District of Columbia: Source of Funding for Needle Exchange Programs
(Correspondence, 09/15/2000, GAO/AIMD-00-318R).

This correspondence focuses on the source of funds used for the needle
exchange program in the District of Columbia. GAO's work did not
identify any noncompliance with the legislative prohibition against
using appropriated funds for a needle exchange program in the District
during fiscal year 2000. All of funds used for the program were from
private contributions.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  AIMD-00-318R
     TITLE:  District of Columbia: Source of Funding for Needle
	     Exchange Programs
      DATE:  09/15/2000
   SUBJECT:  Appropriated funds
	     Drug abuse
	     Internal controls
	     Budget administration
	     Health care programs

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GAO/AIMD-00-318R

Needle Exchange Funds

United States General Accounting Office Washington, DC 20548

Accounting and Information Management Division

B-286141 September 15, 2000 The Honorable Kay Bailey Hutchison Chairwoman,
Subcommittee on the District

of Columbia Committee on Appropriations United States Senate

Subject: District of Columbia: Source of Funding for Needle Exchange
Programs Dear Madam Chairwoman: In your July 25, 2000, letter, you asked us
to determine whether the funds used for the needle exchange program in the
District complied with section 150 (a) and (b) of the Fiscal Year 2000
Appropriations Act for the District of Columbia (P. L. 106- 113). Section
150 (a) of the Fiscal Year 2000 Appropriations Act for the District of
Columbia prohibits the use of appropriated funds-- either local or federal--
for needle exchange programs. Furthermore, section 150 (b) of the act
requires that any individual or entity that receives District appropriated
funds and conducts a needle exchange program account for the private funds
used for the program separately from its appropriated dollars. On August 29,
2000, using the slides in the enclosure to this letter, we briefed the
Subcommittee staff on the results of our work.

To identify individuals or entities conducting a needle exchange program
within the District during fiscal year 2000, we (1) interviewed officials
from the Office of the Mayor, the District's Department of Health, the
Whitman- Walker Clinic, and Prevention Works, (2) reviewed the sources of
funding of needle exchange programs to determine whether any contributors
were recipients of fiscal year 2000 District appropriated funds, (3)
performed a walk- through of Whitman- Walker Clinic's financial management
system to determine whether its system segregates restricted fund activity,
and (4) reviewed the independent public accountants' reports for Whitman-
Walker Clinic's financial statements and single audit reports for fiscal
years 1998 and 1999. We conducted our work in July and August 2000 in
accordance with generally accepted government auditing standards. We
obtained oral comments on a draft of the slides from the Senior Deputy
Director for Substance Abuse Service, District's Department of Health; the
Director of Finance, Whitman- Walker Clinic; and the Executive Director,
Prevention Works. The officials agreed with the content of the slides.

B- 286141 GAO/ AIMD- 00- 318R Needle Exchange Funds Page 2

Results in Brief

Our work did not identify any noncompliance with the legislative prohibition
against using appropriated funds for a needle exchange program in the
District during fiscal year 2000. According to District officials,
Prevention Works was the only organization that conducted a needle exchange
program in the District during fiscal year 2000. A Prevention Works official
said that organization received no funding from the District of Columbia for
the period October 1999 to August 2000. However, one contributor to
Prevention Works- Whitman- Walker Clinic-- was a recipient of District
fiscal year 2000 appropriated funds. Officials from Whitman- Walker Clinic,
which conducted the needle exchange program prior to fiscal year 1999, told
us that all funds it contributed to Prevention Works were from private
contributions.

A walk- through of Whitman- Walker Clinic's financial management system
demonstrated that the system has in place internal controls to segregate
private funds from District appropriated funds. These safeguards appear to
meet the requirements of Section 150 (a) and (b) of the Fiscal Year 2000
Appropriations Act for the District of Columbia. In addition, an independent
public accounting firm performed certain procedures on the clinic's
financial records in meeting the audit requirements of the Single Audit Act
for fiscal years 1998 and 1999. The accounting firm reported no material
internal control weakness or material noncompliance with laws, regulations,
and contracts or grant provisions.

As agreed with your office, unless you publicly announce the content of this
letter earlier, we will not distribute it until 30 days from its date. At
that time, we will send copies to Senator George Voinovich, Senator Richard
Durbin, Representative Ernest J. Istook, Representative James P. Moran,
Representative Thomas M. Davis III, and Representative Eleanor Holmes
Norton, in their capacities as Chair or Ranking Minority Member of Senate or
House Subcommittees. Copies will be made available to others upon request.

---- We appreciate the opportunity to be of assistance. If you or your staff
have any questions regarding the briefing or this letter, or if we can be of
further assistance, please contact me at (202) 512- 4476 or Steven Haughton,
Assistant Director, at (202) 512- 5999. I may also be reached by e- mail at
jarmong. aimd@ gao. gov. Key contributors to this assignment were Keith
Thompson, Louis Fernheimer, LaShawnda Wilson, and Richard Cambosos.

Sincerely yours, Gloria L. Jarmon Director, Health, Education and Human
Services

Accounting and Financial Management Issues Enclosure

Enclosure GAO/AIMD-00-318R Needle Exchange Funds Page 3

August 29, 2000, Briefing on the Needle Exchange Program

ACCOUNTING AND INFORMATION MANAGEMENT DIVISION

District of Columbia: Sources of Funds for Needle Exchange Program.

Briefing for the Senate Committee on Appropriations, Subcommittee on
District of Columbia

August 29, 2000

Enclosure GAO/AIMD-00-318R Needle Exchange Funds Page 42

Objectives

Identify the organizations within the District of Columbia for fiscal year
2000 that are conducting needle exchange programs.

Determine the sources of funding used for needle exchange programs.

Evaluate the sources of funding for needle exchange programs to determine if
they comply with section 150 (a) and (b) of the fiscal year 2000
Appropriations Act for the District of Columbia (P. L. 106- 113).

Enclosure GAO/AIMD-00-318R Needle Exchange Funds Page 5

3

Scope and Methodology

Interviewed officials from the Mayor's Office, District of Columbia
Department of Health, Whitman- Walker Clinic Inc., and Prevention Works to
determine which organizations within the District were conducting needle
exchange programs for fiscal year 2000.

Reviewed the sources of funding of needle exchange programs to determine
whether any contributors were recipients of fiscal year 2000 District
appropriated funds.

Performed walk- through of Whitman- Walker Clinic's financial management
system to determine whether its system can segregate restricted fund
activity.

Enclosure GAO/ AIMD- 00- 318R Needle Exchange Funds Page 6

4

Scope and Methodology

Reviewed the independent public accountant's report for Whitman- Walker
Clinic's financial statements and single audit report for fiscal years 1998
and 1999, the most recent ones available.

Conducted our work during July 2000 and August 2000 in accordance with
generally accepted government auditing standards.

Enclosure GAO/ AIMD- 00- 318R Needle Exchange Funds Page 7

5

Background

Section 150 (a) of the FY 2000 Appropriations Act for the District of
Columbia prohibits the use of appropriated funds

-either local or federal, for needle exchange programs. Section 150 (b)
requires that any individual or entity that

receives District appropriated funds and conducts a needle exchange program
shall account for the use of such funds separately from its appropriated
dollars.

On October 21, 1998, the Whitman- Walker Clinic ceased operating its needle
exchange program.

Enclosure GAO/AIMD-00-318R Needle Exchange Funds Page 86

Background

Prevention Works, a private not- for- profit organization established in
October 1998, operates the only needle exchange program in the District of
Columbia.

Enclosure GAO/ AIMD- 00- 318R Needle Exchange Funds Page 9

7

Results in Brief

According to District officials, one organization, Prevention Works,
operates a needle exchange program in the District.

Prevention Works received no funding from the District of Columbia for the
period of October 1999 to August 2000.

One contributor to Prevention Works, Whitman- Walker Clinic, was a recipient
of District fiscal year 2000 appropriation funds.

Whitman- Walker Clinic told us that all funds contributed to Prevention
Works were from private contributions.

Enclosure GAO/ AIMD- 00- 318R Needle Exchange Funds Page 10

8

Results in Brief

Whitman- Walker Clinic's financial management system has internal controls
in place to segregate private funds from District appropriated funds. These
safeguards appear to meet the requirements of Section 150 (a) and (b) of the
fiscal year 2000 Appropriations Act for the District of Columbia.

Independent public accountants reported no material internal control
weakness or material noncompliance with laws, regulations, contracts, or
grant provisions. The independent public accountant performed certain
procedures of Whitman- Walker Clinic's financial records in meeting the
audit requirements of the Single Audit Act (OMB Circular A- 133).

Enclosure GAO/ AIMD- 00- 318R Needle Exchange Funds Page 11

9

Prevention Works Needle Exchange Funding

Information on the funding of Prevention Works' needle exchange program.
Table 1: Needle Exchange Program Funding October 1999 to August 2000

Funding source Funding amount Private foundations $297, 000

Angelica Foundation Broadway Cares Drug Policy Foundation Elizabeth Taylor
AIDS Foundation Public Welfare Foundation Scott Opier Foundation Tides
Foundation Washington AIDS Foundation

North American Syringe Exchange Network $1,400 Whitman- Walker Clinic Inc.(
a) $10,000 Corporate In- Kind Donation (AMES and Target) $75

Contributions from Individuals $3,245

Total $311, 720 (a) Recipient of District appropriated funds.

Enclosure GAO/ AIMD- 00- 318R Needle Exchange Funds Page 12

10

Sources of Funding: Whitman- Walker Clinic

Information on the sources of funding for the Whitman- Walker Clinic Table
2: Source of Funding October 1999 to June 2000

Funding source Funding amount District of Columbia appropriated funds
(local) $1,423,758 Federal funds (pass- through and grants) $6,914,005 Local
area jurisdiction funds $182,813 Private funds $7,699,895

Total $16,220,471

Enclosure GAO/ AIMD- 00- 318R Needle Exchange Funds Page 13

11

Whitman- Walker Clinic

Status of Compliance with section 150 (a) and (b) of the fiscal year 2000
Appropriations Act for the District of Columbia.

Contribution to Prevention Works ($ 10,000) made from private funds.

Whitman- Walker Clinic's accounting system separately identifies all private
funds and federal funds.

Revenues are tracked by private funds and federal funds.

Expenses are tracked by private funds and federal funds.

Enclosure GAO/ AIMD- 00- 318R Needle Exchange Funds Page 14

12

Whitman- Walker Clinic

Whitman- Walker Clinic stated that it rents space to Prevention Works under
what it referred to as an armslength, market- rate lease. Prevention Works
pays the Clinic $1,155 per month for 544 square feet of office space ($
25.50 per square feet).

Enclosure GAO/ AIMD- 00- 318R Needle Exchange Funds Page 15

13

Whitman- Walker Clinic

Independent Auditor's report of Whitman- Walker Clinic's Financial Position
as of September 30, 1999 and 1998.

Financial Statement Items Unqualified opinion issued. No reportable
conditions reported. No noncompliance issues material to the financial

statements. Single Audit Items

No reportable conditions in internal controls over major programs.

Unqualified opinion issued relating to compliance for major programs.

No audit findings required to be reported under section 510 (a) of OMB
Circular A- 133.

(916374)
*** End of document. ***