[Senate Report 106-493]
[From the U.S. Government Publishing Office]



106th Congress 
 2d Session                      SENATE                          REPORT
                                                                106-493
_______________________________________________________________________

                                     

                                                       Calendar No. 943


 
     DISTRICT OF COLUMBIA RECEIVERSHIP ACCOUNTABILITY ACT OF 2000

                               __________

                              R E P O R T

                                 of the

                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                              To Accompany

                               H.R. 3995

    TO ESTABLISH PROCEDURES GOVERNING THE RESPONSIBILITIES OF COURT-
 APPOINTED RECEIVERS WHO ADMINISTER DEPARTMENTS, OFFICES, AND AGENCIES 
                 OF THE DISTRICT OF COLUMBIA GOVERNMENT




October 6 (legislative day, September 22), 2000.--Ordered to be printed
                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   FRED THOMPSON, Tennessee, Chairman
WILLIAM V. ROTH, Jr., Delaware       JOSEPH I. LIEBERMAN, Connecticut
TED STEVENS, Alaska                  CARL LEVIN, Michigan
SUSAN M. COLLINS, Maine              DANIEL K. AKAKA, Hawaii
GEORGE VOINOVICH, Ohio               RICHARD J. DURBIN, Illinois
PETE V. DOMENICI, New Mexico         ROBERT G. TORRICELLI, New Jersey
THAD COCHRAN, Mississippi            MAX CLELAND, Georgia
ARLEN SPECTER, Pennsylvania          JOHN EDWARDS, North Carolina
JUDD GREGG, New Hampshire
             Hannah S. Sistare, Staff Director and Counsel
   Kristine I. Simmons, Staff Director, Subcommittee on Oversight of
   Government Management, Restructuring and the District of Columbia
Mason C. Alinger, Professional Staff Member, Subcommittee on Oversight 
                                   of
   Government Management, Restructuring and the District of Columbia
      Joyce A. Rechtschaffen, Minority Staff Director and Counsel
          Peter A. Ludgin, Minority Professional Staff Member
Marianne Upton, Minority Chief Counsel Staff Director, Subcommittee on 
                              Oversight of
   Government Management, Restructuring and the District of Columbia
                     Darla D. Cassell, Chief Clerk




                                                       Calendar No. 943
106th Congress                                                   Report
                                 SENATE
 2d Session                                                     106-493

======================================================================




       DISTRICT OF COLUMBIA RECEIVERSHIP ACCOUNTABILITY ACT OF 2000

                                _______
                                

October 6 (legislative day, September 22), 2000.--Ordered to be printed

                                _______
                                

Mr. Thompson, from the Committee on Governmental Affairs, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 3995]

    The Committee on Governmental Affairs, to whom was referred 
the bill (H.R. 3995) to establish procedures governing the 
responsibilities of court-appointed receivers who administer 
departments, offices, and agencies of the District of Columbia 
government, having considered the same, reports favorably 
thereon without an amendment and recommends that the bill do 
pass.

                                CONTENTS

                                                                   Page
  I. Summary and Purpose..............................................1
 II. Background.......................................................2
III. Legislative History..............................................3
 IV. Explanation of Amendment.........................................4
  V. Section-by-Section Analysis......................................4
 VI. Estimated Cost of Legislation....................................4
VII. Evaluation of Regulatory Impact..................................5
VIII.Changes in Existing Law..........................................6


                         I. SUMMARY AND PURPOSE

    H.R. 3995 directly addresses concerns about the District of 
Columbia's receivership programs and the accountability of the 
receivers. This legislation will promote financial stability 
and efficient management of the District government, as well as 
establish communication between the city and the receiverships.
    Specifically, the legislation would establish 
recommendations for how court-appointed receivers in the 
District should operate. The legislation would mandate that 
receivers should (1) promote best practices, (2) subject 
themselves to an annual audit by the city's inspector general, 
(3) ensure that costs are consistent with regional and national 
standards, (4) consult with the Mayor and the chief financial 
officer on the budget, and (5) procure through a competitive, 
open-bidding process.

                             II. BACKGROUND

    The District of Columbia has had four of its agencies 
placed under court-appointed receivership in the last five 
years. Typically, court intervention into the administration of 
government agencies is utilized to bring about brief, drastic 
change to an agency. However, the District's court-controlled 
agencies have all languished in receivership for three to five 
years, some showing minimal signs of improvement.
    Two of the four agencies under receivership were returned 
to the city in September 2000. The D.C. Housing Authority, 
which has been in receivership since 1995, has proven after 
five years of receivership to be financially and managerially 
stable enough to return to the city. The Jail Medical Services, 
which has also been under receiver since 1995, was returned to 
the city this September, but substantial concerns remain about 
the agency. (Although medical and psychological services at the 
jail have improved under the receiver, environmental conditions 
remain grave--vermin are rampant, and faulty ventilation 
greatly reduces air movement in critical parts of the 
building.)
    The Mental Health Services Agency, which has been under 
receivership since 1997, is slated to return to the city 
sometime in 2001. However, the agency's return to city control 
is not due to the receiver's success. Mental Health Services is 
being returned to the city because the judge that oversees the 
receiver found that the system has actually deteriorated since 
being seized by the courts.
    The Child and Family Services Agency has also stagnated 
under receivership for the past five years. A September 20, 
2000 hearing by the House Subcommittee on the District of 
Columbia revealed no progress by the Agency under the receiver. 
In fact, conditions at the agency were so bad that at the 
hearing Members called for the agency to return to the city. In 
addition to these agencies currently under receivership, the 
city's public school transportation system has been threatened 
with receivership in recent months due to its inability to 
address the needs of special education children.
    The purpose of court-appointed receivers is to intervene 
and take over a failing government agency, institute the 
necessary management reforms to get the agency properly running 
again, and return the agency to the city in a timely fashion. 
This has clearly not been the case with the District of 
Columbia receiverships. Consequently, this legislation 
establishes minimum standards to guide receivers in managing 
their operations and maintaining accountability.
    H.R. 3995 requires court-appointed District of Columbia 
receivers to ensure that the costs incurred in administering 
the agency under receivership are consistent with regional and 
national standards. Under this legislation, the receiver must 
use the best means available to promote financial stability and 
sound management practices within the agency. The receiver must 
consult with the Mayor and the Chief Financial Officer of D.C. 
when preparing the annual budget. Estimates of expenditures and 
appropriations for the operations of the agency must be 
submitted to the Mayor for inclusion in the city's annual 
budget. The legislation also requires an independent auditor to 
conduct annual fiscal and management audits of the agency under 
receivership. Nothing in this bill is intended to impede a D.C. 
receiver's mandate to remedy constitutional violations.

                        III. LEGISLATIVE HISTORY

    H.R. 3995 was introduced by Delegate Eleanor Holmes Norton 
(D-DC) on March 15, 2000 and referred to the Government Reform 
Committee's Subcommittee on the District of Columbia. On May 5, 
the Subcommittee held an investigative hearing on the status of 
reforms under the Child and Family Services Agency (CFSA) 
receiver. The following witnesses testified: Congressman Tom 
DeLay (R-TX), the General Accounting Office's Cynthia Fagnoni, 
Judy Meltzer from the Center for the Study of Social Policy, 
CFSA Receiver Ernestine Jones, Deputy Mayor for Health Carolyn 
Graham, the Mayor's Special Counsel for Receivers Grace Lopes, 
and Kimberly Shellman from the D.C. Child Advocacy Center. At 
the hearing, the Subcommittee reprimanded the receiver for her 
lack of progress and demanded that she show improvement when 
the Subcommittee called her back in September. However, as 
discussed in the section above, little progress was made.
    Immediately after the May 5 hearing, the Subcommittee held 
a markup and voted the bill out of Subcommittee by voice vote, 
with one amendment. The Subcommittee adopted an amendment by 
Delegate Norton that requires the use of generally accepted 
accounting principles, fiscal management practices, and an 
annual fiscal and management review conducted by an independent 
auditor. In addition, the amendment requires a competitive 
procurement process unless one of the specified exceptions is 
met. Finally, the amendment clarifies the applicability of the 
Anti-deficiency Act. The full Committee on Government Reform 
approved H.R. 3995 on June 12, 2000, and it passed the House by 
unanimous consent the same day.
    On the Senate side, the issue of receivership 
accountability was addressed at a May 9, 2000 hearing by the 
Subcommittee on Oversight of Government Management, 
Restructuring, and the District of Columbia. At the hearing, 
the Mayor testified that his office had appointed a special 
counsel to work with the receivers to establish standards and 
expectations that could be worked into the city's performance 
accountability plan. The Receivership Accountability Act would 
open the lines of communication between the city and the 
receivers in order to make this possible.
    On June 13, 2000, H.R. 3995 was received in the Senate and 
referred to the Committee on Governmental Affairs, where it was 
subsequently referred to the Subcommittee on Oversight of 
Government Management, Restructuring, and the District of 
Columbia on June 20, 2000. The Subcommittee approved the 
legislation by unanimous consent and forwarded it to the full 
Committee on September 18, 2000. It was ordered reported by the 
Governmental Affairs Committee by voice vote at a full 
Committee business meeting on September 27, 2000.

                     IV. EXPLANATION OF AMENDMENTS

    No amendments were offered in the Senate. For an 
explanation of Delegate Norton's amendment, refer to House 
Report 106-633.

                     V. SECTION-BY-SECTION ANALYSIS

    Section 1 establishes the bill's short title, ``District of 
Columbia Receivership Accountability Act of 2000.''
    Section 2 defines a ``District of Columbia Receiver'' for 
purposes of this legislation and provides that all D.C. 
receivers are subject to the requirements of Section 3.
    Section 3 requires that D.C. receivers use administration 
practices which promote financial stability and management 
efficiency, while ensuring that the costs incurred by the 
agency, department, or office under receivership are consistent 
with applicable regional and national standards. The receivers 
are also required to use generally accepted accounting 
principles and fiscal management practices to promote 
efficiency and cost-effectiveness.
    Beginning in fiscal year 2001, D.C. receivers are required 
to consult with the Mayor and the Chief Financial Officer when 
preparing a budget for the agency, department, or office under 
receivership. The receiver then submits a budget to the Mayor 
who forwards it to the City Council pursuant to sections 446 
and 603(c) of the District of Columbia Home Rule Act. The Mayor 
and Council are permitted to make recommendations, but not 
revisions. This budgetary requirement is effective unless the 
terms of the D.C. receiver's appointment permit revisions by 
the Mayor and the Council.
    This section also requires that the D.C. receiver and the 
Mayor jointly choose an independent auditor to conduct an 
annual fiscal and management audit, unless the terms of the 
receiver's appointment permit the parties to the court action 
to select the auditor.
    Section 3 requires the use of competitive procedures 
considered the best suited to the circumstances in order to 
attain a full and open competitive procurement process. 
Alternative methods would need to be used if the amount of 
money involved in the procurement is nominal, the public need 
is urgent, the receiver certifies that only one supplier is 
available, or the required services are technical and 
professional and are performed by the contractor in person, or, 
the services are performed under the D.C. receiver's 
supervision and are compensated based on the period of time 
worked.
    Section 4 clarifies that the provisions of subchapter III 
of chapter 13 of title 31, United States Code, relating to the 
Anti-Deficiency Act, apply to District of Columbia receivers.

                   VI. ESTIMATED COST OF LEGISLATION

                                     U.S. Congress,
                               Congressional Budget Office,
                                Washington, DC, September 29, 2000.
Hon. Fred Thompson,
Chairman, Committee on Governmental Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3995, the District 
of Columbia Receivership Accountability Act of 2000.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are John R. 
Righter (for federal costs), and Susan Sieg Tompkins (for the 
state and local impact).
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 3995--District of Columbia Receivership Accountability Act of 2000

    H.R. 3995 would require agencies of the District of 
Columbia that are in receivership to follow certain budgeting, 
management, and procurement practices. Currently, two District 
agencies--Child and Family Services and the Commission on 
Mental Health Services--are administered by court-appointed 
receivers. Because the legislation would apply only to agencies 
of the District of Columbia, CBO estimates that enacting H.R. 
3995 would have no impact on the federal budget. The 
legislation would not affect direct spending or receipts, so 
pay-as-you-go procedures would not apply.
    H.R. 3995 contains an intergovernmental mandate because it 
effectively would require the departments within the District 
of Columbia that are currently administered by a court-
appointed receiver to adopt certain management practices to 
improve their financial stability. CBO estimates that the costs 
of complying with this mandate would be minimal, and thus would 
not exceed the threshold established in the Unfunded Mandates 
Reform Act ($55 million in 2000, adjusted annually for 
inflation). The legislation contains no private-sector mandates 
as defined in that act.
    On May 31, 2000, CBO transmitted a cost estimate for H.R. 
3995 as ordered reported by the House Committee on Government 
Reform on May 18, 2000. The two versions of this legislation 
are identical, as are our cost estimates.
    The CBO staff contacts are John R. Righter (for federal 
costs), and Susan Sieg Tompkins (for the state and local 
impact). This estimate was approved by Robert A. Sunshine, 
Assistant Director for Budget Analysis.

                  vii. evaluation of regulatory impact

    Pursuant to the requirement of paragraph 11(b) of rule XXVI 
of the Standing Rules of the Senate, the Committee has 
considered the regulatory and paperwork impact of H.R. 3995. 
The legislation contributes to the efficient administration and 
management of both the Federal and District of Columbia 
governments by establishing a framework for oversight of the 
court-appointed receivers in the District of Columbia. It would 
impose additional regulatory burdens on the court-appointed 
receivers, but the intent of the increased regulation would 
serve to streamline the administration of the receiverships, 
and establish lines of communication between the receivers and 
the Mayor in order to expedite and smooth the eventual 
transition of the agency back to the District government. The 
legislation would also reduce the paperwork burdens on the 
court-appointed receivers by clarifying the role and 
responsibility of the receivers. H.R. 3995 would impose no 
burdens on the public and will improve the management of 
taxpayer-funded services.

      viii. changes in existing law made by the bill, as reported

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee states that H.R. 
3995, as reported, makes no changes in existing law.

                                
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