Financial Status: District of Columbia Finances (Briefing Report,
06/22/94, GAO/AIMD/GGD-94-172BR).

The District of Columbia, faced with unresolved long-term financial
issues and short-term financial crises, will run short of cash by the
end of fiscal year 1995 unless steps are taken to compensate for revenue
shortfalls, forcing the city to borrow from the U.S. Treasury.  Although
the District received $331 million from general obligation bonds in 1991
to help relieve its cash shortfall, the city's cash position has
declined by nearly $200 million since then, and the District projects
continuing declines in its cash balance.  The pension payment the
District agreed to make in fiscal year 1995 exceeds the cash projected
to be available on September 30, 1995, by more than $9 million, not
counting any additional costs and interest foregone.  As of June 1994,
the District had no plan to produce the cash necessary to implement its
agreement with the D.C. Retirement Board.  Furthermore, supplemental
budgets to address insufficient funding of District services and
programs have not included shortfalls of the D.C. General Hospital,
which the District subsidizes.  As of September 1993, the Hospital had a
cumulative deficit of $109 million.  In addition, the fiscal year 1994
supplemental and fiscal year 1995 budgeted expenditures do not reflect
historical and projected trends.  Specifically, the budgets for many
programs are lower than past actual expenses as well as future
projections.  Although District officials maintain that short-term
actions will reduce the fiscal year 1994 and 1995 expenditures, such
actions may not be achievable and these budgets may be optimistic.  The
District's authority to issue short-term bonds spanning the year-end is
limited, and financial markets may not favorably receive such
obligations.

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

 REPORTNUM:  AIMD/GGD-94-172BR
     TITLE:  Financial Status: District of Columbia Finances
      DATE:  06/22/94
   SUBJECT:  Financial management
             Budget administration
             Funds management
             Budget deficit
             Future budget projections
             Municipal governments
             Budget receipts
             Financial analysis
             Budget obligations
IDENTIFIER:  Medicaid Program
             Water and Sewer Fund
             District of Columbia
             
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Cover
================================================================ COVER


Briefing Report to Congressional Requesters

June 1994

FINANCIAL STATUS - DISTRICT OF
COLUMBIA FINANCES

GAO/AIMD/GGD-94-172BR

GAO/AIMD-94-172P

GAO/AIMD/GGD-94-172BR D.C.  Financial Status


Abbreviations
=============================================================== ABBREV

  BOP - Bureau of Prisons
  CAFR - Comprehensive Annual Financial Report
  DHS - Department of Human Services
  FTE - full-time equivalent
  OMB - Office of Management and Budget
  TRANS - Tax Revenue Anticipation Notes
  WMATA - Washington Metropolitan Area Transit Authority

Letter
=============================================================== LETTER


B-257550

June 22, 1994

The Honorable Fortney H.  (Pete) Stark
Chairman, Committee on the District of Columbia
House of Representatives

The Honorable Julian C.  Dixon
Chairman, Subcommittee on the District of Columbia
 Committee on Appropriations
House of Representatives

This briefing report responds to your request that we provide
information on the District of Columbia Government's financial
status.  It addresses the District's cash situation and budgets, as
well as other issues you asked us to address.  Our report documents
the briefings we provided to you and your staff. 


   BACKGROUND
------------------------------------------------------------ Letter :1

The District of Columbia is a unique entity, being the only
governmental unit with responsibilities for state and county, as well
as city, functions.  As such, it provides a variety of services and
programs for its residents and visitors, including police and fire
protection, local transportation, Medicaid, hospital care,
sanitation, employment assistance, education, and housing.  The
District currently provides these services primarily from a $3.4
billion budget that was appropriated from the District's general fund
by the Congress.  Approximately 80 percent of the revenue financing
the annual appropriation comes from income taxes, property taxes,
sales taxes, and other local sources of revenue.  The remainder comes
primarily from the annual federal payment intended to compensate the
District for nonreimbursed services provided to the federal
government or revenue shortages caused by federally imposed
limitations on the District's taxing powers.  In addition, the
District expects to receive approximately $750 million in federal
grants, as well as reimbursements for services that are not included
in amounts annually appropriated. 

District officials note that, in recent years, the District has not
only been impacted by a sluggish economy, but its financial situation
has been aggravated by the migration of a significant number of
middle class taxpayers to the suburbs, leaving behind a greater
percentage of residents who are most in need of government
assistance. 

The District of Columbia Self-Government and Governmental
Reorganization Act (Home Rule Act), Public Law 93-198, confers
limited autonomy to the District and provides for congressional
oversight.  For example, the act requires the District to submit
balanced budgets to the Congress and precludes the District from
obligating or expending funds unless approved by the Congress.  The
District annually prepares budgets that include appropriated general
fund revenues and expenditures, a capital projects plan for the next
5 years, and a long-term financial plan. 

The act allows the District to issue general obligation bonds only
for capital projects or to refinance existing maturing debt
instruments.  However, in August 1991, the Congress amended the
District's charter to authorize issuing general obligation bonds to
pay accumulated bills and provide the District with working capital. 
District officials described this amount as sufficient to eliminate
the District's negative financial position, including $284 million
that had existed when the District was created under the Home Rule
Act.  At the time of this bond offering, District officials said that
the liquidity offered by this bond issuance would reduce the need for
short-term borrowing. 


   SUMMARY
------------------------------------------------------------ Letter :2

The District is faced with both unresolved long-term financial issues
and continual short-term financial crises.  Although the District
received $331 million in proceeds from general obligation bonds in
1991 to help relieve its cash shortfall, the city's cash position has
declined by nearly $200 million since then, and the District is
estimating that its cash balances will continue to decline.\1

In its most recent cash forecast, the District estimated that its
cash balance would dip to $65 million by September 30, 1995, even
assuming the deferral of a $74 million pension payment in fiscal year
1995 until fiscal year 1996.  However, on June 7, 1994, the District
announced an agreement with the D.C.  Retirement Board to make all
payments when due in fiscal year 1995 and pay certain additional
costs incurred or interest foregone as a result of deferring fiscal
year 1994 pension payments.  However, the pension payment the
District agreed to make in fiscal year 1995 exceeds the cash
projected to be available on September 30, 1995, by more than $9
million, not including additional costs and interest foregone that
the District has agreed to pay.  As of June 14, 1994, District
officials stated that they have not yet developed the action plans to
produce the cash necessary to implement this agreement. 

The District's year-end cash position is also affected by the
District's ability to successfully execute its budget and its limited
authority to obtain short-term borrowings at fiscal year-end.  The
District prepares its forecasted cash balance using its budget as the
basis.  Revenues and expenditures are then adjusted to reflect the
timing of actual cash receipts and disbursements.  As discussed
below, the District's actual revenues have fallen short and
expenditures have exceeded budgeted amounts in recent years.  In
addition, budgets under current congressional consideration may not
fully reflect the costs of the District's programs.  Further, there
are uncertainties regarding the timing of collections and the
collectibility of the District's newly imposed public safety fee
included in the District's fiscal year 1994 supplemental budget and
cash forecasts. 

Under the Home Rule Act, the District's authority to issue short-term
obligations spanning the year-end is limited, and District officials
have indicated that such obligations may not be favorably received by
the financial markets.  This limitation, combined with optimistic
budgets (that is, certain actions that may not be achievable to
reduce expenditures or increase revenues and items not included in
the budget) present a formidable challenge for the District in
addressing its potential cash shortfalls.  Unless the District can
implement policy changes to compensate for potential cash shortfalls,
it may be forced to borrow from the U.S.  Treasury by fiscal year
1995. 

Because of revenue shortfalls and overexpenditures, the District, in
recent years, has had to increase revenues from local sources, obtain
an increased federal payment, or use other measures to balance its
budgets.  These other measures, which amounted to additional
budgetary authority of $225 million, have included transferring funds
from the Water and Sewer Fund, not recording a Washington
Metropolitan Area Transit Authority payment when due against
appropriated expenditures, and changing the real property tax year. 

For instance, in fiscal year 1993 the District changed the legal
definition of the property tax year.  This change and related changes
resulted in counting approximately $174 million of tax collected as
an increase to fiscal year 1993 budget revenue.  Before the change,
the $174 million would have been recorded as fiscal year 1994
revenue.  This tax year change did not generate any additional cash
during fiscal year 1993, but budgeted revenue and spending authority
were increased by this amount.  Also, because the federal payment to
the District is based upon a percentage of District revenues from
local sources from the second preceding fiscal year, the fiscal year
1995 federal payment authorization may be increased by approximately
$41 million under the payment formula.  (These budget balancing
measures are discussed in appendixes I and II.)

Furthermore, supplemental budgets to address insufficient funding of
District services and programs have not included shortfalls of the
D.C.  General Hospital, which is subsidized by the general fund.  As
of September 30, 1993, the Hospital's cumulative results of
operations was a $109 million deficit.  The District's fiscal year
1994 supplemental budget request estimated that the Hospital's
deficit would increase by $15 million during fiscal year 1994;
however, no additional funds were requested for the Hospital.  By not
recognizing these shortfalls in its supplemental budgets, the
District overstated the amount of resources available to use for
other programs. 

In addition, the fiscal year 1994 supplemental and fiscal year 1995
budgeted expenditures do not consistently reflect historical and
projected trends.  Specifically, the fiscal year 1994 and 1995
budgets for many programs are lower than past actual expenses, as
well as future projections.  District officials maintain that certain
short-term actions will reduce the fiscal year 1994 and 1995
expenditures.  However, such actions may not be achievable and these
budgets may be optimistic. 

For example, the fiscal year 1995 budget for the Department of
Corrections projected that expenditures would decline by 6 percent. 
These figures were based on assumed savings from privatization of
various functions, including food services, and reductions in the
cost of housing prisoners in non-District facilities.  While the
budget estimates that 310 prisoners will reside in such facilities,
it does not include funds to pay for this service.  The original
fiscal year 1994 budget also assumed similar short-term savings,
which were not achieved.  Subsequently, expenses were added to the
fiscal year 1994 supplemental budget. 

In another example, although Medicaid expenditures have increased
significantly in recent years, the budget for fiscal year 1994 shows
a decrease of 1.7 percent, and the fiscal year 1995 budget projects
an increase of just 0.8 percent.  Actual Medicaid payments for the
first 6 months of fiscal year 1994 have exceeded budget estimates and
may be understated by as much as $30 million.  The District's
projections for years beyond fiscal year 1995 show Medicaid
increasing an average of 7 percent per year. 

Another concern is that the District's fiscal year 1995 budget and
long-term financial plan projections may be incomplete.  The
District's multi-year projections show the long-term financial crisis
with a growing shortfall between expected revenues and expenditures
increasing to $742 million by fiscal year 2000.  While these
estimates appear reasonable under current spending and revenue
policy, policy changes could occur, which may reduce or increase this
imbalance.  These multi-year projections do not include deficits from
enterprise funds such as the Water and Sewer Fund and D.C.  General
Hospital.  In addition, the multi-year projections and 1995 budget
may not reflect all operating costs necessary to comply with court
orders or consent decrees.  For example, the documents do not include
fines, imposed subsequent to the fiscal year 1995 budget submission,
of over $21 million annually resulting from the District's failure to
reduce overcrowding in juvenile facilities. 

Finally, the District's fiscal year 1994-2000 capital budget does not
include amounts for many already authorized projects or for projects
that are likely to be needed.  For example, the capital budget does
not include most of the nearly $1 billion that will be required for
improvements to water and sewer plants and D.C.  Public School
buildings.  District officials said that all projects were not
included because of statutory limitations on the total amount of
District indebtedness and a self-imposed limitation on annual
indebtedness that restricts financing of such projects.  Moreover, in
the longer term, the District must address the $4.4 billion in
unfunded pension liabilities. 


--------------------
\1 As used here cash refers to the accumulation in a pool of all
unrestricted operating monies statutorily under the control of the
District.  These monies include the general fund and various
enterprise funds, such as the Water and Sewer Fund. 


   COMMENTS FROM THE DISTRICT OF
   COLUMBIA
------------------------------------------------------------ Letter :3

In commenting on a draft of this report, District officials did not
take issue with the facts as presented.  Their written comments,
which are presented in appendix VI, discuss actions they intend to
take to address many of the issues raised in the report.  We did not
assess the sufficiency or achievability of these actions. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :4

In response to your request, we obtained more that 200 financial and
other documents provided by the District and met with District
officials in the Office of Financial Management and other selected
agencies.  The District was very helpful in providing all requested
documents in a timely manner and in granting access to all needed
District officials.  Documents obtained and analyzed included the
District's Comprehensive Annual Financial Reports (CAFR), cash
forecasts, budgets, and multi-year plans.  The District's CAFR for
fiscal year 1993 was audited by Coopers and Lybrand and Bert Smith &
Co.  The auditors issued an unqualified opinion on the 1993 financial
statements, stating that the statements were fairly presented in all
material respects.  While it was not within the scope of our work to
assess the overall quality of the auditors' work, we obtained
selected information from the workpapers prepared by the auditors,
including workpapers related to receivables and payables. 

In addition, the Congressional Budget Office assisted in the analysis
of the budgets and multi-year financial forecasts.  We also met with
staff of the District of Columbia Council and studied Council reports
from selected committees.  We performed our work from April 1994
through June 1994, in accordance with generally accepted government
auditing standards. 

We are sending copies of this report to the Mayor of the District of
Columbia, the Chairman of the City Council, interested congressional
committees, and other interested parties.  Copies will also be made
available to others upon request.  Please contact me at (202)
512-8549 if you or your staff have any questions concerning this
report.  Other major contributors to this report are listed in
appendix VII. 

John W.  Hill, Jr.
Director, Audit Support and Analysis


THE DISTRICT OF COLUMBIA'S
FINANCIAL STATUS
=========================================================== Appendix I



   (See figure in printed
   edition.)



   WILL THE DISTRICT RUN OUT OF
   CASH? 
--------------------------------------------------------- Appendix I:1

The District's forecasted cash balances for fiscal years 1994 and
1995 show positive cash balances through the end of fiscal year 1995. 
(See appendix III for a complete schedule of the District's
forecasted cash balances.) However, a number of factors could impact
the forecasted cash balances.  Specifically, the District's recent
forecasts do not include payment of certain items when due
(deferrals), include optimistic assumptions, and utilize growing
short-term borrowings to meet expected cash shortages.  Furthermore,
these cash forecasts do not reflect certain mandated costs (discussed
later in the appendix).  As a result of all these factors, the
District could be required to borrow from the U.S.  Treasury. 

The District estimated its cash balance would dip to $65 million by
September 30, 1995.  This estimate assumed deferring a $74 million
pension payment in fiscal year 1995 until fiscal year 1996.  However,
on June 7, 1994, the District announced an agreement with the D.C. 
Retirement Board to make all payments when due in fiscal year 1995
and pay certain additional costs incurred or interest foregone as a
result of deferring fiscal year 1994 pension payments.  However, the
pension payment the District agreed to make in fiscal year 1995
exceeds the cash projected to be available at September 30, 1995, by
more than $9 million, not including additional costs and interest
foregone that the District has agreed to pay.  As of June 14, 1994,
District officials stated they had not developed action plans to
produce the cash necessary to implement this agreement. 

Furthermore, the District's estimated cash balance for fiscal year
1994 and its actual cash balances for fiscal years 1991 through 1993
may have been significantly lower had the District not anticipated or
deferred certain payments.  The following table compares actual or
forecasted cash balances to restated cash balances assuming that
payments were made when due and that no new cash was generated. 
District officials have stated that it is their policy to generally
pay amounts when they are due. 



                          Table I.1
           
             Comparison of Actual/Forecasted Cash
              Balance to Year-End Cash Assuming
                    Payments Made When Due

                    (Dollars in millions)

                     End                       Year-end cash
                      of    Cash   Amount of        assuming
                  fiscal  balanc  restatemen        payments
                    year       e           t   made when due
----------------  ------  ------  ----------  --------------
Actual              1991    $272      $-45\a            $227
Actual              1992     160       -49\b             111
Actual              1993      68       -99\c             -31
Forecasted          1994     132      -190\d             -58
Forecasted          1995      65       -74\e              -9
------------------------------------------------------------
\a Reflects payment of $45 million pension payment deferred in 1991,
but paid in 1992. 

\b Reflects payment of $27 million Washington Metropolitan Area
Transit Authority (WMATA) payment deferred in 1992, but paid in 1993;
and $22 million Bureau of Prisons (BOP) payment, deferred in 1992,
but paid in 1994. 

\c Reflects payment of $72 million pension payment, $23 million WMATA
payment, and $4 million BOP payment deferred in 1993, but paid in
1994. 

\d Reflects payment of $190 million pension payment deferred in 1994,
assuming payment in 1995. 

\e Reflects payment of $74 million pension payment deferred in 1995. 

The District's recent forecasts have also included a number of
optimistic assumptions.  As a result, the District's actual cash
balance at the end of each month has been less than the District had
anticipated. 

The District prepares its forecasted cash balances using its annual
budget as the basis.  The budgeted revenues and expenditures are then
adjusted to reflect the District's estimate of when revenues will be
received in cash and checks written for expenditures.  Forecasted
cash balances can be overstated if budget amounts are unrealistic or
the timing of receipts and disbursements does not correspond to
estimates.  Past experience indicates that the District's actual
revenues and expenditures often differ significantly from budgeted
amounts. 

The impact of optimistic budget estimates on the cash forecast can be
illustrated by looking at Medicaid expenses.  For the first 6 months
of fiscal year 1994, the District budgeted for Medicaid payments of
approximately $51 million per month, while actual Medicaid payments
averaged approximately $55 million per month.  Consequently, actual
payments exceeded the original estimated payments by $23.8 million
over the 6 months.  District officials maintained that they would not
exceed the total Medicaid budget for the fiscal year.  As a result,
in a revised cash forecast, Medicaid expenditures for the final 6
months of fiscal year 1994 were estimated to average only $41
million--more than $10 million less per month than the first 6
months.  However, April 1994 actual Medicaid disbursements were
approximately $54 million.  Consequently, the District's forecasted
cash balance for fiscal year 1994 may be overstated due to Medicaid
expenses by as much as $30 million ($60 million less $30 million in
federal reimbursements). 

In another case, the forecasted cash balance for fiscal year 1994
includes a $25 million receipt for a one-time public safety fee,
which will be assessed on all business revenues including
not-for-profits.  According to the Congressional Budget Office, this
estimate is highly tentative due to the absence of reliable data on
those subject to the tax and the inherent difficulties of predicting
compliance rates for such a one-time, self-assessed fee.  The
projection of when cash receipts from this assessment will be
collected is also uncertain. 

Figure I.1 shows that the District's recent projected cash balances
have not been realized.  For example, the December 1993 forecasted
balance exceeded the actual amount by approximately $134 million (102
percent). 

   Figure I.1:  Comparison of
   Forecasted Cash Balance To
   Actual Cash Balance

   (See figure in printed
   edition.)

Note:  Data points for this figure are provided in appendix IV. 

In addition to optimistic assumptions and deferrals, the District's
cash balances throughout the year assume the District will be able to
borrow to meet short-term cash needs.  These short-term borrowings
generally consist of those borrowings the District expects to receive
and repay within the same fiscal year.  The District's ability to
borrow short term from the securities market beyond the current
fiscal year is limited to 2 percent of its appropriation, or
approximately $70 million in fiscal year 1994.  The District's
forecasted cash balances for fiscal years 1994 and 1995 include the
following short-term borrowings, shown in table I.2, which are to be
repaid before fiscal year-end. 



                          Table I.2
           
              District Fiscal Year 1994 and 1995
                    Short-term Borrowings

                    (Dollars in millions)

                                                   Actual to
Fiscal year                          Estimated          date
----------------------------------  ----------  ------------
1994                                      $150          $200
1995                                       250           n/a
------------------------------------------------------------
The fiscal year 1994 short-term borrowing is the first time, since
the receipt in fiscal year 1991 of $331 million in proceeds from
long-term borrowings, that the District has borrowed on a short-term
basis from the securities market to meet operating cash needs.  Prior
to this long-term borrowing, the District frequently borrowed from
the securities market on a short-term basis. 




   (See figure in printed
   edition.)



   HOW DID CASH DECLINE WITH
   BALANCED BUDGETS IN FISCAL
   YEARS 1992 AND 1993? 
--------------------------------------------------------- Appendix I:2

During fiscal years 1992 and 1993, the general fund's cash balance
declined by approximately $166 million.  During these same 2 years
the general fund budget showed a $10 million excess of revenues over
expenditures, resulting in a difference of $176 million between cash
and budget for the general fund.  This seeming incongruity occurred
because District budgets are prepared based on expected revenues and
expenditures, which can differ from the flow of cash receipts and
disbursements. 

The District's budget, as is common to other municipalities, is
prepared on a modified accrual basis, meaning that revenues and
expenditures can be recognized in the budget before or after cash is
received or expended.  Revenues include amounts earned but not yet
collected (receivables) and exclude amounts not yet earned for which
cash was collected (deferred revenue).  In addition, expenditures
include cash owed but not yet paid (accounts payable) and exclude
cash paid in previous years before receipt or use of the related
goods or services (prepaid expenditures).  Also, the payment of
amounts loaned to other funds and the related repayments of these
loans are not reflected as a budgetary expenditure. 

Table I.3 summarizes the major differences between amounts included
in the general fund budgetary accounts in fiscal years 1992 and 1993
and the related effect on cash. 



                          Table I.3
           
             Effect on Cash in Relation to Budget

                    (Dollars in millions)

                                Fiscal     Fiscal
                             year 1992  year 1993
                             increase/  increase/
                             (decrease  (decrease  Cumulativ
                                     )          )   e effect
---------------------------  ---------  ---------  ---------
Fiscal year 1993 property          n/a    $ (174)    $ (174)
 tax year change
Receivables not yet              $(67)       (18)       (85)
 collected
Increase in D.C General           (13)       (17)       (30)
 Hospital loan not in
 budget
Cash collected before               36       (36)          0
 recognized in budget
Expenditures for budget not         23        144        167
 yet paid (accounts
 payable)
Cash paid for future budget       (54)        n/a       (54)
 expenditure (increase in
 prepaid expenses)
============================================================
Total                           $ (75)    $ (101)    $ (176)
------------------------------------------------------------
Table I.3 shows receivables and loans to the D.C.  General Hospital
increasing during these years, resulting in a decline in the cash
balance.  However, this decline is offset by an increase in accounts
payable, which conserves cash.  Exclusive of the receivables and
payables changes, which are discussed later in this report, the major
difference during these 2 years was the result of a change in the
legal definition of the tax year in 1993.  This and related changes
resulted in counting approximately $174 million of taxes collected in
advance (previously called deferred revenue) as actual fiscal year
1993 revenue.  Therefore, although no additional cash was collected,
budgetary revenue and spending authority were increased by this
amount.  (For a detailed explanation of these changes, see appendix
II.) These budgets should be viewed in conjunction with cash
forecasts to obtain a more complete picture of the District's
finances. 



   (See figure in printed
   edition.)



   WHAT TYPES OF BORROWINGS ARE
   AVAILABLE TO THE DISTRICT? 
--------------------------------------------------------- Appendix I:3

The District of Columbia Self-Government and Governmental
Reorganization Act authorizes the issuance of short- and long-term
debt that is backed by the full faith and credit of the District. 
The District is also authorized to issue obligations that are not
backed by the full faith and credit of the District.  Finally, the
District is authorized to borrow from the U.S.  Treasury to meet its
general expenses. 

The District can issue short-term debt either as Tax Revenue
Anticipation Notes (TRANS) or general obligation notes.  TRANS can be
issued to compensate for expected cash shortfalls related to delays
in receipt of projected tax revenue.  Although TRANS are renewable,
they must be repaid no later than the last day of the fiscal year in
which the notes were issued.  The total amount of outstanding TRANS
at any time is limited to 20 percent of the District's total
anticipated revenue for the fiscal year.  The District utilized this
form of short-term borrowings annually from fiscal year 1986 until
late in fiscal year 1991.  In fiscal year 1992, the District did not
utilize TRANS, but instead relied on proceeds from the previous
fiscal year's general obligation bond issuance.  However, in fiscal
year 1994, the District again issued $200 million TRANS to make up
for cash shortfalls, and is anticipating issuing $250 million in
fiscal year 1995. 

The District can also issue short-term general obligation notes to
meet appropriation requirements when budgeted grants and private
contributions are not realized.  Similar to TRANS, these notes are
renewable.  However, they must be repaid no later than the last day
of the fiscal year following the year in which they were issued.  The
amount of general obligation notes issued during a fiscal year is
limited to 2 percent of the District's total appropriations, or
approximately $70 million for fiscal year 1994.  District officials
said they have never issued this type of note and to do so may impair
their ability to obtain financing in the securities market. 

The District's annual appropriation specifically states that "the
Mayor shall not expend any moneys borrowed from capital projects for
operating expenses of the District of Columbia government." However,
in recent years the District has borrowed from the Capital Projects
Fund.  For instance, in fiscal year 1993, the District borrowed $140
million from the Capital Projects Fund to finance seasonal cash flow
needs.  These funds were repaid by year-end.  The District again
borrowed from the Capital Projects Fund in early fiscal year 1994 to
compensate for cash flow shortages due to a delay in the receipt of
the federal payment.  The $40 million borrowed at this time was
repaid in November 1993.  The District's Corporation Counsel has
concluded that the District does not violate its appropriation so
long as borrowings from the Capital Projects Fund are repaid before
the end of the fiscal year in which the borrowing is made. 

The District also has the authority to issue long-term debt. 
Long-term debt generally takes the form of general obligation bonds. 
The District can issue general obligation bonds to refund (refinance)
existing debt or to finance capital projects.  In fiscal year 1991,
the District also received authority to eliminate the general fund's
accumulated deficit by issuing $331 million in general obligation
bonds.  The District has $2.8 billion in general obligation bonds
outstanding as of May 1, 1994.  The District's ability to issue
general obligation bonds is restricted by the act.  Specifically,
general obligation bond issuances are not permitted if total debt
service in the fiscal year exceeds 14 percent of the District's
revenues, or $500 million as of
May 1, 1994.  The District's debt service for fiscal year 1995 is
expected to be $362 million. 

The District also is authorized to issue revenue bonds, notes, or
other obligations to finance or refinance undertakings in the areas
of (1) housing, (2) facilities for health, transit, utility,
recreation, college, university, or pollution control, (3) college or
university student loan programs, and (4) industrial and commercial
development.  The approximately $384 million of revenue obligations
issued under this provision are not general obligations or debt of
the District and are not backed by the full faith and credit or the
taxing power of the District.  Instead, they are payable from
earnings of the respective projects and may be secured by mortgages
on real property or creation of a security interest in other assets. 

Finally, the District can borrow funds from the U.S.  Treasury to
finance its general expenses.  Between 1939 and 1983 the District
routinely borrowed from the U.S.  Treasury under this provision.  It
has not borrowed from the U.S.  Treasury for general expenses since
then.  At one time, the District also had authority to borrow funds
from the U.S.  Treasury to finance capital projects.  While this
authority to borrow for capital projects was terminated in 1983, the
District had outstanding debt issued under this authority with a
remaining balance of $71.8 million as of May 1, 1994. 




   (See figure in printed
   edition.)



   WHY DID THE DISTRICT'S FISCAL
   YEAR 1993 RECEIVABLES INCREASE? 
--------------------------------------------------------- Appendix I:4

The District's fiscal year 1993 receivables increased by a total of
$90 million, or 8 percent.  In the general fund, the increase was $35
million, or 6 percent.  The most significant increases in the general
fund were the $17 million increase in the receivable due from D.C. 
General Hospital and the $33 million increase in federal grants
receivable.  The most significant increase in other fund receivables
was a $72 million increase in the pension fund receivables.  These
increases were offset by slight decreases in other receivable
accounts. 

The $17 million increase in the general fund receivable from D.C. 
General Hospital was to cover cash losses at the Hospital.  With this
increase, the total amount receivable from the Hospital was $58
million at the end of fiscal year 1993.  However, we believe the
Hospital's losses should have been covered by requesting additional
funds through the supplemental budget process rather than through a
loan. 

The D.C.  Code requires the D.C.  General Hospital Commission, an
independent agency of the District Government that operates the
Hospital, to submit an annual consolidated budget to the Mayor that
covers all anticipated revenues, expenditures, and capital outlays. 
This budget must also request a subsidy to cover the difference
between anticipated expenditures (including debt service for capital
expenditures and a reserve for bad debts) and anticipated revenues. 
The Mayor proposes any modifications to the Commission's budget and
transmits it to the Council. 

Each year, the District included an amount for the Hospital subsidy
in its annual budget submission to Congress.  The Congress included
funds to pay the Hospital subsidy in the general fund appropriation
for Human Support Services.  However, except for fiscal year 1990,
when expenditures continued to exceed revenue above the subsidy,
neither the Commission nor the District submitted a budget requesting
a supplemental appropriation to cover the actual deficit, as the
District has done for other operations where available funds were
insufficient to cover expenditures.  Further, the District did not
reprogram funds within Human Support Services to increase the
subsidy.  Instead, the District transferred cash from the general
fund directly to the Hospital, and recorded it as a general fund
receivable and a Hospital fund payable.  In our opinion, the District
should have requested additional funds for the Hospital through a
supplemental budget request. 

Furthermore, this loan to the Hospital is unlikely to be collected. 
The Hospital continues to operate at a deficit and the independent
auditors' opinion on the D.C.  General Hospital's 1993 financial
statements reports that the Hospital will be unable to repay the $58
million unless the current level of District appropriations increases
or the cash generated from hospital operations increases
significantly. 

The District's receivables also increased because of additional
federal grants.  The Department of Human Services (DHS) accounts for
83 percent of the total federal grants receivable.  In fiscal year
1993, DHS grants receivable increased by $27 million, or 21 percent. 
Of this $27 million, an increase of as much as $16 million would have
been expected because of a 12 percent increase in DHS grant revenues. 
The remaining increase resulted from collections in 1993 of DHS
grants receivable that were at a lower rate than in 1992.  While
District officials reported that the financial management system does
not provide an aging of its grants receivable, we were able to
develop the following chart of DHS grants receivable over 1 year old. 
Figure I.2 shows that the percentage of grants receivable 1 year and
over has increased from 1992. 

   Figure I.2:  Outstanding DHS
   Grants Receivable 1 Year Old
   and Older - Fiscal Years 1992
   and 1993

   (See figure in printed
   edition.)

In addition, Figure I.2 also shows that grants 3 years old decreased
in fiscal year 1993.  This decline was primarily due to the grants
remaining uncollected, so that they were more than 3 years old at the
end of fiscal year 1993.  As of September 30, 1993, the DHS grants
receivable over 3 years old totaled $24 million.  The age of these
grants suggests there may be issues related to their ultimate
collectibility.  In fact, the District estimated and recorded
approximately $18 million in its accounts as an allowance for
potential uncollectible grants at DHS.  It is not unusual for an
organization to maintain a reserve for potential uncollectible
amounts rather than writing them off directly.  Although the
District's outside auditors did not request the District to adjust
its accounts, the auditors identified an additional $16 million in
DHS grants receivable as potentially uncollectible.  The auditors
told us they did not request an adjustment to the District's grants
receivable balance or the allowance account because this potential
adjustment was combined with all other potential adjustments and in
total they were considered not material to the financial statements
as a whole. 

The pension fund receivables increased because of the $72 million
deferral of the 1993 fourth quarter payment from the general fund. 
This receivable is also recorded as a payable in the general fund. 




   (See figure in printed
   edition.)



   WHY DID THE DISTRICT'S FISCAL
   YEAR 1993 PAYABLES INCREASE? 
--------------------------------------------------------- Appendix I:5

The District's payables increased $260 million, or 44 percent, in
fiscal year 1993.  Most of this change was due to increases in
accounts payable, compensation payable, and general fund payable to
the pension fund.  Table I.4 shows the District's fiscal year 1993
payables. 



                                    Table I.4
                     
                     District of Columbia Payables for Fiscal
                                    Year 1993

                              (Dollars in millions)


                                     September     September
Payables                              30, 1992      30, 1993    Amount   Percent
--------------------------------  ------------  ------------  --------  --------
General Fund
Accounts                                  $199          $242       $43        22
 Compensation                              143           181        38        27
 Intergovernmental                          14             5        -9       -64
 Interfund\a                                 2            74        72       360
================================================================================
Subtotal                                   358           502       144        40
Other Funds

Accounts                                   156           255        99        63
 Intragovernmental\b                        51            69        18        35
 Other                                      31            30        -1        -3
================================================================================
Subtotal                                   238           354       116        49
================================================================================
Total                                      596           856       260        44
--------------------------------------------------------------------------------
\a Includes $72 million for D.C.  pension contribution in fiscal year
1993. 

\b Includes $41 million and $58 million owed by D.C.  General
Hospital in fiscal years 1992 and 1993. 

The $43 million increase in general fund accounts payable was
distributed throughout the various agencies.  This balance would have
been expected to increase by as much as $19 million as a result of a
10 percent increase in general fund nonpersonal expenditures.  While
the District's records did not permit us to determine the age of the
accounts payable within the time available, District officials told
us that payments were being made when due and that the increase was
not a result of withholding payments to conserve the cash balance. 
Changes in accounts payable as a percentage of nonpersonal
expenditures are shown in figure I.3. 

   Figure I.3:  General Fund
   Accounts Payable as a
   Percentage of Nonpersonal
   Expenditures

   (See figure in printed
   edition.)

Accounts payable decreased in fiscal year 1991, when the District
received $331 million in borrowing proceeds just prior to the end of
the year to pay some outstanding liabilities.  In fiscal years 1992
and 1993, accounts payable at year-end increased to 12 percent and 13
percent of nonpersonal expenditures. 

Compensation payable in the general fund increased $38 million from
year-end 1992 to 1993.  This increase included (1) $6 million
resulting from one more day in the accrued pay period compared to the
prior year (that is, fiscal year 1992 ended on a Wednesday and fiscal
year 1993 ended on a Thursday), (2) $22 million due to retroactive
pay and separation incentives for teachers, and (3) $3 million in
annual leave due to requirements of the Government Accounting
Standards Board in the accounting for leave. 

General fund payables to other funds increased due to the $72 million
owed to the pension fund.  This payable is also recorded as a
receivable in the pension fund. 

Accounts payable in other funds increased due to $100 million in
payables owed by the pension fund for investments purchased close to
the end of the year.  D.C.  General Hospital's payable to the general
fund increased by $17 million, as mentioned earlier. 




   (See figure in printed
   edition.)



   ARE THERE OTHER POTENTIAL
   REVENUES WITHOUT ADDITIONAL
   CASH? 
--------------------------------------------------------- Appendix I:6

Table I.5 shows the deferred revenue in the general fund at the end
of fiscal years 1992 and 1993, and the changes in each category. 



                                    Table I.5
                     
                          General Fund Deferred Revenues

                              (Dollars in millions)


                             September 30,     September 30,
Deferred revenues                     1992              1993    Amount   Percent
------------------------  ----------------  ----------------  --------  --------
General Fund
Property Taxes                        $245               $47     $-198       -81
 Intergovernmental                      10                14         4        40
 (federal grants)                       83                68       -15       -18
 Other
================================================================================
Total                                 $338              $129     $-209       -62
--------------------------------------------------------------------------------
Deferred revenue from property taxes decreased primarily due to the
change in the real property tax year discussed earlier.  Of the $47
million remaining in deferred revenue from property taxes, about $44
million relates to personal property taxes levied on businesses. 
This tax was collected on July 1 for the period July 1, 1993, to June
30, 1994.  About $22 million of the other deferred revenue for 1993
is corporate and unincorporated business franchise taxes and about $5
million is cash advanced for street repairs.  A change in year-end
for personal property taxes, similar to 1993's change in year-end for
real property taxes, would result in additional revenue without
additional cash being collected in the year of the change.  However,
because such a change would result in a cost to taxpayers of 9 months
of taxes paid in advance instead of the 3 months resulting from the
real property tax year-end change (see appendix II for a discussion
of the real property tax year-end change), District officials
indicated that it is unlikely such a provision could be enacted. 
Further, District officials indicated that they had already
considered such a change and rejected it. 




   (See figure in printed
   edition.)



   HOW REALISTIC ARE THE
   DISTRICT'S BUDGETS? 
--------------------------------------------------------- Appendix I:7

The District is required to submit a balanced budget (that is, a
budget in which revenues are equal to or greater than expenditures)
to the Congress, although the Congress is not required to enact a
balanced budget for the District.  While the District has had
balanced budgets, the budgets have not always reflected historical
and future projected trends.  Some estimated revenues, such as sales
taxes and income taxes, are consistently higher in the original
budgets than actual revenues realized.  Figure I.4 shows the
differences between the original budgets and actual revenues for
income taxes, which represent over 25 percent of the District's total
revenues from sources other than the federal government. 

   Figure I.4:  District Income
   Tax

   (See figure in printed
   edition.)

Source:  1994 Multi-Year Plan and data from D.C.  Office of the
Budget. 

As shown in figure I.4, the District has had some difficulty
forecasting revenues in recent years.  District officials stated that
the estimates have not been realized primarily because the District's
economic recovery has been slower than expected and the loss of
businesses and middle class taxpayers to the suburbs has continually
diminished the tax base.  As a result, revenues frequently have not
generated sufficient resources for the actual expenditures.  In
recent years, the District has reacted to these shortfalls with
supplemental budgets containing significant revenue increases to
balance the budgets.  For example,

  fiscal year 1991's supplemental request included a "dire emergency"
     increase to the federal payment of over $103 million;

  fiscal year 1992's supplemental request included a transfer of $28
     million from the Water and Sewer Fund to the general fund;

  fiscal year 1993's supplemental budget changed the property tax
     year, generating approximately $174 million in revenues for
     1993; and

  fiscal year 1994's request includes tax increases, such as the
     one-time public safety fee ($35 million) and raising the sales
     tax 1 percent ($10.8 million). 

In addition, in fiscal year 1992, the District recorded $23 million
in WMATA expenditures as a nonappropriated expenditure.  These
expenditures for Metro subsidies were previously accounted for as
appropriated expenditures.  District officials indicated that to
record these expenditures against the appropriated budget would have
resulted in an "Anti-Deficiency issue." They recorded the expenditure
as a nonappropriated expenditure and requested appropriated budget
authority in fiscal year 1993.  In effect, recording the $23 million
as nonappropriated expenditures enabled the District to incur a like
amount of appropriated expenditures. 

In addition, the 1993 District budget included $30.8 million of
unallocated cost reductions that were to offset budgeted
expenditures.  District officials stated that OMB, upon review of the
District's budget, requested the District to reduce its revenue from
the Federal Payment by $30.8 million.  To balance its budget, the
District chose to include unallocated cost reductions in its budget
to offset this reduced revenue.  District officials indicated that
these cost reductions were never actually allocated to agencies and
instead were made up by revenue increases during the supplemental
budget process. 

Furthermore, the District's fiscal year 1994 supplemental budget
request and fiscal year 1995 budget estimates for expenditures are
not consistent with historical results and future year estimates. 
Often, the budget's projected expenditures are substantially lower in
relation to past and future amounts, as shown by figure I.5 for the
Department of Corrections.\2

   Figure I.5:  Department of
   Corrections' Total Expenses

   (See figure in printed
   edition.)

Note:  Fiscal years 1994-2000 adjusted for fiscal year 1994 pay raise
based on allocations by CBO. 

Source:  District of Columbia Budgets and Multi-Year Plan. 

As illustrated in figure I.5, Corrections' original fiscal year 1994
expenditure estimates were less than actual expenditures from the
previous 2 years.  The estimates were then subsequently increased in
the supplemental budget.  Additional funds were needed because
short-term actions to reduce spending either did not occur or were
significantly delayed during fiscal year 1994.  However, the fiscal
year 1995 expenditure estimates are again lower in anticipation of
these same short-term actions.  Specifically, Corrections has
projected saving about $11.3 million by returning all prisoners from
federal and state facilities.  However, over 300 prisoners were still
housed in other jurisdictions during fiscal year 1994 and the
District needed about $5.7 million to pay for them.  Furthermore,
while the District's budget for fiscal year 1995 indicated that 310
prisoners would be housed in federal facilities, the budget
anticipates obtaining this service without charge.  Food services in
the prison were also to be privatized, saving about $3.8 million. 
Officials believe the savings from privatization could occur in
fiscal year 1995. 

In another example, in fiscal year 1994 the public schools intended
to pay for $17 million in salary increases granted to teachers, while
reducing spending by another $30 million by (1) closing 10 schools
and disposing of some buildings (saving $10 million), (2) reducing
staff by 700 employees ($10 million), and (3) receiving Medicaid
reimbursement for certain students ($10 million).  However, the
District reported that only about $2.7 million of the savings have
materialized.  Closing the 10 schools saved only about $600,000. 
More than 500 school employees either retired or resigned, but then
teachers had to be hired to fill critical positions left vacant,
resulting in only $2.1 million being saved.  Finally, since the
Medicaid reimbursement has not been implemented, additional revenues
estimated at $10 million have not occurred. 

In addition, as previously discussed, estimated Medicaid expenditures
for the first 6 months have exceeded budget estimates, and the
District's expenditures may be underestimated by as much as $30
million. 




   (See figure in printed
   edition.)



--------------------
\2 Excerpts from a CBO analysis of the District's expenditures are
included in appendix V. 


   HAVE ACTUAL EXPENDITURES
   EXCEEDED THE BUDGET? 
--------------------------------------------------------- Appendix I:8

Even though the District has submitted balanced budgets, in recent
years its actual expenditures have exceeded budgeted amounts.  For
instance, expenditures for Human Support Services exceeded budgeted
amounts by $23 million in fiscal year 1991, $21 million in fiscal
year 1992, and $6.6 million in fiscal year 1993.  In addition,
interest and fiscal charges exceeded budgeted amounts by $8 million
in fiscal year 1992 and $6.8 million in fiscal year 1993, Public
Safety and Justice exceeded amounts by $2.6 million in fiscal year
1993, and Public Works exceeded budgeted amounts by $1.7 million in
fiscal year 1993.\3 We compared the original and supplemental budgets
to actual expenditures.  We found that negative variances (actual
expenditures exceeded budgeted amounts) resulted from
overexpenditures in both personal services, such as salaries and
benefits, and nonpersonal services, such as supplies, occupancy,
contractual services, subsidies and transfers (including payments of
entitlements to individuals), equipment, and debt service. 

In fiscal year 1993, overexpenditures in personal services in two
agencies-- the Fire Department and Public Works--caused negative
variances that were represented as Anti-Deficiency Act violations in
the District's Comprehensive Annual Financial Report (CAFR).  An
overexpenditure in the Department of Human Services (DHS) personal
services also contributed to the negative variance represented as an
Anti-Deficiency Act violation in the CAFR.  As illustrated in figure
I.6, in each of these cases, the supplemental budget(s) reduced the
budgeted amount for personal services.  In the Fire Department, this
resulted in a larger negative variance than would have occurred
without the supplementals.  In the other two agencies, the
supplemental budgets caused a negative variance that would not have
existed under the original budget. 

   Figure I.6:  Variance Between
   Original and Final Budgets and
   Actual Expenditures - Personal
   Services - Fiscal Year 1993

   (See figure in printed
   edition.)

In addition, we found that in some cases negative variances resulted
from overexpenditures in nonpersonal services.  For example, actual
expenditures for nonpersonal services at DHS exceeded both the
original and final budget for fiscal years 1991, 1992, and 1993.  The
$6.6 million overexpenditure for Human Support Services in the CAFR
includes Medicaid and other entitlement programs.  Other examples in
which expenditures exceeded both the original and final budget are
Disability Compensation for fiscal years 1991, 1992, and 1993;
Unemployment Compensation in fiscal year 1993; and Debt Service for
fiscal years 1992 and 1993. 

In many other instances, either personal or nonpersonal services
showed negative variances at various agencies, but the agency as a
whole did not go over budget because of offsetting positive variances
in nonpersonal or personal services.  For example, figure I.7 shows
that positive variances in nonpersonal services offset the negative
variances from personal services in Public Works and the Fire
Department in fiscal year 1992, and the Public Schools in fiscal
years 1992 and 1993.  This means that funds that had been budgeted
for vehicles, textbooks, maintenance, etc., were used to pay salaries
and benefits. 

   Figure I.7:  Positive Variances
   in Nonpersonal Services Offset
   Overages in Personal Service

   (See figure in printed
   edition.)

District officials told us that they had to rely on agencies to
monitor personal services spending, but that nonpersonal services
spending is monitored through the financial management system.  The
system does not allow agencies to post transactions that would exceed
the budgeted amount.  However, (1) the control is based on all
spending authority, including appropriated, grant, and other
authority, (2) entitlements are allowed to exceed the budget, and (3)
expenditures under $10,000 can be made before the transactions are
entered into the system.  In addition to the DHS example given
previously, many agencies had smaller overexpenditures in nonpersonal
services. 




   (See figure in printed
   edition.)



--------------------
\3 We were asked to compare actual expenditures on a cash basis to
budgeted amounts.  We were unable to convert budgets and actual
expenditures to a cash basis at an agency level. 


   WHAT ARE THE POTENTIAL
   EXTRAORDINARY COSTS: 
   OPERATIONAL PROGRAMS
--------------------------------------------------------- Appendix I:9

As previously discussed, the D.C.  General Hospital had a $109
million accumulated deficit, $58 million of which was funded through
loans from the District, as of September 30, 1993.  In fiscal year
1994, the District initiated a plan to reduce the accumulated debt,
designating $10 million per year to the Hospital.  However, the
fiscal year 1994 supplemental budget reduced this amount for fiscal
year 1994 to $4.5 million.  In addition, the Mayor has also submitted
a plan to the Council to address the financial operations of the
Hospital with the intent of resolving the deficit growth.  Prior to
submitting the plan, the deficit was expected to increase to almost
$280 million by fiscal year 2000. 

The District's pension obligations to the retirement funds for
police, fire fighters, teachers, and judges exceeded the pension
funds' assets by about $4.4 billion as of September 30, 1993.  The
District's contributions are supposed to be sufficient to pay current
costs plus a portion of the interest on the $4.4 billion unfunded
liability.  The contributions also increase as the number of retirees
increase.  As shown in figure I.8, the contribution has grown from
$180 million in 1989 to about $300 million for 1995, and is expected
to continue increasing to almost $400 million by 1999. 

   Figure I.8:  District
   Expenditures for Pension

   (See figure in printed
   edition.)

Source:  1989-1993 CAFR and 1995-1999 Multi-Year Plan. 

In the past, the Water and Sewer Fund has maintained a working
capital balance to provide for its operating needs, finance its
continuing capital projects, and establish a favorable debt service
ratio necessary for future revenue bond financing.  Also, the fund
has had cash available for the District's use in the cash pool. 
However, current projections show a net loss in each of the next 6
years, which is not included in the District's general fund budget or
its multi-year financial forecasts (see figure I.9).  Similarly, cash
flow is also expected to decrease to the point where the fund will be
a cash user rather than a cash provider for the District's cash pool
by 1996. 

   Figure I.9:  Water and Sewer: 
   End of Year Cash

   (See figure in printed
   edition.)

Note:  Fiscal years 1991-1993 actuals, fiscal years 1994 and 1995
budgets, fiscal years 1996-2000 projected. 

Source:  Water and Sewer Utility Administration. 




   (See figure in printed
   edition.)



   WHAT ARE THE POTENTIAL
   EXTRAORDINARY COSTS:  CAPITAL
   PROGRAMS
-------------------------------------------------------- Appendix I:10

The District has over a billion dollars of capital program costs to
upgrade the schools and water and sewer operations.  Most of these
projects are not included in the capital improvement plan.  In
addition, some of the authorized projects included in the capital
improvements plan have no related financing.  Since 1980, the
District has approved more than
$4 billion in capital improvement projects; however, $1.5 billion of
these projects have not been financed.  The ability of the District
to finance capital projects is restricted by the Home Rule Act.  By
law, the annual payment of principal and interest charges may not
exceed 14 percent of anticipated revenues.  Although the debt service
limit is 14 percent of anticipated revenue, the District has exceeded
what it deemed the advisable 10 percent debt service ratio.  As a
result, the District plans to limit annual financing of capital
projects to $250 million. 

The public schools have about 180 facilities, most of which are old
and in need of serious repairs--over half are more than 50 years old. 
Realizing that significant improvements were needed, D.C.  Public
Schools hired a consultant to develop the cost of renovating all of
the schools to address serious deficiencies and code violations. 
Repairs and renovations outlined in the consultant study included
roof and window replacements, electrical system repairs, and
improvements to address fire and life safety deficiencies.  The study
estimated that between $522 million and $650 million was needed to
correct the deficiencies.  Public school officials said the schools
needed at least $50 million in capital spending annually to begin
correcting these deficiencies, yet capital spending is projected at
$30 million annually.  District officials indicated that these public
school projects were not included in the capital projects plan
because they represented maintenance and repairs, which should be
financed from the public schools operating budget, although they
acknowledged that they had not seen nor reviewed the consultant's
study.  As noted earlier, over the last several years the public
schools have used nonpersonal services funds, including funds for
maintenance, to pay for personnel costs. 

Environmental Protection Agency regulations require that by the end
of fiscal year 1996, Water and Sewer must construct new facilities to
accomplish sewage plant expansions to 370 million gallons per day
from 309 million gallons per day.  The projected cost of this
expansion is $350 million.  In addition, Water and Sewer officials
estimated that an additional $326 million is needed for improvements
to other water and sewer facilities.  The capital improvement plan
includes planned spending for less than 60 percent of these costs. 



   (See figure in printed
   edition.)



   WHAT ARE THE POTENTIAL
   EXTRAORDINARY COSTS: 
   CORRECTIONS COURT ORDERS
-------------------------------------------------------- Appendix I:11

District officials provided us information relating to any court
orders and consent decrees that may require $500,000 or more to
fulfill the court's requirements.  Even though the District either
agreed to comply with consent decrees or had been ordered by the
court to implement remedies, it had not estimated the costs to fully
implement the required actions.  District officials maintain that the
full cost of compliance has been included in the applicable program's
total costs.  As discussed below, certain capital projects that could
contribute to complying with the courts' requirements do not include
adequate planned spending.  Because the costs of compliance were not
separately determined, we were unable to verify that all costs were
included in the budgets, multi-year financial plans, or capital
plans. 

The District's Corrections facilities are under a number of court
orders regarding medical care, environmental improvements, prisoner
population, and correctional officer staffing.  Specifically,
District officials indicated that the following areas within
Corrections will require over $500,000 to remedy. 

  A Special Officer appointed by the District Court reported that
     medical care at the D.C.  jail does not meet the basic and
     serious medical needs of inmates incarcerated there.  The
     Special Officer reported that the continued violations of court
     orders, originally issued in 1971, evidence pervasive and
     systemic deficiencies in the medical delivery system that have
     rendered the system dysfunctional.  The hiring of health care
     staff to provide medical, dental, and psychiatric care is key to
     achieving the actions ordered by the court.  Furthermore, the
     Special Officer recently reported that Corrections is not in
     compliance with the court order to segregate inmates with
     communicable diseases and sexually transmitted diseases at the
     modular facility located at Lorton. 

  As a result of court orders, the District's Department of
     Corrections capital improvements plan has identified a number of
     issues that need to be addressed.  For example, upgrading
     institutional facilities, upgrading and expanding water and
     sewage facilities, and improving food preparation and handling
     facilities.  The capital improvements plan includes
     authorization for $38 million for sewage treatment plant
     improvements at the Lorton correctional facility.  However, only
     $10 million of the $38 million is included in the District's
     spending plan. 

  District officials indicated that each District correctional
     facility is under court-imposed population caps as a result of
     inmate complaints regarding prisoner overcrowding, health and
     food services, and safety issues.  Corrections officials stated
     that the capital improvements plan includes authorization for
     new or expanded facilities that are needed to resolve this
     overcrowding, but the projects are not all financed.  Included
     in the capital improvements plan is a new medium security
     facility costing $85 million for which past and planned spending
     totals only $3.2 million. 

  A January 1993 technical assistance visit report, requested by the
     Special Officer, to study the District's providing of
     correctional officers at Lorton's Maximum and Central Facility
     recommended staff increases to address inmate complaints that
     there were insufficient measures taken to protect them from
     actual and threatened violence.  The District's fiscal year 1994
     supplemental budget request includes an increase of 149
     full-time equivalent staff for the Corrections Department, but
     shows a decline of 184 in the fiscal year 1995 budget, primarily
     resulting from measures to privatize various functions, such as
     food services. 




   (See figure in printed
   edition.)



   WHAT ARE THE POTENTIAL
   EXTRAORDINARY COSTS:  OTHER
   COURT ORDERS
-------------------------------------------------------- Appendix I:12

District officials also identified the following three areas that
will require over $500,000 to comply with court-ordered remedies. 
Again, the costs of fully implementing the court-ordered remedies
were not known. 

  An April 1994 progress report by the court-appointed monitor stated
     that the District's child welfare system needs to be reformed. 
     Included among the reform requirements are hiring additional
     social workers and adoption branch staff to handle cases more
     timely and installing a new child welfare information system. 

  A December 1993 report prepared by a court-appointed compliance
     monitor stated that the District must provide adequate care and
     services in the juvenile justice system and a suitable
     environment according to an individual's needs and the degree of
     their offense.  For example, some juveniles may require more
     individual care and attention than other offenders, while, in
     other cases, more violent juveniles should be isolated from the
     dormitory facilities. 

The primary costs of these provisions are associated with
establishing facilities to alleviate the current overcrowding of
existing facilities.  Fines for exceeding the population cap or for
not placing a child in the proper environment in a timely manner are
estimated by District officials to be over $21 million for fiscal
year 1995.  These fines were imposed subsequent to the budget
submission.  District officials are appealing these fines; however,
should the fines require payment, District officials maintain that
the Department of Human Services will have to reduce its other
program costs. 

  The final report, dated April 11, 1994, by the special master for
     the court, reported that the District must provide a more
     comprehensive continuum of community mental health treatment,
     rehabilitation, housing, support, and homeless services.  These
     agreed-upon remedies include establishing residences for
     patients as they transition from treatment facilities into the
     community and additional staff for community programs. 



   (See figure in printed
   edition.)



   DISTRICT OF COLUMBIA STAFFING
   TRENDS (FISCAL YEARS 1990-1994)
-------------------------------------------------------- Appendix I:13

The fiscal year 1995 budget provides information on District staffing
from fiscal year 1990 to 1994.  However, the data for fiscal years
1990 through 1992 are based on budgeted positions, while the data for
fiscal years 1993 and 1994 are based on full-time equivalent
positions (FTEs).  In addition, District officials noted that the
positions in the fiscal year 1990 to 1992 budgets were not fully
funded in those budgets, while the FTEs represent fully-funded
positions.  As a result, all of the data are not comparable. 
District officials also told us that the data cannot be converted
into comparable data. 

To show a trend with comparable personnel data, we used information
from the District of Columbia Office of Personnel on the average
staff paid for fiscal years 1990 through 1994.  The average staff
represents the number of employees who were paid based on payroll
data for four pay periods during each fiscal year:  October 15,
January 15, April 15, and July 14.  For fiscal year 1994, only the
first two payroll dates were used. 

Table I.6 summarizes these data.  It shows that the average number of
staff being paid declined 4.4 percent, from 47,570 in fiscal year
1990 to 45,490 in fiscal year 1994. 



                          Table I.6
           
            District Staffing Trends, Fiscal Years
                         1990 to 1994

Fiscal year                 1990   1991   1992   1993   1994
-------------------------  -----  -----  -----  -----  -----
Appropriated\a
Continuous full time       28,10  26,69  26,79  26,34  26,87
                               2      4      2      4      5
Continuous part time         767    606    710    581    982
Temporary full time        1,005  1,024    975    746    795
Temporary part time          152    149    119     96     48
Total appropriated         30,02  28,47  28,59  27,76  28,69
                               5      3      5      6      9
Nonappropriated\b
District intra transfer\b  1,376  1,412  1,409  1,429  1,437
Federal grants             13,25  14,81  13,19  14,28  12,32
                               0      6      1      7      8
Other revenues             2,919  3,131  3,127  3,208  3,026
Total nonappropriated      17,54  19,35  17,72  18,92  16,79
                               5      9      7      4      1
============================================================
Grand Total                47,57  47,83  46,32    690  45,49
                               0      2  2 46,             0
------------------------------------------------------------
Note:  Table does not include employees who did not receive a
paycheck while employed by the District of Columbia.  For example, an
employee who was in Leave Without Pay status for the entire pay
period would not be included. 

\a Beginning with fiscal year 1990, the public schools reclassified
several thousand employees in its payroll data from appropriated to
grant funded positions.  The Office of Personnel, however, continues
to classify many of those positions as appropriated.  For example,
the District's fiscal year 1993 budget reports 11,967 appropriated
FTEs for the public schools.  The school payroll data, however, show
that for fiscal year 1993, even counting part-time workers, there are
only 1,803 appropriated positions.  According to the Director of the
Office of Personnel, the school system at the end of each fiscal year
makes the necessary corrections so that the proper funding is
charged.  These accounting actions, however, result in the number of
appropriated staff shown in this table to be understated and
nonappropriated to be overstated. 

\b District intra transfer represents those employees whose positions
are funded by another agency.  Those funds can be either appropriated
or nonappropriated. 

Source:  D.C.  Office of Personnel. 

Figure I.10 shows selected agency staff changes between fiscal years
1990 and 1994. 

   Figure I.10:  Selected Agency
   Staff Changes From Fiscal Year
   1990 Through January 1994

   (See figure in printed
   edition.)

Source:  District of Columbia Office of Personnel. 



   (See figure in printed
   edition.)



   DISTRICT PER PUPIL EXPENDITURES
-------------------------------------------------------- Appendix I:14

Data from the 1993 Digest of Education Statistics (which we did not
independently verify) containing data for 1990 and 1991, the latest
available information, show that of the nation's 40 largest public
school districts, the District of Columbia had the highest per pupil
expenditure--$7,383.  These data are compiled by the U.S.  Department
of Education and are to include nearly all costs of education.  Most
state education expenditures are allocated to local school districts;
however, some state education administrative costs are not included. 
This may slightly understate the per pupil expenditures of all school
districts other than the District of Columbia.  Table I.7 shows this
information. 



                          Table I.7
           
            Enrollment and Per Pupil Expenditures
               for the 40 Largest Public School
                          Districts

                                     Expenditure  Enrollment
                                       per pupil       (Fall
Name of school district       Rank   (1990-1991)       1991)
----------------------------  ----  ------------  ----------
D.C. public schools              1        $7,383      80,618
New York City, NY                2         7,380     962,269
Montgomery County, MD            3         6,778     107,399
Fairfax County, VA               4         6,604     131,230
Milwaukee, WI                    5         6,603      93,381
Cleveland City, OH               6         6,593      71,640
Los Angeles Unified, CA          7         5,832     636,964
Dade County, FL                  8         5,788     304,554
Palm Beach County, FL            9         5,763     110,599
Philadelphia City, PA           10         5,756     195,735
Baltimore County, MD            11         5,451      89,964
Broward County, FL              12         5,440     170,032
San Diego City Unified, CA      13         5,363     123,591
Prince Georges County, MD       14         5,359     111,652
Dekalb County, GA               15         5,093      76,587
Orange County, FL               16         5,061     106,619
Hawaii Department of            17         5,054     174,747
 Education
Hillsborough County, FL         18         5,002     127,439
City of Chicago Schools, IL     19         4,898     409,731
Pinellas County, FL             20         4,852      96,333
Detroit City, MI                21         4,722     169,320
Charlotte-Mecklenburg           22         4,694      77,746
 County, NC
Baltimore City, MD              23         4,665     110,325
Long Beach Unified, CA          24         4,641      74,048
Fresno Unified, CA              25         4,594      74,693
Duval County, FL                26         4,509     115,940
Jefferson County, CO            27         4,433      79,244
Albuquerque, NM                 28         4,356      90,155
Orleans Parish Schools, LA      30         4,228      83,847
Clark County, NV                31         4,104     129,233
Dallas ISD, TX                  32         4,083     137,746
Cobb County, GA                 33         4,046      71,942
Virginia Beach City, VA         34         4,003      71,683
Gwinnett County, GA             35         3,971      68,674
Fort Worth ISD, TX              36         3,831      71,224
Nashville-Davidson County,      37         3,813      69,103
 TN
Houston ISD, TX                 38         3,667     196,689
Memphis City, TN                39         3,400     105,005
Granite, UT                     40         2,586      80,330
------------------------------------------------------------
Source:  1993 Digest of Education Statistics. 

Data on school districts of greater than 20,000 students show that
six school districts have higher per pupil expenditures than the
District of Columbia.  Table I.8 shows statistics for these six
school districts and the District of Columbia. 



                          Table I.8
           
           Highest Expenditure Per Pupil for School
           Districts With More Than 20,000 Students


                                     Expenditure  Enrollment
                                       per pupil       (Fall
Name of school district                (1990-91)       1991)
----------------------------------  ------------  ----------
Rochester City, NY                        $8,866      33,792
Newark City, NJ                            8,400      48,374
Hartford Public Schools, CT                8,013      25,716
Pittsburgh, PA                             7,931      40,384
Kansas City, MO                            7,838      35,227
Boston, MA                                 7,791      60,992
D.C. public schools                        7,383      80,618
------------------------------------------------------------
Source:  1993 Digest of Education Statistics. 

Table I.9 shows information on enrollment and per student
expenditures for selected school districts in the Washington and
Baltimore area and Richmond, Virginia. 



                          Table I.9
           
               Enrollment and Student Costs for
                  Selected School Districts


                                     Expenditure  Enrollment
                                       per pupil       (Fall
Name of school district                (1990-91)       1991)
----------------------------------  ------------  ----------
Fairfax County, VA                        $6,604     131,230
Prince Georges County, MD                  5,359     111,652
Baltimore City, MD                         4,665     110,325
Montgomery County, MD                      6,778     107,399
Baltimore County, MD                       5,451      89,964
D.C. public schools                        7,383      80,618
Prince William County, VA                  5,248      42,712
Howard County, MD                          6,208      31,599
Richmond City, VA                          6,571      27,611
------------------------------------------------------------
Source:  1993 Digest of Education Statistics. 


CHANGE IN THE REAL PROPERTY TAX
YEAR
========================================================== Appendix II

DISTRICT OF COLUMBIA REAL PROPERTY
TAX PAYMENT TIMETABLE

Prior to enactment of D.C.  Law 10-25 (Act 10-57), the District's
real property tax year was from July 1 to June 30.  Property taxes
were paid in two 6-month installments--one on September 15 for the
period from July 1 to December 31, and the other on March 31 for the
period from January 1 to June 30.  Beginning October 1, 1993, D.C. 
Law 10-25 changed the real property tax year to run on an October 1
to September 30 cycle.  The law also provided for the tax to continue
to be paid in two equal installments, on March 31 (covering the first
6-month period from October 1 to March 31) and September 15 (covering
the second 6-month period from April 1 to September 30). 

Thus, the March 31, 1993, property tax bill covered the last half of
tax year 1993 (January 1 - June 30 of 1993) as it existed under the
old law, while the March 31, 1994, tax bill covered the first half of
tax year 1994 (October 1, 1993 - March 31, 1994) as created by D.C. 
Law 10-25.  These March payments had the effect of leaving a
transitional 3-month period (June 30 - September 30 of 1993)
uncovered by the change in the District's tax year.  D.C.  Law 10-25
thus provided for a specific payment on September 15, 1993, to cover
the transition period, but calculated the amount of the September
payment on the basis of a 6-month period. 

The change in the real property tax law did not have any immediate
cash impact on the District's real property owners.  Property owners
will continue to pay taxes on September 15 and March 31.  However,
for residential customers, the effect of this change will be realized
at the time the taxpayer sells the owned property, because taxes that
previously would have been considered as paid in advance will no
longer be reimbursed at closing.  In addition, commercial taxpayers
who generally use accrual accounting methods were required to
immediately write off 3 months of prepaid taxes. 

District government officials acknowledged that the net effect of the
change was a doubling of the tax rate for the one tax payment (from
July 1st to September 30th) because the taxpayer paid for 6 months
but received only 3 months credit.  District officials initially took
the position that taxpayers paid the District no additional cash and
thus were not currently impacted by the change.  The following
example, which is illustrated in figure II.1, demonstrates the
difference between the old and new procedures. 

   Figure II.1:  Change in the
   Real Property Tax Year

   (See figure in printed
   edition.)

   Note:  Although the amount of
   tax and payment dates remain
   the same, the effect of the
   change was that the September
   15, 1993, tax payment was
   applied to a 3 month instead of
   a 6 month period.

   (See figure in printed
   edition.)

On September 15, 1993, a taxpayer paid a real property tax of $1,150. 
Under the previous tax law, the $1,150 payment would have given the
taxpayer credit for taxes paid from July 1, 1993, to December 31,
1993.  Under the new tax law, the $1,150 payment only provided the
taxpayer with credit for taxes paid for the period July 1, 1993, to
September 30, 1993.  Thus, the taxpayer lost an asset, a prepaid tax,
for the 3 months from October 1, 1993, to December 31, 1993.  On
March 31, 1994, the taxpayer again paid a real property tax bill of
$1,150 and received credit for taxes paid for the period October 1,
1993, to March 31, 1994.  Thus, while the taxpayer paid, in terms of
cash, nothing in additional taxes, the March payment only paid taxes
through March 31, while under the previous law the March payment
would have paid taxes through June. 

REASONS FOR THE CHANGES IN THE
DISTRICT REAL PROPERTY TAX YEAR

District officials said the change in the real property tax year was
made because the District, in fiscal year 1993, needed additional
revenue to balance its budget.  By changing the tax year, the
District could recognize $174 million in revenues.  As a result, by
changing the tax year and recognizing the full 6 months of tax
revenue in fiscal year 1993, instead of deferring half of that
revenue to fiscal year 1994 as was required under the old tax year,
the District was able to balance its fiscal year 1993 budget.  This
additional revenue was used to offset $174 million of spending in
excess of the original budget. 

District officials further agreed that while this change improved the
financial and budget statements of the District, it did not provide
the District with additional cash for paying bills.  The net effect
of the change was additional revenue, but not additional cash flow. 


CONSOLIDATED CASH FLOW STATEMENTS
========================================================= Appendix III



                                                                                     Table III.1
                                                                       
                                                                          Consolidated Cash Flow Statement -
                                                                                   Fiscal Year 1995

                                                                                (Dollars in millions)

                                                                                                                                                                 Septembe
Receipts                                            October  November  December   January  February     March     April       May      June      July    August         r      Total
-------------------------------------------------  --------  --------  --------  --------  --------  --------  --------  --------  --------  --------  --------  --------  ---------
Individual income tax                                $ 38.9    $ 43.8    $ 55.3    $ 79.4    $ 47.3    $ 35.9    $ 75.8    $ 69.9    $ 62.5    $ 48.0    $ 48.4    $ 78.1    $ 683.3
Real property tax                                       5.0       2.5       4.0       1.5       2.2      81.2      65.0      10.0      10.0      10.0      10.0     137.7      339.1
Special real property tax                               0.0       0.0       0.0       0.0       0.0     114.9      66.1       0.0       0.0       0.0       0.0     181.0      362.0
General sales and use tax                              41.0      38.6      36.6      40.6      36.6      37.4      41.6      43.6      37.6      38.5      38.5      37.5      468.1
Miscellaneous taxes                                    36.9      33.7      49.2      45.9      35.9      55.4      47.0      47.9      57.2      60.7      52.0      90.9      612.7
Federal payment                                       673.6       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0      673.6
Miscellaneous receipts                                 72.8      72.7      72.7      69.2      69.2      69.2      70.8      70.9      70.9      65.0      64.9      63.8      832.1
Water and sewer                                         9.6      21.8       8.4      16.8      20.7       8.4      15.7      20.6       8.9      15.3      21.9      15.9      184.0
Federal grants                                         63.3      63.3      63.3      63.3      63.3      63.3      63.3      63.3      63.3      63.3      63.3      63.2      759.5
Recovery bonds/notes                                    0.0       0.0       0.0       0.0     125.0       0.0       0.0       0.0     125.0       0.0       0.0       0.0      250.0
Receivable management                                   1.5       1.5       1.5       1.5       1.5       1.6       1.5       1.5       1.5       1.5       1.6       1.5       18.2
====================================================================================================================================================================================
Total Receipts                                        942.6     277.9     291.0     318.2     401.7     467.3     446.8     327.7     436.9     302.3     300.6     669.6    5,182.6
Disbursements
Payroll                                               147.8     165.8     183.7     173.6     205.0     183.7     147.8     165.8     183.7     147.8     184.7     198.2    2,087.6
Miscellaneous disbursements                            77.7      78.7      78.7      78.7      78.7      77.7      86.7      86.6      85.7      85.3      83.8      85.5      983.8
Public assistance                                      10.8      10.8      10.8      10.8      10.8      10.8      10.8      10.8      10.8      10.8      10.8      10.9      129.7
Medicaid                                               48.4      48.4      48.4      48.4      48.4      48.5      48.5      48.5      48.5      48.6      48.6      48.6      581.8
Pension contribution and benefits                     289.0      25.0      25.0      99.2      25.0      25.0      99.8      25.5      25.5      25.5      25.5      25.5      715.5
Transit authority contribution                         29.3       0.0       0.0      29.2       0.0       0.0      29.3       0.0       0.0      29.3       0.0       0.0      117.1
Debt service                                            0.0       0.0       0.0       0.0       0.0     114.9      66.1       0.0       0.0       0.0       0.0     181.0      362.0
Recovery bonds/notes                                   16.9       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0     255.4      272.3
====================================================================================================================================================================================
Total Disbursements                                   619.9     328.7     346.6     439.9     367.9     460.6     489.0     337.2     354.2     347.3     353.4     805.1    5,249.8
Receipts Less Disbursements                           322.7    (50.8)    (55.6)   (121.7)      33.8       6.7    (42.2)     (9.5)      82.7    (45.0)    (52.8)   (135.5)     (67.2)
Beginning Balance                                     131.9     454.6     403.8     348.2     226.5     260.3     267.0     224.8     215.3     298.0     253.0     200.2      131.9
====================================================================================================================================================================================
Ending Balance $                                    454.6 $   403.8 $     348.2    $226.5    $260.3    $267.0    $224.8    $215.3    $298.0    $253.0    $200.2     $64.7      $64.7
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Source:  District of Columbia cash forecasts. 



                                                                                     Table III.2
                                                                       
                                                                          Consolidated Cash Flow Statement -
                                                                                   Fiscal Year 1994

                                                                                (Dollars in millions)

                                                                                                                                                                 Septembe
Receipts                                            October  November  December   January  February     March     April       May      June      July    August         r      Total
-------------------------------------------------  --------  --------  --------  --------  --------  --------  --------  --------  --------  --------  --------  --------  ---------
Individual income tax                                $ 41.8    $ 37.7    $ 57.7    $ 86.6    $ 35.3    $ 35.8    $ 74.9    $ 62.8  $ 60.7 $      44.5    $ 44.4    $ 58.7    $ 640.9
Real property tax                                       5.4       6.8       4.1       7.1       0.4     153.0      13.4       7.5       4.5       3.4      15.0     149.3      369.9
Special real property tax                               0.0       0.0       0.0       0.0       0.0      45.0     127.2       0.0       0.0       0.0       0.0     180.7      352.9
General sales and use tax                              37.2      35.5      39.7      38.2      24.4      43.5      38.2      39.6      39.6      42.6      42.7      42.7      463.9
Miscellaneous taxes                                    28.4      25.5      50.7      39.0      29.0      59.3      52.2      45.4      54.3      81.1      92.4      69.7      627.0
Federal payment                                        47.9     600.1       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0      648.0
Miscellaneous receipts                                117.9      56.9      67.5      56.1      56.5      73.8      62.5      62.5      62.5      62.5      64.5      63.6      806.8
Water and sewer payment                                12.1      19.0       9.5      17.6      27.6      10.2      19.1      18.7      12.3      15.2      19.1       8.4      188.8
Federal grants                                         60.0      11.3     120.1      82.8      57.0      68.8      64.0      64.0      64.0      60.1      58.9      48.8      759.8
Short term notes                                        0.0       0.0       0.0       0.0       0.0       0.0       0.0     200.0       0.0       0.0       0.0       0.0      200.0
Receivable management                                   0.4       0.4       0.4       4.6       1.4       0.8       7.8       2.3       2.4       7.2       2.4       2.4       32.5
====================================================================================================================================================================================
Total Receipts                                        351.1     793.2     349.7     332.0     231.6     490.2     459.3     502.8     300.3     316.6     339.4     624.3    5,090.5
Disbursements
Payroll                                               188.4     165.0     159.9     159.8     151.9     177.9     189.2     153.0     153.0     153.0     169.4     181.4    2,001.9
Miscellaneous disbursements                            92.0     153.3     168.0      64.0     105.9      87.3      75.1      78.4      78.4      78.4      66.8      71.6    1,119.2
Public assistance                                      10.6      11.1      10.5      11.4      10.7      11.0      10.2      10.1      10.2      10.1      10.2      10.2      126.3
Medicaid                                               62.1      49.6      64.8      53.2      50.1      52.6      43.0      40.8      40.8      40.8      40.8      40.8      579.4
Pension contribution and benefits                      24.0     173.5      24.4      24.3      24.4      24.6      24.6      64.7      24.7      24.7      24.7      24.7      483.3
Transit authority contribution                          2.4      53.8       0.0      33.0       0.0       0.0      31.5       0.0       0.0      22.9       0.0       0.0      143.6
Debt service -bond payments                             0.0       0.0       0.0       0.0       0.0      45.0     127.2       0.0       0.0       0.0       0.0     180.7      352.9
Payment of notes                                       17.4       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0     202.9      220.3
====================================================================================================================================================================================
Total Disbursements                                   396.9     606.3     427.6     345.7     343.0     398.4     500.8     347.0     307.1     329.9     311.9     712.3    5,026.9
Receipts Less Disbursements                          (45.8)     186.9    (77.9)    (13.7)   (111.4)      91.8    (41.5)     155.8     (6.8)    (13.3)      27.5    (88.0)       63.6
Beginning Balance                                      68.3      22.5     209.4     131.5     117.8       6.4      98.2      56.7     212.5     205.7     192.4     219.9       68.3
====================================================================================================================================================================================
Ending Balance                                        $22.5    $209.4    $131.5  $117.8 $     6.4 $    98.2 $      56.7    $212.5    $205.7    $192.4    $219.9    $131.9     $131.9
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Note:  October through March are actual amounts; April through
September are estimated amounts. 

Source:  District of Columbia cash forecasts. 



                                                                                     Table III.3
                                                                       
                                                                          Consolidated Cash Flow Statement -
                                                                                   Fiscal Year 1993

                                                                                (Dollars in millions)

                                                                                                                                                                 Septembe
Receipts                                            October  November  December   January  February     March     April       May      June      July    August         r      Total
-------------------------------------------------  --------  --------  --------  --------  --------  --------  --------  --------  --------  --------  --------  --------  ---------
Individual income tax                                $ 39.6    $ 43.5    $ 55.1    $ 72.0    $ 42.8    $ 34.7    $ 70.0    $ 58.8    $ 57.7    $ 39.4    $ 44.9  $ 64.9 $      623.4
Real property tax                                       5.0       2.9       5.7       5.6       2.7     160.3      55.2       8.2       5.1       1.6      11.4     169.3      433.0
Special real property tax                               0.0       0.0       0.0       0.0       0.0      72.2      55.2       0.0       0.0       0.0       0.0     167.0      294.4
General sales and use tax                              37.1      34.4      33.8      35.3      29.7      35.4      38.1      37.2      37.5      39.6      36.3      34.8      429.2
Miscellaneous taxes                                    12.8      26.1      52.8      30.2      28.0      50.6      61.7      45.2      59.9      58.5      82.9      68.9      577.6
Federal payment                                       645.9       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0      645.9
Miscellaneous receipts                                 67.1      69.7      67.3      67.4      65.2      74.1      51.8      68.9      79.7     191.0      52.8      52.0      907.0
Water and sewer payment                                11.1      25.6      10.4      12.5      25.4      13.2      13.2      19.0      17.2      18.8      20.2      13.5      200.1
Federal grants                                         27.5      38.5      58.5      63.6      63.6      59.6      59.2      74.7      66.7      62.0      69.3      62.1      705.3
Recovery bonds/notes                                    0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0        0.0
====================================================================================================================================================================================
Total Receipts                                        846.1     240.7     283.6     286.6     257.4     500.1     404.4     312.0     323.8     410.9     317.8     632.5    4,815.9
Disbursements
Payroll 1                                            81.8 1    43.7 1    44.4 1    43.4 1    46.6 1    68.0 1    92.9 1    32.1 1    44.5 1    52.2 1    60.6 1    35.9 1     ,846.1
Miscellaneous disbursements                            97.6     109.1     101.4      87.3      85.3     104.3     116.5     115.0      67.2      80.2      97.2     285.3    1,346.4
Public assistance                                       9.7       9.9      10.2      10.4      10.4      10.5      10.7      10.7      10.7      10.9      10.9      11.1      126.1
Medicaid                                               46.3      42.7      50.0      50.0      46.0      46.0      51.9      40.4      56.1      53.4      54.3      52.3      589.4
Pension contribution and benefits                      95.8      22.7      22.7      94.1      22.7      22.7      95.8      22.9      22.9      23.0      23.9      24.1      493.3
Transit authority contribution                         44.4       0.0       0.0       0.0      49.3       0.0      26.6       0.0       0.0       7.4       0.0       0.0      127.7
Debt service                                           43.2       0.0       0.0       0.0       0.0      74.0      94.0       0.0       0.0       0.0       0.0     167.0      378.2
Recovery bonds/notes                                    0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0       0.0        0.0
====================================================================================================================================================================================
Total Disbursements                                   518.8     328.1     328.7     385.2     360.3     425.5     588.4     321.1     301.4     327.1     346.9     675.7    4,907.2
Receipts Less Disbursements                           327.3    (87.4)    (45.1)    (98.6)   (102.9)      74.6   (184.0)     (9.1)      22.4      83.8    (29.1)    (43.2)     (91.3)
Beginning Balance                                     159.6     486.9     399.5     354.4     255.8     152.9     227.5      43.5      34.4      56.8     140.6     111.5      159.6
====================================================================================================================================================================================
Ending Balance                                       $486.9    $399.5    $354.4    $255.8    $152.9    $227.5     $43.5     $34.4     $56.8    $140.6    $111.5     $68.3      $68.3
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Source:  District of Columbia cash forecasts. 


INFORMATION ON THE DISTRICT OF
COLUMBIA'S CASH STATUS
========================================================== Appendix IV



                          Table IV.1
           
            Data Points for Figure I.1, Comparison
             of Forecasted Cash Balance to Actual
                         Cash Balance

                    (Dollars in millions)

                                                  Forecasted
                                                        cash
                                        Actual       balance
                                          cash    (Nov. 1993
Month                                  balance         est.)
----------------------------------  ----------  ------------
November 1993                             $209          $320
December 1993                              132           266
January 1994                               118           159
February 1994                                6            96
March 1994                                  98           124
April 1994                                  53            57
------------------------------------------------------------
Source:  District of Columbia cash forecasts. 


EXCERPTS FROM CBO ANALYSIS OF THE
DISTRICT OF COLUMBIA'S
EXPENDITURES
=========================================================== Appendix V



                                    Table V.1
                     
                      Program Level Expenditures History and
                       Projections -Fiscal Years 1988-1994

              Actual
                  FY    Actual    Actual    Actual    Actual    Actual   Revised
              1988\a   FY 1989   FY 1990   FY 1991   FY 1992   FY 1993   FY 1994
----------  --------  --------  --------  --------  --------  --------  --------
Program
Fixed
 Costs:
Debt        $219,851         $         $  $256,676         $         $         $
 service               226,608   240,790             326,334   347,977   329,752
Percent                   3.07      6.26      6.60     27.10      6.63     -5.24
 increase/
 decrease
Retirement   179,554   193,300   221,600   224,315   253,220   291,300   306,200
 -
 police,
 fire,
 judges,
 and
 teachers
Percent                   7.66     14.64      1.23     12.89     15.04      5.12
 increase/
 decrease
Subsidies:
D.C. Gen.     41,930    44,430    49,993    59,510    69,010    58,768    46,735
 Hospital
 subsidy
Percent                   5.96     12.52     19.04     15.96    -14.84    -20.48
 increase/
 decrease
WMATA        101,882   105,876   110,406   122,440    98,973   126,893   115,732
 subsidy
Entitlemen
 ts:
Medicaid     153,250   158,973   171,226   205,096   249,713   286,181   281,377
 payment
Percent                   3.73      7.71     19.78     21.75     14.60     -1.68
 increase/
 decrease
AFDC          35,781    38,058    39,955    48,926    53,688    59,001    58,659
GPI/SSI       16,849    16,846    18,147    17,967    12,342    12,209    13,271
Unemployme     3,693     4,892     4,507     4,859     7,068     8,359     8,098
 nt
 compensat
 ion
Disability    18,237    18,573    19,539    22,639    24,177    26,623    25,562
 compensat
 ion
Foster        41,085    37,016    46,781    20,997    27,599    33,623    35,860
 care
Mental        92,655    75,953    79,750    83,738   140,622   132,299   122,446
 health
Public       432,752   456,161   497,130   517,628   519,599   515,258   534,925
 Schools:
Percent                   5.41      8.98      4.12      0.38     -0.84      3.89
 increase/
 decrease
Public
 Safety:
Courts\b      73,385    77,027    87,546    91,367    92,926   103,915   112,064
Police\b     197,686   212,428   249,794   238,231   240,330   241,211   244,196
original                                                       241,211   227,196
 projection
personal                                                       214,325   197,382
 services
pay                                                                       17,000
 increase
 distribut
 ion
percent                    7.5      17.6      -4.6       0.9       0.4       1.2
 change in
 total
 spending
Fire\b        84,097    89,861    98,360   100,238    96,102    95,181    84,049
original                                                        95,181    76,049
 projection
personal                                                        85,697    68,792
 services
pay                                                                        8,000
 increase
 distribut
 ion
Correction   193,783   215,319   252,768   245,974   246,860   247,489   248,501
 s\b
original                                                                 237,901
 projection
personal                                                       168,616   167,379
 services
pay                                                                       10,600
 increase
 distribut
 ion
percent                   11.1      17.4      -2.7       0.4       0.3       0.4
 change in
 total
 spending
All other    807,433   842,024   845,435   852,141   826,110   829,060   804,621
 programs
percent            4      .3 0        .4       0.8      -3.1       0.4      -2.9
 increase/
 decrease
 Total  $2,707,8  $2,871,8  $3,091,5  $3,184,1  $3,298,6  $3,433,9  $3,382,0
 Budget           99        89        66        94        64        95        48
================================================================================
Percent                    6.1       7.6       3.0       3.6       4.1      -1.5
 increase/
 decrease
--------------------------------------------------------------------------------
\a Amounts are in thousands of dollars, percentages show the percent
change from the previous year. 

\b The multi-year projections for Courts, Police, Fire, and
Corrections exclude pay adjustments.  The pay adjustments for those
agencies is captured under "All Other Programs." CBO has distributed
these pay increases for fiscal year 1995 and beyond based on District
management's proposal for fiscal year 1994 of a 6 percent salary
adjustment for police officers and firefighters and 5 percent for all
others including non-union employees.  The overall personal service
expenditure is projected to increase by an average annual rate of 4.5
percent from fiscal year 1995 through fiscal year 1999. 

Source:  Excerpts from CBO analysis of District budget office data. 



                                    Table V.2
                     
                     Program Level Expenditures Projections -
                              Fiscal Years 1995-2000

                      Proposed  Projecte  Projecte  Projecte  Projecte  Projecte
                            FY      d FY      d FY      d FY      d FY      d FY
                        1995\a      1996      1997      1998      1999      2000
--------------------  --------  --------  --------  --------  --------  --------
Program
Fixed Costs:
Debt service                 $         $         $         $         $         $
                       345,447   366,900   385,500   404,200   422,600   434,100
Percent increase/         4.76      6.21      5.07      4.85      4.55      2.72
 decrease
Retirement -police,    297,100   325,800   349,700   374,400   400,900   428,800
 fire, judges and
 teachers
Percent increase/        -2.97      9.66      7.34      7.06      7.07      6.96
 decrease
Subsidies:
D.C. Gen. Hospital      46,735    50,006    53,506    57,251    61,259    65,548
 subsidy
Percent increase/            0      7.00      7.00      7.00      7.00      7.00
 decrease
WMATA subsidy          117,051   122,904   129,049   130,339   136,856   143,699
Entitlements:
Medicaid payment       283,498   308,037   329,599   352,672   377,359   403,774
Percent increase/         0.08      8.66      7.00      7.00      7.00      7.00
 decrease
AFDC                    60,659    63,692    66,877    67,545    70,923    73,761
GPI/SSI                 13,271    13,935    14,631    14,778    15,516    16,136
Unemployment             7,944     9,000     7,000     6,000     5,500     5,000
 compensation
Disability              20,800    21,840    22,932    23,161    24,319    25,462
 compensation
Foster care             36,120    37,926    39,822    40,221    42,232    44,174
Mental health          116,339   122,156   128,264   129,546   136,024   142,477
Public Schools:        542,682   571,444   601,731   633,408   667,201   702,797
Percent increase/         1.45      5.30      5.30      5.26      5.34      5.34
 decrease
Public Safety:
Courts\b               115,919   118,237   120,602   123,014   126,705   130,506
Police\b               254,617   268,195   282,819   297,995   313,832   330,267
original projection    226,898   230,346   234,385   238,499   242,777   247,132
personal services      225,101   235,231   245,816   256,878   268,437   280,517
pay increase            27,719    37,849    48,434    59,496    71,055    83,135
 distribution
percent change in          4.3       5.3       5.5       5.4       5.3       5.2
 total spending
Fire\b                  84,856    93,498    99,390   107,200   116,594   127,949
original projection     73,016    77,497    78,321    79,886    81,525    83,198
personal services       80,632    96,632   117,702   145,016   180,085   224,836
pay increase            11,840    16,001    21,069    27,314    35,069    44,751
 distribution
Corrections\b          233,562   256,490   272,136   290,737   300,333   315,259
original projection    214,063   228,582   235,439   244,857   244,857   249,754
personal services      186,878   195,287   204,075   213,259   222,855   232,884
pay increase            19,499    27,908    36,696    45,880    55,476    65,505
 distribution
percent change in         -6.0       9.8       6.1       6.8       3.3       5.0
 total spending
All other programs     820,936   863,396   895,280   958,024  1,000,26  1,050,74
                                                                     2         8
percent increase/          2.0       5.2       3.7       7.0       4.4       5.0
 decrease
Total Budget          $3,408,5  $3,625,0  $3,810,9  $4,022,7  b>$4,231  b>$4,453
                            36        05        65      40 <    ,276 <      ,961
================================================================================
Percent increase/          0.8       6.4       5.1       5.6       5.2       5.3
 decrease
--------------------------------------------------------------------------------
\a Amounts are in thousands of dollars, percentages show the percent
change from the previous year. 

\b The multi-year projections for Courts, Police, Fire, and
Corrections exclude pay adjustments.  The pay adjustments for those
agencies is captured under "All Other Programs." CBO has distributed
these pay increases for fiscal year 1995 and beyond based on District
management's proposal for fiscal year 1994 of a 6 percent salary
adjustment for police officers and firefighters and 5 percent for all
others including non-union employees.  The overall personal service
expenditure is projected to increase by an average annual rate of 4.5
percent from fiscal year 1995 through fiscal year 1999. 

Source:  Excerpts from CBO analysis of District budget office data. 




(See figure in printed edition.)Appendix VI
COMMENTS FROM THE DISTRICT OF
COLUMBIA
=========================================================== Appendix V



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================= Appendix VII

ACCOUNTING AND INFORMATION
MANAGEMENT DIVISION, WASHINGTON,
D.C. 

Lisa G.  Jacobson, Acting Associate Director
William Anderson, Audit Manager
Lorraine A.  Avery, Administrative Assistant
Suzanne M.  Burns, Senior Evaluator
Terry L.  Carnahan, Assistant Director
Charles W.  Culkin, Assistant Director
Judith B.  Czarsty, Audit Manager
Michael J.  Fischetti, Assistant Director
John C.  Fretwell, Assistant Director
Shane D.  Hartzler, Reports Analyst
Lee H.  Ho, Senior Evaluator
Rosemary M.  Jellish, Assistant Director
Janet M.  Krell, Assistant Director
Lisa Manning, Auditor
Don R.  Neff, Audit Manager
John D.  Sawyer, Evaluator
Debra B.  Sebastian, Audit Manager
Edward H.  Stephenson, Assistant Director
Laura B.  Triggs, Audit Manager

GENERAL GOVERNMENT DIVISION

J.  William Gadsby, Director, Government Business Operations
Thomas E.  Johnson, Evaluator-in-Charge
Thomas G.  Keightly, Senior Evaluator
John A.  Parulis, Senior Evaluator

OFFICE OF GENERAL COUNSEL

Richard T.  Cambosos, Senior Attorney

CONGRESSIONAL BUDGET OFFICE

Robert Hartman, Assistant Director
James Hearn, Analyst
John Mikesell, Visiting Scholar
Marvin Phaup, Deputy Assistant Director
David Torregrosa, Analyst