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 Hutchison:

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 Act1

 (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 reported2

 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

proceedings5

 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. § 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).
2 GAO-03-224R DCPS Limitation of Attorneys’ Fees

placement of the students or the provision of free, appropriate public education for the

students.

In a March 29, 2002, report6

 to the Congress, the District stated that it had paid $12.7 million7

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.
3 GAO-03-224R DCPS Limitation of Attorneys’ Fees

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 Act8

 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 200112 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. § 1415(i)(3).

10See GAO-02-559R. 11See 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.

12The 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.
4 GAO-03-224R DCPS Limitation of Attorneys’ Fees

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 for

administrative

proceedings

Legal 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
5 GAO-03-224R DCPS Limitation of Attorneys’ Fees

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
6 GAO-03-224R DCPS Limitation of Attorneys’ Fees

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

7 GAO-03-224R DCPS Limitation of Attorneys’ Fees

Comments from the District of Columbia Public Schools

(194152)