U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

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79–010

" " SENATE 106TH CONGRESS

2d Session

REPORT

2000

106–493

Calendar No. 943

DISTRICT OF COLUMBIA RECEIVERSHIP

ACCOUNTABILITY ACT OF 2000

R E P O R T

OF THE

COMMITTEE ON GOVERNMENTAL AFFAIRS

UNITED STATES SENATE

TO ACCOMPANY

H.R. 3995

TO ESTABLISH PROCEDURES GOVERNING THE RESPONSIBILITIES

OF COURT-APPOINTED RECEIVERS WHO ADMINISTER DEPARTMENTS, OFFICES, AND AGENCIES OF THE DISTRICT OF COLUMBIA GOVERNMENT

OCTOBER 6 (legislative day, SEPTEMBER 22), 2000.—Ordered to be printed

(II)

COMMITTEE ON GOVERNMENTAL AFFAIRS

FRED THOMPSON, Tennessee, Chairman

WILLIAM V. ROTH, Jr., Delaware

TED STEVENS, Alaska

SUSAN M. COLLINS, Maine

GEORGE VOINOVICH, Ohio

PETE V. DOMENICI, New Mexico

THAD COCHRAN, Mississippi

ARLEN SPECTER, Pennsylvania

JUDD GREGG, New Hampshire

JOSEPH I. LIEBERMAN, Connecticut

CARL LEVIN, Michigan

DANIEL K. AKAKA, Hawaii

RICHARD J. DURBIN, Illinois

ROBERT G. TORRICELLI, New Jersey

MAX CLELAND, Georgia

JOHN EDWARDS, North Carolina

HANNAH S. SISTARE, Staff Director and Counsel

KRISTINE I. SIMMONS, Staff Director, Subcommittee on Oversight of

Government Management, Restructuring and the District of Columbia

MASON C. ALINGER, Professional Staff Member, Subcommittee on Oversight of

Government Management, Restructuring and the District of Columbia

JOYCE A. RECHTSCHAFFEN, Minority Staff Director and Counsel

PETER A. LUDGIN, Minority Professional Staff Member

MARIANNE UPTON, Minority Chief Counsel Staff Director, Subcommittee on Oversight of

Government Management, Restructuring and the District of Columbia

DARLA D. CASSELL, Chief Clerk

Calendar No. 943

106TH CONGRESS REPORT

2d Session " ! SENATE 106–493

DISTRICT OF COLUMBIA RECEIVERSHIP ACCOUNTABILITY

ACT OF 2000

OCTOBER 6 (legislative day, SEPTEMBER 22), 2000.—Ordered to be printed

Mr. THOMPSON, from the Committee on Governmental Affairs,

submitted the following

REPORT

[To accompany H.R. 3995]

The Committee on Governmental Affairs, to whom was referred

the bill (H.R. 3995) to establish procedures governing the responsibilities of court-appointed receivers who administer departments,

offices, and agencies of the District of Columbia government, having considered the same, reports favorably thereon without an

amendment and recommends that the bill do pass.

CONTENTS

Page

I. Summary and Purpose .................................................................................. 1

II. Background .................................................................................................... 2

III. Legislative History ......................................................................................... 3

IV. Explanation of Amendment .......................................................................... 4

V. Section-by-Section Analysis .......................................................................... 4

VI. Estimated Cost of Legislation ....................................................................... 4

VII. Evaluation of Regulatory Impact .................................................................. 5

VIII. Changes in Existing Law .............................................................................. 6

I. SUMMARY AND PURPOSE

H.R. 3995 directly addresses concerns about the District of Columbia’s receivership programs and the accountability of the receivers. This legislation will promote financial stability and efficient

management of the District government, as well as establish communication between the city and the receiverships.

Specifically, the legislation would establish recommendations for

how court-appointed receivers in the District should operate. The

legislation would mandate that receivers should (1) promote best

practices, (2) subject themselves to an annual audit by the city’s inVerDate 11-MAY-2000 18:15 Oct 09, 2000 Jkt 079010 PO 00000 Frm 00003 Fmt 6659 Sfmt 6602 E:\HR\OC\SR493.XXX pfrm08 PsN: SR493
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spector general, (3) ensure that costs are consistent with regional

and national standards, (4) consult with the Mayor and the chief

financial officer on the budget, and (5) procure through a competitive, open-bidding process.

II. BACKGROUND

The District of Columbia has had four of its agencies placed

under court-appointed receivership in the last five years. Typically,

court intervention into the administration of government agencies

is utilized to bring about brief, drastic change to an agency. However, the District’s court-controlled agencies have all languished in

receivership for three to five years, some showing minimal signs of

improvement.

Two of the four agencies under receivership were returned to the

city in September 2000. The D.C. Housing Authority, which has

been in receivership since 1995, has proven after five years of receivership to be financially and managerially stable enough to return to the city. The Jail Medical Services, which has also been

under receiver since 1995, was returned to the city this September,

but substantial concerns remain about the agency. (Although medical and psychological services at the jail have improved under the

receiver, environmental conditions remain grave—vermin are

rampant, and faulty ventilation greatly reduces air movement in

critical parts of the building.)

The Mental Health Services Agency, which has been under receivership since 1997, is slated to return to the city sometime in

2001. However, the agency’s return to city control is not due to the

receiver’s success. Mental Health Services is being returned to the

city because the judge that oversees the receiver found that the

system has actually deteriorated since being seized by the courts.

The Child and Family Services Agency has also stagnated under

receivership for the past five years. A September 20, 2000 hearing

by the House Subcommittee on the District of Columbia revealed

no progress by the Agency under the receiver. In fact, conditions

at the agency were so bad that at the hearing Members called for

the agency to return to the city. In addition to these agencies currently under receivership, the city’s public school transportation

system has been threatened with receivership in recent months due

to its inability to address the needs of special education children.

The purpose of court-appointed receivers is to intervene and take

over a failing government agency, institute the necessary management reforms to get the agency properly running again, and return

the agency to the city in a timely fashion. This has clearly not been

the case with the District of Columbia receiverships. Consequently,

this legislation establishes minimum standards to guide receivers

in managing their operations and maintaining accountability.

H.R. 3995 requires court-appointed District of Columbia receivers

to ensure that the costs incurred in administering the agency

under receivership are consistent with regional and national standards. Under this legislation, the receiver must use the best means

available to promote financial stability and sound management

practices within the agency. The receiver must consult with the

Mayor and the Chief Financial Officer of D.C. when preparing the

annual budget. Estimates of expenditures and appropriations for

the operations of the agency must be submitted to the Mayor for

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inclusion in the city’s annual budget. The legislation also requires

an independent auditor to conduct annual fiscal and management

audits of the agency under receivership. Nothing in this bill is intended to impede a D.C. receiver’s mandate to remedy constitutional violations.

III. LEGISLATIVE HISTORY

H.R. 3995 was introduced by Delegate Eleanor Holmes Norton

(D–DC) on March 15, 2000 and referred to the Government Reform

Committee’s Subcommittee on the District of Columbia. On May 5,

the Subcommittee held an investigative hearing on the status of reforms under the Child and Family Services Agency (CFSA) receiver. The following witnesses testified: Congressman Tom DeLay

(R–TX), the General Accounting Office’s Cynthia Fagnoni, Judy

Meltzer from the Center for the Study of Social Policy, CFSA Receiver Ernestine Jones, Deputy Mayor for Health Carolyn Graham,

the Mayor’s Special Counsel for Receivers Grace Lopes, and Kimberly Shellman from the D.C. Child Advocacy Center. At the hearing, the Subcommittee reprimanded the receiver for her lack of

progress and demanded that she show improvement when the Subcommittee called her back in September. However, as discussed in

the section above, little progress was made.

Immediately after the May 5 hearing, the Subcommittee held a

markup and voted the bill out of Subcommittee by voice vote, with

one amendment. The Subcommittee adopted an amendment by

Delegate Norton that requires the use of generally accepted accounting principles, fiscal management practices, and an annual

fiscal and management review conducted by an independent auditor. In addition, the amendment requires a competitive procurement process unless one of the specified exceptions is met. Finally,

the amendment clarifies the applicability of the Anti-deficiency Act.

The full Committee on Government Reform approved H.R. 3995 on

June 12, 2000, and it passed the House by unanimous consent the

same day.

On the Senate side, the issue of receivership accountability was

addressed at a May 9, 2000 hearing by the Subcommittee on Oversight of Government Management, Restructuring, and the District

of Columbia. At the hearing, the Mayor testified that his office had

appointed a special counsel to work with the receivers to establish

standards and expectations that could be worked into the city’s performance accountability plan. The Receivership Accountability Act

would open the lines of communication between the city and the receivers in order to make this possible.

On June 13, 2000, H.R. 3995 was received in the Senate and referred to the Committee on Governmental Affairs, where it was

subsequently referred to the Subcommittee on Oversight of Government Management, Restructuring, and the District of Columbia on

June 20, 2000. The Subcommittee approved the legislation by

unanimous consent and forwarded it to the full Committee on September 18, 2000. It was ordered reported by the Governmental Affairs Committee by voice vote at a full Committee business meeting

on September 27, 2000.

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IV. EXPLANATION OF AMENDMENTS

No amendments were offered in the Senate. For an explanation

of Delegate Norton’s amendment, refer to House Report 106–633.

V. SECTION-BY-SECTION ANALYSIS

Section 1 establishes the bill’s short title, ‘‘District of Columbia

Receivership Accountability Act of 2000.’’

Section 2 defines a ‘‘District of Columbia Receiver’’ for purposes

of this legislation and provides that all D.C. receivers are subject

to the requirements of Section 3.

Section 3 requires that D.C. receivers use administration practices which promote financial stability and management efficiency,

while ensuring that the costs incurred by the agency, department,

or office under receivership are consistent with applicable regional

and national standards. The receivers are also required to use generally accepted accounting principles and fiscal management practices to promote efficiency and cost-effectiveness.

Beginning in fiscal year 2001, D.C. receivers are required to consult with the Mayor and the Chief Financial Officer when preparing a budget for the agency, department, or office under receivership. The receiver then submits a budget to the Mayor who forwards it to the City Council pursuant to sections 446 and 603(c)

of the District of Columbia Home Rule Act. The Mayor and Council

are permitted to make recommendations, but not revisions. This

budgetary requirement is effective unless the terms of the D.C. receiver’s appointment permit revisions by the Mayor and the Council.

This section also requires that the D.C. receiver and the Mayor

jointly choose an independent auditor to conduct an annual fiscal

and management audit, unless the terms of the receiver’s appointment permit the parties to the court action to select the auditor.

Section 3 requires the use of competitive procedures considered

the best suited to the circumstances in order to attain a full and

open competitive procurement process. Alternative methods would

need to be used if the amount of money involved in the procurement is nominal, the public need is urgent, the receiver certifies

that only one supplier is available, or the required services are

technical and professional and are performed by the contractor in

person, or, the services are performed under the D.C. receiver’s supervision and are compensated based on the period of time worked.

Section 4 clarifies that the provisions of subchapter III of chapter

13 of title 31, United States Code, relating to the Anti-Deficiency

Act, apply to District of Columbia receivers.

VI. ESTIMATED COST OF LEGISLATION

U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, September 29, 2000.

Hon. FRED THOMPSON,

Chairman, Committee on Governmental Affairs,

U.S. Senate, Washington, DC.

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 3995, the District of Columbia Receivership Accountability Act of 2000.

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If you wish further details on this estimate, we will be pleased

to provide them. The CBO staff contacts are John R. Righter (for

federal costs), and Susan Sieg Tompkins (for the state and local impact).

Sincerely,

BARRY B. ANDERSON

(For Dan L. Crippen, Director).

Enclosure.

H.R. 3995—District of Columbia Receivership Accountability Act of

2000

H.R. 3995 would require agencies of the District of Columbia

that are in receivership to follow certain budgeting, management,

and procurement practices. Currently, two District agencies—Child

and Family Services and the Commission on Mental Health Services—are administered by court-appointed receivers. Because the

legislation would apply only to agencies of the District of Columbia,

CBO estimates that enacting H.R. 3995 would have no impact on

the federal budget. The legislation would not affect direct spending

or receipts, so pay-as-you-go procedures would not apply.

H.R. 3995 contains an intergovernmental mandate because it effectively would require the departments within the District of Columbia that are currently administered by a court-appointed receiver to adopt certain management practices to improve their financial stability. CBO estimates that the costs of complying with

this mandate would be minimal, and thus would not exceed the

threshold established in the Unfunded Mandates Reform Act ($55

million in 2000, adjusted annually for inflation). The legislation

contains no private-sector mandates as defined in that act.

On May 31, 2000, CBO transmitted a cost estimate for H.R. 3995

as ordered reported by the House Committee on Government Reform on May 18, 2000. The two versions of this legislation are identical, as are our cost estimates.

The CBO staff contacts are John R. Righter (for federal costs),

and Susan Sieg Tompkins (for the state and local impact). This estimate was approved by Robert A. Sunshine, Assistant Director for

Budget Analysis.

VII. EVALUATION OF REGULATORY IMPACT

Pursuant to the requirement of paragraph 11(b) of rule XXVI of

the Standing Rules of the Senate, the Committee has considered

the regulatory and paperwork impact of H.R. 3995. The legislation

contributes to the efficient administration and management of both

the Federal and District of Columbia governments by establishing

a framework for oversight of the court-appointed receivers in the

District of Columbia. It would impose additional regulatory burdens on the court-appointed receivers, but the intent of the increased regulation would serve to streamline the administration of

the receiverships, and establish lines of communication between

the receivers and the Mayor in order to expedite and smooth the

eventual transition of the agency back to the District government.

The legislation would also reduce the paperwork burdens on the

court-appointed receivers by clarifying the role and responsibility of

the receivers. H.R. 3995 would impose no burdens on the public

and will improve the management of taxpayer-funded services.

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VIII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with paragraph 12 of rule XXVI of the Standing

Rules of the Senate, the Committee states that H.R. 3995, as reported, makes no changes in existing law.

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