threshold from 
$25,000 to $100,000. Essentially, what I am doing with the 
District is coming on line with streamlining that you are 
probably familiar with that occurred within the federal 
government. I am taking the small purchase dollar limit and 
raising it a little higher so that we can get those things that 
are simple out of the large purchase system a lot faster than 
we could otherwise.
    You see, right now at the $25,000--level, for example, if I 
have to do a deal at $25,001, I must go through a whole 
solicitation process--IFB process--which is resource-driven and 
paper-driven, and requires longer load-time. If the dollar 
value, squeaked underneath $25,000, like $24,999, which I am 
sure you have seen in the federal government and procurements 
tend to hover at $24,999. There is a good reason for that, 
because in that process, it is quicker to use the small 
purchase process because ofit only requires three quotes. It 
requires less paper, and you can actually cut the deal a lot faster.
    What I want to do is raise the dollar threshold so that we 
can actually focus our personnel on the more complicated buys, 
as Suzanne has said, and we can focus on the service deals that 
really are resource-driven and are more important.

              Perception THAT Procurement System Is Broken

    Mr. Knollenberg. On a general point, every person that I 
run into in this city--I think almost every person, group, 
organization--complains about procurement. They do, and that is 
not an arrow at you or anybody sitting here, but I think there 
is a problem with this thing called transparency.
    I do not think that it is apparent to an individual on the 
street what they have to go through, what kind of darkness 
there is with respect to procurement. And even Members of 
Congress, obviously, let alone the general public, even we have 
some difficulty trying to probe into some of those areas 
because it is dark. It is not transparent. And the answer is 
not always a quick answer.
    I am not suggesting that you have an answer for that 
tomorrow, because these conversations I have had have been very 
recent. So obviously, this is still ongoing.

              Improving Transparency of Procurement System

    What is being done about improving the transparency of the 
District's Procurement System?
    Mr. Abadie. Well, I can talk to that as part of my 
testimony, which I did not talk about, initially because I 
wanted to lay the groundwork with what I perceive to be as this 
prohibiting transparency in procurement. It really revolves 
around what I call the life cycle of procurement which is 
really an integrated process with not only agency personnel, 
but procurement personnel.
    Oftentimes, we think of procurement as this black hole that 
it goes into, and we do not know how it comes out on the other 
side.
    Mr. Knollenberg. That is kind of the black hole that these 
people were describing to me.
    Mr. Abadie. Yes, but what I think it is is an educational 
process to understand that there are pieces of the life cycle 
that everybody must be integrated with.
    I will give you an example. In order for me to do a 
procurement, there are three things that I have to have. I have 
to have a statement of work. I have to have the ability to 
understand the business deal. And I also have to have money. 
And because of our unique situation in the District, any of 
those three that are either weak or do not occur causes 
procurement to get on a treadmill and not go anywhere.
    Mr. Knollenberg. Are those getting integrated?
    Mr. Abadie. Yes. These are getting integrated. As a matter 
of fact, my whole educational program of what I am doing with 
procurement is I am trying to cause procurement personnel, not 
necessarily to think that this is a process that is rules-
driven, albeit we have to follow certain rules, as I am trying 
to turn them into what I call business managers; to be partners 
with the agency folks and the CFO folks to look at the business 
deal, and then provide the best business case to try to get the 
goods and services to the citizens.
    I am trying to refocus the procurement organization to 
understanding that we are actually business partners with 
everybody throughout the District, and that, in fact, if we are 
business partners and understand how the life cycle works, the 
likelihood of getting the goods on time, cheaper, better, 
faster is much higher. This is where I am trying to go with 
this education.
    Mr. Knollenberg. I would appreciate, obviously, any success 
that you can muster along that line, because people do have a 
concern about it and they are stymied by it.

                Improvements Made On Contract Monitoring

    Mr. Abadie. Well, as a success I might point out that part 
of my testimony--you will read it--is a piece of training that 
I do internally to OCP. We provide training not only internally 
for the business managers, but for the agency personnel to 
monitor contracts, which I think is also an important piece.
    I think we probably do a real good job of looking at the 
business deal, but we have to strengthen what we do in terms of 
how we monitor the deals.
    Mr. Knollenberg. I do have some follow-up questions which I 
am not going to ask, but I am going to submit for the record, 
and some have to do with that aspect, Mr. Abadie. I also have a 
couple of questions for some of the other witnesses as well. So 
I will get that done.
    In the interest of time, now that we have a vote on, I am 
going to defer to Mr. Fattah and then we can conclude here 
shortly.
    My only suggestion is to keep it down a little bit so I can 
do the two-minute thing, so you are on, Mr. Fattah.

              Percent of Procurement with D.C. Businesses

    Mr. Fattah. Mr. Chairman, I am going to do better than 
that. I will just ask that if at some point you could provide 
the chairman and myself information about what percentage of 
the procurement is done with DC businesses.
    Mr. Abadie. Okay.
    Mr. Fattah. And what percentage is outside of the District, 
and whatever. That would be helpful to me.
    We did a similar study in Philadelphia, and you know, 
public sector procurement is never going to be like private 
sector procurement for obvious reasons. But I would be 
interested in that information.
    [The following information on what percentage of 
procurement is done with D.C. businesses follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Mr. Fattah. I thank the chairman for the hearing. I thought 
it was enlightening in many respects.

             Recognition of Congressman Fattah's Experience

    Mr. Knollenberg. Mr. Fattah, thank you. We are fortunate to 
havesomebody at the dais here who has been through a similar 
process in Philadelphia. This was mentioned earlier as has been 
mentioned by Ms. Norton and others, and I think we could all gain a 
little bit from the experience he has had as well.

                          Tribute to Witnesses

    But I want to pay tribute to all of you. Some of these 
questions have been pointed and direct, and they were in search 
of an answer of some accuracy. That is something we are going 
to continue to do, to probe and probe. And you all are familiar 
with that. That will not change. We will continue to do that. 
Our job is, of course, oversight, and I think there is nothing 
that we would like better in time to see is that overnight 
disappear and you could do it all on your own.
    At the table in front of us we have some very competent 
people. I do not have to tell you that John Koskinen did not 
come here because of Y2K. He came here because he has a 
background that is long and broad and very, very supportive of 
knowing what to do and when to do it. The rest of you as well--
Dr. Gandhi--and I would not excuse any one of you from being 
among that group. I want to say that we are very, very pleased 
that you are part of the District government. We want to make 
the system better. I know you do, too. We want to help you.

                         Conclusion of Hearing

    There are no further questions, so we are going to wrap up 
this hearing and adjourn until tomorrow, May 17, at 1:30 in the 
same room for those of you that may be interested. Our hearing 
tomorrow is the one that was rescheduled from May 10.
    So again, I am very pleased with everyone appearing here 
today. Your testimony has been very helpful to us, and we will 
continue to search with you for some answers, and you will 
expect from us some questions.
    So thank you very kindly.
    This concludes today's hearing.

                        Questions for the Record

    [Clerk's note.--The following material reflects questions 
submitted for the record by the Committee and the response to 
each question:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



                                            Thursday, May 17, 2001.

      HOUSING AND ENVIRONMENTAL ISSUES IN THE DISTRICT OF COLUMBIA

                             HOUSING ISSUES

                               WITNESSES

ERIC PRICE, DEPUTY MAYOR FOR PLANNING AND ECONOMIC DEVELOPMENT,
          ACCOMPANIED BY:
        MILTON BAILEY, DIRECTOR, DEPARTMENT OF HOUSING AND COMMUNITY 
            DEVELOPMENT;
        ZOREANA BARNES, ACTING EXECUTIVE DIRECTOR, D.C. HOUSING FINANCE 
            AGENCY;
        THEODORE GORDON, CHIEF OPERATING OFFICER AND DIRECTOR OF 
            ENVIRONMENTAL HEALTH, D.C. DEPARTMENT OF HEALTH
MICHAEL KELLY, DIRECTOR, D.C. HOUSING AUTHORITY,
        ACCOMPANIED BY BERNIE TETREAULT, REAL ESTATE ADVISOR TO THE 
            EXECUTIVE DIRECTOR, D.C. HOUSING AUTHORITY
JAY FISETTE, MEMBER, BOARD OF DIRECTORS, METROPOLITAN WASHINGTON 
    COUNCIL OF GOVERNMENTS, AND CHAIRMAN, ARLINGTON COUNTY BOARD

                Chairman Knollenberg's Opening Statement

    Mr. Knollenberg. The meeting will come to order. I 
appreciate very much the panel being here in advance of the 
appointed hour. We will be joined shortly by our Ranking Member 
Congressman Fattah. With two Members present, we have the 
necessary quorum, so we will begin the meeting.
    Let me welcome the panels. We have two panels with three 
witnesses on the first panel and I believe five on the second. 
I may repeat myself on this, but we would like to have the 
first three members present their testimony, and then we will 
go to questions with these three gentlemen, and then you can be 
on your way. You are certainly welcome to stay as part of the 
audience. We will then hear from the other five witnesses.

                    Housing and Environmental Issues

    I am pleased that the subcommittee will be discussing 
housing and environmental issues during this afternoon's 
hearing. These are both areas that I have always been very much 
interested in. Both Mr. Fattah and I sit on the VA/HUD 
appropriations subcommittee, which writes the checks for both 
HUD and EPA, as you know.

                              Housing Tour

    Not only have I heard very positive things about housing in 
the District of Columbia, but I have seen it with my own eyes. 
Ten days ago I went on a tour to see some of the housing 
facilities in Washington. We toured LeDroit Park in Northwest; 
Montana Terrace in Northeast; and Wheeler Creek, a HOPE VI 
initiative, in Southeast. I have to say I was very impressed 
with what we saw. We were ably led, obviously, by Michael 
Kelly, who is one of the panelists that we will be hearing 
from.
    Since I became Chairman of this subcommittee, I have 
repeatedly said that I wanted to learn from the District what 
is going right with housing and what is going wrong.

                  Detroit, Michigan Housing Situation

    Now, because my backyard is the city of Detroit, Michigan, 
things aren't going as well there right now with respect to 
particularly HOPE VI and housing. You don't have to take my 
word for it, because just yesterday the independent inspector 
general of HUD released a report that found things in Detroit 
so bad that some $18 million of taxpayer funds appear to have 
been misspent. A receivership is being recommended for the 
Detroit Housing Commission, and that is also in play. Again, I 
contrast this with Washington, D.C. and want to find out what 
you are doing right.

                       Agencies Represented Today

    I look forward, of course, to discussing these housing 
issues as well as environmental matters with our panelists this 
afternoon. Our witnesses today represent various city agencies. 
We have the District of Columbia Housing Authority, the 
Metropolitan Washington Council of Governments, the Office of 
Deputy Mayor for Planning and Economic Development, the Mayor's 
Office for EnvironmentalAffairs, the U.S. Environmental 
Protection Agency, the District of Columbia Water and Sewer Authority, 
and the District of Columbia Environmental Health Office, as well as 
the U.S. National Arboretum.
    Our Ranking Member, Congressman Fattah, he is on the House 
floor right now perhaps making an eloquent speech, but as soon 
as he comes in, I will offer him the opportunity to make an 
opening statement.

                        Witnesses on First Panel

    Let me now introduce specifically the gentlemen on the 
first panel. Michael Kelly, of course, is director of the D.C. 
Housing Authority; the Honorable Jay Fisette, who is a member 
of the board of directors of the Metropolitan Washington 
Council of Governments. He is also chairman of the Arlington 
County Board. We also have before us again Eric Price, Deputy 
Mayor for Planning and Economic Development.
    I appreciate all of you being here. You may have others 
with you to represent you in some areas, so at this time I am 
going to swear in the witnesses, and all of those who are going 
to be testifying as a principal or supporting witness I am 
going to ask to stand and raise your right hand.

                            Witness Sworn In

    According to the Rules of the House and section 1(b) of the 
Rules of the Committee, I am authorized to administer the oath.
    [Witnesses sworn.]
    Mr. Knollenberg. If there is no objection, we will take 
each panel separately and hear all of the opening statements. 
We will operate under what we like to think is a 5-minute rule, 
gentlemen, if you can. Please highlight your entire testimony 
in those 5 minutes and certainly anything that you want to 
submit for the record will be accepted. We will also insert 
your entire statement into the record.
    First we will hear from Mr. Eric Price. I think that we are 
pretty well set to hear from you. So you are recognized, Mr. 
Price.

Opening Statement of Eric Price, Deputy Mayor for Planning and Economic 
                              Development

    Mr. Price. Chairman Knollenberg and members of the District 
of Columbia Appropriations Subcommittee, thank you for inviting 
me to testify before you today on housing development in the 
District of Columbia. My name is Eric Price, and I am the 
Deputy Mayor for Planning and Economic Development in the 
District of Columbia.
    I have presented my full testimony for the record, which 
includes detailed information about projects and programs under 
consideration by the District government agencies.
    I would like to at this point also acknowledge Milton 
Bailey, who is here, who is the director of the Department of 
Housing and Community Development; and Zoreana Barnes, who is 
also here, who is the director for the Housing Finance Agency.

                       Balanced Housing Strategy

    What I am going to do today is briefly describe the Mayor's 
housing agenda and talk about why we need to have a balanced 
housing strategy. First, just for a little background, there 
are really three to four things that are structuring our 
housing agenda here in the District. One of them, and we have 
talked about it before, is our tax base and the structure of 
our tax base, the fact that a significant amount of District 
land is tax-exempt so we don't have those property taxes that 
come as a form of revenue to help with the other services we 
need to provide as a city. The other thing is that two-thirds 
of District workers don't live in the District, and so we don't 
get the income taxes from those workers.

  Economic Development in District Different from Other Municipalities

    So the combination of those two things means that the way 
we look at economic development in the District could be 
different than some other municipalities, for example, that go 
after corporations to bring them in. That might not give us the 
best--might not be the best form of economic strategy for us in 
all instances, whereas housing would be. With housing we get 
the property taxes from the individuals, and we get the income 
taxes from the people who work in those offices that are in the 
District of Columbia. So, in fact, it drives what we do and 
what I am going to talk about in a little bit more detail.

                          Rental Housing Stock

    The other thing that drives what we do is that the 
District's rental housing stock is about 23 percent of the 
region's housing stock. Yet low-income housing in the 
District--the number of low-income housing units we have in the 
District account for about 50 percent of all the low-income 
housing for the region. So when you take those issues together, 
we have to come up with a balanced housing strategy to address 
those things.
    The way the Mayor has proposed doing that is really three 
ways. One, we have to make a better use of the existing 
programs that we have in the District, and we started to do 
that. One example is just a couple of months ago we had two 
different agencies that provide mortgage financing to low- to 
moderate-income families. We decided to leverage the monies 
from DHCD home money with the financing from the Housing 
Finance Agency. What happened was over a 4-week period, we had 
about 108 families that qualified. We gave mortgages to 30 
families, and we expedited the process, but we worked together 
to leverage our existing resources in that case. We ended up 
providing mortgages to families below 4 percent in that 
particular example. So that's just one example, and I can talk 
about more in the Q&A.

                     Preserving Affordable Housing

    Another thing we need to do is to expand our resources and 
protect affordable housing stock that we have. The Mayor has 
introduced major legislation, 11 to 12 initiatives that are 
included in it, and they really look at three things. We look 
at preserving affordable housing. We look at the rehabilitation 
of our vacant and abandoned properties, and we look at 
expanding housing production for all income levels, and just 
quick examples on each one.

             Five Percent Cap on Increase in Property Taxes

    When I talk about preserving affordable housing, right now 
the housing in the District, we have a very good market. 
Housing prices have increased in the last year about 14 
percent, but this does place demands on homeowners with very 
low incomes who have lived in neighborhoods for many years.
    So what the Mayor did is he has proposed a 5 percent cap on 
the increase in property taxes for families with incomes below 
$49,000 that have lived in their homes 10 or more years. So 
that's the kind of things that we are talking about when we 
talk about preserving affordable housing for families in the 
District.

                      Streamline of Building Codes

    When we talk about rehabilitating vacant and abandoned 
properties, we mean we need to streamline our building codes 
for rehabilitation. They are very old, over 20 years old, and 
they are geared towards new construction. So we are looking at 
the examples of some States that have already donethat.

                          Historic Tax Credits

    We also want to provide historic tax credits. The District 
has--the District housing stock, I think the number, someone 
can correct me, is about 44 percent of all of the housing stock 
is over 60 years old in the District of Columbia. So the Mayor 
has put forth legislation that provides an historic tax credit 
that will be available for families at certain income levels.
    The last thing we have done is how do we expand housing 
throughout the District for all income levels? And we have 
looked at a couple of things. One of those things is tax 
credits. The tax credits differ: tax credits of 100 percent if 
there is an affordability component; tax credits in areas where 
housing may just be beginning to take place, but we just want 
to give an incentive for it and be limited in scope, but we are 
working very hard with developers.
    The other thing that we are doing is leveraging the 
resources that we have. In the case where the District owns 
land, we are putting that land out to bid to provide mixed 
income opportunities in the District of Columbia.

           Things the Federal Government Has Done and Can Do

    There are a couple of things that I think the Federal 
Government has done and can continue to do in working with the 
District. One of those things--I am just going to mention 
three, my testimony mentions many more, but one of those things 
is expanding the low-income housing tax credit for the District 
of Columbia.

         City Has Disproportionate Share of Low-Income Housing

    As I said earlier, we do have a disproportionate share of 
low-income housing in the District. The low-income housing tax 
credit is based on the population of the District of Columbia, 
and so we get far less of a share than the city of Baltimore 
may get, theoretically because the low-income housing tax 
credit would be based on the State's population. So we want to 
talk with the Federal Government about increasing that, given 
the fact that--and looking at it on a regional basis and not 
just on the District's population, given the fact that such a 
disproportionate share of low-income housing is in the 
District.

               Capital Dollars for Foreclosed Properties

    The other thing is the FHA has the ability to provide 
capital dollars for foreclosed properties, and we want to talk 
and work with the FHA to do that. We have projects in the 
District right now that we could use.

                     Expiring Use Capital Projects

    The final thing, and I will end my testimony, is we have 
right now a number of expiring use contract projects in the 
District of Columbia. These were projects, Mr. Chairman, as you 
know, that the debt financing was for a much longer period than 
the subsidy on those projects. It is estimated that in the next 
5 years, about 10,000 units or 114 projects will be in the 
position to opt out of the program. We want to work with the 
Federal Government to help preserve that housing stock and talk 
about some ways and some ideas that we have that we think can 
help facilitate that.
    I will be glad to answer any questions that you may have.

                    Prepared Statement of Eric Price

    [Mr. Price's prepared statement follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mr. Knollenberg. Thank you. Thank you very much, Mr. Price. 
We do appreciate your keeping your oral testimony within the 5-
minute mark. We will have plenty of time for some questions.
    Now I would like to go to Mr. Kelly, who is the gentleman, 
again, that was kind enough to provide some leadership in 
getting us around to some of the communities, some of the areas 
a week ago Monday, I believe it was, which afforded what I 
thought was going to be a small group that turned into a large 
group. The bus almost overflowed with people, but that was 
good. We had a good opportunity to see a lot and communicate 
and interface with a number of people.
    Mr. Kelly, you are recognized.

  Opening Statement of Michael Kelly, Director, D.C. Housing Authority

    Mr. Kelly. Thank you, Mr. Chairman, and committee members. 
My name is Mike Kelly, and I am the executive director of the 
Housing Authority here in the District of Columbia. Thank you 
again for allowing my written testimony to be entered into the 
record.
    It is an honor to have the opportunity to share with 
Chairman Knollenberg the highlights of what we have 
accomplished at the Housing Authority, as was mentioned, for 
the second time in less than a couple of weeks. The tour was a 
very valuable experience, and I think that on behalf of the 
thousand employees of the Housing Authority and many of the 
senior leadership that's here with me today, we are proud of 
our accomplishments and welcome any opportunity to share with 
you our accomplishments. We are here so that our agency gets 
some more national display of those achievements.

             Housing Authority Largest Landlord in District

    We serve approximately 25,000 residents in our 9,500 or so 
public housing units in our conventional program. We serve 
another 25,000 in the 9,800 Federal Section 8 program units 
that we administer. As such, the Housing Authority is the 
largest landlord here in the District. We are currently 
monitoring a fiscal year 2001 consolidated budget of about $260 
million, which is made up of grants, rent subsidy, and our 
Section 8 administration.
    Within the last year, the Housing Authority has moved from 
the successful court-ordered receivership to a more 
conventional form of governance in which policy is set by a 
nine-member Board of Commissioners that includes three elected 
residents. It also includes Eric Price, the Deputy Mayor for 
Economic Development for the District, as well as Russell 
Simmons, who serves as senior vice president of Riggs Bank.
    While we are not a line city agency, we work in tandem with 
the administration, particularly with Mayor Anthony Williams, 
his housing and economic development team, and Deputy Mayor 
Eric Price.
    To underscore a point that was raised by Deputy Mayor 
Price, the work of the Housing Authority is an important 
segment of the Mayor's overall housing strategy. As members of 
the same team, we participate in that agenda, and we believe 
that the contribution that the Housing Authority brings adds 
value to what the city is currently doing.

                          Housing Legislation

    Additionally, the Mayor's housing legislation that Mr. 
Price addressed complements the existing housing programs and 
benefits the residents of public housing. Currently the Housing 
Authority is in the first year of a 3-year comprehensive 
strategic plan that we use to accomplish our overall mission to 
provide decent and affordable housing for many of the 
underprivileged; and many of them the working poor.

            Regionalized Organization of Property Management

    To provide a high level of service to our clients, the 
residents, and to keep the housing inventory in good quality, 
we have regionalized our approach to the organization of our 
property management. We have divided our stock into three 
geographic regions, each with an independent staff, 
administrators and equipment. It is a type of delivery service 
that brings our services as close to our client as possible. 
Because of this, we currently have an average occupancy rate of 
about 98 percent, a percentage that rivals anything in the 
private sector.

                   Public Housing in 55 Developments

    Residents of public housing are housed in 55 developments, 
which include 19 elderly and disabled buildings throughout the 
District. We can proudly report that currently we have a 98 
percent rent collection rate, 100 percent of our emergency work 
orders are done within 24 hours, our routine maintenance work 
orders are done within 2 weeks, and we have semiannual 
inspections of all of our units, all of which--exceed the 
industry standards.
    It is worth reiterating that our public housing has gone 
through a tremendous makeover in recent years, and that process 
continues. A good example is our HOPE VI projects. They 
represent more than $100 million in Federal grants, but nearly 
three times that amount, nearly a third of a billion dollars, 
in redevelopment value. This is why we consider our well-
coordinated involvement with the city's redevelopment plan so 
critical to the city's vitality in future decades.

                          Hope VI Developments

    To review those HOPE VI developments a little more closely, 
I would like to share with you the latest on The Townhomes on 
Capitol Hill, which is not very far from the Capitol itself. 
These units have been open for about 2 years now, and they 
continue to flourish. As the former Ellen Wilson Dwellings, 
this development stood abandoned for 8 years between 1988 and 
1996. It was a blight on this neighborhood, and a $26 million 
HOPE VI grant combined with a wrecking ball, a great team of 
planners, architects and developers, and a very committed 
resident body have turned this into a fully occupied 
centerpiece of our stock today.

                             Wheeler Creek

    More recently, as was mentioned, Mr. Chairman, we had the 
opportunity to go to Wheeler Creek. It is a remarkable blend of 
home ownership, rentals and senior dwellings east of the river. 
This, too, has proven to be a great success. While it was still 
called Valley Green, it was a sprawling wasteland of mostly 
empty walk-ups, harboring a culture of crime, drugs and 
violence. The future, based again on HOPE VI, is bright, and 
since the official groundbreaking last fall, its rental offices 
have been full of applicants trying to take advantage of this 
25-acre, nearly pastoral setting for home ownership.

                         Other Housing Efforts

    The success of these developments and the favorable track 
record for the Housing Authority that has been established in 
getting them done also bodes well for our progress in finishing 
Frederick Douglass and Stanton Dwellings, a 600-unit, mixed-
income project that will feature home ownership, rentals and 
lease-to-own opportunities; and East Capitol, where we hope to 
build 555 units of rental and home ownership units, as well as 
a major supermarket that will be the first one in this part of 
the city.
    It is with this track record of commitment that we look 
forward to working with you and the city to have a successful 
Arthur Capper/Carrollsburg redevelopment. This project is sited 
right between the Navy Yard and what is going on on the 
waterfront, and we believe it is a remarkable opportunity we 
have to rebuild that entire part of the city.

                      Unit Rehabilitation Program

    The remainder of the stock has been renovated through our 
Occupied Unit Rehabilitation Program. It is a program in which 
we go into each of our units and do work, less than full-gut 
rehab, so that every one of our sites is brought up to a high 
level of housing quality standards.
    Obviously, while we are investing--in buildings, it is 
important for us to invest in the people. We have some 
remarkable programs. It is in my written testimony, but I would 
like to mention, as you have in terms of your own 
responsibilities with the HUD/VA appropriations, the 
President's HUD bill at this point shows some dramatic cuts in 
capital funding as well as the drug elimination program. These 
programs have immediate impact here in the District and I 
welcome your continued research on these cuts on behalf of not 
only the District, but also the entire industry and for the 
Nation.
    At this point, Mr. Chairman, I would like to end by 
thanking you again for the opportunity to be heard and I look 
forward to visiting more of the housing authority's sites with 
you at a certain time. I am open for any questions that you 
might have.

Prepared Statement of Michael P. Kelly, Executive Director, District of 
                       Columbia Housing Authority

    [Mr. Kelly's prepared statement follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mr. Knollenberg. Thank you very much, Mr. Kelly.
    I think what we will do is continue with Mr. Fisette's 
testimony. That will give me about 2 minutes to get to the 
House floor vote and return quickly. We are trying to economize 
on time. With that, I am going to recognize Mr. Fisette, and 
please go forward with your statement.

     Opening Statement of Hon. Jay Fisette, Council of Governments

    Mr. Fisette. Thank you very much.
    As you mentioned, I am the chairman of the county board in 
Arlington and today am representing the board of directors of 
the Metropolitan Washington Council of Governments, where I 
serve as an elected official. We are pleased to be here today. 
COG has a long history in working with the issue of affordable 
housing, and I know it is a little symbolic that I am here 
representing COG. COG has often felt that many important public 
policy issues, in fact, like affordable housing, have a 
regional component and sometimes merit regional solutions.
    In Arlington particularly, this is one of our most 
intransigent issues right now, affordable housing, as with the 
District. We finished an affordable housing task force, and, 
that may prove to be helpful. There are a lot of ideas in there 
that are probably applicable to the District as well.
    And I will also mention it is our 200th anniversary. 
Together we share a 200th birthday because we were part ofthe 
original District of Columbia.

                  COG Represents 17 Local Governments

    COG represents 17 local governments in the Washington 
metropolitan region. It is a forum for consensus-building, the 
development of intergovernmental policies and programs, and 
this year, under the leadership of Carol Schwartz, the chair of 
COG, affordable housing is the identified priority issue area, 
although we all know it is a national issue.
    The Mortgage Bankers Association recently released new 
national findings that show families earning between 80 and 120 
percent of median income are now finding it difficult to find 
decent and affordable housing. We experience it in Arlington, 
as the District does. These are our employees. These are our 
teachers, police officers, health care and child care workers, 
the backbone of the community.

                        Fair Share Housing Plans

    It has been more than 20 years since COG adopted one of the 
first regional Fair Share housing plans in the nation. That 
plan served our region well and was a catalyst for millions of 
dollars of bonus Federal housing aid for local governments. But 
Fair Share was largely centered on project-based assistance. 
Most Federal housing assistance now is tenant-based, moving 
freely throughout the region.
    What we need are new tools and strategies to reflect 
today's twofold housing challenge, both the very low-income and 
middle-class and working families. A recent Post article 
reported on the challenge facing the Washington region as more 
families move farther out to find low-cost housing. Drawn by 
lower housing costs, Baltimore and the surrounding communities 
are increasingly being recognized as bedroom suburbs for the 
Washington area workers, just as Arlington was a bedroom 
community to D.C. decades ago.
    Housing savings are too often lost to higher transportation 
costs, congestion and resultant environmental costs borne by 
everyone. No one in this area would doubt that at the top of 
every survey, transportation and the congestion issues, 
although you cannot forget the housing dimension, top the list 
of concerns in the region.

            New Workers Live in Distant Cities and Counties

    Some data that we have come up: A study that COG was 
responsible for, released March 23 of this year, shows that 
even though the region's economy has grown rapidly over the 
last decade, a substantial number of the area's new workers 
must live in distant cities and counties. COG's study concluded 
that because people spend most of their income where they live, 
approximately $7.8 billion is lost to the regional economy when 
its workers must move to distant locations. High housing costs 
also force households to spend more on housing than other goods 
and services within the local economy. The report estimates 
that this diversion of consumer spending costs the region 
another $1 billion, bringing the total costs of the region's 
housing shortfall to almost $9 billion.

            Affordable Housing Has Profound Economic Impact

    Greater affordable housing opportunities in the region as a 
whole and especially in the District of Columbia and close-in 
suburbs would have a profound economic impact.
    The study shows the number of housing units in the region 
increased by 12.3 percent in the last 10 years; however, the 
number of renter-occupied units declined by 7,500. The research 
also suggests the problem is not going to get better any time 
soon. Rental prices in the region increased by nearly 14 
percent in the year 2000, after increases of almost 9 and 6 
percent in the years before that.

               Renters Pay More Than 30 Percent of Income

    More than a third of renting households in the region now 
pay more than 30 percent of their income for housing, which is 
the traditional percentage we use. A person earning minimum 
wage can only afford a rent of $230.
    This year, the COG board has agreed to look at this issue 
in depth, as I mentioned. We are looking at several things: 
housing policy overall, how to build on the Fair Share plan 
from years past. Secondly, innovative housing programs. We have 
received a grant, 1 of 15 HUD demonstration grants in 1997, to 
administer a regional Section 8 rental assistance mobility 
counseling program. The goal of this program, scheduled to end 
in 2002, is to widen housing choices available to Section 8 
families.

                 Brookings Report ``A Region Divided''

    I also bring to your attention the Brookings report. A 
Region Divided, recently published, which challenges the 
balkanized approach to overseeing rental assistance and 
suggests that there may be, in fact, metropolitan opportunities 
for Section 8 coordination.

           COG Report--``Best Affordable Housing Practices''

    There is another report that COG put out, which is the best 
affordable housing practices in the region, which may be of 
assistance as well.
    The third area, and I will finish with the third, fourth 
and fifth, the third area is enriching regional housing 
information and data. That's part of COG's purpose. We are 
working on that.
    Fourth is outreach. Just had a successful conference 
dealing with housing and economic development. Part of the 
outcome of that conference, with a very inspiring speaker from 
Silicon Valley, which as you know, has dealt with a lot of our 
issues, is the development of a regional housing trust fund, 
which is being explored.
    So we believe that the solutions, as you pursue them, deal 
with partnerships between local government, Federal Government 
and the private sector.
    I appreciate the opportunity to be here.

            Prepared Statement of the Honorable Jay Fisette

    [The prepared statement of the Honorable Jay Fisette, with 
attachments, follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Mr. Knollenberg. Mr. Fisette, thank you.
    I think what we will do now is I will do a lightning-like 
move upstairs, to vote and, come right back down, so we can 
proceed with questions.
    [Recess.]
    Mr. Knollenberg. The meeting will come back to order.
    As I mentioned in my opening remarks, 10 days ago I went on 
the housing tour around the city and certainly got an eyeful. I 
am not going to sit here and tell you that the HOPE VI program 
in D.C. is perfect, but it is certainly better than the program 
in any other city around the country, particularly Detroit, 
which I mentioned in my opening comments.

                         HOPE VI--Wheeler Creek

    The problem there, I think, is one where they have had a 
terrible time administering the HOPE VI program. That system is 
plagued by many problems, it has no transparency, and sadly, it 
mostly hurts the people it is intended to help.
    D.C. has had the opposite experience with their HOPE VI 
program. One of the places I visited was Wheeler Creek in the 
southeast part of town. I was impressed with Wheeler Creek and 
hope it will set--or serve, rather, as yet another example of 
the revitalization of the housing in the District.
    I guess the question is a very quick one, and I am going to 
turn to Mr. Kelly. What, in your judgment, has the city done to 
make it so successful? What have you done? What has the 
department done to make it so successful?
    Mr. Kelly. Well, Mr. Chairman, I believe that there is no 
one formula for HOPE VIs across the country; that it really is 
a local issue. In many cases it is a neighborhood response to 
the opportunities that the HOPE VI grant provides.
    I believe here in the District there has been a very 
successful convergence of leadership, vision and will. 
Leadership--beginning with the resident leadership, the 
identification of strong resident leaders, the training that 
they would need to act professionally as a partner in the 
development process; the leadership that happens on the Housing 
Authority staff level, with the Mayor's office and the Mayor's 
support, and in HUD and their support. Showing, I believe, that 
Wheeler Creek and the other examples that have had success here 
in the District; it shows that people that were put in at 
various levels of responsibility showed that type of 
leadership.
    In terms of vision also I believe that it was made crystal 
clear as early as possible to all the stakeholders what they 
wanted to get accomplished and when they wanted to accomplish 
it.
    Mr. Knollenberg. Was HUD impressed with your own training 
process?

          Hope VI--Federal Involvement and Other Partnerships

    Mr. Kelly. Oh, it----
    Mr. Knollenberg. It is a Federal program, and so they have 
to come to you. Did they design anything for you, or was that 
pretty much designed by you?
    Mr. Kelly. Well, the HOPE VI application process requires a 
lot of partnerships, a lot of evidence of efficiency and 
evidence of being able to pull it off. I think what we had here 
in the District are strong developers that had a track record. 
And Housing Authority staff that had grown from the old 
modernization program that showed the type of grass-roots 
construction management that talked about how do you administer 
change orders, how do you administer the actual construction 
project; and the development of community and supportive 
services, and making sure of that type of training.
    So, Mr. Chairman, I believe that it wasn't necessarily 
training that was HUD-provided as much as training that each of 
these groups came to the table with.

               HOPE VI--$105 Million Program In District

    Mr. Knollenberg. How large is the HOPE VI program in the 
city?
    Mr. Kelly. Collectively we have approximately $105 million 
worth of grants that we administer, but it is three-quarters of 
a billion when you look at the leveraging opportunities that 
have come with that.

             HOPE VI--Oversight at Federal and Local Levels

    Mr. Knollenberg. One of the hallmarks of the HOPE VI 
program is that it is intended to provide some maximum 
flexibility for local jurisdictions. Presumably, that is some 
of what you are talking about here. Unfortunately, as I learned 
in Detroit, oft times the proper oversight isn't always there 
by the local officials to ensure that the taxpayers' money is 
spent wisely. Once again, I point to the District of Columbia 
as an example of what is going right with the HOPE VI funds.
    What level of oversight, beyond what you have already told 
me, is performed to ensure that HOPE VI funds are spent wisely?
    Mr. Kelly. Again, I think the oversight that's made the 
District's HOPE VI project successful is, I believe, looking at 
every sector and every facet of the redevelopment process and 
having checks and balances with each aspect of it. A mixed-
finance deal, is a very complicated financial deal that has a 
lot of partners that need to come to the table with their 
commitments.
    I believe the Housing Authority really needs to remain a 
major ringmaster, if you will, Mr. Chairman, in the 
coordination of the effort, but I think accountability can be 
brought--built into the system through contractual 
responsibilities, lease responsibilities, legal agreements, and 
that goals and milestones can and should be monitored through 
that type of mechanism.
    Mr. Knollenberg. Clearly I saw at Wheeler Creek that there 
are good examples there. That's a good example, I think, of the 
kind of innovation and creativity that should be a hallmark of 
the HOPE VI program.
    I was going to ask, Mr. Price, if you had any comment in 
regard to the questions I have raised with Mr. Kelly?

              HOPE VI--Upfront Work in Application Process

    Mr. Price. I think I would just add to what Mr. Kelly said, 
that I think that the difference between the District and some 
other cities is the amount of upfront work that is done when 
the District comes in in the application process. The work with 
the tenants, I think, the Housing Authority does a tremendous 
job with. So we know what we want when we come in and ask for 
the funds. There is also a lot of work done with the lenders 
and the other financing entities that are going to be a part of 
it. There are commitments that come from the District 
government, as well as working with our planning agency and 
understanding the overall planning objective of the city, and I 
think that's what has enabled us to so far be successful with 
the program.
    Mr. Knollenberg. Thank you very much.
    I will yield now to Mr. Fattah, the Ranking Member. If you 
have an opening statement, Mr. Fattah, you are certainly 
welcome to deliver it.
    Mr. Fattah. I will forego an opening statement unless there 
is an objection, Mr. Chairman.
    Mr. Knollenberg. No objection.
    Mr. Fattah. Let me apologize. I was having to deal with 
some legislation on the House floor, and it delayed my 
presence. But I want to welcome all of you to the Committee, 
and, to the Deputy Mayor, welcome you back to the committee.
    Mr. Price. Thank you.

                   HOUSING AUTHORITY IN RECEIVERSHIP

    Mr. Fattah. I thank the Chairman for convening us. Let me 
just say a couple of things. One is in relationship to the 
Housing Authority. The Chairman has talked a lot about your 
HOPE VI program. This Housing Authority is doing well, 
especially considering the fact that it was in receivership not 
too long ago. It is one of the--along with Philadelphia's 
Housing Authority and a number of others housing authorities 
that were listed by HUD as being troubled. So I want to 
congratulate you for what you have done.
    I am interested, just in general now, but more specifically 
to the degree you want to share with us in writing at some 
point, in what it is that we can do to help the Housing 
Authority proceed in terms of its overall program.
    Your HOPE VI program, all of these projects, the projects 
that you are working on now are mixed-income developments?
    Mr. Kelly. Yes, sir.

                             HOPE VI GRANTS

    Mr. Fattah. Thus far, you have received HOPE VI grants at 
how many rounds?
    Mr. Kelly. In four different rounds now.
    Mr. Fattah. Four different rounds. And you will be applying 
again?
    Mr. Kelly. Yes, sir.
    Mr. Fattah. You have been successful. I understand.

                         HOPE VI--DEVELOPER MIX

    Now, in terms of the developer mix, you said you had a 
capable group of developers, and some of them are from the 
District of Columbia and are connected to the community?
    Mr. Kelly. Yes. We have been fortunate to have good strong 
developers that have been local.

                          HOPE VI--Tax credits

    Mr. Fattah. The deal flow, in terms of the use of tax 
credits, have you used tax credits as part of your HOPE VI 
deals?
    Mr. Kelly. Very much so, and that's again why the 
partnership with the Mayor's office is so critical to the 
success of this.
    Mr. Fattah. How does the fact that you don't have a State 
government and the way the whole tax credit allocation works, 
how does that impact you; positively or negatively?
    Mr. Kelly. I think it has a very positive influence in that 
the new legislation that has created the Housing Authority has 
established a priority for tax credits to the Housing Authority 
projects, and so it is very, very beneficial in its current 
structure.

               AVERAGE PRICE FOR HOUSE IN PRIVATE MARKET

    Mr. Fattah. Okay. And to the Deputy Mayor, let me start 
with you in a more general question. In the private market in 
D.C., I see that the average market price for a home is above 
$300,000; is that right?
    Mr. Price. I think that's probably a little high, but it 
has been increasing.
    Mr. Fattah. That was part of the survey that was provided 
by the Metropolitan Council of Governments. It says here that 
it is $300,000 and that the days on the market have dropped 
from 171 days on the market to 46 days?
    Mr. Price. That would not surprise me.
    Mr. Fattah. To 54 days. Excuse me. I want the record to be 
clear.
    Mr. Price. Yes.

              IMPACT OF PRIVATE MARKET ON ASSISTED HOUSING

    Mr. Fattah. I want to understand how the impact of the 
private market impacts with the development of publicly-
assisted housing in the District in terms of the long-term 
gain. We have had a discussion before.
    Mr. Price. Yes.
    Mr. Fattah. Under the economic development round of these 
discussions, about how important it is to attract and retain 
residents to the District.
    Mr. Price. Right.
    Mr. Fattah. Could you talk to us for just minute about how 
these two interface?

                LOSS OF RESIDENTS AND IMPACT ON HOUSING

    Mr. Price. It depends on the type of housing stock. The 
District has lost over 200,000 residents, and so we do have a 
lot of vacant and abandoned properties in the District. So when 
it comes to single-family development, having more market-rate 
housing has been desirable from a lot of--a different context. 
But the downside of that, and we talked a little bit about that 
last time, is the pressures that places on displacement for 
longtime residents that live in those neighborhoods. And I 
talked earlier about legislation that we are looking to cap the 
increased property taxes that they would have to pay if they 
have been in their residence for a period of time, they have a 
certain income.

                       MULTIFAMILY HOUSING STOCK

    On the multifamily housing stock, where you have, say, 
gentrification, where you have the values going up and more 
development occurring of market-rate housing, there is a great 
concern on our part in terms of what could potentially result 
in a lot of displacement.
    I talked about in the next 5 years we have a number of 
expiring use contract projects in the District of Columbia. It 
is about 114 projects, and it is about 10,000 units of 
affordable housing.
    Mr. Fattah. These are where Section 8 certificates are 
going to become invalid because the time has run?
    Mr. Price. The project subsidy, which might have been a 25-
year period, the length of the mortgage is 40 years. So the 
owners will be in the position to opt out and flip the 
properties.
    In that regard, we do have a concern, and we do want to 
work with the Federal government in terms of talking about 
resources that we might be able to use to mitigate the 
potential impact of a number of owners opting out of the 
program.
    Mr. Fattah. Well, it should be a concern, I think, given 
what the potential downside could be.
    Still, given the increased value of the market-rate 
housing, and given all the good news about the Housing 
Authority, as with many cities, including my own, you still 
have interestingly enough, and unfortunately enough, blighted 
areas, vacant, abandoned.
    Mr. Price. That's right.

            BLIGHTED AREAS, VACANT, AND ABANDONED PROPERTIES

    Mr. Fattah. Can you tell me how many such structures exist?
    Mr. Price. Our data shows about 4,000 vacant and abandoned 
properties in the District of Columbia.
    Mr. Fattah. Do you have a sense--an inventory of about how 
many of them are readily rehabilitatable at some reasonable 
cost?
    Mr. Price. Yes.
    Mr. Fattah. Which I guess is a debatable issue in and of 
itself, but versus those that might have been and will at some 
point be brought down, either by inertia or a wreckingball?
    Mr. Price. I don't have that information. That's actually 
the type of analysis we do now and that we are doing now to try 
to figure that out. What we have been doing right now, just to 
keep things going, though, we do have in some cases large 
tracts of land which we have been doing RFPs for, and those 
RFPs are for mixed-income development, and we can leverage the 
development because we own the land in those instances.
    Mr. Fattah. I understand that, and you have a development 
plan for those vacancies. I am really talking about the places 
where you have structures still standing that either can be 
rehabilitated or not, and it is a positive decision as well as 
a financial decision about how you might go along with dealing 
with that.
    I will yield at this time.
    Mr. Knollenberg. Mr. Olver.

                             CENSUS CHANGES

    Mr. Olver. Well, Mr. Price, you have mentioned a couple of 
words that have triggered my interest. I don't know--have you 
seen--have you yet had a full analysis of the census changes in 
terms of--well, I am curious whether the majority is still 
growing or whether--you mentioned gentrification. I noticed--I 
have seen in the Washington Post, at least, the articles about 
the great growth of the minority population, actually now a 
majority population in Prince George's County, but still a 
minority in Montgomery. That growth probably, to some degree, 
comes from folk moving out of D.C., I assume, and I am curious 
whether then is gentrification--is that gentrification 
increasing the diversity in Washington, or is it--have we gone 
through a maximum majority and it is coming down within the 
city in this last census?
    Mr. Price. A couple of things. I don't know the exact 
numbers, but I think in the last decade the District lost about 
60,000 residents. The majority of them were where the African 
American community left, went to the surrounding region and 
other places.
    The African American community is still the majority 
population in the District. It is less than it was.
    Mr. Olver. Less than in 1990?
    Mr. Price. Than in the last census.
    Mr. Olver. It has gone down significantly?
    Mr. Price. I don't know if it is significantly, but it is 
less. That is also due to----
    Mr. Olver. Is that the first time it has gone down? Can you 
tell me anything about the demographics over a period?
    Mr. Price. I don't know the answer to that. I am not sure 
about that, but I can find out for you. That is also due, 
though, to an influx of people from other areas of the world. A 
large Latino and Hispanic population has also moved into the 
District of Columbia. But gentrification, as you may know, is 
the influx of higher-income residents into the District, the 
income--the influx of more white residents to the District. We 
are actually going through a redistricting now in the District 
of Columbia to look at that issue, and changing the size and 
shapes of some of our wards to reflect those changes in 
demographics.

                   RATIO OF RENTALS TO HOME OWNERSHIP

    Mr. Olver. The housing stock, do you have a sense of now in 
the year 2000, 2001 time of census versus 1990, is it more--
higher or lower rental versus ownership? What is the ratio of 
rentals to home ownership?
    Mr. Price. The home ownership rate is about 41 percent, and 
so, as Milton Bailey was telling me, 60-40 rental. Just about 
60 percent of the housing stock is rental.
    Mr. Olver. Sixty percent is rental?
    Mr. Price. Right.
    Mr. Olver. Now?
    Mr. Price. That's correct.
    Mr. Olver. Do you know what that would have been 10 years 
ago?
    Mr. Price. I don't know. I don't know the answer.
    Do you know what the answer is?
    Mr. Bailey. Yes, sir. It was about 38 percent back in 1990.
    Mr. Knollenberg. Would you identify yourself and your 
title?
    Mr. Bailey. I apologize. I am Milton Bailey. I am the 
director of the Department of Housing and Community 
Development.
    Mr. Knollenberg. Thank you.
    Mr. Bailey. In direct answer to the Congressman's question, 
back in 1990, sir, the city's ownership population was about 38 
percent. It has grown to 40.7.
    Mr. Olver. It is now 41?
    Mr. Bailey. It is about 41 percent. It is 40.7.
    Mr. Olver. There is a little bit greater home ownership. Is 
that a deliberate policy of the city to increase home 
ownership?
    Mr. Price. Well, we are trying to increase home ownership. 
I don't know if in the past that was a deliberate one or the 
market just drove it that way.
    Mr. Olver. Does that contribute to an improvement on the 
diversity side?
    Mr. Price. I think, yes; I think sure. I am sure it has.

                            PEOPLE DISPLACED

    Mr. Olver. Then what happens to the people who are 
displaced?
    Mr. Price. Well, that's a question. Are people being 
displaced? Are they making rational decisions to move out of 
the District? Because at the time during the flight of people 
that left, I think they were--most of them were middle-income 
families who were making decisions about their jobs, making 
decisions about housing prices, making decisions about crime, a 
number of quality-of-life issues.
    I think the home ownership rate is increasing because 
people are making those same decisions and see changes in the 
District in terms of how it provides public services, and crime 
and some of the other issues that people make those choices 
about.

                      CITY OWNED HOUSING PROPERTY

    Mr. Olver. Can you give me some sense of what the pattern 
of either abandoned or unoccupied--in any case, old housing is? 
Is most of that taken up by the city? Does the city own a lot 
of places that have been taken for tax title or things of that 
sort?
    Mr. Bailey. Congressman, again, Milton Bailey, Department 
of Housing and Community Development. Very little of the city's 
inventory is ownership housing. In fact, those properties----
    Mr. Olver. Is ownership housing?
    Mr. Bailey. Excuse me. Whether ownership or multifamily. 
Very little of the city's inventory is made up of rental or 
ownership housing. We have in DHCD's inventory only 68 
properties, and those properties go into our----
    Mr. Olver. Are you saying those properties were never 
housing?
    Mr. Bailey. There is a combination of housing andcommercial 
properties that are otherwise abandoned and delinquent.
    With respect to the housing units, both multi and single 
family, there are only 68 properties that are in the District's 
inventory. The balance of those properties----
    Mr. Olver. Those are owned and held title by the District?
    Mr. Bailey. That's correct, sir.
    Mr. Olver. I guess my next two questions would be is there 
a deliberate program for getting those properties back into 
development?
    Mr. Bailey. Yes; yes, sir.
    Mr. Olver. And is there another stock of properties that 
are either unoccupied or abandoned or very substandard or tax-
delinquent or something that the city is--if you have an active 
program for moving the properties that you have got in your 
inventory back into development, that that program could apply 
to if those kinds of properties were, in fact, brought into the 
city's inventory?

            4,800 ABANDONED UNITS OWNED BY PRIVATE CITIZENS

    Mr. Bailey. Yes, sir, on both instances. There are roughly 
48--as Mr. Price mentioned earlier, there are roughly 4,800 
units or properties within the District that did not fall 
within the District's ownership. Only 68 properties did. The 
rest, the vast majority of those, are now owned by private 
citizens who have either decided not to do anything with their 
property, wait for the market to turn and then sell it, or are 
not in a capacity to do anything with their property, or there 
is a dispute on the property among survivors or heirs.

                     HOUSING LEGISLATION INITIATIVE

    The Mayor's housing legislation initiative that we are 
going forward with addresses that by saying, look, if those 
properties that remain underutilized for a period of time and 
that we have provided due process for having that property 
returned to working or productive use, that we will take that 
property, include it in our homestead program, offer it to both 
nonprofit as well as for-profit housing developers, bring those 
properties up to speed, and then the turnkey properties or the 
improved properties put into a lottery and given to persons of 
low- and modest-income means.
    Mr. Olver. What impediments are there to that? Mr. 
Chairman, I will defer, if you wish.
    Mr. Knollenberg. Go ahead and ask the question.
    Mr. Olver. I am curious. What impediments do you see to 
making that program really work?
    Mr. Price. I think the problem has been in the past the 
length of time it takes to clear title to the properties.
    Mr. Olver. Clear title?
    Mr. Price. Is the longest. Also, our ability to actually do 
the takings, which the legislation addressed now, to allow us 
to take the properties much quicker, clear the liens, make them 
available for private development.
    Mr. Olver. I see. Thank you.
    Mr. Knollenberg. Thank you very much, Mr. Olver.
    Thank you.

                         RISING VALUES OF HOMES

    Let me go to a question for Mr. Fisette. We have heard 
about the population changes in the District on a regional 
perspective. What kind of impact has it made in the last, say, 
4 or 5 years to the region? I am talking about the rising 
market values in the city, some inflow of people from the 
outlying areas presumably into the city--what impact can you 
give us in like a snapshot in the last 4 or 5 years?
    Mr. Fisette. Right. Well, just to go back, the--Mr. Fattah, 
I believe it was, that asked about D.C., and I think the number 
was $250,000 in 1990, and it went up by January of 2001 to 
$325,000 was the average home sale. So it was a 30 percent 
increase that was seen in the last year.
    Mr. Knollenberg. You are talking about the region, or you 
are----
    Mr. Fisette. That was D.C., for the District. And the only 
jurisdiction that had a higher average price for a single-
family home, and I believe that would be single-family home, 
was Falls Church.

                     TRANSPORTATION AND CONGESTION

    The response I would give to your question is that 
regionally the number one issue that comes up on survey after 
survey is transportation and congestion. There is no question 
that when we at the Council of Governments looked at trying to 
address that, it is a very challenging question. The inner 
jurisdictions, the core jurisdictions, D.C., Arlington, 
Alexandria, have a need for affordable housing, the outer 
jurisdictions have a need for the jobs, the goal being, in your 
developments, land use, to have a mixed development so that you 
have jobs, housing and retail, recreation all in the nearby 
proximity. Some would call that smart growth.
    The implication when you don't--when you don't have enough 
affordable housing in the District is that a lot of your 
service workers, lower-income folks have to live further and 
further out, and the bedroom communities move from Arlington 
now to Centerville and then to Stafford County and further and 
further away. If transit is not available, you then simply clog 
your roadways and create a great loss of productivity and 
frustration and many other outcomes.
    There are clearly other impacts. The number one, I think, 
on most people's minds is around transportation.
    Mr. Knollenberg. Thank you.

                           ANNUAL ASSESSMENTS

    Let me ask a question now of Mr. Price. I think we covered 
last time when you were the issue of annual assessments, and we 
are progressing forward to an annual basis.
    Mr. Price. Yes.
    Mr. Knollenberg. There is the cap, however, that you are 
talking of imposing at 5 percent----
    Mr. Price. That's correct.
    Mr. Knollenberg [continuing]. On incremental increases, so 
that anyone who just received that adjustment would have a cap 
of 5 percent----
    Mr. Price. That's what we would hope, yes.

                    FIRST-TIME HOME BUYER TAX CREDIT

    Mr. Knollenberg [continuing]. On this first-time home buyer 
tax credit, which is $5,000, and I think that helped spur a lot 
of the boom.
    Mr. Price. Yes.
    Mr. Knollenberg. I know there are some staffers that have 
taken advantage of it, so I know it is working, and it is 
encouraging some people into the area. How many residents have 
taken advantage of that first-time credit?
    Mr. Price. I don't know that number. I don't know if----
    Mr. Knollenberg. Could you get that for us----
    Mr. Price. I am sure I could.
    Mr. Knollenberg [continuing]. And supply that for the 
record?
    Mr. Price. I will get that for you.

    [Clerk's note.--See page 1217 for response provided March 
8, 2002 by Deputy Mayor Eric Price.]

           HOME BUYER TAX CREDIT--RESIDENTS EAST OF THE RIVER

    Mr. Knollenberg. Do you find any residents east of the 
river taking advantage of the tax credit?
    Mr. Price. I would have to--I am sure they do. I would just 
have to get that information for you.
    Mr. Knollenberg. Would that be available? Could you make 
that available?
    Mr. Price. We will work on getting that for you.
    [Clerk's note.--Deputy Mayor Eric Price failed to provide, 
as of March 11, 2002 (10 months after this hearing), the 
information requested by Chairman Knollenberg.]


                    OTHER INCENTIVES FOR HOME BUYERS


    Mr. Knollenberg. Are there other incentives being 
considered to help home buyers, besides the tax credit?
    Mr. Price. Well, in the legislation, I mean there are a 
number of things that we focused on, and I am not--a lot of it 
is producer-driven because we want people to provide housing 
that would be more affordable. So when I talked about putting 
forth District land for RFPs or try to create mixed-income 
opportunities, we are doing that. When I talk about historic 
tax credit, that would go directly to individuals in certain 
income levels. An example of that is where you could get 
historic property and where the cost may be, let's just say, 
$100,000, they would only pay $75,000 of that, and $25,000 of 
that would be a tax credit against their credits.
    There are some things that we are doing. There is a number 
of programs that we have in the District now that provide lower 
mortgage financing, as well as down payment and closing costs.


                      HOMEOWNER HOUSING INSURANCE


    Mr. Knollenberg. What about insurance availability? Is that 
a problem in the city?
    Mr. Price. I don't know. Is Zoreana here? She might--I was 
going to let the director of the Housing Finance Agency answer 
that. She was here, because she probably deals with them on a 
more frequent basis. Is she?
    Mr. Knollenberg. Would you identify yourself and your 
position?
    Ms. Barnes. Mr. Chairman, members of committee, my name is 
Zoreana Barnes. I am the acting executive director of the D.C. 
Housing Finance Agency.
    Typically in our bonds programs, insurance is not an issue. 
Our loans are FHA, VA, Fannie Mae, and now Freddie insured and 
collateralized.
    Mr. Knollenberg. In terms of--I am talking about the 
homeowner product, the homeowner insurance itself, the fire 
insurance, the hazard insurance--is that a problem?
    Ms. Barnes. Those are not issues that are barriers to home 
ownership.


                         HOME IMPROVEMENT LOANS


    Mr. Knollenberg. Okay. Thank you.
    We understand there is a backlog of home improvement loans. 
I think that would be a question for Mr. Price or perhaps one 
of his associates?
    Mr. Price. It might be Mr. Bailey.
    Mr. Bailey. Mr. Chairman, could you please repeat that 
question? My attention was diverted.
    Mr. Knollenberg. Yes. What is the current status on the 
backlog of home improvement loans? We understand there is a 
backlog.
    Mr. Bailey. Home improvement loans that are being sponsored 
by the Department of Housing and Community Development, the 
backlog is about five or six deep. That is just a ministerial 
issue that we need to correct in making sure that those loans 
go forward.
    With respect to housing rehabilitation loans in the 
District, in the market of the city, I don't have sufficient 
data to find out what the problem is there.
    Those properties that are being financed through our 
homestead program, and one of the things that we are taking a 
look--corrective measures that we are taking a stab at is 
making sure that instead of providing a mortgage loan in a 
qualified limit for people to go out and rehab their own homes, 
only to be faced with, in a competitive environment such as we 
are experiencing here in D.C., the rehabilitation company's 
interest in declining the rehab loan in favor of one in which 
they are going to make more money, what we are looking to do 
there is work with a consortium of developers, in particular 
the National Association of Home Builders, have the home 
builders take those properties that Mr. Price addressed 
earlier, 4,800 units or so, have those properties rehabilitated 
by a group of folks that can do that, and then lift that burden 
off of the shoulders of the individual homeowners.


                        PUBLIC SAFETY SITUATION


    Mr. Knollenberg. Thank you. I just want to close with a 
question on the safety situation. I know that all along I have 
said public safety has got to be one of the very important legs 
of the stool, along with two others, that being education and 
the other being economic development.
    Recently visiting Montana Terrace as we did, this was the 
former home of a drug king back some years ago. It is a credit 
to the city. I think Chief Ramsey has done an excellent job 
with public safety. There is some distance to go, but there is 
much that has been done, and I think that's positive.
    What is, in a word or two, the current public safety status 
in the District relative to----
    Mr. Price. I don't know the statistics. I can get that from 
Chief Ramsey and his office today, but I would say in addition 
to that, as you know, I think even more powerful is the 
perception that exists now that, you know, crime is not central 
to the District of Columbia, you don't think of Washington that 
way, and I hear that a lot from businesses and home buyers 
moving into the District.
    Mr. Knollenberg. The area upon which we stood the other 
day, going back a decade or two, it was the sound of gunshots. 
Today you can't--you couldn't imagine a gunshot coming from 
anywhere. So my belief is that it is much better.
    Mr. Price. That's right.
    Mr. Knollenberg. If we could get some grip on how much 
better, it would be helpful if you could supply that.
    Mr. Price. Sure.
    [Clerk's note.--Deputy Mayor Eric Price failed to provide, 
as of March 11, 2002 (10 months after this hearing), the 
information requested by Chairman Knollenberg.]
    Mr. Knollenberg. I yield now to Mr. Fattah.
    Mr. Fattah. I think I have covered the areas that I wanted 
to go over, Mr. Chairman, so I will be glad to yield to my 
colleague.
    Mr. Olver. I am fine.
    Mr. Knollenberg. Mr. Olver.
    Mr. Olver. I am fine.
    Mr. Knollenberg. If that's the case, I do have another 
question or two. You are saying you have no more for this 
panel?
    Mr. Fattah. Yes, Mr. Chairman.

                               LEAD PAINT

    Mr. Knollenberg. On the matter of lead paint, you may want 
to refer to one of your associates. It is a serious issue, but 
how serious is it in the District?
    Mr. Price. I am going to defer to Ted Gordon who maybe 
could answer that question for me.
    Mr. Knollenberg. Sir, would you go to the mike and turn it 
on so the reporter can pick it up, and identify yourself and 
your position.
    Mr. Gordon. My name is Theodore Gordon. I am the chief 
operating officer and the Director of Environmental Health for 
the D.C. Department of Health.
    Lead poisoning is a significant problem in the District of 
Columbia in that we have the oldest housing stock in large 
portions of our city. Our city is relatively old, and most of 
that housing stock resides in Ward 1 in the District of 
Columbia. We have approximately a lead poisoning rate of around 
16 percent, and we are attempting to reduce that.
    We have implemented a number of programs. We have a lead 
abatement program. We have a federally delegated certification 
program. We are certifying lead abatement contractors in the 
District of Columbia to do lead abatement work. It is a 
permitting process. Anyone who comes to the city and to do 
renovations in their home has to obtain a permit to do lead 
abatement. Homes are being tested, and children are being 
screened. We screened over 23,000 children last year for lead.

                             LEAD SCREENING

    We have a significant outreach and education program. In 
terms of screening, we purchased a mobile screening van. We are 
taking that van to the community and screening children in 
churches.
    Mr. Knollenberg. So the van is traveling out in the area, 
is it?
    Mr. Gordon. It is now in the area, and we are screening--we 
will be screening children through the mobile lead van in June, 
and we will be taking it to churches on Sunday, screening 
children on Sundays. We are screening on Saturdays and through 
the week and taking it to the community.
    Mr. Knollenberg. D.C. is a city with a lot of old 
buildings.
    Mr. Gordon. Correct.
    Mr. Knollenberg. You mentioned a moment ago, did you say 16 
percent?
    Mr. Gordon. Yes.
    Mr. Knollenberg. How does that compare nationally?
    Mr. Gordon. We are just a little bit above the national 
average.
    Mr. Knollenberg. A little bit above.
    Mr. Gordon. A little bit above.
    Mr. Knollenberg. So it is not any kind of dire situation?
    Mr. Gordon. No, it is not, but any child that is exposed is 
serious.
    Mr. Knollenberg. I understand that. You sound like you are 
with the EPA, which is all right. That's fine.
    That answers the question for me. Thank you very much.
    I think we talked about the rising housing costs and the 
credit allowances and development of programs that entice and 
encourage people to come into the city.

                         LAND AND HOUSING COSTS

    One estimate of the housing costs in the District says that 
the price per square foot for prime land is about $80 or $90. 
Mr. Price, or anybody can respond, is that average? Is that 
high?
    Maybe I should just repeat the question. Did you get the 
question?
    Mr. Bailey. Would you please, sir?
    Mr. Knollenberg. Yes. There is an estimate that I have 
heard of housing costs in the District. It is my understanding 
the reasons housing costs are on the high side is because prime 
land is selling for $80 or $90 a square foot? Is that accurate?
    Mr. Price. I don't know the exact figure because it is 
varying across the District, whether it is land downtown or it 
is land in different parts of the District. So I am not sure 
what the average is.
    Mr. Knollenberg. The reason I bring that up is if that is 
true, that translates into a monthly rent of $2,900 for a 700-
square-foot apartment. That's expensive. So what you are saying 
is you are not sure?
    Mr. Price. It's not that high.
    Mr. Knollenberg. That amount is something that you believe 
is perhaps inflated?
    Mr. Price. We are seeing rents downtown at about--you know, 
they are going as high as $250, $260 a foot. So a 1000-square-
foot is about $2,600, $2,700.
    Mr. Knollenberg. Gentlemen, I believe that concludes our 
questions for the first panel. I have no other questions.
    Mr. Fattah, you mentioned something.

                        REGIONAL HOUSING PICTURE

    Mr. Fattah. Let me just ask one quick question. In terms of 
the regional picture here, your impression of the other 
jurisdictions in the region, level of enthusiasm in terms of 
affordable housing, is it high, low?
    Mr. Fisette. I think there is a great awareness and sense 
of responsibility regionally. I will say that the point is 
different in Loudoun County. One might argue, they or Prince 
William have or feel they have an excess of affordable housing, 
and that's driving some of the lower- and moderate-income folks 
to that part of the region, therefore creating the 
transportation and commute challenge.
    They may be in need of some higher-rent homes to balance, 
in their minds.
    Mr. Fattah. If you took the totality of the affordable 
housing available in the region, what percentage of it is in 
the District?
    Mr. Fisette. I don't know the answer to that. I think the 
Region Divided report would suggest that there is more 
available in the eastern half of the region than in the western 
half, though I can tell you--in Arlington, because of the 
location, the prime location of the county and the small size--
it is a constant challenge for usto maintain the level we have.

                  PUBLICLY ASSISTED HOUSING IN REGION

    Mr. Fattah. Let me ask, can you tell me--or maybe Mr. 
Bailey can tell me--about where publicly assisted housing is in 
the region, from a percentage basis, the District versus the 
rest of the region?
    Mr. Fisette. I don't know the answer to that.
    Mr. Fattah. Taxpayer-supported housing.
    Mr. Price. To your earlier question, about 50 percent of 
the low-income housing is in the District, of the region is in 
the District of Columbia. And public housing, I think the 
number is probably much larger in the District. What is that?
    Mr. Kelly. In terms of the population, it is about 10 
percent of the D.C. population that we serve.
    Mr. Price. To give you an example----
    Mr. Fattah. I am not talking about population here. I am 
talking about taxpayer-supported housing, public housing, 
Section 8 subsidized housing. How many units are there in the 
District versus other places?
    Mr. Kelly. Well, in the District it is about 10,000 
conventional public housing and another 10,000 Section 8s.
    Mr. Fattah. Ten thousand conventional; ten thousand Section 
8.
    Can you tell me anything about Arlington or anywhere else 
in the region?
    Mr. Fisette. Sure. I can tell you Arlington doesn't have 
public housing. What we have is taxpayer-funded, affordable, 
low- and moderate-income housing and Section 8 housing through 
our nonprofits.
    Mr. Fattah. You have Section 8 rent subsidies?
    Mr. Fisette. Yes.
    Mr. Fattah. That are site-specific or individual 
certificates?
    Mr. Fisette. They are mobile. We get apartments to be a 
part of the program.
    Mr. Fattah. Do you know how many of those you have?
    Mr. Fisette. I don't know the answer to that in Arlington, 
but we don't have a public housing authority in the county.
    Mr. Fattah. Are there any other public housing authorities 
in any of the other parts of the region? Does Prince George's 
County have a public housing authority?
    Mr. Kelly. Bernie Tetreault from my staff was the executive 
director of the Montgomery County Public Housing Authority for 
many, many years.
    Mr. Knollenberg. Please go to the mike and identify 
yourself and your title.
    Mr. Tetreault. My name is Bernie Tetreault, and I am the 
real estate adviser to the executive director here in the 
District, but I was the executive director in Montgomery County 
for 24 years. Montgomery County has approximately 2,000 public 
housing units and about 5,000 Section 8 certificates.
    Mr. Fattah. Thank you very much.
    Thank you, Mr. Chairman.
    [The following information was supplied by the Metropolitan 
Washington Council of Government:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Mr. Knollenberg. Mr. Cunningham has joined us, and we 
welcome your questions.

                   REMARKS OF CONGRESSMAN CUNNINGHAM

    Mr. Cunningham. Thank you, Mr. Chairman.
    I am one of the few people that volunteered to stay on this 
Committee. Most Members fight to get off of it. I mean, I don't 
raise any money from it for my campaign. I sure don't get any 
benefit out of it other than knowing we are doing good for D.C. 
And the pain and the corruption and the run around that I get 
out of the city for 3 years, you have just about worn my 
patience. Three years, and you are going to turn one of your 
biggest supporters to one of the biggest enemies, and I will be 
specific.

                        ANACOSTIA RIVER CLEAN UP

    A while back, I worked to help with the Anacostia River. I 
started this thing 8 years ago. I think the Mayor is probably 
working on that. I at least see that on television.
    Mr. Price. That's correct.
    Mr. Cunningham. The second thing was along with the 
Anacostia River to clean up all of the--I even went after my 
own Navy to clean up the PCBs and to clean up that whole area 
and to put tough laws on throwing trash and all of those kind 
of things, and the next was to work with the education system.

                  TOWN HALL MEETING ON PROSTATE CANCER

    The third, I also sit on Labor-HHS, and I wanted to help 
establish a town hall meeting because I am a prostate cancer 
survivor. The highest rates of prostate cancer are in African 
American males. Of all of the areas in the United States, the 
highest incidence is right here in D.C. I offered the Mayor--I 
got Dr. Klausner, the head of NIH, to do a town hall meeting. I 
volunteered his time. He has agreed to do it.
    For 2 years I have been after the Mayor to come up with a 
site. I will just kick it off, and I will turn it over to the 
professionals. But nowhere in D.C. has anyone ever taken--you 
know, the hospital issue is a big issue--but no one has ever 
met with the constituents on a problem that's critical within 
this city. And I can't get the Mayor's office off the dime to 
budge on it. It's not your issue right here.

                     SOUTHWEST WATERFRONT NEGLECTED

    The issue that you do have something on, you know, I took 
and I put $3 million in Federal money--because I walked down 
there on the waterfront near the fish market and I fell through 
a plank. And I looked out there and I saw all of these pylons 
leaching creosote into the water. It was dangerous. The city 
leases this land from the Federal government, and the city is 
supposed to be responsible for keeping it up. Over the last 70 
years, they have not done their job.
    Then I found out they were issuing 1-year leases, so they 
could get money under the table to issue a lease. So I went and 
fought to get 30-year leases so that we can invest in that 
waterfront and we can build it up like San Diego or Baltimore 
or San Francisco so that you have a revenue producer instead of 
a revenue drainer on the city and make it nice for your 
constituents. It's been three years, between the City Council 
and the Mayor and people dragging their feet, I don't know if 
it is an agenda or what, but one reason or another it hasn't 
gotten done.

         CITY DRAGGING ITS FEET ON SOUTHWEST WATERFRONT PROJECT

    What do you see? Tell me, if this is a roof line, where is 
the roof on that? Is it from here to here?
    I just got back--we have been working for a year and a half 
with the Corps of Engineers to come up and replace that roof, 
and I got this thing, they said, ``well, this part of the roof 
isn't included.'' Fix the damn roof. The city has one reason 
after another for delaying this project--but 3 years is 
patience enough. I have been waiting 3 years to get those 
pilings ripped out of there and we can start work. We have got 
all the work set to make that one of the most beautiful areas 
in the world down there, to make a little park area where 
people can go, set up a bridge that goes across to the park and 
people walk across, and the city keeps for one reason or 
another dragging its feet.
    Then last week I hear, ``Oh, by the way, Congressman, they 
took $100,000 out of the $3 million that you had appropriated 
to clean up the waterfront to study the traffic flow.''
    I need some help, and I am getting tired, and my patience 
is wearing thin.
    Mr. Price. Congressman, I would like to--I have the 
director of the agency that's responsible for the waterfront 
issue is here today. He is going to give you a status and an 
update on that. But what I would have to say to you is that in 
the 2\1/2\ years that Mayor Williams has been Mayor, we have 
taken a government where just about everything in the 
government was in receivership, we have taken it out of 
receivership. There has been no practice of corruption in doing 
that, and people are working very hard.
    Mr. Cunningham. I have seen that.
    Mr. Price. Thank you.
    But in regards to the waterfront, I think Milton Bailey is 
here, and he would be glad to give you a current update on what 
is going on.
    Mr. Cunningham. I was not accusing anybody today of that. I 
am saying under Marion Barry, the corruption, the fraud was 
rampant, and that it was very poor business practice.
    Mr. Price. Thank you.

              CITY'S STATUS REPORT ON SOUTHWEST WATERFRONT

    Mr. Bailey. Congressman Cunningham, I appreciate you 
bringing that to our attention. Yes, it has been a sore spot 
for the past 3 years. We are making some progress. I would like 
to think that we have made a little.
    The issue with the roof is absolutely ridiculous. I agree 
with you. If you don't mind, sir, I would like to work with you 
and personally attend to this issue myself.

                                 LEASES

    Mr. Cunningham. They came to me and said, ``Duke, do you 
want to override the position that they said?'' I said, ``hey, 
I am a Congressman. I don't override leases. I don't make those 
decisions. That's for you all to make. Once I start doing that, 
then I get in trouble.''
    Mr. Bailey. I understand.
    Mr. Cunningham. I am not about to do that.
    Mr. Bailey. Sir, it is a simple matter of funds. $120,000 
was allocated to the repair of the membrane roof. There are 
three types of roof. There is a copper, the membrane, and then 
there is the slate roof.
    The transaction was and the Army Corps of Engineers 
agreement was that they would replace the membrane roof for 
$120,000. The additional roofs have been determined by the Army 
Corps of Engineers and the existing contractor on the job to be 
in sufficient shape. They don't require additional work.
    I understand that the tenant wants to have the additional 
work extended to those areas. The only other additional money 
we need is about $6,500.
    Mr. Cunningham. Can I ask you a question on that? That's a 
roof?
    Mr. Bailey. That's a roof.
    Mr. Cunningham. The part that goes up on your house, you 
would say that's my roof?
    Mr. Bailey. Right, right.
    Mr. Cunningham. The bill, the money I got says fix the 
roof; please fix the roof.
    Mr. Bailey. Your point is well taken, sir.
    Mr. Cunningham. Thank you.
    Mr. Knollenberg. Thank you, Mr. Cunningham. You might want 
to request a follow-through of some kind from the gentleman.

     COMMITTEE'S REQUEST FOR FOLLOW-UP ON SOUTHWEST WATERFRONT WORK

    Mr. Cunningham. I would like to know, A, when we can start 
on it? A, I would like to know because we have got bids from 
four different companies to put out those docks that even the 
new hotel system that I don't even know the name of it that you 
can put in there can lease those docks if you want, but you can 
make that one of the most beautiful, pristine areas down there 
instead of looking like it is right now. I want to help you. I 
have been trying to help you for 3 years, and I mean one delay 
after another, and I think my patience can only go so far. 
Please help me.
    Mr. Bailey. Yes, sir, I will.
    Mr. Knollenberg. I might just add that Mr. Cunningham is 
absolutely correct about remaining on this Committee. I am glad 
he is on this Committee because he has been very thoroughly 
involved in trying to better the city, and I think particularly 
with respect to the Anacostia River and the Southwest 
Waterfront area, the area in question.
    So the help would be appreciated.
    Mr. Bailey. Yes, sir.
    Mr. Knollenberg. That concludes this panel's testimony. I 
want to thank you all very much. It has been great for you to 
come here, and we look forward to seeing you again soon. Thank 
you very much.

                    First Time Home Buyer Tax Credit

    [Clerk's note.--The following was supplied March 8, 2002, 
by Deputy Mayor Eric Price in response to Chairman 
Knollenberg's question on page 1206.]
    According to the Internal Revenue Service, the following 
number of persons claimed the first time homebuyers' tax credit 
between 1997 and 2000:

--------------------------------------------------------------------------------------------------------------------------------------------------------
              Tax year                            Number of persons claiming credit                        Total amount of credit  (millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1997................................                                                       995                                                      $3.5
1998................................                                                      4041                                                        14
1999................................                                                      5541                                                      18.8
2000................................                                                      5797                                                        24
                                     -------------------------------------------------------------------------------------------------------------------
    Total over 4 years..............                                                    16,374                                                      60.3
                                     ===================================================================================================================
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                            Thursday, May 17, 2001.

                          ENVIRONMENTAL ISSUES

                               WITNESSES

THOMAS VOLTAGGIO, ACTING REGIONAL ADMINISTRATOR, REGION III, U.S. 
    ENVIRONMENTAL PROTECTION AGENCY
JERRY N. JOHNSON, GENERAL MANAGER, D.C. WATER AND SEWER AUTHORITY
JAMES L. WARECK, SPECIAL ASSISTANT TO THE MAYOR FOR ENVIRONMENTAL 
    AFFAIRS
THEODORE J. GORDON, D.C. DIRECTOR OF ENVIRONMENTAL HEALTH
JIM COLLIER, CHIEF, D.C. BUREAU OF ENVIRONMENTAL QUALITY
THOMAS S. ELIAS, DIRECTOR, U.S. NATIONAL ARBORETUM

                Chairman Knollenberg's Opening Statement

    Mr. Knollenberg. We will go to the second panel.
    The meeting will come back to order. Are all the panelists 
in place? Let me just spend a moment or two in introducing the 
individuals on the second panel. This is in the order of their 
appearance: Thomas Voltaggio, the Acting Regional Administrator 
of Region III, U.S. Environmental Protection Agency; Jerry N. 
Johnson, General Manager of the D.C. Water and Sewer Authority; 
James L. Wareck, Special Assistant to the Mayor for 
Environmental Affairs; Theodore Gordon, Director of the D.C. 
Environmental Health Office; and finally, Dr. Thomas Elias, 
Director of the U.S. National Arboretum.

                           WITNESSES SWORN IN

    I recognize these principal witnesses probably have people 
with them that may be called upon to answer questions, and we 
welcome all of you here this afternoon. I will go through the 
process of swearing in this group, quoting again rule XI, 
clause 2(m) of the Rules of the House and section 1(b) of the 
of Rules of the Committee which authorize me as the chairman of 
this subcommittee to administer the oath.
    So at this time I would ask all of you to please stand and 
raise your right hand.
    If there is no objection, we will let each individual 
present their statement. If you would highlight your statements 
and try not to take over 5 minutes. Certainly the entirety of 
your prepared statements will be entered into the record. But 
in the interest of time, so we do have time, so we do have time 
for questions, please confine your highlights to that 5-minute 
time frame.
    First, we are going to hear from Thomas Voltaggio.
    And, Mr. Voltaggio, you are recognized for 5 minutes. Thank 
you.

 Opening Statement of Thomas Voltaggio, Acting Regional Administrator, 
            Region III, U.S. Environmental Protection Agency

    Mr. Voltaggio. Good afternoon, Mr. Chairman and committee 
members. I am Thomas Voltaggio. I am the Acting Regional 
Administrator for EPA's Mid-Atlantic region. Very pleased to be 
here.
    In recent years with the help of Congress and especially 
this committee, we have effectively addressed many 
environmental issues, most notably the drinking water crisis of 
1996.
    Today we are working on a wide range of issues. I would 
like to focus my comments on two priority areas, one the 
restoration of the Anacostia River and, two, brownfields 
redevelopment.

                   ANACOSTIA RIVER SERIOUSLY DEGRADED

    With regard to the Anacostia River it continues to be 
seriously degraded. Fecal coliform counts are sometimes 
hundreds of times over acceptable standards, and long-standing 
fish advisories exist because of PCBs and other toxins. 
Restoring the Anacostia requires addressing both weather 
impacts and historic contamination of the river sediments.

                        COMBINED SEWER OVERFLOWS

    Combined sewer overflows are a problem in the District as 
they are in a number of older cities. Eighty times a year 
during moderate to heavy rain the combined sewer system is 
overwhelmed, sending more than 2 billions of gallons of storm 
water and raw sewage into District waterways. In fact, each 
time it rains more than a half inch the average amount of 
untreated water, wastewater and sewage flowing into the 
Anacostia could fill the House Chamber to its ceiling 10 times 
over.
    The area served by the combined sewer system is 
concentrated in the old Federal city portion of the District; 
2,300 acres of this combined sewer overflow area are still 
federally owned. For example, the toilets in the House and 
Senate office buildings as well as the Capitol flush into the 
combined sewer system and when it is raining hard enough they 
flush directly into the Anacostia.

                   BLUE PLAINS SEWAGE TREATMENT PLANT

    To address the CSO problems, EPA has taken the local Sewer 
Authority through several steps. The first goal was to rescue 
the Blue Plains sewage plant from near collapse 6 years ago and 
with Congress' help we were able to do so. We took enforcement 
actions and devoted extraordinary resources to help form the 
new Regional Water and Sewer Authority and get a new management 
team into place.

                  CONTROLS FOR COMBINED SEWER OVERFLOW

    Then in 1997, we required WASA to implement the so-called9 
minimum controls for combined sewer overflow. Recently we provided WASA 
with a $7 million grant to develop a long-term control plan, which WASA 
will finalize this year. Preliminary alternatives developed by WASA 
indicate that required controls may exceed $1.5 billion, that is with a 
B.

                   ANACOSTIA RIVER RESTORATION EFFORT

    The other half of the Anacostia restoration effort concerns 
toxic contaminants. Pesticides, PCBs, arsenic and mercury are 
all present in the river sediment. Recent Fish and Wildlife 
Service research indicates that more than half the catfish in 
the river has liver tumors. This is not a liver tumor, but it 
is certainly something that shows what could happen with toxic 
contamination and what it could do to catfish.
    For the past 6 years, EPA has taken enforcement and/or 
cleanup action at sites ranging from the Navy Yard to the WMATA 
facility in Bladensburg to the Agriculture Research Center in 
Beltsville.

            Reduction of Toxics in Anacostia River Watershed

    In 1999, EPA initiated a public-private partnership to 
reduce toxics throughout the Anacostia watershed. Members have 
removed over 7,000 gallons of free phase coal tar, 20,000 
gallons of petroleum from the drinking water aquifer, collected 
and disposed of over 1 million gallons of PCB-contaminated 
water, excavated and disposed of over 27,000 tons of metal and 
PCB-contaminated soils and constructed a protective cap over 30 
acres of contaminated land.
    This summer the long-term cleanup plan will kick into high 
gear. This implementation stage may take a decade and may 
require $100 million. The total cost of cleaning up both the 
combined sewer overflow and toxic sediment problems in the 
Anacostia are staggering, and not all of the funds have been 
identified. Nevertheless, EPA is committed to the restoration 
of the Anacostia River. The law demands it, the agency's 
mission requires it, and EPA's staff are committed to it.
    While the work is considerable, a revitalized Anacostia 
River clear of both its combined sewer and toxic impacts can be 
the engine for economic revitalization in southeastern 
Washington.

                Brownfields and Economic Revitalization

    I would now like to turn to brownfields. Economic 
revitalization is also at the core of the brownfields program. 
EPA has provided the District with $2.1 million and technical 
support to establish a permanent program. We are concerned 
about the District's speed in assessing and prioritizing sites 
for development. Size and progress, however, are evident in the 
District's recent hiring of staff, targeting properties for 
assessment, and providing strong community outreach effort.
    Currently five sites are being developed with funds 
leveraged by the EPA, and the District has identified five 
additional sites for assessments. Two will be done by the 
District, three will be done by EPA.
    As my written testimony indicates, there are a host of 
other environmental issues that I could address. However, let 
me stop here and thank the committee for the opportunity to 
testify today. I would be happy to answer questions at the 
appropriate time. Thank you.

                 Prepared statement of Thomas Voltaggio

    [The prepared statement of Thomas Voltaggio follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mr. Knollenberg. Thank you, Mr. Voltaggio. Now we go to 
Jerry Johnson, General Manager of the D.C. Water and Sewer 
Authority. It is nice to have you here today. You are 
recognized.

Opening Statement of Jerry N. Johnson, General Manager, D.C. Water and 
                            Sewer Authority

    Mr. Johnson. Thank you very much and good afternoon, 
Chairman Knollenberg, members of the subcommittee. I am Jerry 
N. Johnson, General Manager of the District of Columbia Water 
and Sewer Authority. I have several staff joining me here today 
and we will be pleased to answer any questions once we conclude 
the testimony.
    I thank you for the opportunity to testify today on behalf 
of WASA and its role in the stewardship of the environment in 
the District of Columbia. As you know, WASA's motto is 
``Serving the public, protecting the environment.'' these are 
not empty words. Instead they reflect the commitment on the 
part of us all at the Authority to keep services to the public 
and to the environment and protection of that environment in 
the forefront of our planning and of our actions.
    I hope the testimony I give you, the materials we provide 
will offer concrete evidence of the progress WASA has made in 
the area of environmental protection. Equally important, Ivalue 
the opportunity to share our plans for future improvements of the 
environment and ask for your support in making those plans a reality.

                Challenges of Water and Sewer Authority

    The challenges WASA faces in carrying out its mandate for 
services are substantial. We serve more than 2 million people 
in the District of Columbia, Maryland and Virginia. Each day we 
pump an average of 37 million gallons of water transported to 
homes and businesses through 1,300 miles of water lines. Each 
day WASA treats an average of 320 million gallons of wastewater 
carried in 1800 miles of sewers and the Potomac interceptor. 
Blue Plains and its operation is the largest advanced 
wastewater treatment plant in the world with a, daily capacity 
of 370 million gallons per day and peak capacity of 1.76 
billion gallons per day. We indeed touch your life every single 
day.
    Around us we see progress and we see problems. That was not 
always so. Five years ago when WASA was created the 
organization we inherited was truly in the red, both 
financially and operationally. The Environmental Protection 
Agency, as mentioned by the Regional Director, had raised 
numerous issues and our predecessor was operating under several 
consent decrees and administrative orders.

    WASA Fiscally Sound and In Compliance with Federal Requirements

    Today we are fiscally sound, and we are now in compliance 
with all regulatory standards. In fact, WASA has completely 
complied with all of the conditions of the 1995 Federal Consent 
Decree relative to Blue Plains that was issued before it became 
an authority. And on the drinking water side we are on schedule 
to meet the requirements of that particular order as well.

                       Quality of Drinking Water

    One of the most telling ways in which improvement is shown 
is in the quality of the District's drinking water. Since 1996 
for 54 consecutive months WASA has passed the standards 
established by the EPA under the Safe Drinking Water Act. Our 
water tastes better, too. That was demonstrated by WASA's 
competition in international water quality and tasting last 
year where we finished in the top six. It was the only local 
entity to be recognized.
    In addition, a major, a major change to our drinking water 
and the way it is treated at the Washington Aqueduct has also 
taken place. Chloramines, which is a mixture of chlorine and 
ammonia, is used as a secondary disinfection treatment process 
instead of free chlorine. The change is in keeping with the 
rigorous national standards established by the U.S. EPA in 
dealing with the by-products rule and is good news that the 
change reduces the chlorine odor and taste in the water, 
further improving the quality and taste for the residents in 
the District.

                      Chesapeake Bay Water Quality

    Another place where we have contributed to the improved 
water quality is the Chesapeake Bay. A major regional guardian 
of the environment, WASA is firmly committed to supporting 
programs and projects affecting waterways and the environment. 
A significant way of achieving this goal is through the 
nationally recognized Biological Nitrogen Removal Program 
established at Blue Plains. It is a program in daily operation 
and it was begun in partnership with the U.S. EPA and the 
program removes about 40 percent of the nitrogen from the 
wastewater before it is released into the Potomac River and 
ultimately into the Chesapeake Bay.
    Removal of nitrogen is important because of the excess 
nitrogen's promotion of growth of algae that can be harmful to 
aquatic life.

              Wasa First to Complete Planning Improvements

    The District of Columbia is the first, I repeat the first, 
partner in the Chesapeake Bay Agreement to complete the 
planning improvements to reach this 40 percent goal well ahead 
of the schedule. WASA has also taken a number of other actions 
to have positive environmental impacts and it has now an 
aggressive annual water flushing program that was started with 
EPA funds, and this is an important job to improve the water 
quality within the District.

                     Plan for Combined Sewer System

    In spite of this progress and the progress we have made on 
many fronts, WASA still faces daunting challenges. Near the top 
of the list would be the development of a plan of action to 
address the District's combined sewer system. As you know, for 
many years, even since the 1900s, cities, including Washington, 
D.C., built combined sewer systems and under normal conditions 
the wastewater in these systems during moderate rainfall are 
conveyed to the wastewater treatment plant. But on some 
occasions, typically in a heavy rainstorm, as mentioned by the 
Administrator, this water is conveyed physically into the 
waterways around the District.
    Our combined sewer system, which was built by the Federal 
government, is seen as an important advancement to keep houses 
and streets from being flooded. Unfortunately, the intermittent 
discharge of a dilute wastewater and stormwater mixture into 
the waterways is extensive within the District. This drainage 
area covers about 12,000 acres in the District of Columbia and 
about 60 discharge points, as are outlined on this map here. 
Each of those yellow points is a CSO discharge point, and 
primarily along the Anacostia River but also there are flows of 
discharge into Rock Creek and the Potomac River at about 75 to 
80 times per year.
    While combined sewer overflows are quantifiable sources of 
pollution, it is important to note it is not only--not the only 
nor the most significant point of contamination, as was pointed 
out by the Administrator earlier. This has been determined by 
over a decade of study and review.

                 Regional Anacostia Watershed Approach

    To make substantial improvements in the Anacostia River it 
will take a regional watershed approach. Here in the District 
we continue to take steps to reduce pollution and, for example, 
we deploy skimmer boats in the Anacostia River that removes 
about 800 tons of debris on an annual basis. We have installed 
trash traps in the river, and we continue to collect floatable 
debris from the various outfalls.
    We must go further and take action, however. Outflows of 
debris and wastewater throughout the year are constant 
reminders that we need to continue this effort, much the same 
as the cities like San Francisco, Richmond and Chicago and 
Boston.
    After an extensive study of the alternatives for addressing 
this problem, we are poised to begin actions to reduce this 
problem. Federal law and regulations require us to make major 
capital improvements in the District's sewer system, and it is 
right to expect us to do so. By now the estimates that we have 
laid out for the most cost effective system we can put in 
place, one that will reduce the outflows from 70 to 80 events 
per year, would cost about $900 million just along the 
Anacostia River, and when adding in the other water bodies is 
closer to $1.5 billion per year.
    Mr. Knollenberg. Mr. Johnson, could you conclude in the 
next few moments?

                      Capital Improvement Program

    Mr. Johnson. Yes, sir. Thank you very much. Beyond the 
anticipated combined sewer overflow costs, Mr. Chairman, 
members of the committee, we have also currently under way an 
ambitious 10-year, $1.6 billion capital improvement program, 
which is totally ratepayer supported. These costs are currently 
beingincurred to arrest long-term disinvestment in the system. 
Therefore, we seek your help and support in making the necessary 
improvements to the combined sewer system, and by doing so you will 
help us to make a major step forward in improving the quality of our 
waterways and neighborhoods in the District of Columbia and in 
particular along the Anacostia River.
    Again, thank you for the opportunity to appear here today. 
I would be pleased to answer any questions.

                 Prepared Statement of Jerry N. Johnson

    [The prepared statement of Jerry N. Johnson follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mr. Knollenberg. Our next witness is James Wareck, Special 
Assistant to the Mayor for Environmental Affairs. And again if 
you can highlight your commentary within the 5 minute time 
frame so we can have time for questions.
    Mr. Wareck. I actually will. Because of the necessary 
overlap I won't read my entire statement, but ask that it be 
submitted into the record.
    Mr. Knollenberg. As ordered. Thank you.

                 Prepared Statement of James L. Wareck

    [The prepared statement of James L. Wareck follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
 Opening Statement of James L. Wareck, Special Assistant to the Mayor 
                       for Environmental Affairs

    Mr. Wareck. Mr. Chairman, Ranking Member Fattah, 
Congressman Cunningham, thank you for the opportunity to 
testify before your subcommittee and give an overview of Mayor 
Williams' environmental accomplishments since he has taken 
office.

                            Anacostia River

    Any discussion of environmental initiatives must begin with 
the Anacostia River. The river which has suffered 300 years of 
environmental injustice, is the Mayor's top environmental 
priority and the focus of the majority of our efforts.
    To improve water quality, the District government has 
planted, in partnership with the Army Corps of Engineers, 46 
acres of wetlands and worked with WASA and the Anacostia 
Watershed Society to install two trash traps.We are also 
removing the three vessels that were either abandoned on or 
submerged in the river.

                         Combined Sewer System

    While these measures are tangible steps towards a cleaner 
river, no real victory can be achieved without addressing the 
long-term solution of the combined sewer system and the 
overflows.
    I won't go over the same territory that Mr. Johnson and Mr. 
Voltaggio stated. I will say, though, that central to this 
effort is the $12 million that the Mayor and Congresswoman 
Norton requested from the VA-HUD Appropriations Subcommittee in 
March to begin to implement this long-termcombined sewer 
overflow control plan design.

                      KINGMAN AND HERITAGE ISLANDS

    Cleaning up the river is only one component of achieving an 
environmental victory. Judicious use of the adjacent land and 
strong controls on planning and growth are equally important to 
the overall effort. One example is Kingman and Heritage 
Islands, which are located in the center of the river. Once 
slated to be an amusement park, the Williams administration is 
focused on the task of transforming these islands into a nature 
preserve and environmental education center.
    The first 18 months of our efforts were concentrated on the 
legal wrangling needed to wrestle Kingman Island back from this 
plan, and since then we have worked with the Navy Seabees to 
repair the footbridges and are nearing completion of a 
community driven planning process to realize the Mayor's vision 
by the end of 2002.

                 BROWNFIELD AND STORMWATER LEGISLATION

    I would also like to briefly call attention to two 
significant pieces of legislation that impact the environment 
that Mayor Williams introduced and the City Council passed. The 
District now has comprehensive brownfields legislation, which 
Mr. Gordon will talk about in greater detail, as well as 
legislation establishing a Stormwater Administration located 
within the Water and Sewer Authority. Both bills passed with 
strong support and interest from all of the stakeholders, 
including significant input and leadership from members of the 
Council. Councilwoman Schwartz in particular should be 
commended for her leadership on these issues.

                              AIR QUALITY

    A second area of the environmental focus has been air 
quality. The Mayor has taken a position in working with such 
groups as the Natural Resources Defense Council to convince 
WMATA to start buying compressed natural gas buses and stop 
buying diesel buses. Converting Metro's 14,000-bus fleet to 
compressed natural gas over the next 10 years will make 
significant strides in reducing smog and the levels of soot in 
the air. The Washington-Baltimore region is the seventh worst 
in the country for ground level ozone, which is directly linked 
to incidents of asthma. Asthma rates here are extraordinarily 
high, twice that of the national average.

                                 TREES

    Thirdly, restoring the tree canopy to the District is a 
priority. Due to budget constraints and outright neglect, the 
District has lost a significant number of trees over the last 
several decades. Trees are not only esthetically pleasing, but 
lower the city's ambient air temperature and play a key role in 
controlling stormwater discharges into our rivers.

                            TREE TRUST FUND

    I am pleased to report that both the Mayor and the Council 
have recognized the urgent need to and have taken appropriate 
measures in the last several budget cycles to address the years 
of neglect. In addition, the generous gift from Ms. Betty Casey 
will establish a tree trust fund that will combine with 
increased District funding to work toward restoring the 
District tree canopy to its rightful complement.

                    ALTERNATIVE TRANSPORTATION MODES

    Before I close, I would like to briefly mention the Mayor's 
commitment to increasing alternative transportation modes, 
which include installing more bicycle racks, appointing a bike 
coordinator and completing a comprehensive transportation model 
that includes greater access to biking and more green space.
    In conclusion, I think that these initiatives comprise 
positive first steps towards a greener city, but by no means 
can we afford to let the progress stall. Care for the 
environment is a lifelong commitment. As President Kennedy 
stated in his Inaugural Address, ``All this will not be 
finished in the first 100 days nor will it be finished in the 
first 1,000 days nor in the lifetime of this administration nor 
even perhaps in our lifetime on the planet. But let us begin''.
    This quotation certainly can encapsulate many forms of 
government service, but nowhere is it more appropriate than our 
collective responsibility to protect the environment. Thank 
you, Mr. Chairman.
    Mr. Knollenberg. Thank you, Mr. Wareck. We now turn to the 
D.C. Director of Environmental Health, Mr. Gordon.

 Opening Statement of Theodore J. Gordon, Sr., Chief Operating Officer 
 and Senior Deputy Director for the District of Columbia Department of 
                                 Health

    Mr. Gordon. Thank you, Mr. Chairman, members of the 
committee. My name is Theodore Gordon. I am the Chief Operating 
Officer and the Senior Deputy Director of Public Health 
Assurance for the District of Columbia Department of Health. It 
is with great honor and pride that I come before you today on 
behalf of Mayor Anthony Williams to discuss environmental 
programs in the District of Columbia.
    When the Mayor came into office he stated that protecting 
the environment in the District of Columbia would be among his 
highest priorities. He has kept his promise to the residents, 
and I am happy to report on progress to date.

                            ANACOSTIA RIVER

    I would also like to thank the Committee on Appropriations 
District of Columbia Subcommittee for all the support it has 
given the Department of Health's Environmental Health 
Administration over the past 2 years. I also want to personally 
thank the honorable Congressman Duke Cunningham specifically 
for allowing us to come before him last year to brief him on 
our efforts to clean the Anacostia River and to restore its 
natural state. The briefing before him and his committee 
yielded $5 million in capital funding for the Anacostia River 
Restoration Project.

          Support for the U.S. Environmental Protection Agency

    I could not go without publicly thanking and acknowledging 
the U.S. Environmental Protection Agency for its support over 
the last 2 years. The Department of Health and EPA have formed 
a partnership that has been absolutely critical to the 
successful implementation of our environmental programs and 
agenda.

                      ANACOSTIA RIVER RESTORATION

    I would like to go directly to the Anacostia River 
restoration. As mentioned earlier, it was the foresight and 
strong commitment on the part of this committee that enabled 
the Environmental Health Administration to begin the progress 
of restoring the Anacostia River. The Environmental Health 
Administration has initiated several agreements with the U.S. 
Army Corps of Engineers, Baltimore District, the National 
Resource Conservation Service, and other Federal agencies 
concerning improvements to the Anacostia River. These 
agreements are the precursors to the implementation of habitat 
and water quality improvement projects that have been in some 
cases on the District's wish list for many years. There are 12 
subprojects associated with the restoration of the Anacostia 
River. We have included the maps identifying each of them in 
your individual packets, and we also have a map that we can 
display.

                              POPLAR POINT

    I would like to go on in summarizing my testimony further, 
another special project is Poplar Point. For fiscal year 2001 
the District of Columbia received $3.45 million from Congress 
for environmental and infrastructure costs at Poplar Point. At 
least $2.15 million was allocated for environmental assessment, 
site remediation, and wetlands restoration of real property 
under the jurisdiction of the District of Columbia. 
Approximately $1.3 million is to beused for infrastructure 
costs for an entrance to Anacostia Park.
    The Environmental Health Administration has begun 
discussions with the National Oceanic and Atmospheric 
Administration to enter into an interagency agreement that 
would encompass the environmental tasks associated with the 
project. The Environmental Health Administration has also 
invited other stakeholders to form a partnership to accomplish 
the goals presented by Congress.
    Currently the partnership is comprised of the U.S. 
Environmental Protection Agency, the U.S. National Park 
Service, the Architect of the Capitol, and the D.C. Office of 
Planning. Activities will also be coordinated with other 
stakeholder groups comprised of government agencies, various 
environmental and civic groups, and the public in general.

                          BROWNFIELDS PROGRAM

    The next program of particular interest is our Brownfields 
Program. As of October 1, 2000, the Brownfields Program has 
been realigned as a section of the new Clean Lands Program. The 
Clean Lands Program is supported by the U.S. Environmental 
Protection Agency through a $1.4 million Core Program 
Cooperative Agreement, a $200,000 Brownfields Site Assessment 
Pilot Program, and a $500,000 Brownfields Cleanup Revolving 
Loan Fund.
    Additionally, EPA has recently announced that the District 
will receive $100,000 in supplemental site assessment funding. 
The Environmental Health Administration has negotiated an 
agreement with the EPA for the performance of three initial 
targeted brownfield site assessments in the District of 
Columbia. These assessments are performed at no cost to the 
District taxpayers.
    We have worked closely with the Deputy Mayor for Planning 
and Economic Development in order to identify sites where the 
performance of a site assessment would facilitate redevelopment 
that minimizes exposure pathways and protects public health. 
Through the brownfields site assessment pilot, the U.S. Army 
Corps of Engineers is completing a site assessment on two 
properties, a site at 5th and K Streets, the site at the old 
Wax Museum, and a site located at Georgia Avenue and Upshur 
Streets.
    The D.C. City Council passed the Brownfields Revitalization 
Amendment Act of 2000 on December 5th, 2000. The Department of 
Health in cooperation with the General Counsel's Office is 
developing regulations in support of this legislation. The 
regulations will provide a structure for an enforcement 
regulatory program, volunteer cleanup, and other tax and 
financial incentives.
    In closing, I would like to thank you for the opportunity 
to present to you some of our exciting programs that are 
happening in the area of environmental health in the District 
of Columbia. We are making great progress and anticipate a very 
bright future ahead towards ensuring a clean and safe 
environment for our children and families.
    I have attached a list of the environmental health 
activities that the Department has initiated. I look forward to 
continuing the partnership that we have established. Thank you.

             PREPARED STATEMENT OF THEODORE J. GORDON, SR.

    [The prepared statement of Mr. Gordon follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mr. Knollenberg. Mr. Gordon, we thank you very much for 
your testimony. Now we go on to the Director of the U.S. 
National Arboretum, Mr. Thomas Elias. Dr. Elias.

   Opening Statement of Dr. Thomas S. Elias, Director, U.S. National 
     Arboretum, Agricultural Research Service, U.S. Department of 
                              Agriculture

    Dr. Elias. Thank you. Mr. Chairman and members of the 
subcommittee, I am pleased to be here today to talk about plans 
for effective stormwater treatment for Hickey Run, a small 
stream that flows through the National Arboretum. I commend the 
subcommittee for recognizing the need to restore Hickey Run, 
which has the dubious distinction of possibly being the most 
degraded tributary to the Anacostia River and one of the most 
degraded urban streams in the Chesapeake Bay watershed.

                               HICKEY RUN

    We are grateful to this subcommittee for its support in 
addressing the serious environmental problems caused by Hickey 
Run. While only a small stream, it is the dominant drainage 
system for the National Arboretum as well as primary conveyer 
on surface runoff on approximately 822 acres of commercial, 
industrial and residential areas in northeast Washington D.C. 
The result is a double hit into the Anacostia River and 
eventually the Chesapeake Bay, because of vast amounts of 
trash, debris and sediments on the streets and sidewalks in 
this area washing into the storm sewer system and emptying into 
the Arboretum where it then drains into Hickey Run. The second 
hit is all the surface runoff that flows into Hickey Run and 
eventually the Anacostia.

           $500,000 APPROPRIATED FOR TRASH RACK AT HICKEY RUN

    The $500,000 appropriated by this subcommittee in the D.C. 
appropriations bill for FY 2001 is designated for the design, 
construction and maintenance of a trash rack to be installed at 
the Hickey Run stormwater outfall at the U.S. National 
Arboretum. Upon receiving this appropriation, our staff started 
working closely with members of the Chesapeake Bay Office of 
the Environmental Protection Agency and the District of 
Columbia Department of Health to resolve this serious source of 
pollutants to the Anacostia River and Chesapeake Bay. Prior to 
the FY 2001 appropriation, the Arboretum contracted for a 
stormwater management conceptual design for the Hickey Run Sub-
Watershed. This study led to the decision that a trash rack to 
collect floatable debris accompanied by other devices to 
capture certain liquid pollutants was needed. Based on this 
information, the Environmental Protection Agency awarded a 
contract to the Center for Watershed Protection in September of 
2000 to review existing engineering proposals to control oil 
and floatable pollutants that enter Hickey Run. The contract 
also calls for analyzing the feasibility and capability of a 
series of 10 proprietary and nonproprietary stormwater 
treatment practices for this site. EPA, D.C. Department of 
Health, and the National Arboretum believe this study will 
identify the best engineering and cost effective solution to 
the stormwater outflow problems of Hickey Run.
    We will keep this subcommittee informed of the study 
recommendations and, if found acceptable, we will move forward 
to award a contract for the design and construction of the most 
suitable trash rack for this site. We anticipate that the 
design phase of this project will be completed late this year. 
If costs are within the 2001 allocation, construction could 
begin in mid to late 2002. Once completed, hundreds of tons of 
floatable debris and trash will be removed before it can enter 
the Anacostia and the Chesapeake Bay. In addition, the National 
Arboretum will have resolved a recurring problem due to the 
enormous amounts of trash and debris in a stream that bisects 
its property.
    Mr. Chairman, I conclude my remarks by saying that the 
National Arboretum is ready to continue to work with Congress 
and our restoration partners to ensure that a viable management 
system is put in place to mitigate the pollution problems 
associated with Hickey Run. We thank you for your support.

               PREPARED STATEMENT OF DR. THOMAS S. ELIAS

    [The prepared statement of Dr. Thomas S. Elias follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mr. Knollenberg. Dr. Elias, thank you very much. 
Incidently, you have, what is it, 446 acres in a spot that very 
few people that come to Washington are aware of, but it is a 
very beautiful place. I have been there several times. I 
believe in June there is going to be some annual event for 
Members of Congress, and I believe the District is also being 
saluted in some fashion, is that right?
    Dr. Elias. Yes, sir. It will be focusing on the District of 
Columbia and the region of the city and tree planting. And 
Mayor Williams will be the honorary chair for that event.
    Mr. Knollenberg. We look forward to seeing you and we will 
be there as well.
    That concludes the statements from this panel. I think we 
have heard from everybody. We appreciate each of you staying in 
line with the 5 minutes. That helps us a great deal.

              COMBINED SEWER OVERFLOWS NATION-WIDE PROBLEM

    This situation with combined sewer overflows is a problem. 
In my district back in Michigan I think every township and city 
and village that I have talked to in the last several months, 
if you are talking to public officials, are concerned about the 
future of the infrastructure in their communities. It is a 
problem that is not just D.C. related. It is all over the 
country.

                              ROUGE RIVER

    I have been involved in this problem back home since 1995 
in securing appropriations for the Rouge River, which involves 
some 48 communities, and it is a huge problem. We are just 
beginning to scratch the surface. I am well aware of the status 
of repair costs and the estimates, and the estimates are merely 
estimates. They don't really give us any essence of accuracy.
    This is such a general question that it may be I would 
revise it. What is the current status of the CSO repair 
situation, or maybe more appropriately the question is how do 
you compare nationally or how do you compare with the region? 
We might get some idea from that as to where D.C. is. And I 
think this question would probably go to Mr. Voltaggio.

                    COMBINED SEWER OVERFLOW PROBLEMS

    Mr. Voltaggio. Yes. Thank you, Mr. Chairman. The District, 
like any older urban area, has problems, as many other older 
urban areas have. We have CSO problems in Richmond, Baltimore, 
Philadelphia, and Pittsburgh, to just name a few. What makes 
the District unique really is the extraordinary Federal 
presence that is here. The Federal Government owns 40 percent 
of the land area in the District. So a substantial portion of 
the stormwater runoff is coming from Federal property.
    And in addition, the original sewer system was built by the 
Federal Government back in the late 1870s. As I noted in my 
written testimony, the drainage area serves roughly 20 square 
miles and is concentrated in pretty much the old city area. So 
we have this oddity of having not only a kind of combined sewer 
issue that we have in many older urban areas throughout the 
Northeast and the Midwest, but the additional difficulty of 
dealing with it with such a large portion of the area drained 
being Federal facilities. I would put the District pretty much 
in the same league as those other cities that I recognized.

                         COMBINE SEWER REPAIRS

    Mr. Knollenberg. I will return to Mr. Johnson and ask him 
the same question. What is the current status of the CSO 
repairs in the District itself?
    Mr. Johnson. With regard to repairs, Mr. Chairman, we just 
completed, in fact this week reviewed with our CSO 
subcommittee, the preliminary plan for CSO abatement in the 
District of Columbia. That plan is one that calls for a series 
of major civil engineering projects, that would cost somewhere 
between a billion to a billion and a half for completion and 
would reduce the number of CSO events from somewhere around 80 
per year to less than a half dozen under the current plan.
    We will be submitting that at the end of this month, at the 
end of June, for public comment and to the EPA as well, and we 
will have a final plan hopefully by December of this year for 
abating the problem.

                EPA ENFORCEMENT ACTIONS AGAINST DISTRICT

    Mr. Knollenberg. Mr. Voltaggio, why hasn't the EPA taken 
enforcement actions in the District or have they? My 
understanding is that EPA has not. You described some of the 
overflow problems in great detail and there must be enough of 
them or more than enough for everybody. But why hasn't the EPA 
taken enforcement action?
    Mr. Voltaggio. Well, we have in the past taken actions. The 
actions we took at Blue Plains was an example of what we needed 
to do to get the system put into line with what was required. 
That has been very successful, as you have heard.
    Mr. Knollenberg. I am talking about CSO overflow problems.

       PENDING ENFORCEMENT ACTIONS ON DISTRICT'S SEWER OVERFLOWS

    Mr. Voltaggio. Well, we have an issue right now that is 
under way we can't really talk too much about. We do have 
pending enforcement action for the overflow problems. We are 
involved in discussions with the Water and Sewer Authority at 
this time. And I really can't really go into it very much more. 
You can----
    Mr. Knollenberg. So that is a pending situation?
    Mr. Voltaggio. Yes, sir.
    Mr. Knollenberg. We may want to get back to you personally 
on that issue to get some information for the Committee.

                 $30,000 SEWER SYSTEM UPGRADES NOT TRUE

    Let me go to another quick question. During the recent trip 
I had into the city, we ran into a gentleman in the 
construction industry. He was complaining about WASA with 
respect to arequirement apparently that prospective home buyers 
in the city have to--with respect to sewer upgrades--they have to put 
up to as much as $30,000 out of pocket. That is an add-on to the house 
itself to provide sewer upgrades, which are apparently mandated by the 
city in some fashion. That is a lot of money. It drives a lot of people 
to the point of saying they can't afford the house if that is the 
requirement. First of all, is this true? I am sure WASA wasn't 
shouldering the entire burden for these CSO upgrades. How are these 
costs being passed along to consumers?
    Mr. Johnson. I personally am unaware of any provisions in 
WASA regulation or in the District Code that requires 
individual homeowners to upgrade sewer systems as a result of 
construction of a house. However, if there is a requirement to 
tie into the sewer line, one of the requirements of the 
Authority is that customers pay for the services that are 
provided. So if there is an excavation that has to be done from 
the property to the street to tie into the sewer line, then 
that would be a cost that would be billed directly to that 
homeowner.
    Mr. Knollenberg. That is a presumption that there is a need 
to get to the sewer line itself. But my understanding is that 
it is a repair of the existing sewer from the house to the 
sewer line, that is the part that becomes the burden. You are 
saying that is not true?
    Mr. Johnson. I am not familiar with that circumstance. I 
would be glad to look at that particular case, sir. But I am 
unaware of any general provision that requires anyone to make 
repairs.
    Mr. Knollenberg. We don't know that it is true. We have 
been told that it is true. So we are coming to you for an 
answer. So we would appreciate if you would follow through to 
see if there is some kind of dictum within the regulations of 
the city. You are saying you don't know of any through WASA, 
but we were told it was WASA that provided the requirement or 
suggested the requirement was one that had to be met. It is an 
anecdotal situation but one that is disturbing. But the 
individual insisted there was validity to his complaint.
    Mr. Johnson. I would be pleased to look into that 
particular circumstance for you, sir.
    [The information follows:]

    There is no WASA or District government rule, regulation or 
law that requires a $30,000 sewer upgrade for prospective 
homebuyers. In addition, WASA could find no record of any 
complaints on this issue from either prospective homebuyers or 
realtors.

    Mr. Knollenberg. I will yield now to Mr. Fattah.
    Mr. Fattah. Thank you very much.

                        WASA Established in 1996

    Let me ask Mr. Johnson about the WASA authority. You said 
it was established in 1997.
    Mr. Johnson. 1996.

              Governing Board of Water and Sewer Authority

    Mr. Fattah. What is the governing board?
    Mr. Johnson. The composition of the Authority is six 
members, six representing the District of Columbia, two each 
from Prince George's and Montgomery, Maryland, and one from 
Fairfax County.
    Mr. Fattah. Okay. So you serve the District of Columbia and 
these other jurisdictions?
    Mr. Johnson. Yes, sir, in addition to Loudoun County.

                     Cost to Reduce Sewer Overflows

    Mr. Fattah. Now, the combined sewer issue when it rains and 
the flow, as I would understand your written testimony, I think 
you mentioned it verbally also, there is a $1.6 billion capital 
improvement program going on now, paid for by the ratepayer.
    Mr. Johnson. That is correct, sir.
    Mr. Fattah. It is a 10-year plan?
    Mr. Johnson. Yes.
    Mr. Fattah. And to further alleviate this problem which is 
substantially worse because of the Federal presence in the 
District, it could conceivably be another billion?
    Mr. Johnson. Yes, sir.
    Mr. Fattah. To take it from 75 to 80 instances in which 
there are overflows going out into the river to--I thought your 
testimony was something less than a dozen.
    Mr. Johnson. Less than a half dozen, sir.
    Mr. Fattah. Now, the Mayor made a request to the 
subcommittee that I serve on other than this one, the HUD-VA 
Subcommittee, for $12 million. Is that part and parcel of this 
billion effort?
    Mr. Johnson. Yes, sir.
    Mr. Fattah. What part does it play?
    Mr. Johnson. Initially we are in the planning phases now. 
Once we get the plan approved, it is going to take probably 15 
years, 10 to 15 years to get all of the construction done that 
would need to be done associated with this. And we were being 
very realistic in looking at the $12 million as the initial 
money that would be needed to begin the design work and some of 
the preliminary things that would have to be done to get the 
program moving and on its way.

  Federal Government Constructed and Paid for Current Sewer Overflow 
                                 System

    Mr. Fattah. This system that is presently the cause of the 
problem was built by the Federal government?
    Mr. Johnson. That is correct, sir.
    Mr. Fattah. The Federal government, when you say yes, sir, 
that is correct, do you mean the Federal government paid for it 
or the Federal government designed it. Do you know the extent 
of Federal involvement? I will be glad to let the Mayor's 
special assistant tell me, too.
    Mr. Johnson. I think it was both paid for and built by the 
Federal government.

                Combined Sewer System Built in 1870-1900

    Mr. Wareck. It was sometime between 1870 and the turn of 
the century when the combined sewer for the central city was 
established by the Federal government, by Congress.
    Mr. Fattah. This system now causes how much waste to go 
into the river?
    Mr. Wareck. On an average of 80 tons a year; several 
billion gallons of diluted sewage and stormwater go directly 
into the river.
    Mr. Fattah. And a significant amount of that comes from 
Federal facilities itself, including the Capitol?

                        Federal Share of Sewage

    Mr. Wareck. To the extent that the Federal facilities, the 
percentage that the facilities are part of the central combined 
sewer system, yes, sir.
    Mr. Fattah. Somebody said around 40 percent.
    Mr. Wareck. The lands are about 40 percent. When we chaired 
the stormwater task force, we think that the contribution was 
somewhere between 30 and 40 percent. And the allocation of 
stormwater was----

                   Measure of Waste Going Into River

    Mr. Fattah. How do you actually measure how much waste is 
going into the river? How is that capacity--is that a 
guesstimate or are you pretty certain on, an hourby hour basis 
how much waste is going directly into the river when you have these 
overflows?
    Mr. Johnson. We have done some fairly sophisticated 
computer models based on the size of the system, the various 
pipes that enter into it and the drainage area that give us a 
fairly accurate calculation of the number of gallons of flow 
that might come into the system.

  Difference in Overflow of Waste If Rain is in Evening Versus Daytime

    Mr. Fattah. Let me ask you a question. If you don't have 
the answer, I will be glad to have you supply it to the 
chairman. I am sure he would make it available to me. I am 
interested in whether or not there would be a difference in the 
overflow of waste if it rained in the evening versus the 
daytime.
    Mr. Johnson. It is volumetrically based. It depends on how 
much rain we get.
    Mr. Fattah. I am still trying to learn this stuff. But I 
have been told that the District's population during the day is 
one number and the District's population during the night is 
another number, as the District grows by about two-thirds 
during the course of the day, a large amount of which is 
related to the population of Federal workers who are coming 
into the District to go to work and who financially benefit 
through their work in the District and then leave in the 
evening.
    I am trying to understand not only whether the Federal 
government built this system and approved its design and it is 
now causing a problem and a large percentage of sewer overflow 
comes from these Federal facilities, but whether there is even 
a disproportionate share of the waste, even well beyond just 
the land mass itself, associated with Federal workers.
    Mr. Johnson. I am told by my senior engineer that we have 
not modeled it in a day and night kind of pattern. What we have 
done more is looked at it on a seasonal basis to try to 
determine that average and the number of overflows that occur.

                  Wastewater Treatment Plant Capacity

     If you will recall, as part of the presentation we talked 
about the wastewater treatment plant and its capability of 
handling an average of about 370 million gallons a day. And 
during a rainfall that is also sized along with the pipes that 
convey the flow to the plant to handle about just over a 
billion gallons. So when that is exceeded, that is the point at 
which you get the overflow into the water bodies.
    Mr. Fattah. Thank you very much. I see that the light is 
on. I yield back, Mr. Chairman.
    Mr. Knollenberg. Mr. Cunningham.

                     Fecal Count in Anacostia River

    Mr. Cunningham. I am a kinder, gentler self now. I want to 
tell you I empathize, with all the things you are trying to do 
to improve the Anacostia River. I think that is an area they 
are working. I don't think we can wait 12 or 13 years and let 
this fecal count remain in the Anacostia. I am willing to work 
with you within the guidance and the limits of our budget to do 
anything that we can to help. Because I think whether you are 
looking at the Point, I drive by there in my little boat, I see 
families out there playing soccer--I am glad to see the police 
down there because frequently I see a bunch of rowdies down 
there--and then you look at Potomac Park over there and what a 
beautiful area it can be. But if you have the fecal material 
coming into there and the fish right there, it is not just the 
carcinoma when you have fish dying there, it is not just for 
that, it is because the fecal count is so high it eats the 
oxygen and the fish suffocate. I don't think you want to wait 
10 or 12 years for that. I know I don't. I don't think the 
chairman does.
    I should say within the limits of our budget, within the 
limits of my chairman and what we can do, I will do everything 
I can to help, and particularly in this. I think it is one of 
the major problems we have in this city, and we have to invest 
in that sewer system for clean water and to help. I want you to 
know I am committed to do that.

                    Capital Yacht Club--Sewer Pipes

    This next statement, don't take it as a negative. I am 
going to do it as a positive. It is a conversation between an 
EPA inspector and the Capital Yacht Club Commodore. It kind of 
went like this: EPA inspector--I can give you the name if you 
like--said to the Commodore, we are going to fine you for that 
water pipe coming out of the wall there-- you don't have 
permits and you don't have anything that is flowing there into 
the Anacostia River. Commodore: Sir, this is not the Anacostia 
River. It is up there with the Capital Yacht Club. EPA 
inspector: Well, that is fine but we are going to fine you 
anyway for the water that is going into this river. Commodore: 
Sir, it is the city's pipe, not the Capital Yacht Club pipe. 
What do you want us to do? EPA Inspector: What about that other 
pipe down there? Commodore: Sir, that is the pipe from the 
restaurants. It is not the Capital Yacht Club's pipe. EPA 
inspector: Well, your parking lot, we are going to fine you 
because you don't have a runoff plan. He looked and it was the 
public parking lot which then runs off into the Capital Yacht 
Club parking lot. EPA inspector: Well, we are going to fine you 
because you don't have a plan. But if you plead no contest, we 
won't fine you.
    But if the Capital Yacht Club did that then that would be 
in violation of their 100-year lease and they would be subject 
to be removed.
    You can see the problem that, first of all, the credibility 
of sending somebody down there who doesn't know their business.

             City Should Establish Partnership With Marinas

    I know myself this last week I saw somebody sanding a boat 
down there without a vacuum cleaner, not at the Capital Yacht 
Club. Four of us went over and made the gentleman stop because 
that was going into the water. And the fish market over there 
was hosing stuff off into the river. We made them stop. They 
were putting trash over into our parking lot. We made them 
stop. I think if you come down and establish a partnership with 
the marinas down there, I think it would be a very, very 
positive thing. You'll have strong supporters, people that want 
to live down there that want to do it ethically and morally and 
want to protect the environment. I think it will go a long way.
    At the same time, when I had an airplane the FAA used to 
come to me and say, ``well, Duke, you know this is going to be 
due in a week or so. I am not going to fine you now, but get it 
fixed.
    I think if the EPA worked in that same way, instead of 
writing fines and penalties, if they would sit down and work 
with those marinas, I think you can establish a great 
relationship and actually triple your force down there to 
protect the environment and the water source. I mean that is a 
positive thing. Some of the marinas really feel threatened.

                 Anacostia Marina Boat Repair Facility

                      see also pages 1235 and 1349

    You know what happened to Tommy Long's down there in the 
Anacostia marina. And in some cases I thought the National Park 
Service and other people were wrong, although I knew Tommy Long 
was a big violator. If you can let me know what they plan on 
doing with that, because it is one of the few places where 
people can have their boats fixed.
    Do they plan on making it a park? Are they going to let 
somebody lease it and continue to have it but under stricter 
regulations? If you have a problem with some of the other 
marinas that you plan--there is one I think that you are 
looking to close. If you could keep me informed so that--or if 
there is a problem with them that we can come up to speed and 
help them to help you, I will be glad to serve in that process 
as well.

                    CAPITAL YACHT CLUB SEWAGE SYSTEM

    We have a sewage system we put in this Capital Yacht Club 
and also in the Gang Plank, the pipes that go right into the 
city's sewage system. And we haven't been able to find out why 
we haven't been able to hook those up yet, but it just makes 
for a cleaner environment, I think, instead of having to use 
that honeydew wagon that goes up and down and pumps that out.
    I think I have covered Poplar Point.

  CONGRESSMAN CUNNINGHAM--OFFER TO ASSIST CITY ON WATERFRONT PROBLEMS

    If you could keep me informed on any initiatives with the 
hotel, with, you know, the Spirit cruise boats, what's that 
little round one down there that goes out, that pleasure boat 
or whatever it is, and anything that you plan on doing down 
there on the waterfront I will be glad to serve as your 
catalyst and to help you with it. I think what you are doing is 
noteworthy. I think this is long overdue. I agree the Federal 
government has got some responsibility in helping as much as we 
can. You know 1870, that didn't happen on my watch. I don't 
take credit for that. But I think we also have some compliance 
to meet up with our obligations now today with the Federal 
workers, and I will be glad to help you.

                         GREEN MARINAS PROGRAM

    Mr. Voltaggio. We do have a green marinas program that we 
have on the Bay in some areas. I know we are dealing in 
Maryland right now with it and we are starting to talk to the 
District as well. So maybe that could knit very well into what 
you are asking for. So basically compliance, assistance type of 
work to help folks understand what can be done. So I will 
definitely be pushing that.
    Mr. Cunningham. If you want to have a meeting I will set it 
up with Gang Plank, with Capital Yacht Club, with any of those. 
You want to have a meeting and discussion that will be 
beneficial for all of us, I will be happy to facilitate that 
for you.
    Mr. Wareck. Congressman, Mr. Chairman, Congressman 
Cunningham first let me take this opportunity to thank you for 
all the work that you have done on behalf of the Mayor. It has 
been a privilege personally to work with you.
    Mr. Cunningham. I like the Mayor. I am just frustrated.
    Mr. Wareck. I want to add to that on the green marinas, as 
you know, the Mayor strongly supported the efforts to keep the 
Anacostia Marina open, notwithstanding the legal problems of 
Mr. Long, but to keep it open as part of his commitment to a 
living river. And actually the Mayor brought that up 
specifically with Interior Secretary Gale Norton several weeks 
ago, and also the Acting Director of the National Park Service 
was there, that it is the Mayor's intent and this 
administration's intent to make sure that those marinas that 
serve as service boats, that service our police boats 
incidentally, remain open, that the river is a living river, is 
a vital component of the overall plan, and again thank you for 
all the work that you have done.

                   PLANS FOR CLOSED ANACOSTIA MARINA

    Mr. Cunningham. Do you know what they plan on doing with 
that facility?
    Mr. Wareck. I don't want to paraphrase the Interior 
Department and the National Park Service, but I think it was my 
intention--or their intention----.
    Mr. Cunningham. I will ask Park Service and Interior.
    Mr. Wareck. Thank you.
    Mr. Knollenberg. Thank you, Mr. Cunningham. It may not have 
been on Mr. Cunningham's watch, but it is conceivable it could 
have been on Chaka's.
    Mr. Fattah. I will never suggest that Duke Cunningham would 
have done anything like that.
    Mr. Cunningham. Strom Thurmond was here.

             COMBINED SEWER--STATE OF THE ART IN 1870-1900

    Mr. Fattah. Actually, even though the Federal government 
did install the combined sewer and therefore we have some 
responsibility, and we should be held accountable for it, the 
truth of the matter is that when it was installed it was state-
of-the-art at that point. So it was helpful to the District at 
the time that it was done. It is just now in hindsight that 
what was then state-of-the-art is now the major cause of 
pollution that you are the principal advocate that we do 
something about, which I think is admirable.

                       MEETING ON PROSTATE CANCER

    Mr. Gordon. Mr. Chairman, I would like to personally 
apologize to Congressman Cunningham with reference to the 
administration's failure to respond to you on the prostate 
cancer issue. I am now the Chief Operating Officer for the 
Department of Health, and I will personally make a commitment 
to you to talk with the Director and we will get a meeting with 
you to get that moving right away. I think it is a very, very 
significant public health issue in the city and you are 
absolutely correct. Please accept my apologies for us.
    Mr. Cunningham. I spoke to him day before yesterday and he 
still won't set that up.
    Mr. Gordon. I will make a personal commitment to get that 
done.
    Mr. Cunningham. Prostate cancer affects African Americans, 
and that is primarily the male population in D.C. I think these 
town meetings will help.
    Mr. Knollenberg. Thank you, Mr. Gordon.
    Mr. Fattah. You are not trying to make an announcement or 
something?
    Mr. Cunningham. No. I am a survivor for prostate cancer.
    Mr. Fattah. In terms of your ethnic background, I thought 
you were trying to get in the Congressional Black Caucus.
    Mr. Cunningham. I am as Irish as you can get.
    Mr. Knollenberg. Let me say too that not only is Duke 
Cunningham one of the Members of Congress that lives, makes 
their residence on the city's waterways, we have some others 
too. I don't know how many. But there are a number of them that 
are aware of this and live there on the water, so they have a 
priority interest.

                           ANACOSTIA PROJECT

    Relative to the Anacostia, I think we can't say enough 
about its potential. We have something in place now that we 
have implemented, and that's the Anacostia Project. We can see 
some great things taking place, and we are hopeful that they 
will continue into the future.
    I understand that people--I am asking a question on this. I 
understand that--I have heard that some people are fishing the 
Anacostia River. Is this true? Anyone want to respond to that?
    Mr. Gordon. Yes. Congressman, my name is Theodore Gordon.

                FISHING RESTRICTION FOR ANACOSTIA RIVER

    We have a fishing restriction on the Anacostia, and a 
fishing----
    Mr. Knollenberg. They shouldn't be fishing if they are?
    Mr. Gordon. They should not be fishing the Anacostia; 
however, there are people that do. We have had signs posted on 
the Anacostia, and we also have told them that fish consumption 
is not the thing to do. However, there are certain individuals 
that fish the Anacostia.
    We encourage, through the Metropolitan Police Department, 
who maintains--enforces our fishing regulations, and they issue 
tickets to people who do fish when they shouldn't be, and there 
is a concern about consumption because of the contaminants in 
the sediment, particularly the bottom feeders, such as catfish.
    Mr. Knollenberg. It would seem to me that that would be a 
proper thing to dissuade.

                      FISHING IN THE POTOMAC RIVER

    Incidentally, they do fish in the Potomac, I know, because 
I live near the Potomac. I am not sure what they are catching 
out there, but there is fishing.
    Mr. Gordon. Ironically, the Potomac River is considered one 
of the top 10 sport fishing areas in the United States in terms 
of bass tournaments.
    Mr. Knollenberg. Let's hope the Anacostia gets to that 
point.
    Mr. Gordon. We are sure moving towards that point.

                BROWNFIELDS--NUMBER OF SITES IN DISTRICT

    Mr. Knollenberg. Let me go to the subject of brownfields. 
Maybe the answer is in this packet, I am not sure, but 
brownfields are a big issue in every urban community around the 
country. In some cases, a city lot can date back hundreds of 
years and occupants put up with all kinds of substances.
    What I have been asking for a long time now is how many 
brownfields are there in the District? I see by your map that 
there are--or maybe it was the testimony--60 suspected, 18 
confirmed. Now, this says these are potential brownfield sites.
    Would you clarify for me--first of all, how many 
brownfields are there; how many are owned by the city; how many 
by private groups? Didn't we hear in somebody's testimony that 
there were 60 suspected sites?
    Mr. Gordon. Yes. That was my testimony, Mr. Chairman. We 
have 18. The way we do the definition, that is correct.
    Mr. Knollenberg. Are these the 18?
    Mr. Gordon. Those are the 18. Those sites--what we have 
done is extensive research on what was the prior use of these 
properties. And some of them are undergoing site assessments, 
and we believe that they meet the definition of a brownfield. 
However, until the actual site assessment is completed, which 
is, of course, sampling determined levels of contamination, 
that's when we actually confirm it.
    But under the EPA definition, we have considered these 18 
sites in the city.
    Now, when we talk about the total 67 sites, the others are 
private sites that we have researched and identified. We would 
provide--we will provide the addresses of those. However, we 
have not publicly released that information because they are 
private property, and with due respect to the owners of those 
properties, as we move forward with our brownfields programs, 
we--it creates some nervous anxiety with them.
    [The following list of brownfield sites and legislation on 
Voluntary Cleanup Program follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



               SOUTHEAST FEDERAL CENTER--BROWNFIELD SITE

    Mr. Gordon. But there are 18, and there is one Federal site 
in the city, and that's the Southeast Federal Center, which is 
a----
    Mr. Knollenberg. That's the only Federal brownfield site?
    Mr. Gordon. That is the only Federal site that is a 
brownfields site.
    Mr. Knollenberg. That's been confirmed?
    Mr. Gordon. Confirmed.
    Mr. Knollenberg. Are there others that could be?
    Mr. Gordon. Certainly that's possible.
    Mr. Knollenberg. That are Federal?
    Mr. Gordon. That's possible, yes.

                   Incentives to Purchase Brownfields

    Mr. Knollenberg. All right. Does the city have any kind of 
incentives for the purchase of brownfields?
    Mr. Gordon. I am sorry?
    Mr. Knollenberg. Does the city--I should probably ask this 
question, of anyone that's connected with economic development, 
but do you have any plans to offer incentives for the purchase 
of brownfields?
    Mr. Gordon. Yes, yes. In our brownfields legislation, we 
have tax incentives. That legislation was just passed by the 
city council. It is before the control board for approval, and 
then hopefully it will be up here on Capitol Hill for the 
Congress to react to. There are financial and tax incentives as 
it relates to brownfields--brownfield properties for 
development.
    We have also built in a voluntary cleanup piece that is, we 
feel, a significant and attractive effort to developers to come 
forward and clean up their properties on a voluntary basis. If 
they do that, then they have the opportunity to take advantage 
of those tax advantages and benefits that are in the 
legislation.
    Mr. Knollenberg. Are people clamoring to do that?
    Mr. Gordon. I don't think they are clamoring right now 
because we haven't----
    Mr. Knollenberg. Are they aware that you are making it 
available in that fashion? Are they aware of the fact that you 
have confirmed brownfield sites?

                  Brownfields Redevelopment Task Force

    Mr. Gordon. In many instances, yes, because we have a 
brownfields redevelopment task force, and on that task force we 
have developers that have been working with us. It is a 
cooperative stakeholders program. We have government officials, 
private developers, and we also involve some law firms that are 
interested in brownfields development as well, and we meet on a 
monthly basis, and sometimes we meet on a biweekly basis in 
reviewing potential brownfield sites and brownfield programs 
throughout the city.

     EPA concern over city's slowness in assessing Brownfield Sites

    Mr. Knollenberg. Someone mentioned in their statement that 
EPA was concerned about the District's speed in assessing and 
prioritizing sites. I think that was Mr. Voltaggio. Is this 
pace too slow, in your judgment? Why are you concerned about 
it?
    Mr. Voltaggio. I think the pace was too slow. I think that 
with all the work that Ted has spoken about, we are feeling 
much more comfortable that the District is moving ahead with 
the brownfields program similarly to other ones of our States. 
It was really--we, you know, gave our first brownfield grant 
back in 1988, and it was just basically getting the criteria 
for the inventory settlement and getting that moving that, you 
know, really caused us some concern.
    In the District's defense, however, let me say that this is 
a new program with literally no staff; had no enabling 
legislation and, you know, no real regulations.
    So we see now that they have overcome that hurdle. And so 
it was really stated to just kind of get a sense of why we are 
coming at it late. Now that we are here now, we feel 
comfortable with the pace.
    Mr. Knollenberg. That's a step up.
    Mr. Gordon. Mr. Congressman, if I may further respond to 
your question?
    Mr. Knollenberg. Yes.
    Mr. Gordon. Part of the delay that we encountered, this is 
not to cast blame on others, but in an initial development of 
our program, we partnered with the Army Corps of Engineers. We 
have good partnerships with them, but they have a very 
litigious process that is very time-consuming that one has to 
go through. An example was we were moving forward to identify 
the new ATF site as a possible site assessment area, as a 
previous brownfield site. We got bogged down in feasibility 
study after feasibility study, which created monumental delays.
    So we made a conscious policy decision within the 
department to go outside with a private contractor, with the 
consent and advisement of EPA to get that done, and it is 
working much better.
    So, I mean--but I don't want to cast any aspersions on my 
friends in the Corps, but they just have a process that's very 
litigious to go through.

                Brownfield Sites in district's Inventory

    Mr. Knollenberg. One thing we would like to have from the 
appropriate entity is a list of the sites in the District's 
inventory, and potential sites, then we would like to know what 
the others are beyond that potential arena, too. It is a 
question that comes up quite often for us, and it would help 
us. There are opportunities here with respect to these 
brownfields that could pay off in some great ways.
    [Clerks Note.--See pages 1353-1357 for listing of 
brownfield sites.]
    Mr. Fattah.
    Mr. Fattah. I am basically at the conclusion. I will ask 
one quick question, though, of the acting regional 
administrator?
    Mr. Voltaggio. Acting, sir.


                           CONTAMINANT LEVELS


    Mr. Fattah. When you list the contaminants that was 
originally, one of them was arsenic?
    Mr. Voltaggio. Yes.
    Mr. Fattah. Yes. There is no indication of how much of any 
of these contaminants there is. Is this just an alphabetical 
listing?
    Mr. Voltaggio. Yes.
    Mr. Fattah. Can you talk to me about the level of arsenic 
that was found?
    Mr. Voltaggio. The levels are something we can get 
specifically, depending on the location that you are concerned 
about.
    Mr. Fattah. Well, if you could give me the extremes?
    Mr. Voltaggio. I don't think I can give it to you right 
now. I could get it to you, Congressman.
    Mr. Fattah. That's fine.
    Mr. Voltaggio. I would be happy to. Arsenic is not 
necessarily the most--the contaminant of most concern. It is a 
contaminant of concern. We find that the tumors, for instance, 
are caused mostly by the PAHs, the polynuclear aromatic 
hydrocarbons. There are PCBs. There are a number of things.
    Mr. Fattah. That's what you could do for me, that is, if 
you could have someone give me an indication of the relative 
problems associated with each of these, that would be helpful.
    Mr. Voltaggio. I would be certainly happy to do that.
    Mr. Fattah. I could learn more.
    Mr. Voltaggio. I would be certainly happy to do that.
    Mr. Fattah. Thank you.
    Thank you, Mr. Chairman. I am done.
    Mr. Knollenberg. Thank you.
    Mr. Doolittle, we want to recognize you. If you have any 
question, you are certainly free to ask it.
    Mr. Doolittle. I will submit any questions I have in 
writing, Mr. Chairman.
    Mr. Knollenberg. Thank you.
    Mr. Knollenberg. Mr. Doolittle is from California, so we 
have kind of covered the country here, the Middle West as well, 
and we appreciate him coming in after having two hearings 
already this afternoon.
    I want to go into a couple of quick questions, and I think 
that will tend to finalize our hearing, unless, Mr. Fattah, you 
have something more to talk about.
    Mr. Fattah. I am done.

         Problem of District Allowing EPA Grant Funds to Lapse

    Mr. Knollenberg. These are on management issues. There 
seems to be a problem with respect to the District actually 
drawing down funds from EPA grants. This is a question, for Mr. 
Voltaggio. The District has not drawn down any funds from 11 of 
the 36 grants that EPA currently has with the District. You 
also note in your testimony that annually you have a problem 
with the authority to use funds lapsing without the District 
ever using the funds. If that is true, obviously ther must be a 
problem. Is it a serious problem? And is this peculiar to the 
environmental grant system, or is this a broader management 
issue?
    Mr. Voltaggio. Of course, we are only familiar with the 
environmental grant assistance.
    Mr. Knollenberg. Yes.
    Mr. Voltaggio. But it is our understanding that it is not 
peculiar only to this, based on hearsay. We do know that it is 
a concern here more so than it is with other--with our other 
States. It is a concern because we have been able in the past 
to return money that has been lapsed in subsequent years, but 
we are not certain whether we are going to be able to continue 
this based upon budget constraints.
    So I would underscore the fact that it is a serious 
management issue. It is one of long-standing, and it seems to 
be the necessity for the financial system to allow drawdowns or 
taking money from the grants, from the EPA, to occur.
    Mr. Knollenberg. Do you have any idea how much money this 
amounts to?

               Amount of EPA Grant Funds Lost By District

    Mr. Voltaggio. Well, I can give you some figures that I 
have here. For instance, in our fiscal year 1999, nearly 
$500,000 was returned to EPA. Similarly, we estimate that 
almost $1 million, $975,000, will be returned by the end of 
fiscal year 2000. I say estimate because we don't know until we 
actually see the year-end report.
    We just have to say that we have provided substantial 
assistance, due dates, extensions, from virtually all of these 
reports, and we are unable to get that situation taken care of.
    Mr. Knollenberg. Is this a broader management problem?
    Mr. Voltaggio. I beg your pardon?
    Mr. Knollenberg. Is it a broader management problem that 
goes beyond these EPA grants?
    Mr. Voltaggio. I think that it--it is a problem, I think, 
with chief financial officer responsibilities within the 
District. We have met--we are going to form an action team 
between EPA, the D.C. Department of Health and the chief 
financial officer for the District to try and evaluate the 
issues that are causing this to happen. We don't want money to 
lapse.
    Mr. Knollenberg. Right.
    Mr. Voltaggio. We do want money to go into the 
environmental programs, and perhaps the Committee may be in a 
better position than EPA, you know, to try see if we can get to 
a better situation.
    I would recommend perhaps to give us a shot with this.
    Mr. Knollenberg. Is there anything that we can do? For 
example, how is your relationship with the Mayor's office? How 
is your relationship with----
    Mr. Voltaggio. It is fine. Our relationship with the 
District, with Ted Gordon, is excellent. My feeling is it is 
somewhat pushing a string sometimes between what the Department 
of Health can do and what the chief financial officer can 
respond to.
    I would suggest perhaps that if you can just give us 
anopportunity to work with this group that we are forming now, and if 
that doesn't work, perhaps we might come back to you.
    Mr. Knollenberg. I want to refer to Mr. Gordon for his 
comments. Mr. Gordon.

                    Bureaucratic Process for Grants

    Mr. Gordon. Yes, Mr. Chairman. I think that it is a 
multifactorial problem. Many of our grants that we get from the 
U.S. Environmental Protection Agency are annual grants. We 
write them each year. One of the problems that we continuously 
run into is if the budget isn't approved, the grant starts 
October 1, the beginning of a new fiscal year. We have 
encountered in some instances where there have been differences 
between the Congress and the President, we operate on a 
continuing resolution. When our grants--our grant 
modifications, where we get an increase above and beyond what 
the previous year was, or there is a modification to that 
grant, we can't spend the money.
    Then the problem secondary to that is that we can't get it 
loaded timely. Loaded is once we get the notification of the 
award, we can't get it loaded because we have a control board 
that has to approve all of our Federal grants for loading.
    So there is a bureaucratic process that in and of itself 
becomes an impediment in delaying our ability to meet our 
program objectives.

               Infrastructure Problems within CFO Office

    Then the third thing is, there are infrastructure problems 
within the chief financial officer in reconciling.
    Mr. Knollenberg. What kind of infrastructure?
    Mr. Gordon. The infrastructure, as Tom indicated, the 
timely reconciliation of FSRs, financial statements and 
reporting, as to how the money was spent based on accounts 
receivable. That has been a problem since I have been there.
    I have been in the government for 29 years, and I can tell 
you it has been a problem since I have taken over the 
environmental programs in 1998. I have met with the former 
regional administrator. I have met with the CFO. We have 
elevated this issue, and, of course, it is one that has been a 
barrier, and it is very frustrating for us on the program side 
as well. And we have expressed that, let me tell you, to the 
chief financial officer.
    We have a new CFO; Dr. Gandhi. I am extremely confident, 
along with Tom, in his ability to assist us in overcoming this 
barrier, because it is a barrier, and it impacts our ability to 
meet our obligations, and we certainly want to be spending all 
the Federal money we can versus taxpayers' money, and we also 
want to be able to get more Federal money. And Tom is 
reluctant, although I have twisted his arm, to give me more if 
I haven't spent what I have. That's the short and sweet of it 
from my vantage point.
    Mr. Knollenberg. I appreciate those comments. It just seems 
to me that if you leave money on the table, it is not a very 
logical thing to do.

                EPA Grants for Use on Federal Properties

    I have another question for you, Mr. Gordon. Last year the 
Committee included language that now allows EPA to make grants 
to the District for use on Federal properties. Has this 
provision been used? Has it been of any value? Was it a useful 
change in the law?
    Mr. Gordon. Yes. I am going to ask Jim Collier, who is the 
chief of my Bureau of Environmental Quality, to address that 
issue.
    Mr. Knollenberg. Mr. Collier, just grab the mike and 
introduce yourself and your title.
    Mr. Collier. I am Jim Collier. I am the chief of the Bureau 
of Environmental Quality.
    The help that that change made is that a lot of the green 
space that you see in the District of Columbia is Federal 
parkland, and it surrounds streams. The EPA regs would not 
allow us to use EPA money to go in there and do stream bank 
protection, fish habitat modifications, to reduce the pollutant 
loads that come down to the Anacostia.
    Since then, we have three projects that are rolling: Fort 
Dupont in the Anacostia----
    Mr. Knollenberg. Three projects, did you say?
    Mr. Collier. We have three projects that are under way. 
They are in various stages of design, and some of them are 
getting close to construction and should hit construction about 
a year from now: Watts Branch, Fort Dupont and Fort Stanton. 
All three are little tributaries to the Anacostia. All three of 
them will reduce part of the sediment loads that go into the 
Anacostia, part of the stormwater runoff that erodes the bank, 
and we will increase the habitat for the creatures who have a 
difficult time living there now. It has been very helpful.
    Mr. Knollenberg. How much money is involved?
    Mr. Collier. Somewhere in here I have a sheet. It is 
generally going to be about somewhere between $300,000 to 
$500,000 a tributary that we get under section 319 of the 
Federal Clean Water Act.
    Mr. Knollenberg. You would characterize, then, that the 
change in the law was helpful?
    Mr. Collier. It was extremely helpful. Most of the streams 
are on Federal land, and EPA couldn't get--we couldn't get 
through the bureaucracy, and they couldn't get through. It was 
just against the law for us to take their money and work on 
those streams.
    Mr. Knollenberg. It would seem to me the change we made in 
the law is a huge help in terms of bringing about some common 
sense to what appears to have been a bureaucratic maze that 
just goes on beyond belief.
    Mr. Gordon. We truly appreciate it, too, Congressman, the 
help of the Committee to get us there.

                  Hazardous Substance Research Center

    Mr. Knollenberg. We're glad we could be of help.
    The EPA is familiar with the work being done by the 
Hazardous Substance Research Center. That's South Southwest. I 
believe, the work is being done by LSU, the Louisiana State 
University. Administrator Voltaggio, would that be something 
that you could respond to? Are you familiar with the work 
there?
    Mr. Voltaggio. Yes, we are.
    We think that as we look into the strategies for a cleanup 
in the Anacostia, that it could very well be an option that 
could be considered.
    The discussion about what to do about sediments out in the 
middle of rivers creates a tremendous problem from a logistical 
standpoint, and the work that LSU has done gives us something 
to add to the mix.
    If it could be shown to be effective, we would love to see 
it. I think it is too early to determine that, but it is 
something that is intriguing enough that it should be put into 
the mix when we get to the point of deciding how we deal with 
the contaminants that we find out in the river.
    Mr. Knollenberg. Thank you. That concludes any questions I 
have.
    Mr. Fattah, do you have anything for the record?
    Mr. Fattah. I do not . Mr. Chairman. If I have any further 
questions, I will submit them for the record.
    Mr. Knollenberg. I will do likewise.

           Information for the Record--Agencies Need to submit

    In terms of any of the previously-referenced requests for 
information of one kind or another, we would very much like to 
have those in a timely manner. I speak for all of the Members.

 Committee's Strong Interest In Assisting City to Remedy Environmental 
                                Problems

    Mr. Knollenberg. I do appreciate your holding fast with us 
today. We are going to conclude now in just a moment. The 
testimony we have received is very helpful. I believe we have a 
better understanding of the players, and all of us--I believe, 
strongly on this Committee, Mr. Fattah and I have talked about 
this, too--we want to see improvements made environmentally, 
and the first place you think of is the Anacostia River.
    So it is certainly in our interest to help in any way we 
can. I am glad to hear that some of these things are helping. 
We are appreciative of all the testimony today and want to 
continue to work with you.

                          Conclusion of Hearing

    With that, our next hearing is scheduled for Wednesday, May 
23, from 1:30 to 4:30. As of yet, we do not have a hearing 
room, but we will borrow one somewhere. The hearing will be on 
the fiscal year 2002 District of Columbia budget. So until next 
Wednesday, May 23 at 1:30, we are adjourned.

                        QUESTIONS FOR THE RECORD

    [The following material includes the Committee's questions 
for the record for the U.S. Environmental Protection Agency and 
the Agency's response:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



                                           Wednesday, May 23, 2001.

                      BUDGET FOR FISCAL YEAR 2002

                               WITNESSES

HON. ANTHONY A. WILLIAMS, MAYOR, DISTRICT OF COLUMBIA
HON. LINDA W. CROPP, CHAIRMAN, COUNCIL FOR THE DISTRICT OF COLUMBIA
NATWAR M. GANDHI, CHIEF FINANCIAL OFFICER, DISTRICT OF COLUMBIA
ALICE M. RIVLIN, CHAIRMAN, DISTRICT OF COLUMBIA FINANCIAL 
    RESPONSIBILITY AND MANAGEMENT ASSISTANCE AUTHORITY
JOHN KOSKINEN, DEPUTY MAYOR AND CITY ADMINISTRATOR, DISTRICT OF 
    COLUMBIA

                Opening Remarks of Chairman Knollenberg

    Mr. Knollenberg. The committee will come to order.
    I appreciate all of our panelists being here on time. We 
were a trifle late, but we were close.
    We are going to have a series of votes on the House floor 
at around two o'clock, so we will try to get into the basic 
part of the opening, and perhaps some questions before the 
votes start. We will try to get as far as we can.
    With that in mind, we are meeting this afternoon to receive 
testimony concerning the District of Columbia's fiscal year 
2002 budget and fiscal year 2001 supplemental request.
    We are pleased to have with us today, the Mayor of our 
Nation's Capital, Anthony A. Williams; Linda Cropp, who is the 
chairman of the Council of the District of Columbia; Dr. Natwar 
Gandhi, who is the District's independent chief financial 
officer; and of course, Alice Rivlin, chairman of the DC 
Financial Responsibility and Management Assistance Authority 
which is commonly referred to as the control board.

                 Budget Fashioned by Mayor and Council

    This is a very important day for the District of Columbia. 
This is the first time in six years that we have a budget from 
the District that has been developed and approved by the Mayor 
and the elected Council, without control board involvement. And 
the reason is you have had four consecutive years of balanced 
budgets. This good news means that the control board will 
sunset, and the District's elected leaders will have more 
control over their finances.
    I commend each of you. Mayor Williams, for your work, 
first, as the District's chief financial officer and, now, as 
mayor.
    Chairman Cropp and the Council, for your work in helping to 
keep the budget balanced. We appreciate your fine attention to 
that.
    Dr. Gandhi, for your managerial and technical competence in 
restructuring the District's tax and revenue operations that 
has resulted in a much more efficient operation and additional 
revenue collections of over $700 million.
    And then, Chairman Rivlin and the control board, we thank 
you for your hard work and persistence and dedication working 
with the Mayor, the Council as well as various interest groups 
in achieving this milestone.
    Nobody would say it was easy. It has not been, but then 
nobody said it was going to be either.
    You can all be very proud of what you have accomplished in 
a relatively short period of time. The District is in much 
better shape, not only from the standpoint of its finances and 
some modest improvements in service delivery, but also because 
of the revitalized and re-energized citizenry.
    I realize that everyone does not agree with all of 
thedecisions that you have made, but I believe the changes that you as 
a group have made and that you continue to make will have a very 
beneficial and lasting impact on current and future generations of 
Washingtonians through improved service delivery and certainly for a 
better quality of life in the District.
    On behalf of the Committee and all of us here, I want to 
thank each of you very much.
    At this time, I am going to recognize the ranking member, 
Mr. Fattah, for an opening statement.

                 Opening Remarks of Congressman Fattah

    Mr. Fattah. Let me thank the chairman for, not only his 
opening statement, but his extraordinary commitment to the work 
of this subcommittee.
    We have had a number of hearings, and I think we have 
explored a number of subjects, leading up, obviously, to this 
most important hearing.
    And it is a pleasure to see the Mayor again. We have had a 
chance to talk privately, and I have told him, which I will now 
state publicly, of my support for the work that he has done. He 
has moved this city in a very positive direction.

                     FOUR YEARS OF BALANCED BUDGETS

    Under the leadership of both you and your finance director 
and, obviously, the control board under the leadership of Ms. 
Rivlin and others, this city has now seen four years of 
balanced budgets, and there is a lot to be supportive of, for 
the Congress.

 COMPARISON OF OTHER NATIONAL GOVERNMENT'S ROLE TO THEIR CAPITAL CITIES

    I am new in this role, and I have stated it privately to 
the chairman, but I want to make it public to all who are here, 
that my interest is that, one of the things I would like to see 
us do is to compare our national government's role and the 
support of our capital to the role of other national 
governments in support of their capital cities.
    I think that part of the dilemma of DC over the years has 
been somehow seeking to hold the District accountable on a host 
of matters in which the District does not have the support that 
it needs from the national government to respond to and, on the 
other hand, looking for the District to somehow solve problems 
that no other city has been able to solve.
    All of this at a time when the District has little input, 
at least as a voting matter, in the decisions of the Federal 
Government. So I think this whole context needs to be reviewed. 
The chairman has assured me that after we move through the 
appropriations process, we are going to take some time and 
delve into this issue.

                     LONDON'S SUPPORT FROM ENGLAND

    London, for instance, has a grant from the Federal 
Government of close to $3 billion, and $500 million is locally 
generated. It is almost a reverse of the financial 
circumstances here in Washington, how the capital city is 
treated in England versus how the capital city is treated here.
    But nonetheless, this years' appropriations process is one 
in which we are going to do our best to support the chairman 
and support the city administration as we try to deal with the 
issues at hand.
    And I want to thank the chairman for convening this hearing 
and the work that he has done in his sincere interest in the 
future of the District.
    Mr. Knollenberg. Thank you, Mr. Fattah.
    Let me introduce Duke Cunningham from California. He is 
Vice Chairman of this subcommittee.
    If you have any comments, Mr. Cunningham, you are welcome 
to make them at this time.
    Mr. Cunningham. Mr. Chairman, I have a lot of things I want 
to talk about, but I would rather listen to them first so we 
can get on with the business.
    Mr. Knollenberg. Very good. Thank you, Mr. Cunningham.
    Mr. Olver, do you have any opening comment?
    Mr. Olver. I do not, Mr. Chairman. Thank you.
    Mr. Fattah. I did neglect to recognize the delegate from 
the District, and I do want to thank her for her support for 
the Committee's activities.
    Mr. Knollenberg. Mr. Fattah, I did the same, but I had her 
name written down. It has been on the tip of my tongue, but 
welcome, again, to Delegate Norton.
    I want to just echo very quickly--Mr. Fattah and I have 
talked about the issue of trying to make this city the very 
best, one that shines and gleams. He has spent some time on a 
project that looks at some of the capitals of the world because 
there are some very beautiful capital cities, and we would like 
to see this capital city become comparable or even exceed all 
the others. So I thank you for your comments, Mr. Fattah.

                        SWEARING IN OF WITNESSES

    I realize that we have witnesses here in addition to the 
principal panelists. I welcome you all, of course, but I am 
going to at this time, under the rules of the House, swear in 
all of you. I will ask all of you to stand--and by the way, in 
case you are wondering, I am vested with this authority by 
virtue of being the subcommittee chairman. It is a standard 
procedure, so if you will all stand and raise your right hand.
    [Witnesses sworn.]
    If there is no objection, we will hear all of the opening 
statements before we go to questions. I am going to designate a 
five-minute time frame for each one of you. That is a little 
close, I know. If you run over, we will not penalize you, but 
we would like for you to highlight your prepared statement in 
about five minutes, and then it will give us time to get into 
questions. Your entire prepared statement will be included in 
the record.
    First, we have the Mayor of the City of Washington, Mayor 
Anthony Williams. You are recognized.

                  Opening Statement of Mayor Williams

    Mayor Williams. Good afternoon, Chairman Knollenberg and 
Ranking Member Fattah, Congresswoman Norton, members of the 
Committee. Thank you for the opportunity to discuss the 
District's fiscal year 2002 budget and financial plan with you.

             THEME OF BUDGET ``BUILDING A CITY THAT WORKS''

    The theme of this budget is building a city that works for 
everyone, neighborhood by neighborhood. And this theme reflects 
the focus of our efforts in the District to date, and it 
reflects our vision for the future.
    Every year, elected officials around the country face the 
same dilemma: How do we aggressively improve service delivery 
and at the same time maintain fiscal responsibility? I believe 
that this budget meets this challenge by adhering to several 
guiding principles.
    First, it focuses budget resources on the service 
improvements that citizens care about most: education, services 
for our most vulnerable residents, and neighborhood quality of 
life.
    Second, it maintains a balance of revenues and expenditures 
in fiscal year 2002 and every year thereafter.
    Third, it includes not one dollar of spending that is 
contingent on unallocated savings or changes to federal law.

                   FY 2002 BUDGET SETS NEW STANDARDS

    In short, the District's fiscal year 2002 budget 
andfinancial plan sets a new standard for investing in critical 
priorities and maintaining fiscal responsibility.

                   MAJOR INCREASES FOR PUBLIC SCHOOLS

    If we invest in critical services, the first and foremost 
priority of my administration is to ensure that every child has 
access to high quality education in a safe and healthy school. 
In fiscal year 2001, I committed to full funding for education, 
and we continue that commitment in fiscal year 2002.
    In fact, our budget includes a $29 million increase for DC 
public schools and a $37 million increase for the DC public 
charter schools. In addition, we include $750,000 to launch the 
Lead Principals Initiative. This is a recruiting drive that 
will draw highly talented principals from across the country to 
our lowest-performing schools and, in addition to that, $1.2 
million for the teaching fellows program which will help the 
District recruit and train committed new teachers from an array 
of professional backgrounds.

                        TEACHING FELLOWS PROGRAM

    We appreciate the fact that Congress and the President also 
place a high priority on education in the District, and the 
city is particularly pleased that First Lady Laura Bush helped 
us launch the teaching fellows program.
    We are even more pleased to report to this Committee that 
over 1,200 people, including dot.com executives, retired 
persons and even a few congressional staffers applied for this 
program in its first year. This is a solid indication that 
citizens are willing to invest themselves in turning around our 
school system.

                    40 CHARTER SCHOOLS IN OPERATION

    As you know, Washington is also home to probably the most 
vibrant charter school movement in the country. This fall, we 
will have 40 charter schools in operations. We have not been 
able to satisfy all needs for facilities, but we are working 
with these schools closely to help them and all of our public 
schools with their facility needs.
    Between the large array of charter schools and liberal out-
of-boundary enrollment program, the District has embraced 
public school choice. Parents have many options, and it is my 
hope to broaden these choices, especially for those in 
chronically low-performing schools, as DCPS, our public 
schools, implement plans to reconstitute schools and provide 
parents with new environments within the public school system.

                            NEW SCHOOL BOARD

    Against this backdrop, our new school board and 
superintendent are working hard to put in place accountability 
systems that will help implement change. Mr. Chairman, the 
District has earned a great distinction among major urban areas 
that have reformed school governance under their own power.
    This was not mandated to us. We did it on our own. Our 
changes were self-instituted and ratified by the voters. And as 
a city, we came together, recognized the need for change and 
went about doing it. Our new system has met some bumps along 
the way, but I can assure you that the system is working and 
will continue to improve for our children.

                    TUITION ASSISTANCE GRANT PROGRAM

    The subcommittee will also be happy to know that, thanks to 
the Federal tuition assistance grant program, more than 1,800 
District youth receive Federal financial assistance to attend 
colleges and universities in 35 states. For many of them, this 
program means the difference between attending or not attending 
college. The number of applicants, grantees, and participating 
schools far exceeded our expectations.
    With a school year's worth of operations under our belt, I 
urge the Congress to amend the original statute and remove the 
requirement that participants have graduated after January 1, 
1998, and that they have commenced higher education within 
three years of their high school education.
    These restrictions needlessly exclude older students and 
others who, for whatever reasons, fall into these categories. 
Financially and administratively, the program, I believe, can 
withstand this expansion. I urge the Congress to consider these 
changes.

           CAPITAL PROGRAM OF $174 MILLION FOR PUBLIC SCHOOLS

    The budget also includes $174 million to renovate and build 
quality school buildings so that our children have safe, 
functional, inviting environments in which to learn.
    We need to find ways to support the proposed master 
facilities plan designed with the counsel and input of our 
citizens, and as we look to the future, we have to make sure 
that the executive branch, the regular part of our government 
is working with our schools to see that there is a cooperation 
and a coordination between our different functions, all in the 
interests of our children.
    Mr. Chairman, there are a number of other enhancements in 
the budget that are in my testimony that has been submitted for 
the record. I want to pay attention to particularly our program 
of $61 million to provide better health care as part of a 
network in our city; our capital budget for construction of 
other human service facilities; and in working with the 
Council, expansion of the District's earned income tax credit 
for low income citizens.

              PREPARED STATEMENT OF MAYOR ANTHONY WILLIAMS

    [The prepared statement of Mayor Williams follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
                 FISCAL AND CASH POSITION IMPROVEMENTS

    Mayor Williams. Also, I would pay attention, Mr. Chairman, 
to the advances that we have made--I think they are all 
recorded now--in the fiscal and cash position of the city.
    We are well ahead of schedule and moving toward home rule; 
well ahead of schedule in changing our fiscal positions, some 
$1 billion swing; well ahead in changing our cash position; and 
are now, I think, some two or three years ahead of meeting the 
cash reserve targets that we worked with the Council, the 
Control Board and the Congress to put in place, and that we 
heartily support.
    By 2003, we will have 7 percent of our operations in cash 
reserve, which is well in excess of other cities and states 
around the country.
    And with that in mind, Mr. Chairman, I would like to ask 
that as we move toward increases in our bond ratings, increases 
in our financial performance, increases in our overall 
performance and efficiency, that this committee, in its wisdom 
and in the spirit of partnership and respect for our city, 
grant our city, upon the cessation of the Control Board, not 
only return to regular home rule, but enhance home rule in that 
the city's budget autonomy could be tied to our financial 
performance.
    If we meet certain financial performance or fiscal targets, 
the review and oversight of the Congress and the committee's 
would decrease. If we fell back into arrears forsome unforeseen 
reason or some contingency, there would be a commensurate increase in 
oversight and responsibility to the committee.
    I urge the Committee look at that, and also urge the 
Committee, in the spirit of Ranking Member Fattah's comments, 
to look closely and to support the legislation that has been 
sponsored by Congresswoman Norton and Senator Lieberman, 
taxation without representation, recognizing that we pay the 
second-highest Federal income tax in the country without 
representation, and until such time as we have the 
representation that we think we are due, that there be a 
commensurate relief from Federal income tax requirements, 
which, needless to say, would go a long way toward our economic 
development.
    So I would like to thank the Committee for this opportunity 
to testify. Again, my remarks have been submitted for the 
record, and I look forward to not only answering your 
questions, but working, as we have been, in partnership with 
this Committee in the furtherance of our nation's capital.
    Mr. Knollenberg. Mr. Mayor, thank you very kindly, and your 
entire prepared statement will be placed in the record without 
objection.
    Next, we have the chairman of the DC Council, Linda Cropp, 
who is no stranger to us.
    We have worked together on a number of issues.
    Welcome, Ms. Cropp. You are recognized.

           Opening Statement of Council Chairman Linda Cropp

    Ms.Cropp. Thank you very much, Chairman Knollenberg. To 
Ranking Member Fattah, to the other members of the Committee, 
to our representative, Eleanor Holmes Norton, to each of you, 
good afternoon. I am pleased to be here with you today to 
testify on behalf of the city and the Council on our fiscal 
year 2001 budget.
    Also in the room is Councilmember Sandy Allen, and I would 
like to recognize her.
    The fiscal year 2002 budget is the year that we have been 
looking forward to with great anticipation. The Council, 
together with the Mayor, is pleased to present to Congress our 
fiscal year 2002 budget.

               Budget Accomplished Without Control Board

    Although this budget is another in a series of fiscally 
sound and responsible budgets, it is a turning point in our 28-
year history of home rule. This budget was accomplished without 
the Financial Authority and came on the heels of several major 
accomplishments of the city. We have demonstrated that as 
leaders we are ready to govern the city ourselves; that is, 
without the Financial Authority.
    As this Council period comes to an end, however, I would 
like to publicly thank the work of the Financial Authority, in 
particular its chair, Alice Rivlin; former chair, Andrew 
Brimmer; and each member of previous and current Financial 
Authorities for their dedication and commitment to the District 
of Columbia. We truly do appreciate that.
    We, though, have exercised sound financial discipline in 
our oversight role by putting safeguards, insurance policies 
and triggers in this year's budget. We have made remarkable 
progress in improving the city's image and services.

             FY 2000 Accumulated Surplus of $464.9 Million

    We are in good shape economically, as seen in our real 
estate market, both private and commercial. We have obtained 
clean audits for the fourth consecutive year. We ended fiscal 
year 2000 with a healthy accumulated surplus of $464.9 million.
    We are in good fiscal standing, and our bond ratings have 
raised. We have a healthy rainy-day savings, which is projected 
to reach 7 percent by fiscal year 2003. And we have prepared a 
spending plan, which is our fifth consecutive balanced budget.

                     Council Added To Subcommittees

    As part of the Council's reorganization for period 14, we 
have added two subcommittees to the existing 10 standing 
committees. Our legislative agenda included seven important 
goals: demanding fiscal discipline; revitalizing our 
neighborhoods; investing in our youth; protecting our most 
vulnerable residents; overseeing the executive performance of 
service delivery; promoting continued economic stability and 
growth; and expanding home rule democracy.
    And for your information, we will send you a copy of the 
Council period 14 legislative agenda when it is formally 
printed. However, we can submit to you current copies.

               March 12 Budget Submission Date To Council

    In December of last year, the Council passed the fiscal 
year 2002 budget submission requirements resolution of 2000. It 
established March 12 as the day by which the Mayor shall submit 
to the Council the proposed budget. The Mayor transmitted his 
budget, and within 50 days, as required by the home rule 
charter, we took action on this budget.
    During this 50-day period, the Council worked diligently 
with the Mayor in aligning both sets of priorities, put 
together a fiscally sound and responsible spending plan that 
will serve our citizens well and make the District a much 
better place to live.
    The operating budget funds basic city services and 
programs. The capital budget, as a result of stringent 
oversight by the Council, was realigned by directing funds from 
nonperforming or delayed projects to new or existing projects, 
resulting in a better capital improvement plan that will 
improve the infrastructure of the District and encourage 
economic growth.
    I have here copies of the Council's committee reports on 
the supplemental budget request for fiscal year 2002, and I 
would ask that they also be made a part of the record, and I 
will submit them to you.
    [Clerk's note.--The documents referred to have been 
retained in the Committee files.]
    When the Mayor submitted the budget to us on March 12, he 
had proposed a local budget of $3.53 billion, an increase of 
$95 million or 2.7 percent over the new fiscal year budget 
amended in the supplemental budget request.

                      FY 2001 Supplemental Budget

    At this point, we ask that you support the fiscal year 2001 
supplemental. This supplemental appropriations of $90 million, 
charged in part against the additional $109 million revenue as 
certified by the CFO, is needed to fund some basic critical 
needs of the city. It will be used to improve various health, 
youth and human services initiatives, increase community 
education programs, promote e-commerce in the city.

         FY 2001 Supplemental Request for D.C. General Hospital

    I would specifically note that the supplemental budget 
approved by the Council included $21.5 million for funding DC 
General Hospital. Since the Council's consideration of the 
supplemental request, events have proceeded which have led to 
the loss of residents from the teaching hospitals at Howard 
University and Georgetown Medical School. This action has had a 
negative impact on DC General Hospital's ability to provide 
services.
    Despite disagreement over the privatization of DC General 
between the Mayor, the Financial Authority and the Council, we 
remain committed to a good health care delivery system and will 
work together toward that end.
    An integral part of the Council's budget process is public 
input, and as such, many hearings on the fiscal year 2002 
budget were held. The process gave citizens and our work force 
an opportunity to comment and critique the programmatic and 
funding needs of agency performances throughout the city.
    This feedback is invaluable because it contributed to and 
culminated in the decisions and recommendations of each 
committee in the markup of its budget.
    Following a review of the committee recommendations, the 
committee of the whole made additional revisions in order to 
bring the budget into balance.
    At the end of this process, the committee has conducted a 
total of 61 public hearings, and where appropriate, 
incorporated the findings of our citizens and employees into 
the budget.
    I am going to skip over some of it as my time is drawing 
close, and I would like all of it to be submitted to the 
record.

               Prepared Statement of Chairman Linda Cropp

    [The prepared statement of Chairman Linda Cropp follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Ms. Cropp. But I would note that I do want to talk about 
the relationship between the District and the Federal 
government. And it has been a unique political and financial 
arrangement.

                 Federal Payment Between 1879 and 1920

    Between 1879 and 1920, the Federal government would provide 
assistance by paying half of all of the District's 
expenditures. Subsequently, given the various Federal 
prohibitions on taxing nonresident incomes, Federal properties, 
Federal purchase of goods and services, the District would 
receive a direct payment.
    This payment was stopped in 1997 when the Federal 
government took over some of the unusual costs such as the 
contribution toward police, firefighters, and teachers 
retirement plan.
    Last year, the Council requested the Greater Washington 
Society of CPAs to analyze the District's purported 
disproportionate share of revenues from Federal grants. Their 
conclusion was, the ratio of Federal grants to the District 
general fund revenue is not high.

              Proportion of Federal Funds to General Fund

    And I would like to direct you to Table I. In short, the 
Federal government is not subsidizing the District generously 
as many think. When compared to 50 other states, 32 states 
receive a greater proportion of Federal funds for their general 
fund than the District of Columbia.
    It is worth recalling that in 1997, when theRevitalization 
Act passed, one recommendation was that since the District no longer 
receives any Federal funds, that Congress would not need to review or 
approve the local budget. Congress should no longer approve the local 
portion of the District of Columbia budget just like 50 other states.

                   Capital Cities in other Countries

    I was heartened to hear Mr. Fattah's talk about the capital 
cities in other countries in the world. And certainly, the 
Council and I am certain the Mayor would be willing to work 
with each of you as we sit down and look at how capital cities 
are treated. And there is no doubt in my mind that there is the 
will and the commitment in the greatest country in the world 
for the capital of that country to be treated no less than 
capital cities in other countries.
    I join with the Mayor in looking for and hoping for 
autonomy as the Financial Authority leaves.
    And finally, as you consider our appropriations request, we 
ask that you support and pass the budget in time for the start 
of the new fiscal year. And Chairman Knollenberg, you have 
stated that on many occasions, and we are very pleased that you 
are doing that. We will work with you to that end.
    The Council will continue to oversee the executive 
operations and expenditures. We will be responsive to our 
constituents who call the District their home. We will work 
with the Mayor and with Congress to make Washington, DC, the 
type of city that we all know that it can be, even better than 
it is.
    Mr. Knollenberg. Thank you very much, Ms. Cropp.
    I appreciate your comments as well as your thoughts and 
your vision on some of these issues.
    Now, we will turn to Dr. Natwar Gandhi, who is the chief 
financial officer of the District of Columbia.
    You are recognized, Dr. Gandhi. If you can, try to keep 
oral remarks within that five-minute frame.
    Dr. Gandhi. Yes, sir.
    Mr. Knollenberg. Thank you.

     Opening Remarks of Dr. Natwar Gandhi, Chief Financial Officer

    Dr. Gandhi. Good afternoon, Mr. Chairman, and Mr. Fattah, 
Mr. Cunningham, Mr. Olver, Ms. Norton.
    I am Natwar Gandhi, the chief financial officer for the 
District of Columbia, and I am here to testify about the 
District's fiscal year 2002 budget. My remarks will briefly 
touch on the fiscal year 2001 supplemental and the fiscal year 
2002 budget request, and two proposals that would help improve 
the District's overall financial picture.

                         Goals of CFO's Office

    When I testified before the subcommittee in July of last 
year, I had just been confirmed as the chief financial officer. 
I noted three over-arching goals that had to be achieved for my 
office to be successful: obtaining a clean audit opinion on 
time from an independent auditor was the first priority; the 
second was ensuring a balanced budget; and third was providing 
effective, efficient financial systems.
    Since then, we have met the first two goals and made 
considerable progress on the third one.

                        Tobacco Settlement Funds

    We have also completed the valuation of the District's 
tobacco settlement funds and achieved an upgrade from all the 
rating services.

                          FY 2001 Supplemental

    Since the Mayor and Mrs. Cropp talked about fiscal year 
2002 budget, I will simply concentrate on the fiscal year 2001 
budget supplemental. It totals about $95 million and should be 
approved by Congress as soon as possible.
    I want to emphasize the importance of moving on this very 
quickly. In addition to the fact that only about four months 
remain in this fiscal year, limiting the time we have to 
actually spend the funds, certain items in the supplemental are 
time sensitive.

                          Student Census Audit

    For example, the District's law requires a student census 
audit be completed by December 31, 2001. A contract for this 
audit must be awarded by June 30, in order to complete the 
census by the deadline. Of course, any item not approved in 
this supplemental budget then becomes a spending pressure for 
the next year.

                  Structural Imbalance in D.C. Budget

    Let me turn to some of the larger issues that we have in 
the structural imbalance in the District's budget. I believe 
there is a structural imbalance inherent in the city's budget 
which may eventually precipitate spending in excess of revenues 
or serious cuts in the city services.
    The sources of this imbalance are well-known and 
documented. First, the District provides as much as $339 
million in public services to support federal property, which 
comprises over 40 percent of the District's property by area. 
Lacking a state-like support from the federal government, the 
District spends as much as $588 million per year on state-like 
functions.
    Third, the District can tax only about 34 percent of income 
earned in the District. And finally, tax exemption of federal 
commercial property activities reduce the District's revenue by 
as much as $193 million.
    The Federal exemption of certain pension liabilities, 
courts and prison functions was an important step in correcting 
this imbalance. But I believe that even good government and 
fiscal prudence would not be enough in the event of a serious 
or sustained economic downturn.
    Long-term solutions to this imbalance are matters to be 
addressed by District and congressional policy makers. 
Additional federal tax incentives may be part of this answer.
    Revising restrictions on the District's local taxing power 
might be another.
    A third possibility could be revisiting the Federal-local 
relationship and the partnership for providing city services 
and instituting a permanent federal payment to equitably 
compensate the District for services provided to the federal 
government. Such a payment, if instituted, may provide for the 
District a badly needed inflow of funds to improve its 
infrastructure and schools.

                             Cash Reserves

    Now, I will turn to our recommended solution for such a 
policy. By the end of fiscal year 2001, the District will have 
$102 million in its cash reserves, an amount that will go to 
over $250 million by the end of the fiscal year 2003.
    Now that the District is building cash reserves and would 
have an accumulative fund balance of over three-fourths of $1 
billion by fiscal year 2005, we would like to revisit the 
requirement that the District have a budgeted reserve of $150 
million.

                          Reserve Requirements

    Existing District reserve requirements total about 11 
percent of the local funds. By contrast, median state reserves 
are only about 3.5 percent of the total expenditures and are 
generally held as fund balances.
    A proposal for your consideration, as the Mayor noted in 
his testimony, is to phase out the budgeted reserve, beginning 
in fiscal year 2002 and concluding in the fiscsal year 2005. At 
the same time, we would phase in a new $50 million operating 
cash reserve, starting with $25 million in 2003 and another $25 
million in 2004.
    The new cash reserve would be held at the $50 million level 
and be replenished as needed. Funds in this newreserve would be 
available as certified by the CFO. We believe this new structure would 
provide the District with the much needed financial flexibility for the 
future, and we urge your consideration of it.
    In conclusion, Mr. Chairman, I will be pleased to answer 
any questions you may have in terms of reserves and the Federal 
payment to the District.
    I request that my written testimony be made part of the 
record.
    Thank you.

               Prepared Statement of Dr. Natwar M. Gandhi

    [The prepared statement of Dr Gandhi follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mr. Knollenberg. Thank you, Dr. Gandhi.
    And now, we turn to the chairman of the DC Control Board, 
who is one person at the table who will not have a position any 
more down the road a little bit.
    So we welcome you, Ms. Rivlin.

               Opening Remarks of Alice Rivlin, Chairman

    Ms. Rivlin. Thank you, Mr. Chairman, Mr. Fattah and to each 
of your colleagues.
    This is the last time that the Authority will appear before 
this subcommittee to discuss the proposed District of Columbia 
Budget and Financial Plan because, as you know, and as the 
chairman stated earlier, the Authority has fulfilled its 
statutory mission and will sunset at the end of this current 
fiscal year.
    And indeed today, we already appear in a transitional role 
that is different from our role in previous years. In previous 
years, the Authority was required to approve the District's 
budget. That approval or disapproval power gave us considerable 
leverage in the formulation of the budget, which the Authority 
used effectively to broker compromises between the Mayor and 
the Council and ensure that the budget was solidly in the 
black.
    Last year at this time, the Authority reported to the 
subcommittee that we had played a less active role in the 
formulation of the Fiscal Year 2001 budget, because we believed 
that the District was increasingly capable of operating without 
heavy participation of the Authority.

                 FY 2001 Budget Was a Consensus Process

    The 2001 budget was a product of a consensus process in 
which the Mayor and the Council played the leading roles and 
the Authority provided oversight and final approval.
    Now, we have reached a new stage in the District's return 
to fiscal autonomy. Under the Authority Act, the Authority in 
this last control year simply reviews the District's proposed 
budget and makes appropriate comments to the District 
government, the Congress and the President. That process is 
under way, and we expect to conclude our review shortly. We 
will provide our views to the Mayor and the Council, and to 
you, and request that the document be included in the record of 
this hearing, time permitting.
    [Clerk's note.--The material referred to appears as part of 
Ms. Rivlin's prepared statement.]
    In undertaking this review, we are taking a new approach. 
We are not going into such detail as we have in the past. But 
we are trying to look at the major expenditures of the District 
and sources of risks going forward, such as special education 
services and some cross-cutting issues that may affect multiple 
agencies.
    We have of course been observing the budget process as it 
has unfolded so far. And we wish to commend the Mayor and the 
Council as well as the Chief Financial Officer for what appears 
to be an exceptionally cooperative and productive approach to 
developing the District's proposed budget for Fiscal year 2002.

                          Health Care Services

    We believe the Mayor and the Council have shown an ability 
to work together on the budget this year that augurs well for 
future cooperation in the post-control period. Recently the 
good working relationship between the Mayor and the Council has 
been overshadowed in the press by the controversy surrounding 
the decision to contract with a private entity to deliver the 
health care services previously provided by the former Public 
Benefit Corporation.
    However, we believe the PBC issue was a special situation, 
and that the divisiveness surrounding it should not shake your 
confidence in the ability of the District government to handle 
its own affairs.
    The PBC situation was special because it required the 
District under severe time constraints to manage a difficult 
process of eliminating an organization with historical linkages 
to many residents. The District was forced by the financial 
collapse of the PBC to move rapidly to develop a plan to 
contract for important health care services, to manage a 
complex bid process, negotiate the terms of an agreement to 
deliver comprehensive health services to the low-income and 
uninsured population of the District and to undertake the 
transition to the new system, all in a very narrow time frame.
    The Authority has played an important role in helping to 
resolve the issues, but we believe that the District will be 
able to manage the new health system going forward.
    The Authority, as I pointed out, did not participate in 
developing the proposed 2002 budget. Nevertheless, the Mayor 
and the District Council have agreed to fund the newly 
configured health services in that budget, and the Authority 
commends their approach to this part of the budget process.

                      FY 2001 Supplemental Budget

    I would also like to point out that the Authority did 
approve, because it was still under our jurisdiction, the 2001 
Supplemental Budget that will accompany the District's Proposed 
Budget for Fiscal Year 2002.
    This budget allocates additional revenue, certified by the 
Authority, not foreseen in the original budget for 2001, to a 
list of urgently needed expenditures. We urge the 
appropriations committee to give this supplemental prompt and 
favorable consideration.

                          FY 2002 D.C. Budget

    I will not discuss the 2002 budget because the Mayor and 
Chairman Cropp and Mr. Gandhi have already done so. But let me 
close by associating myself with two remarks that have already 
been made.
    One is the proposal made by the chief financial officer and 
the Mayor, to modify the reserve which seems to us to be a very 
sensible one. And the other is Mr. Fattah's emphasis on re-
examining the Federal-DC relationship. We believe that to be 
very important.
    Thank you, Mr. Chairman.

                   Prepared Statement of Alice Rivlin

    [The prepared statement of Alice Rivlin follows:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mr. Knollenberg. Thank you, Ms. Rivlin. Thank you very 
kindly.
    Now that we have heard from each of the panelists, we will 
get into questions.
    My estimate of a 2 o'clock vote was a little off, so we 
will proceed. But the interruption will occur, I can assure 
you. We will wait until it does.
    I will start the questioning. What we will do is allow five 
minutes for each member. And we will try to get through at 
least one round of questions.

                       MAJOR INCREASES IN BUDGET

    And I will start with a question for the Mayor. I believe 
you mentioned in your summary the major program increases in 
the fiscal year 2002 budget, but would you give me a quick grip 
on those again? Is it education, health, economic development? 
In what areas are those major increases?

                        NEW HEALTH CARE NETWORK

    Mayor Williams. The two major increases, Mr. Chairman, are, 
one, in health. I believe it is $61 million to fund the new 
health care network, circumstances, a crisis, and I think good 
policy dictates we pursue, that is going to provide better 
health care, medical, home. You have heard a lot of the 
presentation about the new health care network.

                 INCREASE IN BUDGET FOR PUBLIC SCHOOLS

    The remainder of the bulk, if you will, of the increase in 
the budget is for education, to fully fund the per-pupil 
student formula, dollars for the regular public schools, $27 
million, I believe it is, as well as dollars for our public 
charter schools.
    Mr. Knollenberg. Thank you.

                                REVENUES

    I would like to turn the questioning now to Dr. Gandhi. We 
have had previous conversations about the revenue. I think you 
have done an extraordinary job of bringing that system in line 
so it is up to date. We are actually billing people and 
collecting money, and you are doing it in a way that makes it 
appreciated, obviously, by all of us.

               $100 MILLION REVENUE INCREASE OVER FY 2001

    My question for you is simply this: How much in additional 
revenue do you contemplate or do you expect in fiscal year 2002 
over 2001?
    Dr. Gandhi. Our expectation at this moment, sir, is about 
$100 million more we will collect in the year 2002. Our basic 
billers are real property taxes, general sales taxes, 
individual income taxes.

                REAL PROPERTY TAX--TRIENNIAL ASSESSMENT

    Mr. Knollenberg. The biggest increase or spike among those 
is in what tax?
    Dr. Gandhi. It is basically real property, sir, because 
this is the first time we will have the upswing on a triennial 
assessment and will be able to capture the increase assessment 
and that implication on taxes, sir.
    Mr. Knollenberg. Thank you.
    Mr. Mayor, one of your goals was to develop a single set of 
goals that would consistently reflect the city-wide and agency 
strategic plan. It also would apply to budget submissions and 
performance contracts. Can you tell me, has this been 
completed? If not, what is the status and what has been 
implemented among those goals?

                            SCORECARD GOALS

    Mayor Williams. Well, Mr. Chairman, to try to give you a 
summary. We started out, the citizen summit had developed a 
list of goals. These were based on initial set of action items 
just to get the ball rolling to rebuild confidence in the 
government.
    These goals in the strategic plan were expressed in 
performance agreements with our manager and in a set of 
scorecard goals for our managers for the last year. Of those 
scorecard goals, by the ending period for the scorecard, we had 
achieved some 80 percent of the goals with a good bulk of the 
remainder coming in over a three to four month period following 
that.
    What we have done now is work aggressively to continue this 
measurement process, but to do a couple of fundamental things. 
One, to wed this process of performance agreements with our 
managers, performance with our agency heads, performance plans 
for our manager and incentives for employees to take this 
process, this performance process and wed it to our budget.
    So FY 2002, under the leadership of our City Administrator 
John Koskinen, will be the first year where both the period for 
the goal setting and the period for the budget will be the 
same. And that is important, because it will allow our Council, 
it will allow this Congress to be able to connect our resources 
to real results.

            PERFORMANCE MEASUREMENT WITH BUDGET INFORMATION

    And I just looked at it again, the last couple of days, 
there is a chapter in the budget submission, I forget whether 
it is chapter three or four, where there are a set of, I think, 
seven program areas in the budget, where for the first time, we 
have linked performance measurement with budget information.
    And it is our goal to do that systematically throughout the 
entire budget for the 2003 submission. And for anyone who has 
worked in government or worked anywhere, that is an enormous 
achievement.
    [The following was supplied for the record:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
                        TOP MANAGEMENT POSITIONS

    Mr. Knollenberg. How many top management positions are yet 
to be filled?
    Mayor Williams. Oh, good, none. [Laughter.]
    Mr. Knollenberg. None.
    Mayor Williams. None. I was going to say one, but none.
    Mr. Knollenberg. So we got zero. That is easy.

              EFFORTS TO BRING MAJOR RETAILERS TO DISTRICT

    I heard about your trip to the shopping center convention 
in Las Vegas to try to bring major retailers to the District. 
How soon can we expect to see the arrival of Kmart, the arrival 
of Home Depot? I hear stories about a certain food chain that 
is going to be coming back? What about Costco? Can you tell us 
how those are progressing?
    Mayor Williams. Well, Mr. Chairman, I have been now, on the 
urging of Mayor Dennis Archer of Detroit, who you know very 
well--as I visited our mayors before my inauguration, Dennis 
Archer told me that one of the things I had to do was go to Las 
Vegas, not in general.
    Mr. Knollenberg. Not to gamble, right? [Laughter.]

              INTERNATIONAL CONVENTON OF SHOPPING CENTERS

    Mayor Williams. But for the purpose of going to the 
International Convention of Shopping Centers. I have traveled 
there now for three years with Council members--three Council 
members with me on this trip--Vincent Orange of Ward Five, 
Adrian Fenty of Ward Four, and Councilman Harold Brazil, who is 
chairman of the Economic Development Committee.
    And Mr. Chairman, the difference between our first meeting 
out there, our second meeting last year and our third meeting 
this year, there is no other way to put it but night and day.
    I met with eight corporations, commercial interests, 
developers, all of whom were interested in developing in the 
city. It was not a question of whether. It was a question of 
where and when and under what conditions could we assemble the 
packages.
    They were very, very impressed with the DC marketing center 
that we put together, the presentation materials we put 
together. And the long and short of it is, while I cannot get 
into details about any particular deal because, as you can 
imagine, of the principals involved, and while I would be happy 
to share information with the committee on a private basis, a 
nonpublic basis, I believe that there are six or seven major 
interests who are interested in developing in the city, and we 
could see real concrete results of this over the next year, 
year and a half.
    And as it goes to Home Depot and Kmart, I know the chairman 
will be invited, as well the leadership of our city, to 
opening, groundbreaking, I believe, this June or July. So that 
is well underway and will be started.
    Mr. Knollenberg. Very good. Well, that is good news. I know 
you cannot comment on some of those, but thank you very much 
for that status report. It looks like there is some headway 
being made.
    Mayor Williams. Absolutely. And the incentives that our 
Congresswoman has worked on with the various committees have 
been really instrumental in us assembling the investment 
packages that people are looking for.
    Mr. Knollenberg. Very good. Thank you.
    Mr. Fattah?
    Mr. Fattah. Thank you, Mr. Chairman.

                RE-EXAMINING FEDERAL ROLE WITH DISTRICT

    I appreciated the comments of all of the witnesses about 
re-examining the federal role in terms of the District. I am a 
strong believer in home rule, as are many, I believe, of my 
colleagues. I hear many of them say how they believe that 
people at the local level, who are closest to the issues at 
hand, should be in a position to make the decisions, and that 
we should avoid having a strong central government dictating to 
local communities.
    And I am hopeful that, given a review of other capital 
cities, like for instance Paris, where the people who reside 
there not only enjoy a great deal of support from the national 
government to make Paris what it is, but they also have a right 
to vote for representatives in the national government.
    And I think that what would be instructive to the Congress 
is to take a look at how these circumstances are and how we 
have been treating the residents of the District for, I think, 
far too long.

               EDUCATION HIGH PRIORITY IN MAYOR'S BUDGET

    Let me talk about the budget submission and thank the 
Chairwoman of the Council for her presence here today. There 
are a lot of choices that have to be made, and I can appreciate 
that, because we have to do it back home in my city, but I am 
very appreciative of the fact that you and the Mayor and the 
Council decided that education would be a very high priority.
    I take note of the very significant presence of charter 
schools, and the significant increase in the appropriation for 
charter schools. Could you tell us what those dollars would be 
used for?

                           PER PUPIL FORMULA

    Ms. Cropp. We developed a formula, working with the 
education community, as to what it would cost per student. The 
charter schools get the same amount of dollars as they do in 
the public school, and it will be used for the carrying out of 
their educational program, whether it is for teachers, 
textbooks, facilities and whatever other items that may cost 
them.
    We had two objectives.
    Mr. Fattah. What is that amount per pupil?

                       PER PUPIL COST IN FY 2002

    Dr. Gandhi. Per pupil in 2002, it is around $6,000 per 
pupil, and then you adjust that for special needs that will be 
provided for the students.
    Ms. Cropp. There are some adjustments, depending on certain 
issues that we have all agreed to, where there may be slight 
adjustments.
    Mr. Fattah. Is that the total amount being spent per pupil 
in the District?
    Dr. Gandhi. When you look at the entire number of students 
that we have and then multiply times the per pupil, that would 
aggregate into the total budget of the schools and also the 
charter schools.
    Mr. Fattah. Are there state functions that are not being 
counted in that number?
    Dr. Gandhi. Right.
    Mr. Fattah. And if you totaled both of those numbers, what 
would it be per pupil?
    Dr. Gandhi. I do not have that number, but we will forward 
you that number.
    Mr. Fattah. Okay. Mr. Mayor, do you know?
    Mayor. Williams. I do not have the number, but we can get 
that for you, Congressman.
    [The following information was provided for the record:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
                  COMPARISON OF PER PUPIL EXPENDITURES

    Mayor Williams. But we do not have the kind of state aid 
that other cities have.
    Mr. Fattah. Right. Well, I would be very interested in that 
number. You know, there are a lot of myths about DC. And you 
hear some people who want to suggest that you are spending more 
per pupil in DC than in the surrounding communities, which 
apparently to me, at least in studying the numbers, is not the 
case. In looking at Fairfax and Alexandria and others on a per 
pupil basis, the District is substantially below that.
    And I would like for us to clarify that in the record, 
because again, many of my colleagues, who obviously are well-
intentioned, but nonetheless, parakeet this notion that the 
District is spending an enormous amount and has still somehow 
fallen short of its responsibility.
    And therefore, they are reluctant to be supportive and, in 
some cases, want to push items onto the District that theyare 
not pushing in their home districts.
    So I would be very interested in seeing if we can nail down 
exactly what is being spent per pupil, so that we can compare 
that to surrounding districts.
    [The following information was submitted for the record:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
                             Teachers' Pay

    Mayor Williams. If you look at what we pay our teachers and 
compare to surrounding jurisdictions, we pay less. If you look 
at what we pay per pupil, we actually pay, per pupil, less.
    If you look at the administrative costs in the system, 
which are also the subject of a lot of controversy and 
criticism, I believe that successive school administrations 
actually have begun to get their arms around that and bring 
those indirect costs down to a level they should be.
    There really is not in the school system--there are a lot 
of problems, a lot of efficiencies that the schools 
administration is addressing--the huge issues of bloated 
bureaucracy that people believe. I really believe that.
    Mr. Knollenberg. Thank you, Mr. Mayor.
    Mr. Olver, if you run out for the House floor vote, we will 
restart the time clock when you come back. But you are 
recognized, and I think we have just about enough time for you 
to get through. Thank you.
    Mr. Olver. Well, I will try to get through what I would 
like to ask in that five-minute period.
    Thank you, Mr. Chairman.

                      Class Size in Public Schools

    I would like to follow up, and maybe somewhat in the same 
area that my ranking member was in, when the school department 
was here earlier, I had spent a little bit of time trying to 
understand whether we had different class sizes at the high-
school level and at the elementary level. And I think we 
concluded, if I remember correctly, that they were somewhat 
smaller at the lower levels, class sizes.
    And I did not at that time understand that you had quite a 
strong charter school situation here. So I now want to ask some 
questions there.

                  Number of Students in School System

    How many total students do we have in the public school 
system here in DC?
    Dr. Gandhi. Sir, in fiscal year 2002, we will have over 
82,500 total number, of which 68,900 roughly would be in the 
public schools and about 13,600 in charter schools.
    Mr. Olver. 13,600 in the charter schools.
    Mr. Gandhi. And 68,978 in public schools.

                      Structure of Charter Schools

    Mr. Olver. Can you tell me something about the structure of 
the charters? Are the charters elementary and middle schools 
and high schools, charters at all levels?
    Mr. Gandhi. All levels.
    Mr. Olver. At all levels.
    And do these charters cut across arts, humanities, 
sciences, at least at the upper levels and maybe even at the 
lower levels? These things really do have early levels of 
operation. Do you have science charters? Or are these general 
charters?
    Ms. Cropp. They come in many different forms. There are two 
chartering agencies: One, privately, somewhat, and the other 
through the Board of Education. And as they put in their 
application for the different charters, they may be chartered 
as a science school, they may be chartered as a language 
school. So the charter schools are based on the mission of that 
particular school.
    Mr. Olver. There are charters with many different missions.
    Ms. Cropp. That is correct.
    Mr. Olver. At all levels?
    Ms. Cropp. Yes.
    Mr. Olver. Or do the specific missions really appear only 
at the upper level?
    Ms. Cropp. It depends on the mission of that particular 
chartering school. They may have an elementary school where 
they may have a mission on that elementary school level, or 
they may have one on a secondary level. So it is up to that 
charter school as to what their goal is, what their mission is.

                        Total Number of Schools

    Mr. Olver. How many total schools are there? How many total 
schools are there in the system? In the whole system?
    Dr. Gandhi. About 190.
    Mr. Olver. So, if there are 190 in the whole system, that 
would sound as if the charter schools are not smaller. I 
thought they might be smaller, but on average, that would mean 
that they were actually perhaps even a little larger than the 
average in the whole system.
    Dr. Gandhi. Overall, we have 192 schools; 154 are regular 
schools and 38 are charter schools.
    Mr. Olver. Okay, so that would say that there are 350 and 
some odd kids in a charter school.
    Dr. Gandhi. Roughly.
    Mr. Olver. And you have 69,000 kids in the 154 regular 
schools, so I am a little bit off there, but it would then be 
almost 500 or so, roughly 500 per school in the regular 
schools, 154 regular schools. So they are slightly smaller.

                     Class Size of Charter Schools

    Is the class size smaller in the charter schools? Is the 
student-teacher ratio lower in the charter schools, generally? 
Do we have measures of performance in the charter schools?
    I do not know how long they have been operating. I am 
putting out a whole lot of questions here all at once, and I 
really would like to understand the pattern in what kind of 
performance we are seeing from the charters.
    Mr. Knollenberg. Mr. Olver, can I interrupt you just one 
second.
    And I appreciate the questions, and I am going to suggest 
we do this. We have three minutes until the House floor vote. 
We do not want to run too long into that three-minute time 
frame, but I am going to suggest that if you can come back, you 
will be given the rest of your time.
    And in the meantime, perhaps they can do some study on 
those question you have raised.
    I want to point out, too, that there is a series of votes. 
I am going to suggest to you that it will be at least a half-
hour before we get back, so I am going to call a recess for at 
least 30 minutes. And hopefully with no procedural votes, we 
will be back here by then. And hopefully everybody can stay, 
because we would love to have you here.
    Mr. Olver. Mr. Chairman, may I just say, rather than have 
everybody scurrying around here trying to figure out what did 
he want to know, it might be best if they try to put this 
information in a form, for all of the things that I have thrown 
out here.
    Mr. Knollenberg. Without objection, if they would do that, 
that would be fine.
    Thank you, Mr. Olver, that is what we will do. We will 
expect that.
    [The following information was provided for the record:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mr. Knollenberg. We are adjourned for 30 minutes.
    [Recess.]
    Mr. Knollenberg. The meeting will come to order. We 
apologize for that delay. It was a little longer than I told 
you. I have no prediction on how votes will work out over on 
the House floor.
    We will start the next round of questioning.

       WHAT DID CONTROL BOARD MISS THAT NOW REQUIRES SUPPLEMENTAL

    Dr. Rivlin, the Control Board reviewed and gave its 
approval, as you know, to the fiscal year 2001 budget last 
year. What has happened since that time that requires a 
supplemental? In other words, what did you not foresee at that 
time that now requires a supplemental?
    Ms. Rivlin. A couple of major expenditures were 
underestimated. One was Medicaid expenditures. Another item 
that was not built into the budget--and indeed I think we all 
thought it had been--was increases in pay that come out of the 
negotiations with the unions.
    There are a few other items, but those are the big ones.

                      Control Board Basic Missions

    Mr. Knollenberg. The control board was established in 1995 
with two basic missions: financial responsibility and 
management improvements. As the District continues to 
revitalize, it seems to gain some financial stability and 
efficient administration.

           Management Improvements Initiated By Control Board

    What management improvements, specifically, did the control 
board implement since 1995 when it was established? What 
specific implementation items has the Control Board done since 
1995?
    Ms. Rivlin. The Authority was basically in charge in 1995 
as the Chief Financial Officer and hired Tony Williams.
    He, in turn, under the aegis of the Control Board moved to 
improve revenue collection and brought in Dr. Gandhi. The major 
effort on expenditure control began in that period, and we also 
began the process of looking at the services the District 
actually provides and measuring the provision and the cost of 
those services.
    Those were incredibly primitive times, in terms of the data 
available to measure and manage the city's performance. How 
many people did the city employ, for instance? There was not a 
clear answer to that question, at that time.
    Mr. Knollenberg. Is there now?
    Ms. Rivlin. Yes, I think so.

                 Control Board's Role in FY 2002 Budget

    Mr. Knollenberg. Of course, the control board did not have 
a formal role in developing the 2002 budget this year.
    Ms. Rivlin. That is correct Mr. Chairman.
    Mr. Knollenberg. But what are your thoughts on the Mayor's 
and the City Council's budget, what they have agreed to in the 
FY 2002 budget? What are your oversight views or your questions 
about that?
    Ms. Rivlin. As I said in my prepared statement, we will be 
reviewing this budget, and this hearing was scheduled before 
our review was completed. When it is complete, we will transmit 
it to the Mayor and to the Council chair and to you.
    [Clerk's note.--See pages 1433-1446 for control board's 
review.]
    In general, we are satisfied in several areas. There was a 
better job this year of making realistic projections of the 
cost of ongoing services.
    I do not think the mistakes that were made last year in 
estimating Medicaid casts, for instance, or in provision for 
increases in wages, will happen again.
    Also the Council and the Mayor have worked together very 
well, as we have perceived it, placing additional emphasis on 
some of the most important services, particularly schools and 
also on funding the health system.
    Mr. Knollenberg. Thank you. I appreciate those responses.
    I am going to turn to Mr. Olver, who as you recall was in 
the middle of a series of questions. Mr. Olver, do you care to 
be recognized? We will finish up that round.
    Mr. Olver. Well, Thank you very much, Mr. Chairman. 
Iappreciate you allowing me to go back to that train of thinking.
    I got very interested because I really have now been able 
to think about the numbers a little bit more, that you have one 
out of six students in charter systems of one sort or another.
    I do not know how broadly those missions and such are 
really spread, and whether you have coverage of charters under 
the different missions and also the different levels as well. 
But it sounds like a good place for a bit of good educational 
experimentation, not that the city was not a great place for 
educational experimentation in any case.
    Thinking about the number, the charter schools are only a 
little smaller than the others, on average; 350 for the 
charters and 450 for the others, which is not much of a 
difference. And I really would like to see what kind of 
demographics occur in those systems in terms of such things as 
classroom size.
    I am told now--after we recessed, Mr. Chairman, I had asked 
a question of the Mayor and discovered that most of these 
charters have only really been opened within the last couple of 
years, so there is not much experience with them. That leaves a 
good opportunity for seeing what happens over time.

             TWO ROUTES FOR CHARTER SCHOOLS TO BE CHARTERED

    What you had said was that there were two routes by which 
charters are created, one by the school board. I understood the 
other one is some route that we created. What are the different 
regulations? Are there differences in what they must present in 
order to be licensed under the two? Well, what are the 
differences?
    Ms. Rivlin. We can give you a more detailed answer in 
follow-up. My understanding is there are no broad differences 
in the rules. The Public Charter Authority, which was created 
under the congressional legislation, has had a larger number of 
schools and, I think until recently, was applying somewhat 
stricter standards. But now we have a new school board, and 
that may change.
    Mr. Olver. So the school board licenses, but also the 
Public Charter Board licenses, both by similar rules?
    Ms. Rivlin. Similar criteria, yes.
    Mr. Olver. Did materials have to be presented and 
justifications and needs and so on?
    Ms. Rivlin. That is my understanding. But I am not an 
expert on this. The experts are, with all due respect, not at 
this table.
    Mr. Olver. Yes.
    Ms. Rivlin. But we could provide information for the 
record.
    Mr. Olver. And then the other obvious question is whether 
there are impediments or complications that come because of our 
two different mechanisms by which charters are licensed within 
the city? And that, I suppose, is also something that somebody 
else ought to be answering.
    Mr. Knollenberg. Mr. Olver, if I could just interrupt, this 
panel probably is not the proper panel to relate to.
    Mr. Olver. Yes.

                STATUTORY AUTHORITY FOR ISSUING CHARTERS

    Mr. Knollenberg. But the questions are good ones, and if 
they have not been answered in writing before, why don't we 
make it a point to request that information from the proper 
individuals.
    Mr. Olver. Well, that would be great, Mr. Chairman. And I 
am likely to follow up on this next year when we get into the 
proper people who are speaking about the education aspects. But 
I now have gotten a very different picture, a much broader 
picture, and a picture that ought to be examined a little bit 
more closely, I think.
    Mr. Knollenberg. Very good. Well, thank you.
    [The following information was provided for the record:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    Mr. Knollenberg. We have to finish the first round, so we 
are back to Mr. Cunningham. I do not think you have spoken yet.
    Mr. Cunningham. No, I was over on the votes.
    Mr. Knollenberg. You are recognized.

            Southwest Waterfront Project Supported by Mayor

    Mr. Cunningham. The answer is yes, Mr. Mayor, with me and 
you, I think, with what we talked.
    Mayor Williams. Yes, sir.
    Mr. Cunningham. And all I need is a commitment to try and 
expedite this thing. Three years is, I think, a longtime.
    Mayor Williams. I am committed, Congressman, too. I have 
sent letters to the Corps of Engineers which has the line 
responsibility to try to expedite this project, the colonel 
involved, and that he can work with my team to see that that 
happens, as well as to working with the NCPC, which has got a 
statutory interest in this because of, apparently, the 
transportation or the planning aspects involved, to work with 
them to expedite it as well, so that we can work with you on 
things like awareness and a campaign against prostate, as 
opposed to go over the same ground, which I know you do not 
want to do and we do not either.

                  Town Hall Meeting on Prostate Cancer

    Mr. Cunningham. And like I said, I just talked to Dr. 
Klausner, and he is more than willing, not only himself, to 
bring his whole cancer team from NIH to put on a town hall, 
which we would love to have you kick off. I do not have to be 
there, it is something I can do that is good, I think, for the 
city and for people that may be subjected to cancer. And I 
would like to help with that.

                             Sewage Problem

    When we met in our last hearing earlier this week--they 
talked about 10 to 12 years to correct the combined storm sewer 
overflow problem. I do not think the city can go for 12 years 
with the sewage overflows into the river and the pollution 
every time it rains and the fecal count.
    You know, you are working very diligently on trying to 
clean up the Anacostia River. But if we have that raw waste 
going in there, so anything that we can do to help I will 
support coming out of the Federal government--on a bond issue 
or on anything we can do.
    Because I live in an area where probably some of the homes 
average around $12 million. I guarantee you, we would not have 
that river there and the sewage system going directly into it. 
We need to clear this up, not in 12 years, and I will do 
anything I can to work with you to help.
    I mean, think of just the health hazard that is, not only 
for the Anacostia River but for the Potomac River and the 
people. We have such an opportunity for a win-win there, when 
it is in as bad a shape as it is. And I want you to know, I 
will help you.

             BOATERS WILLING TO HELP ENFORCE RIVER CLEANUP

    The one thing I want to make sure is that we do not 
disenfranchise the people that own boats down there. You can 
have a team. I have seen the boaters themselves run people off 
for sanding their boats and allowing it to go in the water, or 
the fish market hosing their stuff into the river there, and 
things like that. By working with the boaters down there you 
can have basically an army helping you and the EPA.

       ``DON'T LAUGH AT ME''--SCHOOL VIOLENCE PREVENTION PROGRAM

    One other thing. We had before our Republican conference, 
and he is a good friend of David Obey's too, a man named Peter 
Yarrow. You may recognize Peter, Paul and Mary as a different 
name.
    There are not many men that I have hugged in my life, but 
he is one of them, because I think he is one of the most 
genuine, caring individuals that I have seen. He has a program 
called ``Don't Laugh at Me.''
    I will send you a copy of the tape, but it basically goes 
into the schools to stop the Columbines, the Santanas and show 
that there is diversity, that while we are all different, we 
are all the same. And I am trying to push it with David Obey.
    And believe it or not, I saw Republican men with tears in 
their eyes this morning in our caucus, so it is a very good 
program, and I think it would be good to get into the DC school 
system. And I will bring it to you.

    PARTNERSHIPS WITH CONGRESS--FOSTER CARE; SCHOOLS; ANTI-VIOLENCE

    Mayor Williams. Well, you know, Congressman, we have been 
working with Congressman DeLay on issues as they relate to our 
foster children in the city.
    And so there is a precedent now for this kind of 
partnership, and we would love to work with you on that. The 
Chief has done a good job working with the faith institutions 
and neighborhood organizations certainly to bring youth 
violence down dramatically from last year. And God willing and 
with our efforts, we are going to continue that record.
    But God forbid, you do not want homicides. But below that, 
the general level of violence, I think this can help us speak 
to that and reduce that as well.
    Mr. Cunningham. This is a great. You watch the kids and you 
watch their eyes light up. And then you watch the parents. I 
mean, I challenge any of you out there not to have tears in 
your eyes after you watch and hear this thing. And it is free. 
He is not making a dime on it. It is free to the schools.
    You say, ``Duke, why are you supporting a liberal? He is a 
Democrat.'' Because he is a good guy, and he really cares. He 
gives a damn.

               CAP ON LAWYERS' FEES FOR SPECIAL EDUCATION

    I would like to hear sometime on the school--or, actually, 
I am going to cancel that. I have one quick area.
    One of the areas, a little controversial--over the last few 
years I have been able to work with the IDEA program and cap 
lawyer fees or at least give you and the Council the ability to 
cap lawyer's fees for special education.
    We do not want any child left unrepresented, which has not 
been the case. We have not had any unrepresented children. But 
we saved $12 million which has gone to provide special 
education specialists for these children with special needs.
    And I think that is very important, getting the money down 
to the children instead of going to lawyers. And we have been 
able to do that.
    It comes up every year. The cap language was beaten in the 
Committee, but we changed it in the conference. I would like 
you to think twice about that and help in getting the money 
down to the kids and hiring extra speech pathologists, hearing 
specialists, sight specialists and those things, instead of 
going to the lawyers. There are too many rich lawyers in this 
country. I want to get it to the kids.
    I yield back, Mr. Chairman.
    Mr. Knollenberg. Thank you, Mr. Cunningham.
    Mr. Doolittle?
    Mr. Doolittle. No questions, Mr. Chairman.
    Mr. Knollenberg. Then I am going to go back to our regular 
order here and recognize Mr. Fattah.
    Mr. Fattah. Thank you very much.

                          FY 2001 SUPPLEMENTAL

    I want to follow up on the Chairman's question about the 
supplemental, just to put some things into the record. The 
supplemental, as I would understand it, that the city is 
requesting is about 2 percent, a 2 percent misjudgment about 
the estimated costs the city would have incurred in this fiscal 
year. Is that correct?
    Mr. Gandhi. Yes, sir.
    Mr. Fattah. Because it is really not abnormal, especially 
at the federal government. We have a habit each year of seeking 
supplementals because when you are forecasting expenditures, 
there are going to be unforeseen circumstances. So in looking 
through this, it seems apparent to me that, looking through the 
details of it, there does notreally seem to be anything out of 
order in the request.
    You have a lot of experience as a finance official. I mean, 
supplementals are a normal part of the budgeting process.
    Dr. Gandhi. They generally are, sir. And the ideal thing 
would be to say that there should be no need for a 
supplemental. But as we go through the fiscal year, there are 
spending pressures that we experience for a variety of reasons.
    For example, suppose when we have a demonstration here, 
about the nature of the World Bank or the IMF, or we have 
something else going on? When you run a government of the size 
of the District, $5.5 billion is a massive enterprise and you 
do expect certain expenditures not entirely estimated to the 
last penny.
    I do want to add, sir, that I think the Mayor and the 
agency directors have been very careful in making sure that 
they are not overspending, but there are some areas here that 
are really beyond their control. We alerted them ourselves 
early in November, and we took care of this.

                           SPENDING PRESSURES

    I also want to point out the great number of spending 
pressures have been managed within the city, within our budget, 
because we had early warning on that. So this is something that 
we need to have to make sure that there is no anti-deficiency 
going forward.
    Ms. Cropp. Mr. Chairman, if I could add to that.
    Additionally, you know, we in the District do our budget so 
much earlier than most other places. But in addition to that, 
there were additional revenues that have come into the city, 
and there are service needs for our citizens.
    And if in fact we do not have an opportunity to spend these 
additional revenues, unlike any other government, any other 
city, any other normal business, those revenues just fall to 
the ground, and we cannot carry them over to the next year.
    Mr. Fattah. I understand that.
    The question by the Committee is, obviously, given the 
oversight responsibility that the Committee has, I just want 
the record to reflect that the Congress itself had to pass a 
supplemental of $14 billion last year, which is twice the 
percentage supplemental as the District is now seeking.
    So that in terms of misjudging expenditures and in outlays 
going forward, it is just not possible to be as certain as we 
would like.
    In your testimony, you talked about some of these 
structural imbalances.
    Dr. Gandhi. Yes, sir.

           CAPITAL CITY RELATIONSHIPS TO NATIONAL GOVERNMENT

    Mr. Fattah. And I want to get back to that. You know, 
looking at the capital city relationships to national 
governments, Ottawa, Canada, for instance, is an interesting 
case. The Federal government provides a 35 percent payment in 
lieu of taxes. And obviously, we do not have that same 
relationship here.
    You talk about the fact that there is a need to come to 
some resolution, a relationship in which the federal government 
could realize its financial responsibility.

                            WAGE TAX CREDIT

    Dr. Gandhi. Yes, sir. I think it could take several forms. 
Ms. Norton's wage tax credit would be one thing to do, and an 
excellent idea, whereby the city would get relief of something 
like $400 million with a 2 percent wage tax credit.
    But as a fundamental point of view, understand that the 
city's needs are of a magnitude that the city cannot handle by 
itself. For example, in schools, we need rebuilding for 
infrastructure to the point of about $1.3 billion. In roads, 
bridges, et cetera, we have about $500 million of delayed 
maintenance that we need to take care of.

                  CITY SERVICES TO FEDERAL GOVERNMENT

    On the top of it, the city provides services to the Federal 
government. After all, you know, tens of thousands of federal 
workers come to the city on a daily basis. They use our roads, 
our bridges, fire protection, water, et cetera. That is about 
$300-plus million of services that the city provides to the 
federal government.
    Then there are, as I indicated, state-like expenditures, 
like my own agency, tax and revenue, or DCRA or UDC. All these 
are, in any other jurisdiction, state functions. So there are 
about $500 million that we incur which are usually incurred not 
by a city like Philadelphia, but by a state like Pennsylvania.
    So the issue here is that we are talking about a 
substantial need that the city has, but cannot provide, because 
of its constrained tax base.
    Mr. Fattah. I think that it is something that eventually we 
will have to get to, this question of relationships. And I 
think that the key to it is that we need to understand that it 
is in the interest of the entire country that our capital city 
be a world-class city. And I do not think that we are there 
yet. I think much of the ducking and dodging that goes on is, 
impractical and we should not try to ignore these problems.
    Berlin as the capital of Germany is a city, a state, with 
representatives, and the people of all of these capitals are 
allowed to elect people to the national government who can 
speak for them and vote for them. In our country, we seem to 
defy all of these examples with the way that we have 
constructed and continue to construct our relationship with the 
capital city.
    Mr. Mayor, something came up in one of the previous 
hearings also dealing with the structural imbalance question, 
and that is, particularly right now, there is no sales tax 
being collected on transactions on federal property.
    This is on top of the fact that you are not able to capture 
any type of income tax as every other city in the country does 
from people who come to work in the city, and who leave at 
sundown.
    So I just want you to make a statement about this for the 
record, because I think it is one of the issues that we should 
visit at some point.
    Mayor Williams. Why do not we just say that the activity, 
for example, at the Smithsonian on the Mall, that we cannot 
levy sales tax on those activities, is all part of this issue 
of, as a federal capital, tax base offline. We have property 
tax base that is offline. We have earned income tax base that 
is offline. And in this case, you have sales tax that is 
offline.

                 EFFORTS TO DRAW TOURISTS INTO DOWNTOWN

    But one of the major things that we are trying to do while 
we are working this effort to look at the long-term fiscal 
relationship with the federal government, what we are trying to 
do over the short term--I hope just short term, but maybe even 
medium term--is to as much as possible draw the 25 million 
tourists who come to the Mall, figure out ways to draw them 
into activities in our downtown on which we can tap sales tax.
    It is a short-term strategy, because it is about $8-$10 
million that we are losing annually because of this particular 
provision.
    Mr. Fattah. Thank you, Mr. Mayor.
    Thank you, Mr. Chairman.
    Dr. Gandhi. Mr. Chairman, if I could just put some numbers 
on Mr. Mayor's comment on that. When you add up all these 
things, you are talking about a $200 million gap.
    The constraint that we have is that we cannot tax 
properties in a manner that we would tax any other 
jurisdiction. In addition, obviously, there is the issue of the 
commuter taxation that we are not talking. But all I want to 
point out is that for every $100 that is earned in the city, 
the city can tax only $34, as opposed to, say, Maryland, every 
$100 that is earned, they get to tax $117.
    Mr. Knollenberg. You have made that point, Dr. Gandhi, 
before. We have heard you on that. Let me thank you.
    Mr. Gandhi. I do get carried away when I talk about the 
financial part. [Laughter.]

 CONDITION OF PUBLIC SCHOOL FACILITIES--APPROPRIATIONS NOT BEING SPENT

    Mr. Knollenberg. Earlier this year, I visited some of the 
public schools, a regular public school as well as a charter 
school. My staff has also visited public schools and charter 
schools, sometimes on their own. What we have noticed is there 
is a condition problem in many instances.
    And at one in particular, and I was there with Delegate 
Norton as well, the Maury Elementary School had an example for 
us that we talked about. It is not just there. It is other 
schools as well, where there apparently are capital improvement 
plans that are in place, but we also noticed that there was 
$218 million appropriated last year that still remains unspent.
    I can turn to the Mayor or to you, Dr. Gandhi: Why?
    Dr. Gandhi. Well, I think we do have projects lined up. 
There have been some procurement issues that we are trying to 
resolve currently.
    Mr. Knollenberg. How will it be spent, then?

              FACILITY MASTER PLAN FOR D.C. PUBLIC SCHOOLS

    Dr. Gandhi. We have a master plan and we are going to spend 
in schools as well as in other capital projects.
    Mr. Knollenberg. It will be capital improvements?
    Dr. Gandhi. Yes, sir.
    Mr. Knollenberg. Okay. Solely?
    Dr. Gandhi. Those capital funds are maintained primarily 
for the capital improvements.
    Mr. Knollenberg. Yes. Could you provide a copy of the plan 
to the Committee?
    Dr. Gandhi. Yes, sir. Certainly, we would be glad to give 
you that.
    Mr. Knollenberg. I would like to have it.
    Dr. Gandhi. Yes, sir.
    [The following (pages 1498-1583) was provided for the 
record:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



                  PUBLIC CHARTER SCHOOLS NOT INCLUDED

    Mr. Knollenberg. Also, may I have you and Ms. Cropp respond 
to this question. The FY 2002budget includes $174 million to 
renovate and build quality school buildings. Does that include the 
public charter schools as well?
    Dr. Gandhi. No, sir.
    Mr. Knollenberg. What does it include?
    Dr. Gandhi. Basically the regular public schools.
    Mr. Knollenberg. It does not include the public charter 
schools?
    Dr. Gandhi. The charter schools are in the formula, then 
the money that is provided in the funding is already part of 
the overall school budget.

                 CHARTER SCHOOLS--FACILITIES ALLOWANCE

    Ms. Cropp. Mr. Chairman, the charter schools receive a 
facilities allowance each year. We do not borrow capital 
dollars for them, but they do receive a facilities allowance 
that they then utilize to meet whatever their infrastructure 
needs are.
    Mr. Knollenberg. Is any of that used to help the charter 
schools find adequate housing for their schools?
    Ms. Cropp. I am being told yes.
    Mr. Knollenberg. By whom? [Laughter.]
    Let me just come back to the Mayor.
    I think it is Mr. Koskinen that will respond to the 
question, and you will speak out that it is being spent in that 
fashion.
    And now, Mr. Mayor.
    Thank you.
    Mayor Williams. I was going to say, one of the issues with 
the charter schools is not only each charter school with its 
own board and group of supporters using this funding for 
facilities, but working through a disposition process with our 
existing school facilities, recognizing that there are two 
pressures.

                    DISPOSITION OF SCHOOL PROPERTIES

    Out of all the school properties that we have, I think 
there are now four or five that are really ready for 
disposition at the present time. There are another 11 or 12 or 
so that in the future could be used for disposition, but right 
now are being used for District services which are critical 
services and human services and the like.
    So the two big issues are providing, with the inventory of 
schools we have, one way or another as far as the facilities 
plan and with the consultation of everybody involved, providing 
swing space for the public schools while they are undergoing 
their modernization process, and at the same time, on a 
reasonable basis, meeting the expansion demands of the public 
charter schools. And it is a big issue.
    Mr. Knollenberg. Ms. Cropp.
    Ms. Cropp. If I can add to that, those are the schools that 
have not been declared surplus, but there was a long list of 
schools, since the school population in the District has 
dropped over the years, we have a lot of buildings that were 
not being used.

          CHARTER SCHOOLS HAVE PREFERENCE FOR SURPLUS SCHOOLS

    And in the disposition of those, the charter schools have 
preference. That was built into the law, actually, by the 
Congress. And many of those buildings have been acquired by a 
charter school.
    Mr. Knollenberg. Is the administration meeting with the 
charter school people regularly to talk about some of these 
properties?
    Mayor Williams. Absolutely. And we have given them 
preference, since I have had responsibility for disposition. I 
think we provide for disposition of I think it was some three 
or four schools over the last six or seven months or so.
    But again, while we want to be responsive to the charter 
schools and accommodate the charter schools, now in working 
with a new school board, the board and the superintendent 
recognize that there is this need as well for swing space for 
the regular public schools.

                 ANACOSTIA RIVER WATERFRONT INITIATIVE

    Mr. Knollenberg. On the subject, both Mr. Fattah and I sit 
on the VA-HUD Appropriations Subcommittee, and we received, as 
you know, from you a request for some $12 million for the 
Anacostia River Waterfront Initiative, which I think we are 
doing our best to support any way we can to bring it about.
    By the way, I have been impressed with the plan that I have 
seen, and as you know, we attended that opening together. The 
question I have is to make sure that this money gets spent.

  STATUS OF $5,000,000 PROVIDED IN FY 2000 FOR ANACOSTIA RIVER CLEANUP

    Because this is an initiative that is addressed now in the 
fiscal year 2002 budget, and I am wondering how it is being 
addressed, because here is what I am concerned about: In 
section 159 of the FY 2000 DC Appropriations Act, $5 million 
was appropriated to the District for an Anacostia River 
Environmental Cleanup Program, to be carried out by the Corps 
of Engineers. What is the status of that effort?
    Mayor Williams. I can get that status for you while you are 
asking some other questions.
    Mr. Knollenberg. How much has been spent?
    Mayor Williams. I do not have that off the top of my head, 
Mr. Chairman.
    Mr. Knollenberg. What I want to know is, in addition to 
what has been spent and how much is left, how has it been 
spent? I think, then, what I would suggest to you, is if you 
can get that to me.
    [The following was provided for the record:]


              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    
    And I think that that concludes my questions at this 
moment. So I am going to refer in order to Mr. Doolittle now. 
Do you have anything, Mr. Doolittle, that you want to request 
of the panel?

                         COMBINED SEWER PROJECT

    Mr. Doolittle. Well, not a request, Mr. Chairman, but in 
the last hearing I was interested in the improvements you want 
to make to this combined sewer project. Does this committee 
have anything to say about that project,or is that the VA-HUD 
Appropriations subcommittee
    Mr. Knollenberg. Well, the $12 million request is in the 
VA-HUD subcommittee, Mr. Doolittle, and Mr. Fattah and I have 
something to say about it only because we are both sitting on 
the subcommittee.
    Mr. Doolittle. Oh, that is good. Well, I think that ought 
to be a very high priority to get that situation straightened 
out.
    Mr. Knollenberg. Well, thank you. And we appreciate that 
support. I think you will find that there is quite a bit of 
support for those funds.
    Mr. Fattah.
    Mr. Fattah. Thank you.
    Not to date anyone, but in my college days, I studied the 
writings of Alice Rivlin. I would be interested in your 
comments about the structural imbalances that were spoken of by 
the finance director.

       CHARTER SCHOOL FACILITIES--$5 MILLION PROVIDED IN FY 2001

    And before you do that, let me just put something on the 
record about the charter school issue. The Congress created a 
Charter School Development entity--in fact, it is being run by 
our former colleague from California, Frank Riggs--to assist 
charter schools with the development of facilities here in the 
District, and Congress appropriated some millions of dollars 
toward that effort.
    I think they are closing on their first deal this week. So 
there is a mechanism for charter schools to acquire facilities 
and the process was set in place by the Congress for that 
purpose.

                           STRUCTURAL ISSUES

    But I would really be interested in your views about some 
of these structural issues, because the short-term issues have 
been resolved to, I think, everyone's satisfaction, including 
Wall Street's and all the bond rating agencies. The bond 
ratings are up. The city has surpluses. But clearly, if you 
continue to have structural problems, they will come back to 
haunt the District at some point.
    Ms. Rivlin. I strongly agree. And I think, although the 
short run situation looks quite good--we do have, as Dr. Gandhi 
has said, a significant turnaround in the budget, and we have 
built up funds in the general fund--the longer-run situation is 
precarious. That is largely because the District has such a 
narrow tax base.
    We have benefited in the last few years from very rapid 
development in the downtown and a good increase in property tax 
revenue from the run-up in our property values, and from the 
good economy, nationally and regionally. But it is a very 
delicate balance, really.
    If the city does not keep growing rapidly and continue 
attracting more people to live in the city who help to improve 
the tax base, and if the national and regional economy should 
slow, and if the downtown development cycle peaks so that it 
cannot be counted on for additional revenue, then we will be in 
a precarious situation.
    The main problem is the very narrow tax base. The property 
tax base and the sales tax base are narrow because of the 
presence, not just of the federal government, but also all of 
the institutions that are here because of the federal 
government. The World Bank and the embassies and all of those 
other institutions are a wonderful part of our city, but they 
do not pay taxes, and they narrow the tax base.
    So looking ahead, the city has to continue its efforts at 
economic development, but it really does need a structural 
shift in its relationship with the federal government.
    Mr. Fattah. Do you agree with the finance director's 
numbers in terms of the ability of the District to only tax 
something less than $40 out of each $100 of economic activity?
    Ms. Rivlin. Yes.
    Mr. Fattah. As compared to Maryland taxing over $100 for 
each $100?
    Ms. Rivlin. Yes, and the reason Maryland can tax over $100 
is because Maryland gets tax revenue from some owners who live 
in the District and pay taxes in Maryland.
    Mr. Fattah. No, I understand it. So we have this 
renaissance of cities in the country, my own included, a lot of 
good things are going on.
    The difference is that, in the District, unlike any other 
major city, you have these constraints on you in which, on one 
hand, you are being called on to provide services, and, on the 
other hand, you cannot tax the people who are benefiting from 
the police protection, the fire protection, the host of other 
services, and you cannot attract any of the revenues from it.
    So it is actually stifling the development. And this is not 
some suicide decision made by the elected officials of the 
District that decided you cannot tax these. So the Congress has 
said that the District cannot get at these revenues in any way.

                          INFRASTRUCTURE NEEDS

    Ms. Rivlin. That is correct. And because the District went 
through a period of great difficulty lasting many years, it has 
an accumulation of needs, and it must spend money to improve 
its infrastructure.
    The water-sewer infrastructure is a good example. And we 
also have very old school buildings. We still have not yet 
modernized computer systems for all our agencies. There is a 
backlog of unmet needs, even as the economy has picked up.
    The District is caught in a double-whammy in a sense. 
Sometimes people talk about how we are not able to have a tax 
on commuters the way Philadelphia does.
    But that is only a piece of the problem, and actually a 
very small piece. It is the fact that the state of 
Pennsylvania, like all other states, taxes people who work in 
Philadelphia and any other place in Pennsylvania, and we cannot 
do that. So we have neither a city's ability nor a state 
ability to fully capture that income.

                    FRAGILITY OF DISTRICT'S FINANCES

    Mr. Knollenberg. Dr. Gandhi, as you well know, earlier this 
year you announced the fourth consecutive surplus, which is 
good news. We have talked about that. It means the sunset of 
the control board, of course. It means that the District's 
elected leadership will have more control over what goes on 
with respect to finances.
    We should be mindful, of course, that although the city's 
economic rebound is good, there is some fragility about it that 
we have to be concerned about.

                             CASH RESERVES

    There are requirements in the appropriations bills to 
ensure that the city has enough cash on hand to meet future 
challenges. And these cash reserves are the fundamental basis 
for sustaining the city in the event the local economy does 
slow down.

       CASH IN BANK--SURPLUSES AND RESERVES ARE ``MYSTERY'' WORDS

    I have heard a lot of talk about surpluses and reserves. 
These are the mystery words, it seems to me, in this city. But 
the cash is where the rubber meets the road really. And if I 
were to go to the bank right now, this afternoon, how much cash 
is in the bank?
    Dr. Gandhi. There would be more than $300 million, sir,this 
afternoon.
    Mr. Knollenberg. In the bank, cash?
    Dr. Gandhi. Yes, sir. I think our cash situation is very 
happy right now.
    Mr. Fattah. I would be happy with a small part of that. 
[Laughter.]
    Mr. Knollenberg. But you are saying that the entire 
budgetary surplus is in cash?
    Dr. Gandhi. No, I am not saying that.
    Mr. Knollenberg. What are you saying?
    Dr. Gandhi. What I am saying here, sir, that required cash 
reserve that we have, so-called 7 percent, that we were asked 
to provide that by the year 2007. We could do that by year 
2003. Two, meeting that, something like $250 million, we 
already have in the bank the so-called reserve.
    Mr. Knollenberg. Well, Dr. Gandhi, I understand that. But 
are you on accrual basis or a cash basis?
    Dr. Gandhi. We are on accrual basis.
    Mr. Knollenberg. You are?
    Dr. Gandhi. But most of our revenues is cash, because we 
collect taxes.
    Mr. Knollenberg. Well, I guess the answer I am looking for 
is, how much is in there right now? You say that you could 
write a check for $300 million?
    Dr. Gandhi. Yes, we can write $300 million in checks. But 
what we want to keep in mind here is that our cash comes and 
goes depending upon when the taxes come in and when they go 
out.
    Mr. Knollenberg. Well, I understand that. I know. There are 
peaks and valleys. But you are telling me today, we are looking 
at a flush point in cash right now.
    Dr. Gandhi. Yes, sir.
    Mr. Knollenberg. Okay.
    Mr. Mayor?
    Mayor Williams. I would just, as a former CFO, I think what 
Nat is saying is right now, at this point, we have got $300 
million. That is going to ebb and flow.
    And that is different from your cash reserve, which he is 
building at an accelerated rate, and by 2003, will exceed 
pretty much every other city and state in the country at 7 
percent of operations.
    And that is just there, under the mattress, regardless of 
what the seasonal ebb and flow of cash will be in terms of 
operations.
    Mr. Knollenberg. This has been a problem of understanding 
on the part of a lot of people, and it is particularly, I 
think, confusing to us.
    Dr. Gandhi. This is real, sir.
    Mr. Knollenberg. That is what we are after.
    Ms. Cropp. Mr. Chairman?
    Mr. Knollenberg. Yes, Ms. Cropp.
    Ms. Cropp. Could I just add something briefly?
    Mr. Knollenberg. Sure.
    Ms. Cropp. As a nonfinancial person, as a lay person, the 
restraints that have been placed on the District for us to keep 
putting our cash into the reserve, at some point, it is not 
cost effective at all.
    The city has needs. You have been asking us questions about 
our schools, the repairs for our schools and our facilities. We 
are getting to the point where all we are doing is putting 
money in the bank and saying, ``You have a great deal of money 
in the bank,'' but we cannot do any of the repairs for our 
roads, for our schools, and to provide services.
    We are putting money in the bank at a much faster rate than 
anyone ever anticipated.
    They expected that we would have achieved that 7 percent by 
2007. We are going to achieve it by 2003. We need some relief 
from that.

               Cash Reserves and District's Bond Ratings

    Mr. Knollenberg. Are the cash reserves in any way connected 
to the bond rating?
    Ms. Cropp. Yes, Wall Street is extremely happy to see us 
have a cash reserve, and a nice amount. But I think they also 
would look at how we are just saving money, but not spending it 
on our infrastructures. So I think it is a double-edged sword 
there.
    Mr. Knollenberg. Is there a direct connect between the bond 
rating and the cash in the bank?
    Ms. Cropp. I think there probably is. But at some point, we 
do not need to keep putting money in the bank where we build up 
to a billion.
    Mr. Knollenberg. I understand that. And I am just trying to 
dig down to the bottom on this.
    Ms. Cropp. Yes, and let me finish, Mr. Chairman. We want to 
have a reserve. The city is not saying, ``Forgive us for 
putting any money in the bank and having an actual cash 
reserve.'' We just do not think we need to keep putting in the 
same amount at the same level, and at some point we need to be 
able to cut it off.
    Mr. Knollenberg. I understand.

               Status of McKinley Tech School Renovations

    Let me go to a question, very quickly, on the status of 
McKinley Tech School. Of that $174 million that I believe was 
set aside in the budget for public school renovations, how much 
of that is going to construction, to operating, to capital 
improvements? Is there any breakout on that? Maybe that would 
be a question for Dr. Gandhi.
    Dr. Gandhi. We do have a breakdown on that, but I just do 
not have it with me here. And I will be very happy to supply 
that to the Committee.
    [The following was provided for the record:]

                          DCPS Capital Budget

    The entire $174.1 million allocated in the District's FY 
2002 Capital Improvements Plan for the DC Public Schools is for 
capital improvements. These funds support the DCPS Master 
Facilities Plan and provide for major renovation and/or 
modernization of public school facilities.
    McKinley Technical High School is a part of this Plan, with 
a total of $17.7 million in FY 2002.
    A complete listing of projects comprising the $174.1 
million is contained in the ``FY 2002-FY 2007 Capital 
Appendices'' volume of the District's FY 2002 Proposed Budget 
and Financial Plan, submitted to the Congress on June 4, 2001.

                STRATEGIC PLAN FOR MCKINLEY TECH SCHOOL

    Mr. Knollenberg. Is there a strategic plan that you have 
worked out for the McKinley school? This would be a question 
for the Mayor.
    Mayor Williams. We have a project manager now in the 
process, and we have a plan in place right now which we would 
be happy to share with you that contemplates a $50 million 
investment by the city, and we hope matching sponsorships. We 
have got an initial grant, for example, from Sprint 
Corporation; matching partnership sponsorships from private 
companies as well.
    Mr. Knollenberg. Do you have a plan for when you are going 
to open that school?
    Mayor Williams. I am not sure what the exact date is. I am 
not sure what it is. Well, it was fall 2002, but there has been 
some slippage in that date.
    Mr. Koskinen. I can restrain myself no longer.
    We actually had a meeting yesterday with the 
Superintendent, the Corps of Engineers and the full planning 
team for McKinley High School. The original goal was to try to 
open at least a portion of that school by next school year. 
Officially, it would be open in the summer of 2002.
    What we are now looking at, pursuant to that plan, is 
whether the cost of doing that, the additional cost of trying 
to get some students in by next summer are worth, in effect, 
the effort, as opposed to simply doing the full project without 
having students in between time.
    The goal, if we move beyond next summer, would be to have 
the whole project done, up and running with all the incubator 
space and the private sector involvement in that as well, by 
the following summer. So right now the timeline shows that we 
would have the full school up and operating by August of 2003. 
But we have got a long way to go.
    Mr. Knollenberg. ``Full school'' would mean what?
    Mr. Koskinen. ``Full school'' will have a technical high 
school with a curriculum, including broadcast, information 
technology, bio-engineering, as well as half that facility will 
be, in fact, occupied by information technology companies.
    So you would basically be an incubator for technology 
companies, who would then be a source of both internships and 
work for students as they would be kind of learning and 
experiencing the growth of information technology at the same 
time.
    Mr. Knollenberg. Is there a proposed number of students 
that would hopefully be enrolled?
    Mr. Koskinen. It would be the average size high school of 
the District of Columbia. We are now in the process, just 
having launched a search for the kind of educational leader of 
the program, which we hope to have final candidates for the 
superintendent and the school board to review by the end of 
July.
    Mr. Knollenberg. The idea, is to retain students from the 
DC area to attend?
    Mr. Koskinen. Yes, this would be designed to be a model 
program to, in fact, begin to infuse technology, not only in 
this sort of magnet school for technology for the District, but 
actually to build on a curriculum of information technology 
that would go through the entire school system.
    Mr. Knollenberg. Thank you.
    I have overrun my time and then some. I am going to Mr. 
Doolittle, Mr. Doolittle, if you care to be, you are 
recognized.

                        Speeding Up Road Repairs

    Mr. Doolittle. Did you talk about roads? I missed the first 
part of the testimony. It seems like roads take forever to 
improve back here, not just in the District. In Virginia, I 
notice that a lot, compared to where I am from, California. Is 
there any progress being made on speeding up that kind of work?
    Ms. Cropp. In addition to the partnership with the Federal 
dollars, we have $23 million directly from appropriated funds, 
of which about $11 million will come in as part of the 
rollover. So we hope to be able to see a great improvement in 
our roads with that $23 million.
    Mayor Williams. Can I just add to that, Congressman?
    We have got an outstanding, as the number of people have 
testified, an outstanding responsibility for our roads. It is 
unmet right now in our capital budget.
    But having said that, for the immediate future we have got, 
I think, up to $200 million in a program for reconstruction, 
resurfacing of roads and bridges throughout the city.

             Resurfacing of Streets, Alleys, and Sidewalks

    Chairman Cropp has talked about the Mayor and the Council's 
agreement to invest $23 million for resurfacing of streets, 
alleys and sidewalks in the fiscal 2003 budget. We have got 
funds committed in both 2001 and 2002 budget as well to do this 
kind of work.
    One of the reasons why it takes a long time, though, to get 
the work done is because of problems--and John can speak to 
this--problems that we have historically had in the process, 
and we are working to streamline that.
    But another big constraint is simply that being the third 
most congested traffic area in the world, trying to manage 
construction, trying to manage the fiber optic cabling and 
manage the reconstruction. People want to see that it is 
planned. They want to see that it is organized. They want to 
see that is coordinated. And that stretches out the time it 
takes to do the work.

           Creation of Separate Department of Transportation

    Mr. Koskinen. I would just note one other thing. We are 
preparing for the Council's consideration of the creation of a 
separate Department of Transportation out of the Department of 
Public Works to allow us to facilitate and expedite the 
handling of road work.
    And it is a classic example of the problem the District has 
because the transportation function is obviously a combination 
of a state function, as well as a local function.
    So we have a state highway department function of federal 
roads that get funded federally, and then we have the standard 
local transportation department function of actually paving 
local roads, where we have paved over 500 blocks in the last 
year.
    So we think we will get better focus on this issue and 
management of it if we have a free-standing Department of 
Transportation that merges both the state function of 
transportation as well as the local one.
    Mr. Doolittle. And is that something that is soon to come 
about?
    Mr. Koskinen. Yes, the proposal is being finalized for 
consideration by the Council. We have talked to the Council on 
a preliminary basis and we expect that ultimately we will 
disaggregate the Transportation Department's funding within the 
2002 budget, either now or through our reprogramming in a 
reorganization plan that we will present to the Council and to 
the Congress.
    Mr. Doolittle. Thank you.
    Mr. Knollenberg. Mr. Fattah?
    Mr. Fattah. Thank you, Mr. Chairman.

                    COMMENTS FROM BOND RATING AGENCY

    I want to read in part, just in response to the concern 
about, as expressed by the Council chair, the Standard & Poor 
communication which says, in complimenting the District on its 
financial improvements, ``Although the District's financial 
successes to date have been significant, the District will be 
challenged to continue this positive financial progress while 
focusing on improving the level and quality of services, 
implementing tax and economic incentives and addressing capital 
program needs. Financial pressures will come from the 
District's limited revenue flexibility.''
    Which, again, gets to the overall point that the bond-
rating approval is there, yes, but there is still a recognition 
by everyone involved that the District is really handcuffed in 
a number of different ways, in terms of fully exploiting the 
potential that exists to the benefit of not only the District's 
residents, but to those who visit here as tourists and for the 
nation as a whole, in terms of what we provide as a view of our 
country through the sights and scenes here in our capital city. 
So I want to put that into the record.
    I want to thank the panelists.
    And I think that, Mr. Chairman, I am finished.
    Mr. Knollenberg. Thank you, Mr. Fattah.
    I will conclude with one very short question. It has to do 
with public safety. I think in this year's budget, you have 
enhancements of some $12 million for the Fire Department and 
$10 million for the Police Department. Will this money provide 
allowances for technical equipment that will assist in mapping 
and location finding as well as provide for officer and 
firefighter safety?
    Mr. Mayor, or Dr. Gandhi?

                          NEW 911 CALL CENTER

    Mr. Koskinen. We are doing that. In fact, one of the first 
things we are doing in the process right now of opening a 
combined communications center with the police and the fire 
department, where the 911 call takers, which historically have 
been routed back and forth between the fire and the police 
department, now will be located in one facility with new and 
upgraded equipment, which will allow us to crosstrain all call-
takers so they will be able to handle calls seamlessly.
    There will not be the handoffs that have been a problem in 
the past, and will also allow us to take advantage of better 
definition of location.
    Mr. Knollenberg. That one location will be in the police 
department?
    Mr. Koskinen. No, we actually have a new center that we are 
moving both police and fire to.
    Mr. Knollenberg. Okay. It is one center, though?
    Mr. Koskinen. It is one center. Yes.
    Mr. Knollenberg. Thank you.

                         CROSS TRAINING OF EMS

    Ms. Cropp. Mr. Chairman, I think you also see with the 
fire, there is also a move to cross-train the EMS to be 
firefighters. So you will see budgeted dollars in that public 
safety line to do that.
    Mr. Knollenberg. That is in that $12 million, as a part of 
that?
    Ms. Cropp. Yes, I believe it is a part of that. It is the 
part of the public safety budget with the fire department for 
the crosstraining.
    Mr. Koskinen. There is $12 million for capital 
infrastructure expenses. The Council Chairperson is correct. 
But there is also a move by the fire chief to crosstrain 
paramedics so that we can have on every fire truck paramedic 
assistance.

                     conclusion of fy 2002 hearings

    Mr. Knollenberg. Are there any further questions.
    Mr. Doolittle, do you?
    And, Mr. Fattah, you said you are satisfied, as am I.
    I think that concludes our hearing today.
    And I want to, again, personally thank each and every one 
of you for being here. I am sorry about the intermission that 
went on for the house floor votes. That happens around here.
    We really do appreciate the work that you all are doing, 
and I sincerely mean that. I expect sometimes this looks to you 
like a grilling up here, and it is.
    But it is done in, I think, a way that we can mutually work 
out some things to come to at least getting some answers that 
we feel we need if we are going to be a partner with you. So it 
is in that spirit that we do this. And I just wanted to, again, 
thank you all.
    We do expect sometime in June to have a markup. Chairman 
Young and I have talked about this, Chairman Young is chairman 
of the full Appropriations Committee.

                          SUBMISSION OF BUDGET

    We will be in touch with you on that. We are obviously 
still awaiting the budget, which I know you are in the process 
of getting to us. We need that, obviously, to continue our 
work.
    Mayor Williams. Yes, it has been sent to the President in 
the last few days.
    Mr. Knollenberg. OMB?
    Mayor Williams. Yes.
    Mr. Knollenberg. Yes, very good. Well, it is on the way, 
then.
    So again, thank you very, very much.

                              ADJOURNMENT

    This concludes today's hearing. We will adjourn until 
further notice.

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]





                           W I T N E S S E S

                               __________
                                                                       
                                                                       
Abadie, Jacques, III.............................................   865
Bacon, E. R......................................................   633
Bailey, Milton...................................................  1099
Baker, Josephine.................................................     1
Barnes, Zoreana..................................................  1099
Brown, George....................................................     1
Cafritz, P. C....................................................     1
Carolan, Milou...................................................   865
Clark, J. L......................................................   169
Collier, Jim.....................................................  1219
Copeland, Curtis.................................................   865
Cropp, L. W......................................................  1393
Derrick, J. M., Jr...............................................   633
Dillard, T. W....................................................   169
Elias, T. S......................................................  1219
Few, Ronnie......................................................   317
Fiala, Col. C. J., Jr............................................     1
Fisette, Jay.....................................................  1099
Franzel, Jeanette................................................   865
Gandhi, N. M..................................................865, 1393
Gill, Mary.......................................................     1
Gordon, T. J.................................................1099, 1219
Healey, David....................................................     1
Heller, J. R.....................................................   633
Horton, D. W.....................................................   169
Jayyousi, Kifah..................................................     1
Johnson, J. N....................................................  1219
Jones, C. E......................................................   169
Kellems, Margret.................................................   317
Kelly, Michael...................................................  1099
King, R. G., III.................................................   317
Koskinen, J. A................................................865, 1393
Lewis, W. A......................................................   317
Marrow, David....................................................     1
Mihm, J. C.......................................................   865
Monteilh, Richard................................................   633
Olson, Professor David R.........................................  1600
Ormond, Jasper...................................................   169
Peck, Suzanne....................................................   865
Price, Eric...................................................633, 1099
Ramsey, C. H.....................................................   317
Rickford, Don....................................................     1
Rivlin, A. M.....................................................  1393
Ross, Laurent....................................................     1
Sawyer, K. H.....................................................   169
Seleznow, Steve..................................................     1
Simmons, R. D....................................................   633
Teal, Arabella...................................................   317
Tetreault, Bernie................................................  1099
Travers, Jonathan................................................     1
Vance, P. L......................................................     1
Voltaggio, Thomas................................................  1219
Wareck, J. L.....................................................  1219
Williams, Hon. A. A..............................................  1393




                     I N D E X  C A T E G O R I E S

                              ----------                              

                  District of Columbia Appropriations


                          for Fiscal Year 2002

                                                                       
 1. GPUBLIC SCHOOLS AND PUBLIC CHARTER SCHOOLS (MARCH 29, 2001)..    iv

 2. GCORRECTIONS AND RELATED AGENCIES (APRIL 3, 2001)............     v

 3. GPUBLIC SAFETY AND JUSTICE (APRIL 4, 2001)...................    vi

 4. GECONOMIC DEVEOPMENT IN THE DISTRICT OF COLUMBIA (APRIL 26, 
  2001)..........................................................  viii

 5. GMANAGEMENT REFORM INITIATIVES (MAY 16, 2001)................    ix

 6. GHOUSING AND ENVRIONMENTAL ISSUES IN DC (MAY 17, 2001).......    xi

 7. GBUDGET FOR FY 2002 (MAY 23, 2001)...........................   xii



                               I N D E X

                               __________

                      FY 2002 DC HEARINGS--PART 1

PUBLIC SCHOOLS AND PUBLIC CHARTER SCHOOLS (MARCH 29, 2001).......     1
    Achievement absent...........................................    14
    Borrowings, Cap on District's capital........................   162
    Buildings, Number of school..................................   157
    Business plan for public schools.............................    33
    Capital budget expenditures................................157, 158
        $745 million appropriated over 3 years.................160, 163
        $170 million for repairs in FY 2001......................   160
    Charter schools:
        Excluded from capital budget.............................   158
        Responsible for own facilities...........................   159
        21 approved..............................................    38
        No procurement problems................................139, 146
        Special education........................................   139
    Class size data..............................................   103
    Classroom needs..............................................   100
        Procurement problems.....................................   139
        Shortage of textbooks and supplies.......................   138
    Construction of schools, financial data......................    73
    Corps of Engineers and Maury Elementary School...............   151
        Condition of public school facilities....................   151
        Cost to repair schools...................................   157
        Cost to replace schools..................................   157
        School Board responsible for prioritizing................   152
    Credit enhancement process...................................    39
        Committee................................................    53
    Development of teachers and administrators...................   101
    Disabilities Act projects....................................    91
    Dixon, Tribute to Former Chairman Julian C...................     2
    Ellington School of the Arts.................................   147
    Enrollment 68,978............................................    33
    Enrollment in charter public schools 10,000..................    38
    Executive team...............................................    31
    Expenditures per pupil.......................................    97
    Facilities..................................................90, 116
        Disposition of surplus school............................   163
        Use of small and disadvantaged businesses................   133
    Failure of DCPS to monitor capital program...................   159
    Federal relationship with DC schools.......................146, 150
    Federal mandate constraints..................................    97
    Graduating students, Number of...............................   150
    Master plan for public school facilities.....................    90
    Maury Elementary School and Corps of Engineers...............   151
    McKinley Tech High School Renovation.........................   147
        Occupancy date...........................................   148
    Number of students in regular public schools 68,978..........    33
    Per pupil formula............................................    92
        Expenditures...................................96, 99, 113, 114
    Procurement problems.........................................   139
        Charter schools have no procurement problems.............   139
    Security systems...........................................164, 166
    Statements:
        Chairman Knollenberg.....................................     1
        Congressman Fattah.......................................     3
        Congressman Sweeney......................................   100
        Colonel Charles Fiala, Jr., Corps of Engineers...........69, 90
        Constance Newman, DC Control Board.......................     4
        Josephine Baker, Charter Board Chair.....................34, 38
        George Brown, Credit Enhancement Fund....................39, 53
        Peggy Cooper Cafritz, Board of Education................. 9, 14
        Laurent Ross, DC Tuition Assistance Grants...............55, 67
        School Superintendent Paul Vance.........................16, 31
    Special education:
        Advocacy by Public Defender Service....................244, 291
        Attorney fees for special education students.............  1493
        Buses....................................................   112
        Charter schools special education programs...............   139
        Comparison with Houston..................................   111
        Court order requires driver and attendant................   111
        Electronic mapping.......................................   112
        English as a second language.............................   101
        Houston transportation problem...........................   110
        No procurement problems...........................139, 146, 147
        Overspending on transportation...........................    93
        Partnership with Kennedy Center..........................   146
        Public Defender Service advocacy.......................244, 291
        Question of correct classification.......................    94
        Salary survey for bus drivers............................   113
        Shortage of bus drivers..................................   112
        Transportation problem...................................   110
        Workforce quality........................................   136
    Student-Teacher ratios.......................................    99
    Substance abuse program DARE.................................   165
    Teacher compensation.........................................    94
    Teaching standards...........................................   102
    Teaching fellows program.....................................    31
    Textbook and supplies shortage...............................   138
    Transportation costs: Percentage paid by States..............   140
    Tribute to Former Chairman Julian C. Dixon...................     2
    Tuition assistance grants--statistics........................    60
    Violence by teacher and principal............................   165
    Window replacements and asbestos abatement...................   151

CORRECTIONS AND RELATED AGENCIES (APRIL 3, 2001).................   169
    Arrests of DC parolees on new charges......................208, 228
    Capacity of DC Department of Corrections.....................   275
    Categories of DC inmates...................................274, 293
    Class action lawsuit.........................................   292
    Classification of inmates....................................   293
    Classification problems......................................   294
    Closure of Lorton Complex....................................   188
    Condolences to family of U.S. Marshal Peter Hillman..........   294
    Contract for prison facility in Pennsylvania.................   286
    Contract with Corrections Corporation of America.............   293
    Contracts to house prisoners in private facilities...........   283
    Cost and status of new prison facilities...................286, 299
    Cost per cell of new prisons...............................287, 299
    Crime, 90 percent in DC drug driven..........................   278
    Criminal Justice Coordinating Council......................297, 337
    Drug testing expansion.......................................   231
    Drug court...................................................   245
    Drug treatment, Budget increase for..........................   278
    Drug sanctions...............................................   281
    Drug treatment can stop crime................................   282
    Drugs: Variety used by inmates...............................   280
    Errors in categorizing Youngstown prisoners..................   292
    Evictions....................................................   296
    Facilities, Number of Corrections............................   271
    Family contact, Inmates......................................   270
    Felons, Percent of DC inmates................................   273
    Halfway houses...............................................   276
    Hillman, Condolences to family of U.S. Marshal Peter.........   294
    Inmate transfers to Federal Bureau of Prisons................   266
    Inmate classification problems...............................   294
    Interagency detention group..................................   264
    Legislation requiring privatization of prisons...............   285
    Literacy level.............................................230. 279
    Location of DC inmates away from DC..........................   268
    Location of 7 new prisons....................................   282
    Lorton closure...............................................   188
    Marshals Service, Impact of DC revitalization on...........253, 295
    Marshals Service, Impact of Lorton closure on..............263, 295
    Mental health programs.......................................   246
    New prison facilities............................272, 273, 286, 287
    Offenders under supervision..................................   230
    Parole cases, Backlog of.....................................   292
    Pennsylvania, Contract for new prison facility...............   286
    Phone use, Inmates restricted..............................269, 270
    Police Department partnership................................   232
    Population:
        Federal Bureau of Prisons................................   197
        Lorton inmate............................................   188
    Private contracts for DC inmates.............................   273
    Private prisons in the United States.........................   290
    Privatization of prison facilities...............283, 285, 289, 294
    QUESTIONS FOR THE RECORD (COMMITTEE'S).......................   300
    Corrections--Reduction in Force (RIFs).......................   301
        Letters from Council Member Kathy Patterson expressing 
          concern about inaction on RIFs.........................   302
        News article on Corrections RIFs.........................   305
    Court Services and Offender Supervision Agency...............   307
        Positions, vacant and on-board...........................   307

    QUESTIONS FOR THE RECORD (CONGRESSMAN JOHN E. SWEENEY).......   308
        Community concern over placement of halfway house........   308
        Escapees, Responsibility for.............................   311
        Pretrial Services supervision of halfway houses..........   312
        Efforts to improve supervision of halfway houses.........   313
        Halfway houses--Location and population..................   315
        Corrections--adequacy of local funding...................   312
    Recidivism: Goal to reduce by 50 percent...................280, 282
    Repeat offenders.............................................   267
        Re-arrest rate cut 67 percent..........................277, 282
    Reports, National Institute of Justice.......................   279
    Security categories of DC inmates..........................274, 293
    Special education advocacy by Public Defender Service......244, 291
    Staff at Lorton..............................................   189
    Statements:
        Chairman Knollenberg.....................................   169
        Congressman Fattah.......................................   169
        John L. Clark, Corrections Trustee.....................171, 187
        Kathleen Hawk Sawyer...................................189, 197
        Donald W. Horton, U.S. Marshal.........................246, 253
        Todd W. Dillard, U.S. Marshal..........................254, 262
        Cynthia E. Jones.......................................232, 244
        Jasper Ormond.....................................198, 216, 229
    Substance abuse treatment....................................   268
    Testing for drugs............................................   231
    Treatment, Budget increase for drug..........................   278
    Video conferencing...........................................   296
    Virginia prison system, Contract with........................   265
    Youngstown Prison, Review of...........187, 266, 267, 292, 293, 294
        Classification problems..................................   294
        Sale of Youngstown facility............................298, 300

PUBLIC SAFETY AND JUSTICE (APRIL 4, 2001)........................   317
    Automated reporting system for booking arrestee..............   384
    Battalion chief aides restored...............................   358
    Boston's juvenile program..................................402, 403
    CJA Attorney program.......................................321, 327
    Community policing and diversity.............................   394
    Community prosecution model..................................   401
    Council for Court Excellence material........................   423
    Court Excellence Council recommendations..............406, 423, 431
    Criminal Justice Coordinating Council.................337, 383, 407
    Defender services..........................................321, 327
    Detective superintendent.....................................   347
    Drug markets, Open air.......................................   397
    E-mail communications issue......................348, 385, 388, 393
    Emergency calls..............................................   410
    Fire call response time......................................   409
    Five fire fighters on ladder truck...........................   358
    GAO report, DC Criminal Justice System.......................   383
    Grooming policy for fire personnel.........................359, 369
    Halfway houses.............................................297, 337
    Homicides reduced............................................   347
    Juvenile cases prosecuted by Corporation Counsel.............   401
    Misconduct, Police...........................................   387
    Narcotics strike force.......................................   347
    Narcotics task/strike force..................................   395
    News article on night papering...............................   416
    Newsletter, Fire Department Underground......................   388
    Night papering...................................366, 369, 371, 416
    Overtime paid to police for court appearances................
        323, 327, 335, 348, 361, 369, 371, 375, 398
        670 officers on any given day............................   399
        20 years, Problem goes back..............................   406
        Chairman Knollenberg not satisfied.......................   404
        Congressman Fattah's remarks.............................   408
        Court Excellence Council recommendations..........406, 423, 431
        Excessive................................................   408
        U.S. Attorney involvement................................   400
    Papering:
        Automated system.........................................   384
        Officerless..................................365, 366, 369, 371
        Pilot reform project...................................384, 416
    Paramedic engine program.....................................   358
    Police overtime....323, 327, 335, 348, 361, 369, 371, 375, 398, 431
        670 officers on any given day............................   399
        U.S. Attorney involvement................................   400
        Chairman not satisfied...................................   404
        20 years, Problem goes back..............................   406
        Court Excellence Council recommendations.................   406
        Congressman Fattah's remarks.............................   408
        Excessive................................................   408
    Profile of population versus Police Department...............   391
    Profiling, Racial............................................   385
    QUESTIONS FOR THE RECORD (COMMITTEE'S).......................   413
    Corporation Counsel..........................................   414
        Electronic paper filing..................................   414
    U.S. Attorney for the District of Columbia...................   415
        Night papering to reduce police overtime.................   415
    Police Department............................................   418
        National events, Handling of large.......................   418
        Narcotics Strike Force and Partnerships for Problem 
          Solving program........................................   418
        Overtime for police......................................   419
        Presence on street, More police..........................   419
        Mobile Digital Computer network and offensive e-mails....   420
    Fire Department..............................................   421
        Grooming standards for beards and hair styles............   421
        Newsletter, Underground..................................   421

    QUESTION FOR THE RECORD (CONGRESSMAN JOHN SWEENEY)...........   422
        Courts...................................................   422
        CJA Attorneys, Efforts to attract most qualified.........   422
    Recruitment screening........................................   394
    Reduced homicides............................................   347
    Response time for fire call..................................   409
    Statements:
        Chairman Joe Knollenberg.................................   317
        Congressman Chaka Fattah.................................   318
        Congressman Randy (Duke) Cunningham......................   389
        Congressman John T. Doolittle............................   394
        Congressman Alan B. Mollohan.............................   395
        Council for Court Excellence.............................   423
        Chief Judge Rufus King, III............................319, 327
        Deputy Mayor Margret Kellems...........................328, 335
        Police Chief Charles H. Ramsey.........................338, 347
        Fire Chief Ronnie Few..................................349, 358
        Arabella W. Teal, D.C. Corporation Counsel.............372, 383
        Wilma A. Lewis, U.S. Attorney..........................360, 369
    Reports:
        Council for Court Excellence (police overtime)...........   431
        GAO report, DC Criminal Justice System...................   383
    Traffic signals, Disregard for...............................   395
    Training, Dual-role cross....................................   409
    Victim services..............................................   336
    Waterfront issues............................................   390

ECONOMIC DEVELOPMENT IN THE DISTRICT OF COLUMBIA (APRIL 26, 2001)   633
    Anacostia River:
        Sewage problem...........................................   827
        Development..............................................   828
        Waterfront project.......................................   862
    Assessments, Triennial real property tax.....................   822
        Frequency of assessments.................................   823
        Triennial compared to annual.............................   823
    Business, retention and attraction...........................   646
    Business connections projects................................   818
    Business taxes compared with surrounding jurisdictions.......   840
    Businesses coming to DC....................................832, 835
    Center City Partnership......................................   837
    CFO independence issue.......................................   841
    Charter schools..............................................   819
    Columbia Heights development.................................   822
    Commercial real estate, Occupancy rate.......................   831
    Commitment of $75 million from Fannie Mae....................   806
    Commute for DC residents, Reverse............................   840
    Commuter tax.................................................   835
    Congress--role in Federal City...............................   829
    Control boards in other cities...............................   846
    Convention center site, Redevelopment of old..........830, 831, 833
    Coordination with Federal agencies...........................   843
    Creation of government centers...............................   844
    Data companies...............................................   696
    Development in DC, Housing and economic......................   844
    Drop out rate, School........................................   839
    Enterprise zones.................................695, 821, 826, 829
    Federal government assistance................................   634
    Federal property owned by GSA in DC..........................   833
    Fish wharf leases............................................   827
    GSA, District's relationship with............................   830
    Home buyers, Tax credit for first-time.......................   833
    Hope VI program..............................................   807
    Housing strategy.............................................   686
    Initiative, Greater Washington........................695, 817, 836
    Integrity of DC finances.....................................   842
    Intra-region competition for new business..................838, 839
    Job creation.................................................   687
    Land use.....................................................   821
    Leases, Fish wharf...........................................   827
    Low income households, District's share......................   845
    Metrorail and transportation.................................   819
    National Capital Revitalization Corporation................695, 704
        Background...............................................   804
        Performance plan for 2001................................   704
        Public-private entity....................................   830
        Policy and criteria for assistance.......................   757
        Real estate development..................................   726
        Revitalization plan......................................   711
    Newseum moving to DC.........................................   825
    Occupancy rate for commercial real estate....................   831
    Policies with negative impact on businesses..................   826
    Population decline...........................................   684
    Property tax assessments, Triennial real.....................   822
        Frequency of assessments.................................   823
        Triennial compared to annual.............................   823
    Regionalism................................................817, 839
    Regulatory reform, Business................................692, 696
    Regulatory process.........................................828, 845
    Rental costs in region.......................................   838
    Sewage problem, Anacostia River..............................   827
    Shaw Howard theater area.....................................   825
    Shopping centers, International conference of................   835
    Site, Redevelopment of old convention center..........830, 831, 833
    Skyland Shopping Center......................................   806
    Spending plan for spending $25 million by NCRC...............   847
    Statements:
        Chairman Joe Knollenberg.................................   633
        Deputy Mayor Eric Price..................................   635
        John M. Derrick, Jr....................................687, 694
        John R. Heller and Elinor Bacon........................697, 804
        Richard Monteilh.......................................807, 818
    Strategic plan...................................638, 650, 685, 843
    Tax credit for first time home buyers........................   833
    Tax Parity Act...............................................   841
    Technology industry in DC....................................   840
    Tourism number one industry..................................   824
    Triennial real property tax assessments......................   822
    Tuition assistance...........................................   818
    Waterfront.................................................639, 826
    Workforce shortcomings--school dropout rate..................   839

MANAGEMENT REFORM INITIATIVES (MAY 16, 2001).....................   865
    Bond rating improvements.....................................   990
        Question of scrutiny by rating agencies..................  1000
    Capital City Fellows program..............................940, 1001
    Cash surplus.................................................   903
    Commendation of Dr. Natwar Gandhi, CFO.......................  1019
    Control board when city went bankrupt........................   867
    Electronic procurement system................................   959
    Employee compensation system.................................   887
    Employee compensation system.................................   976
    Federal funds for employee compensation system...............   977
    Financial Management Systems (FMS).....................867, 1036-38
        50 percent of users not trained..........................  1012
        Annual audit required a lot of time..................1015, 1030
        Chief Financial Officer's remarks........................   899
        City Administrator's remarks.............................   892
        Components of SOAR not yet implemented...................  1037
        Executive Information System.............................  1017
        Failing to deliver.....................................887, 896
        FY 1995 recommendations still open.......................   973
        GAO report on weaknesses in District's FMS...............   973
        Hiring of accounting systems managers....................  1001
        Implementation time for other jurisdictions..............   989
        Improvements made; Inadequacies continue.................  1016
        Incomplete modules.......................................  1001
        Manual efforts for year-end closing......................  1013
        No timetable--importance of qualified personnel..........   975
        PRISM automated procurement interface....................   959
        Problems.................................................  1004
        Seven recommendations in GAO report....................974, 987
        Shortcomings of new FMS..................................   902
        Time frame for completing SOAR (FMS).....................  1036
        Timetable for implementation.............................   986
        Weaknesses...............................................   876
    Financial recovery received major assistance, District's.....  1004
    GAO letter on DC employee compensation system................   981
    Health care commission.......................................  1006
    Hospital problem, DC General.................................  1005
    Management issues, Observations on...........................   871
    Management reform initiatives, Problems with...............896, 939
    Management reform initiatives, Personnel...................944, 955
    Pay scales, District has over 200 different..................   977
    Performance plans and accountability reports.................   867
    Performance based budgeting..................................   897
    Procurement:
        Automation and tracking..................................  1020
        Legislative reforms......................................   960
        Small purchase threshold.................................  1022
        Technology's role........................................  1021
        Totals $1.6 billion annually.............................  1020
        With small DC businesses.................................  1023

    QUESTIONS FOR THE RECORD (COMMITTEE'S).......................  1029
        Aging of current liabilities.............................  1035
        Annual Audit--Impact of GASB Statement 34................  1038
        Annual audit--negative unreserved balance................  1039
        Annual audit--fund balance restrictions..................  1033
        Basis for determining reserve amounts....................  1039
        Budget process reengineering.............................  1037
        Components of SOAR not yet implemented...................  1037
        Manual processes required for annual audit...............  1030
        Monitoring of implementation of SOAR (FMS)...............  1038
        Performance based budgeting..............................  1037
        Relationship of cash to fund balance.....................  1036
        Relationship of unrestricted cash to liabilities.........  1034
        Time frame for completing SOAR (FMS).....................  1036
    Regional procurement initiative..............................   959
    Rescission request from CFO Natwar Gandhi....................   978
    Rules, No single set of......................................   940
    Statements:
        Chairman Knollenberg.....................................   865
        Congressman Fattah.......................................   866
        Congresswoman Morella....................................   866
        Delegate Norton..........................................   867
        J. Christopher Mihm, GAO...............................870, 886
        John Koskinen, City Administrator......................888, 895
        Dr. Natwar M. Gandhi, CFO..............................897, 902
        Suzanne Peck, Chief Technology Officer.................904, 905
        Milou Carolan, Personnel Director......................938, 941
        Jacques Abadie, Procurement Officer....................958, 960
    Supervisory service, At-Will Management...................940, 1013
        90 percent of managers joined............................  1003
    Tax system, Integrated.......................................  1002
    Technology Office:
        Management reform project summary--CTO...................   911
    Telephone system, District's.................................   931
    Training...........................................1001, 1002, 1003
        42 percent absentee rate.............................1007, 1010
        50 percent of SOAR users still not attending.............  1012

HOUSING AND ENVIRONMENTAL ISSUES IN DC (MAY 17, 2001)............  1099
  HOUSING ISSUES.................................................  1099
    Abandoned units..............................................  1204
    Anacostia River cleanup......................................  1214
    Cancer, Town hall meeting on prostate....................1214, 1350
    City has disproportionate share of low-income housing........  1103
    City owned housing property..................................  1203
    Detroit housing situation....................................  1100
    Hope VI developments.............1123, 1182, 1197, 1198, 1199, 1200
    Housing Finance Agency.......................................  1111
    Housing units in Washington Metropolitan Area................  1168
    Insurance, Housing...........................................  1206
    Largest landlord in District.................................  1122
    Lead paint...................................................  1208
    Leases, fish wharf and marina................................  1216
    Loans, Home improvement......................................  1207
    Publicly assisted housing in region......................1210, 1213
    Ratio of rentals to home ownership...........................  1202
    Receivership, Housing Authority in...........................  1199
    Reform initiative, Legislative and regulatory................  1115
    Report: Washington, DC Metropolitan Area Housing, 1990-2000..  1165
    Report: The Impact of the Housing Sector on the Washington 
      Area Economy...............................................  1151
    Rising values of homes.......................................  1204
    Safety situation/drugs.......................................  1207
    Section 8 rental housing in region.......................1210, 1213
    Statements:
        Chairman Knollenberg.....................................  1099
        Congressman Cunningham...................................  1214
        Eric Price, Deputy Mayor..............................101, 1104
        Michael Kelly, DC Housing Authority..................1122, 1124
        Hon. Jay Fisette, Council of Governments.............1141, 1143
    Tax credits, Hope VI.........................................  1200
    Tax credit, First-time home buyer............................  1206
    Vacant and dilapidated buildings.........................1116, 1201
    Violence Prevention Program, Youth...........................  1136
    Waterfront neglected, Southwest....................1214, 1215, 1216

ENVIRONMENTAL ISSUES.............................................  1219
    Anacostia Marina boat repair facility..............1235, 1348, 1349
    Anacostia River, CSO discharges to.......................1287, 1291
    Anacostia River seriously degraded.................1220, 1221, 1223, 
        1246, 1276, 1287, 1314, 1347
    Anacostia River watershed....................................  1276
    Article ``Where Sewage Comes Clean''.........................  1305
    Brownfields and economic revitalization......1221, 1226, 1315, 1351, 
        1359
    Brownfield sites, Listing of.............................1355, 1377
        Incentives to purchase...................................  1376
    Cancer, Meeting on Prostate..................................  1350
    Capital improvement program, WASA........................1246, 1254
    Capital Yacht Club...........................................  1347
    Chesapeake Bay water quality.................................  1245
    Combined sewer overflows...............1220, 1224, 1251, 1342, 1345
    Drinking water...........................................1227, 1245
    EPA enforcement actions against District.....................  1343
    EPA concern over city's slowness.............................  1376
    Federal share of sewage......................................  1346
    Fishing restrictions.........................................  1351
    Hazardous Substance Research Center......................1381, 1386
    Nation-wide problem, Combined sewer overflows................  1342
    Poplar Point.................................................  1314
    Potomac River, CSO discharges to.............................  1294
    Problems, District has management............................  1236

    QUESTIONS FOR THE RECORD (COMMITTEE'S).......................  1383
        Brownfields inventory....................................  1387
        Brownfields, District's slowness.........................  1387
        Combined sewers--comparison with other cities............  1385
        Combined sewer overflows.................................  1383
        District losing EPA grants...............................  1389
        Drinking water quality...................................  1391
        EPA relationships with District and WASA.................  1389
        EPA action against District for CSO overflows............  1385
        Federal grants to District and WASA......................  1391
        Federal payments for water and sewer services............  1391
        Hazardous Substance Research Center at LSU...............  1386
        Poplar Point brownfield site ($3,450,000)................  1387
    Rock Creek, CSO discharges to................................  1297
    Statements:
        Chairman Knollenberg.....................................  1219
        Congressman Cunningham...................................  1349
        Thomas Voltaggio, EPA................................1220, 1222
        Jerry N. Johnson, DC WASA............................1244, 1247
        James L. Wareck......................................1308, 1312
        Theodore J. Gordon...................................1314, 1317
        Thomas S. Elias, National Arboretum..................1337, 1338
    Toxic contamination......................................1221, 1225
    Transportation modes, Alternative............................  1313
    Trash rack, $500,000 appropriated for........................  1337
    Unspent Federal grants.............................1236, 1378, 1379
    Waste water..................................................  1228

BUDGET FOR FY 2002 (MAY 23, 2001)................................  1393
    Accounting Statement 34, GASB................................  1601
    Anacostia River initiative...................................  1585
        Status of $5 million appropriated for cleanup............  1585
    Assessments, Triennial.......................................  1447
    Attorney fees for special education students.................  1493
    Bond rating and cash reserves................................  1594
    Call center, New 911.........................................  1598
    Capital program for public schools...........................  1398
        Appropriations not being spent...........................  1497
        Charter schools excluded.................................  1584
        Facility Master plan.....................................  1497
    Cash reserves............................................1419, 1593
        Bond rating and reserves.................................  1594
    Charter schools, Structure of................................  1475
        Statutory authority......................................  1481
        Status of $5 million for credit enhancement..............  1591
    Charter schools, 40 in operation.............................  1397
    Clerk's Note on complaint against KPMG Peat Marwick..........  1600
    College tuition assistance grants............................  1397
    Combined sewer project.......................................  1591
    Committee's complaint against KPMG Peat Marwick..............  1600
    Complaint filed against KPMG Peat Marwick....................  1600
    Control board:
        Review of FY 2002 DC Budget..............................  1433
        What improvements initiated by...........................  1479
    Disposition of school properties.............................  1584
    Fire stations, District has more per square mile.............  1465
    Fire fighters, Crosstraining of EMS to be....................  1598
    Fragility of District's finances.............................  1593
    GASB Accounting Statement 34.................................  1601
    Hospital, DC General.....................................1408, 1427
    KPMG Peat Marwick, Complaint filed by Committee..........1600, 1606
        AICPA notice of violation by KPMG Peat Marwick...........  1624
        DC Board of Accountancy ``inactive'' notice..............  1634
        DC Board of Accountancy notice of violation..............  1636
    McKinley Technology School...................................  1595
    Per pupil:
        Formula..................................................  1469
        Cost comparisons.........................................  1473
    Performance measurement......................................  1448
    Performance scorecard indicators.............................  1461
    Road repairs.............................................1596, 1597
    School buildings, Number of..................................  1476
    School violence prevention program...........................  1493
    Sewage overflow problem......................................  1492
    Shopping centers.............................................  1468
    Special education attorney fees, Cap on......................  1493
    Statements:
        Chairman Knollenberg.....................................  1393
        Congressman Fattah.......................................  1394
        Mayor Anthony A. Williams............................1396, 1406
        Council Chairman Linda Cropp.........................1406, 1409
        Natwar Gandhi, CFO...................................1418, 1420
        Alice Rivlin, DC Control Board.......................1426, 1428
        Professor David R. Olson.................................  1600
    Students in school system................................1475, 1478
    Supplemental for FY 2001.....................1408, 1418, 1427, 1494
    Surplus of $464.9 million....................................  1407
    Transportation Department, New DC............................  1597
    Tuition assistance grants....................................  1397
    Waterfront project.......................................1492, 1585
