GAO

United States General Accounting Office

Testimony

Before the Subcommittee on the District of Columbia, 

Committee on Appropriations, House of Representatives

For Release on Delivery

Expected at

2 p.m.

Tuesday,

May 18, 1999

DISTRICT OF COLUMBIA 

COURTS

Financial Related Issues 

for Fiscal Year 1998

Statement of Gloria L. Jarmon

Director, Health, Education and Human Services 

Accounting and Financial Management Issues

Accounting and Information Management Division

GAO/T-AIMD/OGC-99-176

Page 1 GAO/T-AIMD/OGC-99-176

Mr. Chairman and Members of the Subcommittee:

I am pleased to be here today to respond to your questions related to the 

District of Columbia Courts’ (DC Courts) financial operations for fiscal 

year 1998, its first year of operations with direct federal funding. 

Consistent with your request, we focused on the following four questions:

• What were DC Courts’ obligations for fiscal years 1996, 1997, and 1998?

• Did DC Courts have a spending plan for fiscal year 1998 and obligate 

funds consistent with available resources?

• Why were payments to court-appointed attorneys deferred from July 

through September 1998?

• Did DC Courts process payments to court-appointed attorneys in 

accordance with policies and procedures?

In summary, we found that DC Courts experienced difficulties in planning 

and budgeting during this transition year. As adjusted by us, its records 

showed that it potentially over-obligated its resources by more than

$5 million, which would violate the Anti-Deficiency Act. After we briefed 

DC Courts officials, they told us they do not believe that a violation of the 

Anti-Deficiency Act occurred. I will compare the essence of our respective 

positions later in my statement. We also identified a legal issue regarding 

the Crime Victims Compensation Program.

In performing our work, we reviewed DC Courts’ financial records, and 

held extensive discussions with DC Courts officials over the past several 

months. We shared a draft of this statement with DC Courts officials, and 

incorporated their comments to the extent that it was appropriate. Our 

work was performed in accordance with generally accepted government 

auditing standards.

Reported Obligations 

for Fiscal Years 1996 

Through 1998

DC Courts’ records indicated that total obligations in fiscal years 1996, 

1997, and 1998 were $115.4, $119, and $126.3 million, respectively. Fiscal 

year 1998 obligations reflect our adjustments, as discussed later, and are 

not comparable to the prior years’ obligations. This is primarily due to the 

changes resulting from the Revitalization Act of 1997. For example, DC 

Courts non-judicial employees received federal benefits that increased DC 

Courts’ obligations for fiscal year 1998. In addition, the adult probation 

function was transferred from DC Courts to a new entity, the Court 

Services and Offender Supervision Agency for the District of Columbia 

(COSA), in fiscal year 1998. DC Courts also provided its non-judicial 

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Page 2 GAO/T-AIMD/OGC-99-176

employees a 7-percent pay raise and assumed responsibility for the judges’ 

pension costs as part of its fiscal year 1998 appropriation for court 

operations.

Prior to the decision to transfer the adult probation function to a new 

entity, DC Courts had requested $123.5 million to fund its fiscal year 1998 

operations. When DC Courts received $108 million in its fiscal year 1998 

appropriation, it no longer had operational responsibility for the adult 

probation function, but continued to pay salaries and related costs on 

behalf of the COSA Trustee. In March 1998, the COSA Trustee took over 

the payments for the operations and subsequently reimbursed DC Courts 

$7.8 million for the costs DC Courts paid on the COSA Trustee’s behalf. 

These costs and the related reimbursements were included in DC Courts’ 

fiscal year 1998 obligations and available funds.

DC Courts’ Spending 

Plan 

Upon receipt of its fiscal year 1998 appropriation, DC Courts was 

responsible for developing a spending plan based on an appropriation that 

was about $15.5 million less than it requested. DC Courts did not develop a 

plan to ensure that its obligations did not exceed available resources. It 

obligated throughout the year based on its expectation of receiving 

additional funds. While DC Courts received an additional $1.7 million in 

appropriated funds for the fiscal year, it did not receive all of the funding it 

anticipated. DC Courts also received $12.1 million in grants, interest, and 

reimbursements, including the $7.8 million from the COSA Trustee, during 

the fiscal year.

However, letters between DC Courts and the Office of Management and 

Budget (OMB) during fiscal year 1998 reflect DC Courts officials’ 

expectations of receiving additional resources and OMB’s concern that if 

DC Courts did not lower its rate of spending, its obligations would exceed 

available funds. For example, in an April 1998 letter, OMB advised DC 

Courts that it was incurring obligations at a rate that would necessitate a 

deficiency or supplemental appropriation. For their part, DC Courts 

officials continued to seek additional funds during their discussions with 

the COSA Trustee, Department of Justice, and OMB.

By the end of the fiscal year, DC Courts’ records showed that obligations 

exceeded available resources by about $350,000. Specifically, its records 

showed obligations of almost $122.2 million and funds received of about 

$121.8 million. However, as I will now discuss, we found that adjustments 

needed to be made to these amounts.
Page 3 GAO/T-AIMD/OGC-99-176

• DC Courts deferred more than $4.1 million of court-appointed attorney 

payments that were eventually paid with fiscal year 1999 funds, but did 

not record these amounts as fiscal year 1998 obligations. While DC 

Courts officials had the authority to make these payments with fiscal 

year 1999 funds, this did not make the deferred payments fiscal year 

1999 obligations. The vouchers were approved by the presiding judges 

or hearing commissioners in fiscal year 1998, and the obligations should 

have been recorded in fiscal year 1998. Accordingly, we added this 

amount to DC Courts’ reported fiscal year 1998 obligations.

• DC Courts treated interest earned primarily from its quarterly 

apportionments of its appropriation as available budgetary resources 

for court operations. However, DC Courts did not have authority to 

spend this interest. For this reason, we have reduced the amount that 

DC Courts reported as available resources for fiscal year 1998 by 

$773,000. 

As adjusted, DC Courts’ recorded obligations and available funding for 

fiscal year 1998 would be $126.3 and $121 million, respectively, resulting in 

a potential over-obligation of more than $5 million. The Anti-Deficiency 

Act prohibits federal and DC government officials from making 

expenditures or obligations in excess of amounts available in an 

appropriation or fund unless otherwise authorized by law. The AntiDeficiency Act requires the head of an agency to report immediately any 

such violation to the President and the Congress, including all relevant 

facts and a statement of actions taken. OMB Circular A-34, Instructions on 

Budget Execution, provides additional guidance on information that the 

agency is to include in its report to the President. OMB instructs agencies 

to include the primary reason or cause for the over-obligation, any 

extenuating circumstances, the adequacy of the system of administrative 

control of funds, any changes necessary to ensure compliance with the 

Anti-Deficiency Act, and steps taken to prevent a recurrence of the same 

type of violation.

DC Courts officials told us that they do not believe that a violation of the 

Anti-Deficiency Act occurred. In essence, DC Courts officials assert that 

the authority Congress provided in the fiscal year 1999 Appropriation Act 

to use fiscal year 1999 funds for deferred attorney payments constitutes an 

exception to the Anti-Deficiency Act. DC Courts officials further assert 

that the exception is available whenever they have obligations in excess of 

their budgetary resources. We disagree with this position. The fiscal year 

1999 Appropriation Act was enacted after fiscal year 1998 ended. The 

authority cited by DC Courts only authorizes it to use fiscal year 1999 
Page 4 GAO/T-AIMD/OGC-99-176

appropriations to pay deferred amounts to court-appointed attorneys, but 

does not excuse DC Courts from managing its activities within the 

appropriation level Congress provided or authorize obligations in excess of 

available budgetary resources. Accordingly, the critical issue for applying 

the Anti-Deficiency Act in this case is whether the over-obligations were 

entirely attributable to the mandatory obligations for court-appointed 

attorneys and were, therefore, authorized by law. We conclude that they 

were not, primarily because

1. fiscal year 1998 obligations for court-appointed attorneys were similar to 

the prior fiscal year and the estimated amount for fiscal year 1998; 

2. DC Courts did not base its spending during most of the fiscal year on the 

appropriation it received; and 

3. DC Courts’ records indicated that a discretionary pay raise of about

$2.8 million was given to its non-judicial employees during fiscal year 1998.

In addition, DC Courts officials told us that they were authorized to retain 

the interest earned on quarterly apportionments of their appropriation and 

make it available for court operations. They noted that no statute prohibits 

retaining interest earned on apportionments. We disagree with this 

position primarily because the Revitalization Act specifically requires “that 

all money received by the District of Columbia Courts shall be deposited in 

the Treasury of the United States or the Crime Victims Fund.” Thus, DC 

Courts did not have statutory authority to augment its appropriation with 

interest earned on apportioned appropriations.

Recently, DC Courts officials advised us that there were obligations of over 

$1 million in their fiscal year 1998 records that needed to be de-obligated. 

DC Courts officials stated that these included amounts that the District 

should not have recorded as obligations and amounts for services that were 

no longer anticipated. We are currently reviewing these proposed deobligations. It will be important that DC Courts continue reviewing its 

records and do all required investigating and reporting under the AntiDeficiency Act.
Page 5 GAO/T-AIMD/OGC-99-176

Deferral of Payments 

to Court-Appointed 

Attorneys

Throughout fiscal year 1998, it was clear that unless DC Courts modified its 

spending or received additional funds, it was facing a shortfall. By the third 

quarter when DC Courts had not received the additional funds it 

anticipated, there were limited options available for addressing the 

projected shortfall. DC Courts officials considered furloughing employees 

and closing the courts for a period during the summer, as well as deferring 

court-appointed attorneys’ and expert service providers’ payments. In May 

1998, OMB officials advised DC Courts to reduce non-personnel costs 

instead of furloughing employees or closing the courts to avoid an AntiDeficiency Act violation. DC Courts made the decision on July 24, 1998, to 

defer payments for court-appointed attorneys for the remainder of the 

fiscal year, and then used fiscal year 1999 appropriations to pay those 

amounts. DC Courts had budgeted $31.6 million for such payments in fiscal 

year 1998, an amount that was similar to the previous fiscal year, and as of 

July 1998, $25.8 million had been expended on court-appointed attorney 

payments. The Congress authorized use of the DC Courts’ fiscal year 1999 

appropriation to fund these deferred payments. However, this did not 

change the payments from fiscal year 1998 obligations to fiscal year 1999 

obligations. The presiding judges or hearing commissioners approved the 

vouchers in fiscal year 1998 and the obligations should have been recorded 

in fiscal year 1998.

Processing of 

Payments to CourtAppointed Attorneys

Now I would like to discuss the payments that were made to courtappointed attorneys during fiscal year 1998 in terms of the process for 

making such payments, and whether they were made promptly. Your 

concern was that court-appointed attorneys were being paid late or not the 

right amount and that vouchers were sometimes being lost.

We found that DC Courts processed vouchers for court-appointed 

attorneys in accordance with its policies and procedures. However, its 

procedures did not include time frames for making payments to courtappointed attorneys. Our analysis of DC Superior Court’s fiscal year 1998 

paid voucher data through July 1998, showed that 94 percent of the 

vouchers for court-appointed attorneys and expert service providers were 

paid within 30 days1

 of the presiding judge’s or hearing commissioner’s 

1The District’s fiscal year 1999 Appropriation Act provided that DC Courts would be subject to the 

federal Prompt Pay Act, which requires that DC Courts pay a “proper invoice” within 30 days of its 

receipt or be subject to an interest penalty.
Page 6 GAO/T-AIMD/OGC-99-176

approval and 83 percent of these vouchers were paid within 60 days of the 

date submitted.

You were also interested in the incidence of voucher amounts being 

reduced at the time they are approved by the presiding judges or hearing 

commissioners. Our analysis of fiscal year 1998 paid voucher data showed 

that judges or hearing commissioners reduced voucher amounts in 9 

percent of the cases, of which more than half involved reductions of $100 

or less. DC Courts did not have procedures covering how judges or hearing 

commissioners were to report to the attorney or expert service provider 

their decisions to reduce voucher amounts claimed. However, DC Courts 

officials stated that this information was available to attorneys who 

requested it.

Regarding lost or missing vouchers, we found that there were no 

procedures for retaining data on the number of vouchers reported as 

missing or the disposition of such vouchers. DC Courts officials stated that 

such data were not maintained.

Crime Victims 

Compensation 

Program

I would now like to discuss a matter that did not affect DC Courts’ use of its 

fiscal year 1998 appropriation for court operations, but that will need to be 

addressed if DC Courts is to have the requisite authority to make payments 

out of its Crime Victims Fund. A District law established the Crime Victims 

Compensation Program under DC Courts jurisdiction prior to the 

enactment of the Revitalization Act. The Revitalization Act supports the 

authority of DC Courts to deposit fines, fees, and other money to the credit 

of the Crime Victims Fund under the District law. The District law provides 

that payments of up to $25,000 from the Fund can be made to crime victims 

for shelter, burial costs, or medical expenses. DC Courts’ records indicated 

that over $1.5 million in such payments were made during fiscal year 1998.

However, there is nothing in the language of the District’s fiscal years 1998 

or 1999 Appropriation Acts that appropriates amounts from the Crime 

Victims Compensation Fund, nor have we identified any other federal law 

authorizing payments from the Fund. Accordingly, we conclude that DC 

Courts did not have the requisite legislative authority to make payments 

from the Fund. This is a matter for the Congress and DC Courts to address.
Page 7 GAO/T-AIMD/OGC-99-176

Mr. Chairman, this concludes my statement. We will be separately 

reporting to you on these and other issues that you asked us to review and 

will include recommendations for addressing the matters discussed in this 

testimony. I will be happy to answer questions from you or other members 

of the Subcommittee.

(916280) Letr
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