TITLE:  Anti-Deficiency Act Violation Involving the District of Columbia Health and Hospitals Public Benefit Corporation, B-285725, September 29, 2000
BNUMBER:  B-285725
DATE:  September 29, 2000
**********************************************************************
Anti-Deficiency Act Violation Involving the District of Columbia Health and
Hospitals Public Benefit Corporation, B-285725, September 29, 2000

B-285725

September 29, 2000

The Honorable Ernest J. Istook, Jr.
Chairman, Subcommittee on the District of Columbia
Committee on Appropriations
House of Representatives

Subject: Anti-Deficiency Act Violation Involving the District of Columbia
Health and Hospitals Public Benefit Corporation

Dear Mr. Chairman:

This responds to your letter asking whether there has been any violations of
the Antideficiency Act by the District of Columbia Health and Hospitals
Public Benefit Corporation (PBC) or the District of Columbia government.
Your request was prompted by published news reports that the PBC had drawn
$60 million in unbudgeted cash from the District of Columbia General Fund.
As part of our review, we requested the views of the District of Columbia's
Chief Financial Officer (CFO) and the District of Columbia's Corporation
Counsel to a number of questions raised by your inquiry. We received their
joint response by letter dated July 24, 2000 (D.C. submission). We also
obtained the views of the PBC's General Counsel by letter dated August 16,
2000 (PBC submission).

Your request raises two substantive issues:

  1. Did the PBC violate the Antideficiency Act in fiscal years 1997 through
     2000 by obligating more than the Congress appropriated for those fiscal
     years?
  2. Did the PBC and the District of Columbia violate the Antideficiency Act
     in fiscal years 1997 through 2000 by using the District of Columbia
     General Fund to pay PBC liabilities during those fiscal years in excess
     of the resources PBC ultimately realized?
  3. For the reasons discussed below and in greater detail in the enclosed
     analysis, we conclude that, for fiscal years 1997 through 2000, (1) the
     PBC violated the Antideficiency Act by obligating more than the
     Congress appropriated, and (2) the PBC and the District of Columbia
     violated the Antideficiency Act by using the District of Columbia
     General Fund to pay PBC liabilities in excess of the resources PBC
     ultimately realized.

     Prior to the establishment of the PBC in 1997, the District paid the
     liabilities of DC General Hospital (the predecessor to the PBC) from
     the General Fund. To the extent payments exceeded resources available
     to the Hospital, the District and the Hospital treated the excess
     payments as "loans" for accounting purposes. By the end of fiscal year
     1994 the amount of the "loans" exceeded $85 million. As of September
     30, 1994, the District of Columbia accounted for the $85 million in
     "loans" as uncollectible in an allowance account. Thereafter, the
     District wrote off the uncollectible "loans" without obligating the
     full "loan" amount against an appropriation account.

     Following the District's establishment of the PBC in 1997, the District
     has "advanced" cash to the PBC from the General Fund to pay PBC
     liabilities. As with the Hospital, the District has advanced amounts in
     excess of the amount annually appropriated to subsidize PBC operations
     for nonreimbursed services. The District states that it has made
     short-term advances to provide the PBC with cash until the PBC could
     convert receivables to cash and repay the District's General Fund.
     However, according to District officials, such amounts are unlikely to
     be repaid.

     Since the establishment of PBC in 1997, the District has made
     "advances" to PBC in the total amount [1] of approximately $99,059,000
     as follows: $58,000,000 during fiscal year 2000, $29,154,000 during
     fiscal year 1999 and $12,261,000 during fiscal year 1998. The
     "advances" to PBC are in addition to the line item amount of the
     transfer to PBC from the District's General Fund pursuant to the
     District's appropriation act.

     What the District has characterized as "loans" or "advances" to the PBC
     are in fact payments made on behalf of the PBC from the District of
     Columbia General Fund. The District used pooled cash to make these
     payments, which have turned out to exceed the resources that PBC
     actually had available. These disbursements from the General Fund to
     cover services provided by the Hospital should have been obligated
     against, and liquidated from, an appropriation made by law.

     In addition, during fiscal years 1997 to 2000, PBC incurred obligations
     that exceeded the total amount appropriated in the following
     approximate amounts: for fiscal year 2000 as of September 5, 2000,
     $9,997,000; for fiscal year 1999, $6,380,000; for fiscal year 1998,
     $11,138,000; and, for 1997, $5,869,000. [2] These overobligations are
     unrelated to, and independent of, the amount of the District's
     "advances" to PBC. Instead these amounts represent obligations in
     excess of the total amount appropriated by the "District of Columbia
     Health and Hospitals Public Benefit Corporation" account for each
     fiscal year from both the District's General Fund and other funds.

     The District takes the position that obligations in excess of amounts
     appropriated were authorized by the exception to the Antideficiency Act
     for "emergencies involving the safety of human life." 31 U.S.C. sect. 1342
     (1994). We disagree. Clearly, as part of its functions, the PBC has
     provided services involving the safety of human life. Like other
     entities subject to the Antideficiency Act whose activities impact on
     the safety of human life, appropriations once enacted, and unless
     adjusted by supplemental appropriations or other authority, represent
     the amount of budget authority available to support PBC activities.
     While the failure of Congress to enact appropriations at the beginning
     of the fiscal year may qualify as an emergency event for purposes of
     section 1342, it would be a novel proposition, one that we are
     unwilling to endorse, to conclude that an agency's failure to manage
     and live within the resources provided for an activity involved in
     protecting human life permits it to incur obligations in excess of
     amounts provided. Nothing that we have been provided warrants the
     conclusion that the overobligations resulted from an unanticipated
     emergency rather than from the PBC's failure to manage and live within
     its budgetary resources during the fiscal year.

     Alternatively, the District asserts that the Congress ratified the
     "advances" and writing off the total amount of "loans" without charging
     an appropriation. We disagree. There is no legislation that expressly
     or impliedly ratifies the District's practice of making "advances" and
     not charging the resulting obligations against an available
     appropriation.

     In conclusion, the District and the PBC are not authorized to incur
     obligations in excess of the amounts appropriated for the PBC, and a
     reportable violation of the Antideficiency Act therefore has occurred.
     The District of Columbia should submit to

     the President and Congress the report required by 31 U.S.C. sect. 1351
     (1994) in accordance with the guidance contained in OMB Circular A-34
     (revised October 19, 1999).

     Sincerely yours,

     Anthony H. Gamboa
     Acting General Counsel

     Enclosure

     Antideficiency Act Violation by District of Columbia Health and
     Hospitals Public Benefit Corporation

     A review requested by the Chairman, Subcommittee on the District of
     Columbia, House Committee on Appropriations, raised two issues:
  4. Did the PBC violate the Antideficiency Act in fiscal years 1997 through
     2000 by obligating more than the Congress appropriated for those fiscal
     years?
  5. Did the PBC and the District of Columbia violate the Antideficiency Act
     by using the District of Columbia General Fund to pay during those
     fiscal years PBC liabilities in excess of the resources PBC ultimately
     realized?

For the reasons discussed below, we conclude that, for fiscal years 1997
through 2000, (1) the PBC violated the Antideficiency Act by obligating more
than the Congress appropriated, and (2) the PBC and the District of Columbia
violated the Antideficiency Act by using the District of Columbia General
Fund to pay liabilities of the PBC in excess of the resources PBC ultimately
realized.

BACKGROUND

Advances to DC General Prior to 1997

In the early 1990s, the District's financial condition had deteriorated to
the point that there were significant concerns over its ability to operate
and pay its bills. One of the sources contributing to the District's
financial problems was the worsening financial condition of the D.C. General
Hospital (Hospital). In June 1994, we reported that as of September 30,
1993, the D.C. General Hospital had a $109 million accumulated deficit, $58
million of which had been funded through what were characterized as "loans"
from the District. [3] The "loans" were in addition to amounts that the
District paid the Hospital for uncompensated patient services from funds
appropriated by the "Human Support Services" account. [4] We also reported
that the District did not request (with the exception of fiscal year 1990) a
supplemental or deficiency appropriation or reprogram funds within the Human
Support Service appropriation account to cover the deficits. Instead, the
District transferred funds from the General Fund directly to the Hospital
Fund to finance the deficit and booked a General Fund receivable and a
Hospital Fund payable to account for the transfer of funds. [5]

Establishment of the PBC

Among the proposals made to the District to help address the Hospital's
deficit operation was the proposal to transfer the Hospital to a Public
Benefit Corporation and to restructure the provision of health care in the
District. [6] In 1997, the District of Columbia determined that the
provision and delivery of comprehensive community centered health care and
medical treatment for District residents could be accomplished most
efficiently and effectively by establishing the PBC as a nonprofit public
benefit corporation with a separate legal existence within the District
government. [7] Accordingly, the District transferred to the PBC the health
care functions, assets, property, records, and obligations of, among others,
the D.C. General Hospital and the community health clinics. [8] The law
established the Health and Hospitals Public Benefit Corporation Fund (PBC
Fund) to account for PBC collections and payments separate from the
District's General Fund. [9]

A 13 member Board of Directors governs the PBC. The Mayor, subject to City
Council approval, appoints 6 members and the City Council appoints 5 members
to the Board. The Chief Financial Officer of the District serves as an ex
officio voting member of the Board and the General Manager serves as an ex
officio nonvoting member of the Board. [10] The Mayor may remove any member
from the Board for misconduct, neglect of duty (as defined in the PBC
by-laws), failure to maintain District residency, or for other good cause
after notice to the Board member and the Board. [11] During a control year
(including 1997 through 2000), the CFO exercises control over the management
and accounting of funds available for the operation of the PBC. [12]

The law authorizes the PBC to borrow generally, without specifying the
source of the credit. [13] However, no law expressly authorizes the District
to make loans or otherwise advance cash to the PBC. This lack of express
authority is in contrast to the laws conferring authority on federal
agencies and instrumentalities to borrow from the United States Treasury.
See, e.g., 39 U.S.C. sect. 2006 (1994) (borrowing by the Postal Service); 29
U.S.C. sect. 1305 (c) (1994) (borrowing by the Pension Benefit Guaranty
Corporation). See also 2 U.S.C. sect. 661d(c) (1994, Supp. IV 1998) authorizing
Treasury to lend cash to agency financing accounts in order to provide a
portion of the cash used to make loans to the public.

Pooled Cash Advances

The District submission [14] indicates that it centrally manages its cash by
pooling together available monies from its various operating and capital
project funds.

PBC participates in the District's cash management pool. The District uses
pooled cash when making payments on behalf of PBC to employees, vendors,
service providers, contractors and others. When the PBC overspends or
overdraws its share of the pooled cash, it has a liability to the District's
General Fund (which essentially has loaned the cash to the PBC). The cash is
advanced for cash flow purposes with the expectation that it will be repaid
when the PBC converts accounts receivable to cash. While the District
indicates that the cash advance is to be short-term, District officials
advise that the advances made to PBC are unlikely to be repaid. [15]

In light of the District's explanation it is clear that what the District
has characterized as "loans" or "advances" to the PBC are in fact payments
made on behalf of the PBC from the District of Columbia General Fund using
pooled cash that have turned out to be in excess of the resources that PBC
actually had available. These disbursements from the General Fund to cover
services provided by the Hospital should have been obligated against, and
liquidated from, an appropriation made by law.

The amount of the unrepaid cash advances to PBC since its establishment in
1997 total approximately $99,059,000 as follows: $58,000,000 during fiscal
year 2000, $29,154,000 during fiscal year 1999, and $12,261,000 during
fiscal year 1998. These advances were in addition to the amount appropriated
to PBC from the District's General Fund. [16]

Appropriations to PBC

The fiscal year 2000 District of Columbia Appropriation Act account entitled
"District of Columbia Health and Hospitals Public Benefit Corporation"
appropriates to the PBC "$133,443,000 of which $44,435,000 shall be derived
by transfer from the General Fund and $89,008,000 from other funds." [17]
Similar language has been used to make appropriations to PBC and its
predecessor since 1996. These amounts are reflected in the following table:

 Fiscal Year   2000           1999          1998         1997

 Public Law    106-113        105-277       105-100      104-194

 General       $44,435,000    $46,835,000   $44,335,000  $59,735,000
 Fund
 Transfer

 Other Funds   $89,008,000    $66,764,000   $52,684,000  $52,684,000

 Total         $133,443,000   $113,599,000  $97,019,000  $112,419,000

The General Fund Transfer amount covers the District's share of funding for
PBC's services that are not reimbursed. The amounts appropriated from "other
funds" represent the amounts that PBC expects to receive from third party
payments (such as Medicare, Medicaid, commercial insurance, or
self-insurance) for patient services. The PBC annual budget submission
indicates that the amounts appropriated directly to PBC do not include
amounts the PBC receives as payments from the District for services provided
to other District agencies and some grant money for Maternal and Child
Health Care (MCHC) and the School Nurses Program. [18]

During fiscal years 1997 to 2000, the PBC incurred obligations in excess of
the total amount appropriated for each of these fiscal years by the
following approximate amounts: [19] $9,997,000, estimated as of September 5,
2000, for fiscal year 2000; $6,380,000 for fiscal year 1999; $11,138,000 for
fiscal year 1998; and $5,869,000 for fiscal year 1997. These amounts
represent overobligations unrelated to the cash advance issue and resulted
from the PBC incurring obligations in excess of the total amount
appropriated to it for each fiscal year in the account entitled "District of
Columbia Health and Hospitals Public Benefit Corporation".

DISCUSSION

Section 446 of the District of Columbia Home Rule Act, as amended, [20]
provides that "no amount may be obligated or expended by a District
government officer or employee unless the amount has been approved by an act
of Congress and then only according to that act." The Home Rule Act requires
the District to prepare its annual budget on the assumption that proposed
expenditures resulting from financial transactions undertaken (either on an
obligation or cash outlay basis) for a fiscal year will not exceed estimated
resources from proposed and existing sources. [21] The Home Rule Act
recognizes that the District may submit supplemental and deficiency budget
requests to cover increased spending when appropriate. [22] In addition, the
District may engage in short term borrowing within prescribed limits (1) to
compensate for cash shortfalls caused by unrealized resources or (2) to meet
cash flow needs. [23] During a control year, the Chief Financial Officer
prepares (with the approval of the Authority) the estimate of revenues that
is binding on the Mayor and Council in preparing and submitting the budget
to Congress and the President. [24]

The Antideficiency Act [25] prohibits District government officers and
employees from making obligations or expenditures in excess of amounts
available in an appropriation or fund unless they are otherwise authorized
to do so by law. 31 U.S.C. sect. 1341 (1994). Only an appropriation may
authorize an obligation and expenditure from the General Fund or any other
fund. To control the rate of obligation, the Antideficiency Act requires
that appropriations or funds be apportioned so as to prevent obligation or
expenditure thereof in a manner that would indicate a necessity for
deficiency or supplemental appropriations for such fiscal year. [26] The
Chief Financial Officer during a control year is responsible for
apportioning all appropriations and funds available for obligation during a
fiscal year. [27] The Antideficiency Act precludes officers or employees of
the District from making or authorizing an expenditure or obligation in
excess of an apportionment. [28] While the CFO is responsible for
apportioning appropriations and funds to the agency or activity that will be
incurring the obligations, it is the responsibility of each agency or
activity to manage its funds to avoid over-obligation or over-expenditures
of its available resources.

In its submission to us, the District discussed GAAP accounting at length to
support the manner in which it reported the "advances" in its financial
statements. However, GAAP accounting concepts are not germane here. Whether
a violation of the Antideficiency Act has occurred is a function of
obligational accounting. [29] For purposes of obligational accounting, all
transactions (i.e., liabilities) must be recorded against an appropriation
account when they are incurred (e.g, when a contract is awarded or when
services are performed). When the obligations exceed the amounts currently
available for such obligations, there is a violation of the Antideficiency
Act except to the extent that the law otherwise authorizes the obligations.
Regardless of whether the payments made from the District General Fund on
behalf of the PBC are characterized as disbursements, loans, or advances,
the liabilities being liquidated still must be recorded as obligations
against an available appropriation. The District Corporation Counsel's
Office over the years has in effect advised its clients that such is the
law. [30] Thus, there must be an appropriation to support a payment for
services. Stated conversely, a payment of an obligation may only be made
when supported by an appropriation. Finally, officers or employees may not
incur obligations against anticipated receipts or a requested supplemental
appropriation because anticipated receipts may not be realized or the
requested supplemental may not be enacted into law. [31]

As indicated above, the District established the PBC as a nonprofit public
benefit corporation within the District government. The PBC officers and
employees are officers and employees of the District of Columbia government
subject to the Antideficiency Act's requirements. [32] However, in view of
the powers conferred on the Mayor and CFO vis a vis PBC with respect to its
finances and management operation, the District of Columbia and the PBC have
shared responsibility for monitoring and controlling the PBC obligations
incurred against cash advances. Thus, in our view, both have a
responsibility to ensure compliance with the requirements of the
Antideficiency Act.

District's Asserted Authority

The District asserts that the advances and expenditures made may be
considered as authorized by law because:

  1. all the obligations and expenditures incurred as a result of the cash
     advances satisfy the exemption in the Antideficiency Act for emergency
     expenditures involving the safety of human life; and
  2. by enactment of the appropriation acts for fiscal year 1994 and 1995,
     Congress ratified the advances of $85 million through fiscal year 1994.

Authorized Emergency Expenditure

The District asserts that an exception to the Antideficiency Act's
prohibition on accepting voluntary services set forth in 31 U.S.C. sect. 1342
(1994) authorized it to incur obligations represented by excess payments
from pooled cash that were not repaid. Section 1342 prohibits an officer or
employee of the District of Columbia government from accepting voluntary
services or employing personal services exceeding that authorized by law
"except for emergencies involving the safety of human life or the protection
of property." Section 1342 further provides that the term "emergencies
involving the safety of human life or the protection of property does not
include ongoing regular functions of government the suspension of which
would not imminently threaten the safety of human life of the protection of
property."

The District points out that the Attorney General has construed section 1342
as authority for an agency to incur obligations during a funding gap
(temporary lapses in an agency's budget authority resulting from the failure
to enact the agency's appropriations by the start of the fiscal year) in
emergency situations involving safety to human life or the protection of
property. [33] The funding gap situations discussed by the Attorney General
arise typically at the beginning of a fiscal year because of the absence or
expiration of budget authority under circumstances that are beyond an
agency's control. In the present situation, the exhaustion of appropriations
occurred during the fiscal year because of a rate of operations and
obligations in excess of available resources. Viewed in this light, PBC's
failure to regulate its activities and spending so as to operate within its
available budget resources is not the type of "emergency" covered either by
the Attorney General's earlier opinions or 31 U.S.C. sect. 1342.

The District and PBC address this question by asserting that everything the
PBC does as part of the general ongoing operation of the hospital and
clinics to provide health care services is essential to the protection of
human life. While we agree that services such as inpatient medical care and
emergency outpatient service contribute significantly to the safety to human
life, we think that this argument misses the point. The PBC (like a number
of federal agencies, e.g., U.S. Secret Service, U.S. Capitol Police, Bureau
of Prisons, Veterans Administration) requests and receives appropriations to
cover the costs of providing services essential to the protection of life.
Like other similarly situated federal entities, the Congress may reasonably
expect the PBC and the District to consider this fact when preparing the
budget request for submission to the Congress. Once the Congress enacts
appropriation, it is incumbent on the PBC (and similarly situated federal
agencies) to manage its resources to stay within the authorized level.
Nothing in the District's Submission demonstrates that the PBC's exhaustion
of appropriations prior to the end of the fiscal year was caused by some
unanticipated event or events (e.g., mass injuries resulting from hurricane,
flood or other natural disasters) requiring PBC to provide services for the
protection of life beyond the level it should have reasonably been expected
to anticipate when it prepared its budget.

Moreover, to accept the District and PBC's argument that everything the PBC
does qualifies under the section 1342 exception for "emergency" service
would nullify the oversight and control provided by the appropriation
process and would provide the PBC with unlimited authority to incur
obligations to fund its operations. While the PBC may have to confront
emergencies that qualify under the section 1342 exception, we are unwilling,
for obvious reasons, to agree with PBC's expansive reading of its authority
under this provision of law.

Finally, even in situations where section 1342 authorizes a District officer
or employee to incur obligations, it does not authorize a District officer
or employee to pay the obligations until an appropriation is enacted for
that purpose. [34] However, the PBC not only incurred obligations, the
District continued to pay them by accessing pooled cash on PBC's behalf.
This over expenditure constitutes a violation of the Antideficiency Act
independent of any over obligation of available appropriation.

Ratification

Courts have long recognized that Congress may ratify that which it could
have authorized. Swayne & Hoyt, Ltd. v. United States, 300 U.S. 297, 301-302
(1937) and Mattingly v. District of Columbia, 97 U.S. 687, 690 (1878).
Furthermore, Congress may effect a ratification through appropriation acts.
Greene v. McElroy, 360 U.S. 474 (1959); Brooks v. Dewar, 313 U.S. 354, 361
(1941); Isbrandtsen-Moller Co. v United States, 300 U.S. 139, 147-148
(1937). To conclude that Congress through the appropriation process has
ratified agency action, three factors generally must be present. First, the
agency takes the action pursuant to at least arguable authority ; second,
the Congress has specific knowledge of the facts; and third, the
appropriation of funds clearly bestows the claimed authority. Ex Parte Endo,
323 U.S. 283, n. 24, 303 (1944); D.C. Federation of Civic Associations, Inc.
v. F. Aires, 391 F. 2d 478, 481-482 (D.C. Cir. 1968); and, Wade v. Lewis,
561 F. Supp. 913, 944 (N.D. Ill., 1983).

The District relies on a number of events to support its ratification
argument. The 1994 financial viability plan for the hospital summarized the
financial situation facing it as follows:

"As a result of operating losses incurred by D.C. General Hospital during
fiscal years 1990 through 1993, Hospital cash deficits totaled approximately
$58 million. The District has funded the cash deficits through the General
Fund in order to pay Hospital vendors and creditors. Current levels of
District appropriations and net cash provided from Hospital operations
preclude the Hospital from repaying these funding advances in the near
future."

"As part of the fiscal solvency plan for D.C. General Hospital, the District
has developed a plan to retire the $58 million debt at a rate of $10 million
per year beginning in 1996 until the debt is retired. The debt retirement
will take the form of a loan forgiveness program for D.C. General Hospital
and will not require any fund transfers." [35]

While this plan was being discussed, the District of Columbia Appropriations
Acts for fiscal years 1995 and 1994 each appropriated $10 million for the
purpose of reimbursing the General Fund for costs incurred for the operation
of the Hospital. These amounts were provided in the account entitled "D.C.
General Hospital Deficit Payment" [36] After fiscal year 1995, the District
did not request additional amounts to reimburse the General Fund for the
cash deficit and Congress enacted no appropriations expressly for this
purpose.

The material entitled "D.C. General Hospital Deficit Reduction," District of
Columbia Fiscal Year 1996 Operating Budget, Vol. II, indicates that the
District reduced its FY 1996 budget request for the deficit reduction from
$10 million for the prior year to zero. It also indicates that the FY 1996
and FY 1995-revised budget requests were based on a new strategy implemented
with the completion of the FY 1994 audit. It also states that the audit
required the city to reserve $85 million for the accumulated deficit that
was recorded as a current asset in the general fund.

During hearings on the District's 1996 appropriation request, John W. Hill,
Jr., Director, Financial Management Policies and Issues, Accounting and
Information Management Division, General Accounting Office, responding to
questions from House Appropriations Committee, Subcommittee for the
District, pointed out that the amounts that the District characterized as
"loans" had never been appropriated and recorded as an expenditure. He
pointed out that in order to charge the advances to the budget, the District
would have to have the budgetary resources or the authority to do that.
Lacking the budgetary resources or the authority, the advances could be
considered a potential Antideficiency Act violation. [37]

Although the District wrote off $85 million in loans to the Hospital prior
to the establishment of the PBC, nothing we are aware of demonstrates that
the entire $85 million was ever charged to an appropriation. The District
enacted a law forgiving $29 million owed by the Hospital to the District
prior to creation of the PBC, [38] and the Report of the House
Appropriations Committee that accompanies the District of Columbia
Appropriations Act for fiscal year 2000 so noted. [39] However, we are
unaware of any legislation passed by Congress that either expressly or by
reasonable implication authorized the District to write off any amount
without charging an appropriation made by Congress. [40]

The District claims that the Congress ratified the cash advances to D.C.
General Hospital by making appropriations in fiscal years 1994 and 1995 to
reduce the cash deficit in the General Fund caused by the Hospital's failure
to repay prior years advances. It reasons that Congress would not have
subsequently approved the repayment of the amounts advanced if it considered
them unlawful in the first instance. Finally it claims that Congress'
failure to object to the District's action of reserving or otherwise writing
off the entire $85 million from an accounting standpoint as proposed by the
financial viability plan and the recommendations in the Districts 1996
Operating Budget Prepared for the Congress when coupled with subsequent
failure of the Congress to appropriate amounts is further evidence that
Congress ratified the advances.

The District's ratification argument fails for a number of reasons. First,
as we have already indicated, the advances whether viewed as loans or
expenditures presume obligations that were required by law to be charged
against appropriations current at the time the services were made. [41]
Next, we find the information relied on by the District as constituting
notice to the Congress of the action that they were seeking to have ratified
as wanting in clarity and precision. In addition, awareness by Congress (to
the extent that the awareness of an action by a member or a committee can be
imputed) is inadequate to support the ratification unless it is coupled with
legislative language that expressly or by reasonable implication can be said
to authorize the action taken. The purposes of the 1994 and 1995
appropriations reducing the cash deficit were clear--to authorize a charge
against an appropriation of amounts previously spent without authority.
However, nothing in the language of either appropriation expressly or by
reasonable implication supports the notion that Congress had endorsed an
otherwise unauthorized action by the District. It simply reduced the amount
of the cash deficit by the amount appropriated to the District to cover some
of the overobligations with an appropriated amount. Neither the 1994 nor the
1995 appropriation constitutes congressional ratification of either the
practice of making cash advances or writing off of the remainder of the
deficit without charging it against an available appropriation.

Further nothing in the 1996 appropriation act supports the ratification
claim. The fact that the Congress did not in 1996 appropriate an amount to
further reduce the remaining outstanding deficit does not mean that Congress
ratified an unauthorized act or cured an Antideficiency Act violation.
First, as indicated above the District discontinued its practice of
requesting an appropriation for such purpose. Second, the 1996 appropriation
act does not provide the District with the authority to write off the cash
deficit with or without charge to an appropriation. And third, neither the
House nor Senate appropriations committee reports accompanying the
District's 1996 appropriation act approve the District's plan to write off
the debt or indicate that in light of this plan, they had eliminated funding
for such purpose.

Further, a discussion of a plan, however clear, in a budget justification
submitted to Congress does not warrant the conclusion that Congress accepts,
approves, endorses, let alone, in a legal sense, ratifies the plan. Congress
is under no obligation to address and reject every proposal submitted to it
in the budget or authorization process. B-213771, July 10, 1984. Some action
at a minimum is needed to demonstrate Congress' approval. [42] In other
words, where a grant of authority is needed, silence is not a legislative
act that fills the void. Congressional silence does not constitute
ratification. Here, nothing we reviewed clearly communicates to the Congress
that the District was requesting that Congress ratify or otherwise validate
an unauthorized disbursement made by the District in excess of an available
appropriation let alone that the Congress enact legislation that expressly
or impliedly authorizes the otherwise unauthorized action. While legislative
history may be useful to clarify an ambiguity in legislative language, one
may not refer to the legislative history to write into the law that which is
not there. 55 Comp. Gen. 307, 325 (1975). The District would have us write
into the language of the law something that is not even mentioned in the
relevant committee reports.

In addition, to accept the argument that a proposal coupled with silence
constitutes ratification would raise serious constitutional issues. The
Constitution is clear that proposals to enact or change the law must be
adopted by Congress and either signed by the President or passed by Congress
over the President's veto. U.S. Const., art. 1, sect. 7, cls. 2 and 3. The
District's argument would permit proposals to change the requirements of
section 446 and the Antideficiency Act to take effect unless Congress and
the President took affirmative steps to reject them. The Supreme Court has
rejected this view of lawmaking. Clinton v. New York, 524 U.S. 417 (1998);
Immigration and Naturalization Service v. Chadha, 462 U.S. 917 (1983).

CONCLUSION

Since the District and the PBC are not authorized to incur obligations in
excess of the amounts appropriated for the PBC, we conclude that a
reportable violation of the Antideficiency Act has occurred. Accordingly,
the District of Columbia should submit to the President and Congress the
report required by 31 U.S.C. sect. 1351 (1994) in accordance with the guidance
contained in OMB Circular A-34 (revised October 19, 1999).

Notes

1. We determined the amounts of advances using financial information for
several fiscal years (1) reported in the Comprehensive Annual Financial
Reports of the District of Columbia (CAFR) containing the annual audited
financial statements of the District of Columbia government, (2) the audited
PBC financial statements, and (3) PBC internal documents. In September 2000,
the District of Columbia's Office of the Chief Financial Officer verified
the amounts of advances. The fiscal year 2000 amount of $58 million consists
of two amounts--a $48 million projection made by PBC based on actual
advances through August 31, 2000, and a projected amount for September 2000,
plus a $10 million planned payment to D.C. for Medicaid to settle certain
audit years.

2. We determined the amounts of budget excess by adjusting financial
information for several fiscal years (1) reported in the Comprehensive
Annual Financial Reports of the District of Columbia (CAFR) containing the
annual audited financial statements of the District of Columbia government,
(2) the audited PBC financial statements, and (3) PBC internal documents. We
adjusted the financial information (1) by reducing the reported expenses to
exclude depreciation and bad debt expenses that did not result in actual
obligations of the annual operating appropriation and (2) by allowing for
capital outlays and obligations up to the amount of reimbursements PBC
received for services provided to the District and grants that are not
included in the amounts appropriated from "other funds". In September 2000,
the District of Columbia's Office of the Chief Financial Officer verified
the amounts of the budget excess.

3. Financial Status: District of Columbia Finances at 27, 49
(GAO/AIMD/GGD-94-172BR June 1994).

4. See, e.g., H.R. Rep. 103-558, 41 (1994) and S. Rep. 103-313, 40-41 (1994)
accompanying the District of Columbia Appropriations Act, 1995, Pub. L. No.
103-334, Title I, 108 Stat. 2576 (1994). The Hospital subsidy budget request
covered the difference between anticipated expenditures (including debt
service for capital expenditures and a reserve for bad debts) and
anticipated revenues.

5. Financial Status: District of Columbia Finances at 27
(GAO/AIMD/GGD-94-172BR June 1994).

6. See Recommendation 1B of the proposal of the D.C. Financial
Responsibility and Management Assistance Authority (Authority) submitted to
the Congress on July 15, 1995 and reprinted in the Hearings on the District
of Columbia Appropriations For 1996 before a Subcommittee of the House
Committee on Appropriations (Part 3), 104th Cong. 28 (1997) and the
consultant's recommendation in the "District of Columbia General Hospital
Operational and Financial Viability Plan," May 9, 1994, reprinted in the
Hearings on the District of Columbia Appropriations for fiscal year 1995
before a Subcommittee of the House Committee on Appropriations (Part 2),
103rd Cong. 2144 (1994).

7. D.C. Code Ann. sect.sect. 32-261.1(c), 32.262.2(a) (1981, 1998 Replacement
Volume).

8. D.C. Code Ann. sect. 32.262.7(a)(4) (1981, 1998 Replacement Volume, 2000
Supp.).

9. D.C. Code Ann. sect. 32-262.6 (1981, 1998 Replacement Volume).

10. D.C. Code Ann. sect. 32-262.3(a) (1981, 1998 Replacement Volume, 2000
Supp.).

11. D.C. Code Ann. sect. 32-262.3(j) (1981, 1998 Replacement Volume, 2000
Supp.).

12. See memorandum to Natwar Gandhi, CFO, from Robert Rigsby, Corporation
Counsel of the District of Columbia, dated June 19, 2000, discussing the
authority of the CFO with respect to PBC funds. The memorandum states that
the CFO has custody of all the funds of the PBC and in this capacity has
accounting control over (1) all money received by the PBC, (2) all money
disbursed by the PBC, and (3) all money invested by the PBC.

13. D.C. Code Ann. sect. 32-262.5(e) (1981, 1998 Replacement Volume).

14. As part of our review, we requested the views of the District of
Columbia's Chief Financial Officer and District of Columbia's Corporation
Counsel to a number of questions. We received their joint response by letter
dated July 24, 2000 (DC Submission). We also obtained the views of the PBC's
General Counsel by letter dated August 16, 2000 (PBC Submission).

15. D.C. Submission, p. 2.

16. We determined the amounts of advances using financial information for
several fiscal years (1) reported in the Comprehensive Annual Financial
Reports of the District of Columbia (CAFR) containing the annual audited
financial statements of the District of Columbia government, (2) the audited
PBC financial statements, and (3) PBC internal documents. In September 2000,
the District of Columbia's Office of the Chief Financial Officer verified
the amounts of the advances. The fiscal year 2000 amount of $58 million
consists of two amounts-a $48 million projection made by PBC based on actual
advances through August 31, 2000, including a projected amount for September
2000, plus a $10 million planned payment to the District for Medicaid to
settle certain audit years.

17. Pub. L. No. 106-113, 113 Stat. 1501, 1511 (1999). Prior to fiscal year
1996, the District appropriations act did not expressly appropriate amounts
from grants and receivables from outside sources. The District of Columbia
Financial Responsibility and Management Assistance Act of 1995, Pub. L. No.
104-8, sec. 301(a), 109 Stat. 97, 141 (1995), amended section 103 of the
District of Columbia Home Rule Act, D.C. Code Ann. sect. 1-202, to require that
the District's annual budget submission include all funds received and spent
by the District. The District implemented this requirement starting with its
budget submission in support of its fiscal year 1996 appropriation request.

18. See, e.g., Hearing on the District of Columbia Appropriations Act for
fiscal year 2000 before a Subcommittee of the House Appropriations Committee
(Part 2), 106th Cong. 762-764 (2000) and Hearing on the District of Columbia
Appropriations Act for fiscal year 1999 before a Subcommittee of the House
Appropriations Committee (Part 2), 105th Cong. 712-715 (1999).

19. We determined the amounts of budget excess by adjusting financial
information for several fiscal years (1) reported in the Comprehensive
Annual Financial Reports of the District of Columbia (CAFR) containing the
annual audited financial statements of the District of Columbia government,
(2) the audited PBC financial statements, and (3) PBC internal documents. We
adjusted the financial information (1) by reducing the reported expenses to
exclude depreciation and bad debt expenses that did not result in actual
obligations of the annual operating appropriation and (2) by allowing for
capital outlays and obligations up to the amount of reimbursements PBC
received for services provided to the District and grants that are not
included in the amounts appropriated from "Other Funds". In September 2000,
the District of Columbia's Office of the Chief Financial Officer verified
the amounts of the budget excess.

20. D.C. Code Ann. sect. 47-304 (1981, 1997 Replacement Volume, 2000 Supp.).

21. D.C. Code sect. 47-301(a)(1) (1981, 1998 Replacement Volume).

22. D.C. Code Ann. sect.sect. 47-301(c), (d), 304 (1981, 1998 Replacement Volume,
2000 Supp.).

23. D.C. Code Ann. sect.sect. 47-327, 47-328 (1981, 1998 Replacement Volume, 2000
Supp.).

24. D.C. Code Ann. sect. 47-317.3(5) (1981, 1998 Replacement Volume, 2000
Supp.).

25. 31 U.S.C. sect.sect. 1341, 1342, 1349-1351, 1511-1519 (1994). See section 603(e)
of the District of Columbia Home Rule Act, as amended, D.C. Code Ann. sect.
47-313(e), confirming the continued applicability of the Antideficiency Act
to the District of Columbia following the grant of limited self-government
under the D.C. Home Rule Act.

26. 31 U.S.C. ch. 15, subch. II, sect.sect. 1511-1519 (1994).

27. D.C. Code Ann. sect. 47-317.3 (13) (1981, 1998 Replacement Volume, 2000
Supp.). Otherwise the Mayor apportions. D.C. Code Ann. sect. 47-310 (a)(9)
(1981, 1998 Replacement Volume, 2000 Supp.). The District is currently in a
control year and has been in one since fiscal year 1996. Pub. L. No. 104-8,
sect. 305(4), 109 Stat. 142 (1995), D.C. Code Ann. sect. 47-393 (1991, 1997
Replacement Volume).

28. 31 U.S.C. sect. 1517(a)(1) (1994).

29. These concepts as embodied in the fiscal statutes that applied to the
District prior to the adoption of the Home Rule Act continued unabated
following its adoption. Section 603(a) of the Home Rule Act, D.C. Code Ann.
sect. 47-313(a) provides that nothing in the Home Rule Act "shall be construed
as making any change in existing law, regulation, or basic procedure and
practice relating to the respective roles of the Congress, the President,
the federal Office of Management and Budget, and the Comptroller General of
the United States in the preparation, review, submission, examination,
authorization, and appropriation of the total budget of the District of
Columbia government. (See, e.g., 31 U.S.C. sect. 1501 (1994).

30. See memorandum from Herbert O. Reid, Sr., Corporation Counsel, to Robert
Pohlman, Deputy Mayor for Finance, dated August 7, 1990 (an advance from the
capital project fund to the General Fund that was not repaid until the next
fiscal year constitutes an expenditure of appropriated funds); memorandum
from Wayne C. Witkowski, Deputy Corporation Counsel, Legal Counsel Division,
to Earl Cabell, Interim Chief Financial Officer, dated January 27, 1999
(advances from the General Fund to the D.C. General Hospital require an
appropriation).

31. D.C. Courts Planning and Budgeting Difficulties During Fiscal Year 1998,
10-14 (GAO/AIMD/OGC-99-226, September 1999).

32. A similar conclusion was reached in the memorandum dated June 19, 2000
from Robert R. Rigsby, Corporation Counsel to Natwar Gandi, Chief Financial
Officer. In that memorandum the Corporation Counsel concludes that the PBC
would violate the Antideficiency Act if it spends amounts in excess of the
amounts appropriated to it or authorized by law.

33. 5 Op. O.L.C. 1, 8 (1981) and Memorandum from Walter Dellinger, Assistant
Attorney General, Office of Legal Counsel to Alice Rivlin, Director, Office
of Management and Budget, August 16, 1995.

34. 5 Op. O.L.C. fn. 11 at 9-10 (1981) and Memorandum from Walter Dellinger,
Assistant Attorney General, Office of Legal Counsel to Alice Rivlin,
Director, Office of Management and Budget, August 16, 1995.

35. "District of Columbia General Hospital Operational and Financial
Viability Plan," May 9, 1994, reprinted in the Hearings on the District of
Columbia Appropriations for fiscal year 1995 before a Subcommittee of the
House Committee on Appropriations (Part 2), 103rd Cong. 2144, 2157 (1994)
(Kurron Report).

36. Pub. L. No. 103-334, Title I, 108 Stat. 2576, 2581 (1994) and Pub. L.
No. 103-127, Title I, 107 Stat. 1336, 1341 (1993). However, the District of
Columbia 1994 Supplemental Appropriations and Rescissions Act rescinded $5.5
million of the $10 million appropriated for that year. Pub. L. No. 103-334,
Title II, 108 Stat. 2595, 2597 (1994).

37. Hearings on the District of Columbia Appropriations for Fiscal Year 1996
before a Subcommittee of the House Appropriations Committee (Part 1), 104th
Cong. 216-217 (1998).

38. D.C. Code Ann. sect. 32-262.19a (1981, 1998 Replacement Vol., 2000 Supp.).

39. H.R. Rep. No. 106-249, at 84 (1999).

40. The PBC was forgiven another $55 million for amounts owed by the
Hospital to the District prior to creation of the PBC as a result of a
settlement agreement entered into between the District and the PBC in
January of 1999. Under the agreement the District and the PBC compromised
claims for amounts each asserted as owing to it by the other.

41. There is no evidence of any written agreement that could be considered
an obligating loan document.

42. This would be true even if the plan the District refers to was clear
with respect to the authority that the District was requesting by way of
ratification. In our opinion, it was not.