DCPS: Limitation of Attorneys' Fees for Fiscal Years 1999 through
2001 (06-NOV-02, GAO-03-224R).					 
                                                                 
The District of Columbia appropriations acts for fiscal years	 
1999, 2000, and 2001 limited the amount of appropriated funds	 
that could be paid to an attorney representing a prevailing party
in an action brought against the District of Columbia Public	 
Schools (DCPS) under the Individuals with Disabilities Education 
Act. The appropriations act for fiscal year 2002 lifted the caps 
on attorneys' fees and directed DCPS and GAO to report on	 
judgments awarding attorneys' fees in excess of the limitations  
imposed in fiscal years 1999, 2000, and 2001. In May 2002, GAO	 
reported that, for fiscal years 1999, 2000, and 2001, the	 
appropriations acts' limitations had little if any impact on the 
total amount of attorneys' fees awarded to prevailing parties in 
judgments entered by the courts in judicial proceedings brought  
against DCPS and the act. The District's March 29, 2002 report	 
showed that of the $12.7 million paid for attorneys' fees from	 
its appropriations for 1999 through 2001, $10 million was related
to administrative proceedings and $2.7 million was related to	 
judicial proceedings. DCPS reported that the estimated total	 
amount of fees that might have been paid as a result of 	 
administrative proceedings was $27.4 million over the 3-year	 
period, as compared to $10 million it actually paid.		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-03-224R					        
    ACCNO:   A05473						        
  TITLE:     DCPS: Limitation of Attorneys' Fees for Fiscal Years 1999
through 2001							 
     DATE:   11/06/2002 
  SUBJECT:   Appropriation acts 				 
	     Appropriation limitations				 
	     Legal fees 					 
	     Lawyers						 
	     Courtroom proceedings				 
	     Appropriated funds 				 

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GAO-03-224R

GAO- 03- 224R DCPS Limitation of Attorneys* Fees

United States General Accounting Office Washington, DC 20548

November 6, 2002 The Honorable Kay Bailey Hutchison United States Senate

Subject: DCPS: Limitation of Attorneys* Fees for Fiscal Years 1999 through
2001

Dear Senator Hutchinson: The District of Columbia appropriations acts for
fiscal years 1999, 2000, and 2001 limited the amount of appropriated funds
that could be paid to an attorney representing a prevailing party in an
action brought against the District of Columbia Public Schools (DCPS)
under the Individuals with Disabilities Education Act 1 (IDEA). The
appropriations act for fiscal year 2002 lifted the caps on attorneys* fees
and directed DCPS and GAO to report on judgments awarding attorneys* fees
in excess of the limitations imposed in fiscal years 1999, 2000, and 2001.
In May 2002, we reported 2 that, for fiscal years 1999, 2000, and 2001,
the appropriations acts* limitations had little if any impact on the total
amount of attorneys* fees awarded to prevailing parties in judgments
entered by the courts in judicial proceedings brought against DCPS under
IDEA. This is because court decisions made it clear that the
appropriations acts* limitations applied only to the amount that the
District could pay to a prevailing party under IDEA and not to the amount
that the court could award. The decisions also made it clear that where
there was an independent legal basis for awarding attorneys* fees, such as
the Civil Rights Act, 3 the court could do so without regard to the
appropriations acts* limitations.

Our May 22, 2002, report focused exclusively on the District*s payments
and court awards for attorneys* fee payments resulting from judicial
proceedings as required by section 141 of the District of Columbia
Appropriation Act for fiscal year 2002. However, attorneys* fees may also
be awarded in administrative proceedings. 4 IDEA provides that in
administrative proceedings 5 students and their parents have the right to
be accompanied and advised by counsel. These proceedings occur when
parents of students with disabilities file complaints against DCPS for any
matters related to the identification, evaluation, or educational

1 20 U. S. C. S: 1400 et seq. 2 See U. S. General Accounting Office, DCPS:
Attorneys* Fees for Access to Special Education

Opportunities, GAO- 02- 559R (Washington, D. C.: May 22, 2002). 3 In the
District of Columbia, attorneys* fee awards and payments under the Civil
Rights Act may cover

not only attorneys* fees for the hours spent by attorneys in litigating
matters, but also hourly compensation for paralegals and other attorney
assistants as well as the standard expenses of litigation, such as
copying, messenger, and filling costs. Fee requests also may include
expert witness fees. 4 A court decision makes it clear that attorneys*
fees can be awarded to prevailing plaintiffs in

administrative proceedings under IDEA. 5 20 U. S. C. 1415 (h).

GAO- 03- 224R DCPS Limitation of Attorneys* Fees 2 placement of the
students or the provision of free, appropriate public education for the

students. In a March 29, 2002, report 6 to the Congress, the District
stated that it had paid $12.7 million 7 from its appropriations for fiscal
years 1999 through 2001 for attorneys* fees and related litigation costs
resulting from judicial and administrative proceedings brought against
DCPS and the District under IDEA. Because the District incurs the majority
of its IDEA legal expenses as a result of administrative proceedings, you
requested that we (1) report on the amount of attorneys* fees paid to
prevailing plaintiffs for fiscal years 1999 through 2001, including fees
from administrative proceedings brought against DCPS under IDEA, and (2)
review the District*s estimate of total legal fees requested for
administrative proceedings as an indication of the amount that might have
been paid without the mandated caps on attorneys* fees.

Results in Brief

The District*s March 29, 2002, report showed that of the $12. 7 million
paid for attorneys* fees from its appropriations for fiscal years 1999
through 2001, $10 million was related to administrative proceedings and
$2.7 million was related to judicial proceedings. This report also
contained DCPS*s estimate of the fees that might have been paid to
attorneys resulting from administrative proceedings using 1999, 2000, and
2001 appropriations had the limitation not been in place. DCPS reported
that the estimated total amount of fees that might have been paid as a
result of administrative proceedings was $27.4 million over the 3- year
period, as compared to $10 million it actually paid. Because this estimate
was not based on statistical methods, its precision was uncertain. After
we brought this to the attention of DCPS officials, DCPS recalculated the
estimate using an appropriate statistical methodology. The resulting
revised estimate for the amount of attorneys* fees that might have been
requested is $27.7 million (+ $1.9 million at a 95 percent confidence
level) over the 3- year period. We reviewed DCPS*s statistical
calculations and concluded that the methodology and results of DCPS*s
revised recalculation of the estimate and related confidence interval are
reasonable. On September 13, 2002, DCPS reported to the chairmen of the
Senate and House committees on appropriations the recalculated estimate
and confidence interval by year and in total. In commenting on a draft of
this report, the DCPS Superintendent stated that the statistical
information in our report was consistent with the data that DCPS had
provided in its September 2002 report to the Congress.

Background

IDEA and its predecessor statutes since 1977 have included a requirement
that states and local school systems receiving federal funds make
available procedures for impartial due process hearings in which the
parents of students with disabilities may challenge school district
actions or inaction. By 1998, DCPS was experiencing serious problems in
the timely conducting of hearings requested by parents under the act and
in issuing final decisions within the required timelines. The delays
resulted in an increasingly large number of parental complaints and legal
suits filed against DCPS to obtain access to the educational opportunities
called for under the act. As a result, paying attorneys* fees awarded to
parties who prevailed in IDEA cases became costly to the District of
Columbia.

6 Office of the Superintendent of the District of Columbia Public Schools,
Supplemental Report of the District of Columbia Public Schools Regarding
Attorneys* Fee Payments in Fiscal Years 1999- 2001 Related to Judicial and
Administrative Proceedings Under the Individuals with Disabilities
Education Act (Washington, D. C.: Mar. 29, 2002). 7 The amounts paid
include payments awarded to a special master appointed by the court,
totaling

$806,513 for fiscal years 1999, 2000, and 2001. However, we excluded
amounts paid by the District for outside defense counsel representation.

GAO- 03- 224R DCPS Limitation of Attorneys* Fees 3 Attorneys* fee
provisions under IDEA provide the courts with the discretion to award

reasonable attorneys* fees to prevailing parties in actions brought under
IDEA. However, the District*s appropriations acts for fiscal years 1999,
2000, and 2001 imposed limits on the amounts payable for attorneys* fees
on a per hour and per case basis for cases in which the plaintiffs
prevailed. (See table 1.) Accordingly, payments to prevailing parties in
administrative proceedings using appropriations for fiscal years 1999
through 2001 were subject to the applicable attorneys* fee limitations for
those years.

Table 1: Limitations on Attorneys* Fees for Prevailing Parties for IDEA
Cases Fiscal year Hourly cap Per case cap

1999 $50 $1,300 2000 60 1,560 2001 125 2, 500

For clarity, DCPS*s March 29, 2002, report noted that attorneys* fee
payments awarded to a prevailing plaintiff resulting from administrative
proceedings, which are subject to the limitations, often include not only
compensation for the hours spent by an attorney in litigating a matter,
but also hourly compensation for paralegal and other attorney assistants.
Standard expenses of litigation* such as copying, messenger, and filing
costs* are often requested along with the attorneys* fees, as are fees for
expert witnesses. However, these expenses are not subject to the
limitation and are therefore usually reimbursable (if reasonable) to the
prevailing plaintiff. Section 140( b) of the District of Columbia
Appropriations Act 8 for fiscal year 2002 directed the Superintendent of
DCPS to report to the House and Senate appropriations committees an
itemized list of judgments for attorneys* fees awarded to plaintiffs who
had prevailed in proceedings against the District of Columbia or DCPS
under section 615( i)( 3) of IDEA. 9 DCPS provided its final report
covering awards and payments for attorneys* fees for judicial proceedings
to the House and Senate appropriations committees on February 28, 2002.
Section 141 of the District of Columbia Appropriation Act for fiscal year
2002 directed that we also report on this matter. In May 2002, we issued
our report. 10 The District issued a supplemental report, dated March 29,
2002, which identified all payments of attorneys* fees and costs,
including those that did not result from court judgments. Its report
included those payments resulting from administrative proceedings and
settlement of suits.

Legal Fees Paid for Administrative and Judicial Proceedings Using
Appropriations from Fiscal Years 1999 through 2001

In its March 29, 2002, supplemental report, 11 the District identified
$12.7 million in attorneys* fees and related litigation costs paid during
fiscal years 1999 through 2001 12 to prevailing plaintiffs in judicial and
administrative proceedings brought against DCPS and the District under
IDEA. The District reported that the largest portion of the reported
attorneys* fee payments, totaling approximately $10 million for the 3-
year period, resulted from

8 Public Law No. 107- 96, 115 Stat. 923, 958 (2001). 9 20 U. S. C. S:
1415( i)( 3). 10 See GAO- 02- 559R. 11 See Office of the Superintendent of
the District of Columbia Public Schools, Supplemental Report on

Attorneys* Fee Payments. This report supplements DCPS*s February 28, 2002,
report issued in accordance with section 140 (b) of the District of
Columbia Appropriations Act for fiscal year 2002. 12 The District does not
maintain any single source that identifies all IDEA attorneys* fees
awarded.

Therefore, DCPS determined that the most accurate means of identifying
IDEA attorneys* fees resulting from judicial and administrative
proceedings was to rely on and compile information based on payment
entries in the accounting systems maintained by the Office of the Chief
Financial Officer (CFO), the CFO for DCPS, and the CFO for the Office of
Corporation Counsel.

GAO- 03- 224R DCPS Limitation of Attorneys* Fees 4 administrative
proceedings. During the same period, the District reported payments for

judicial proceedings totaling $2.7 million. The $12.7 million paid in
attorneys* fees for both judicial and administrative proceedings
represented 1.6 percent of the total special education expenses reported
for fiscal year 2000 and 2.8 percent for fiscal year 2001 based on amounts
shown in the Statement of Revenues and Expenses * Budget vs. Actual
(General Fund) included in DCPS*s Consolidated Annual Financial Reports.
(See table 2.)

Table 2: Reported Special Education Expenses for Fiscal Years 1999 through
2001 Fiscal year Legal fees paid administrative

proceedings forLegal fees paid for

judicial proceedings

Subtotal of administrative

and judicial proceedings

Total special education

expenses Percentage of

total special education

expenses

1999 $3,513,824 $518,759 $4,032,583 -- a -- a 2000 2, 468,287 442, 819
2,911,106 $178,660,000 1. 629 2001 3, 972,045 1, 824,122 5, 796,167
$210,215,000 2. 757

Total $9,954,156 $2,785,700 $12,739, 856 b -- a -- a

a We did not calculate the percentage for fiscal year 1999 because total
special education expense data consistent with fiscal years 2000 and 2001
were not reported in the fiscal year 1999 DCPS Comprehensive Annual
Financial Report.

b The amounts paid include amounts awarded to a special master appointed
by the court, totaling $806,513 for fiscal years 1999, 2000, 2001.

Sources: DCPS September 13, 2002, report, figure A, page 3; DCPS September
13, 2002, report, figure A, page 3;

DCPS Comprehensive Annual Financial Report, Fiscal Year Ended September
30, 2000 (Washington, D. C.: Apr. 30, 2001); and DCPS Comprehensive Annual
Financial Report, Fiscal Year Ended September 30, 2001

(Washington, D. C.: Jan. 22, 2002). We did not independently verify this
information. DCPS*s March 29, 2002, supplemental report identified 5,804
payments from fiscal years 1999 through 2001 to attorneys as a result of
administrative and judicial proceedings. The average payment resulting
from an administrative proceeding during the 3- year period in which the
limitations were in effect was $1,715. (See table 3.)

Table 3: Reported Number of Administrative and Judicial Payments and the
Average Attorneys* Fee Payments for Fiscal Years 1999 through 2001

Fiscal year Number of

administrative payments

Average attorneys* fees paid* administrative

Number of judicial payments

Average attorney fees paid*

judicial

1999 1, 761 $1,995 13 $39, 904 2000 1, 925 1,282 32 13,838 2001 2, 118
1,875 54 33,780

1999 through 2001 5,804 $1,715 99 $28,138

Source: Office of the Superintendent of the District of Columbia Public
Schools, Supplemental Report on Attorneys* Fee Payments. We did not
independently verify this information.

DCPS*s Estimated Difference between Requested and Actual Attorneys* Fees
for Administrative Proceedings

The DCPS March 29, 2002, supplemental report also contained DCPS*s
estimate of the fees that might have been paid had the statutory fee cap
limitations not been in place for fiscal years 1999 through 2001. DCPS
estimated that the total requested amount of legal fees for administrative
proceedings was approximately $27.4 million as compared to the $10 million
reported as actually paid over the 3- year period. However, we determined
that DCPS used a

GAO- 03- 224R DCPS Limitation of Attorneys* Fees 5 calculation to
approximate an estimate but did not analyze its sample data using
statistical

methods to arrive at the estimate in its March 29, 2002, report, and
therefore, the precision of the estimate was uncertain.

DCPS subsequently recalculated the estimates using an appropriate
methodology and reported the results of the recalculated estimate and
related confidence interval to the chairmen of the Senate and House
committees on appropriations. The revised estimate for the amount of
attorneys* fees that might have been requested is $27.7 million (+ $1.9
million at a 95 percent confidence level). The District reported that this
total indicates a potential savings of almost $18 million over the 3- year
period based on the difference between the estimated amounts requested ($
27. 7 million) and the amount actually paid in attorneys* fees ($ 10
million). The District*s analysis also showed that the difference between
the amount of legal fees requested and the amount paid increased from $3.2
million in fiscal year 1999 to $9.2 million in fiscal year 2001. (See
table 4.) The amount that DCPS reported as potential savings assumes that
the full amount requested would have been paid. However, DCPS noted that
it would not necessarily have paid the full range of fees requested if
adjustments were needed for unreasonably high hours or hourly fees. We
reviewed DCPS*s statistical calculations and concluded that the
methodology and results of DCPS*s statistical recalculation were
statistically valid and reasonable.

Table 4: Estimate of the Difference between Attorneys* Fees Requested and
the Amount Paid for Administrative IDEA Proceedings for Fiscal Years 1999
through 2001

Fiscal year

Point estimate and confidence interval at 95% confidence level of amount

requested Amount paid

(actual) Fee cap savings

(difference between column 2 and column

3)

1999 $6,713,342 (+) $844, 152 $3,513,824 $3,199,518 2000 7, 463,922 (+)
$948,731) 2,468,287 4, 995,635 2001 13,192,533 (+) $1, 345, 095 3,972,045
9, 220,488

Total $27,723,435 (+) $1, 921,095 $9,954,156 $17,769,279

Source: Summary of results from the DCPS September 13, 2002, report,
figure A, page 3.

District of Columbia Comments

In commenting on a draft of this report, the DCPS Superintendent stated
that the statistical information in our report was consistent with the
data that DCPS had provided in its September 2002 report to the Congress.

Scope and Methodology

To report on the amount of attorneys* fees paid as a result of both
administrative and judicial proceedings filed against DCPS under IDEA for
fiscal years 1999 through 2001, we reviewed DCPS*s March 29, 2002,
supplemental report and DCPS*s methodology for compiling the underlying
data. However, we did not independently verify or audit the completeness,
accuracy, or validity of the compiled data. To review the District*s
estimate of total legal fees requested for administrative proceedings as
an indication of the amount that might have been paid without the mandated
limits on attorneys* fees, we reviewed the District*s sampling methodology
and its methodology for calculating its estimate of the amount that would
have been paid without the mandated limitations. We also discussed the
District*s estimate with DCPS and District officials responsible for
compiling the March report and developing and implementing the District*s
sampling methodology used in the report. We also reviewed and

GAO- 03- 224R DCPS Limitation of Attorneys* Fees 6 analyzed the District*s
revised recalculation of attorneys* fees requested and the underlying

statistical projection that was intended to determine the difference
between the amount requested and the amount paid. We also reviewed and
analyzed the methodology used to select the sample cases included in the
report. We conducted our work from July 2002 through September 2002 in
accordance with U. S. generally accepted government auditing standards.

We provided our draft report to the DCPS Superintendent for review and
comment. The Superintendent provided written comments, which we have
reprinted in the enclosure. DCPS also provided suggested technical and
clarifying comments on this report, which we incorporated as appropriate.

_ _ _ _ _ If you have any questions, please contact me at (202) 512- 9406
or by E- mail at franzelj@ gao. gov. We are sending copies of this report
to the Chief Financial Officer of the District of Columbia, the
Superintendent of the District of Columbia Public Schools, and other
interested parties. This report will be available at no charge on GAO*s
home page at http:// www. gao. gov. Key contributors to this report were
Keith A. Thompson, Deborah R. Peay, and Sharon O. Byrd.

Sincerely yours, Jeanette M. Franzel Director Financial Management and
Assurance

Enclosure

Enclosure GAO- 03- 224R DCPS Limitation of Attorneys* Fees 7

Comments from the District of Columbia Public Schools

(194152)
*** End of document. ***