District of Columbia Courts: Financial Related Issues for Fiscal Year 1998
Published: 1999-05-18T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Pursuant to a congressional request, GAO discussed the issues related to the District of Columbia (DC) Courts' financial operations for fiscal year (FY) 1998, focusing on: (1) identifying DC Courts' total obligations for fiscal years 1996, 1997, and 1998; (2) whether DC Courts had a spending plan for FY 1998, and whether it obligated funds consistent with available resources; (3) why payments to court-appointed attorneys were deferred between July and September 1998; and (4) whether DC Courts processed payments to court-appointed attorneys in accordance with policies and procedures.
section_title: What GAO Found
paragraphs: GAO noted that: (1) DC Courts experienced difficulties in planning and budgeting during this transition year; (2) DC Courts' records showed that it did not operate within its available resources, potentially in violation of the Anti-Deficiency Act; (3) GAO also identified a legal issue regarding the Crime Victims Compensation Program; (4) DC Courts' records indicated that total obligations in fiscal years 1996, 1997, and 1998 were $115.4, $119, and $126.3 million, respectively; (5) FY 1998 obligations reflect GAO's adjustments, and are not comparable to the prior years' obligations; (6) upon receipt of its FY 1998 appropriations, DC Courts was responsible for developing a spending plan based on an appropriation that was about $15.5 million less than it requested as a result of funding changes under the Revitalization Act and the FY 1998 appropriation act; (7) DC Courts did not develop such a plan or properly monitor spending to ensure that its obligations did not exceed available resources; (8) it obligated throughout the year based on its expectation of receiving additional funds; (9) by the end of the fiscal year, DC Courts' records showed obligations of almost $122.2 million and funds received of about $121.8 million; (10) however, GAO found that adjustments needed to be made to these amounts; (11) as adjusted, DC Courts' recorded obligations and available funding for FY 1998 would be $126.3 and $121 million, respectively; (12) thus, DC Courts potentially over-obligated available funds by more than $5 million; (13) 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; (14) to avoid an Anti-Deficiency Act violation, the DC Courts made the decision to defer payments for court-appointed attorneys for the remainder of the fiscal year, and then used FY 1999 appropriations to pay those amounts; (15) however, since the vouchers were approved by the presiding judges or hearing commissioners in FY 1998, the obligations should have been recorded in FY 1998; (16) DC Courts processed vouchers for court-appointed attorneys in accordance with its policies and procedures; and (17) however, its procedures did not include timeframes for making payments to court-appointed attorneys.

section_title: Letter
paragraphs: 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.
subsections: section_title: Reported Obligations for Fiscal Years 1996 Through 1998
paragraphs: 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  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.
section_title: DC Courts’ Spending Plan
paragraphs: 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.
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 Anti- Deficiency 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  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 de- obligations.  It will be important that DC Courts continue reviewing its  records and do all required investigating and reporting under the Anti- Deficiency Act.
section_title: Deferral of Payments to Court-Appointed Attorneys
paragraphs: 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 Anti- Deficiency 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.
section_title: Processing of Payments to Court- Appointed Attorneys
paragraphs: Now I would like to discuss the payments that were made to court- appointed 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 court- appointed 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 days of the presiding judge’s or hearing commissioner’s  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.
section_title: Crime Victims Compensation Program
paragraphs: 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.
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.
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