Appropriations for FY2002: District of Columbia
Released: 2002-01-10T00:00:00

Most Recent Developments

On December 21, 2001, President Bush signed into law the District of ColumbiaAppropriations Act for FY2002, P.L. 107-96 (formerly H.R. 2944 ). The House onDecember 6, 2001 and the Senate on December 7, 2001 approved the conference reportaccompanying H.R. 2944 , after resolving significant differences in the generalprovisions of their respective versions of the act. The act as approved by Congress reduces thenumber of general provisions from 67 to 42. P.L. 107-96 appropriates $408 million in specialfederal payments and approves the District's $7.1 billion total budget, including $5.3 billion ingeneral operating funds. The act includes $12.6 million in special federal payments for securityplanning, in the wake of the terrorist attacks on the Pentagon and World Trade Center on September11, 2001. The city also received $3.4 million to cover the cost of security for a World Bank andInternational Monetary Fund (IMF) meeting scheduled for late September 2001. The World Bankand IMF meeting was postponed amid concerns about security following the events of September11. In response to the attacks, Congress appropriated $40 billion in FY2001 emergencysupplemental assistance to address national needs. The costs of providing federal, state, and localpreparedness for mitigating and responding to the attacks, and repairing public facilities andtransportation systems damaged by the attacks, are two of the eligible uses of funds appropriatedunder the act. The Defense Appropriations Act, P.L. 107-117 , signed on January 10, 2002,appropriates $200 million in special federal payments to the District of Columbia and metropolitanarea regional entities to assist the city and region in upgrading and executing emergency responseplans.

Table 1. Status of District of Columbia Appropriations, FY2002: P.L.107-96 (formerly H.R. 2944)

Background

Since the signing of the District of Columbia Appropriations Act for FY2001, P.L. 106-522 , on November 22, 2000, the District of Columbia government hascontinued to make progress in improving the delivery of services and in the city'slong-term financial health. The cooperative efforts of the city's elected leadership,the District of Columbia Financial Responsibility and Management AssistanceAuthority (the Authority) (1) , the Chief FinancialOfficer (CFO), the courts, andCongress have enabled the city to meet the requirements for the return of home rule. The CFO's Comprehensive Annual Financial Report (CAFR), released in January2001, certified that the city had achieved a $241 million budget surplus for FY2000. This achievement satisfied the final requirement of the District of ColumbiaFinancial Responsibility and Management Assistance Act, P.L. 104-8 , for the returnto home rule--four consecutive years of balanced or surplus budgets. The favorablereport means the end of a control period, and the dissolution of the Authority'spowers on September 30, 2001. The city also has met the preconditions for the returnof four city agencies from court-ordered receivership, yet another sign, according tocity leaders, that the District has made progress in addressing government servicedelivery issues.

During the last year, the District of Columbia's elected and appointed leadership addressed a number of other governance-related issues, including school reform andmedical services for the uninsured. School reform, according to observers, is awork-in-progress. The new Board of Education faces an $80 million budget deficitand issues surrounding special education services and the certification of charterschools. The debate among city officials on the downsizing of D.C. General Hospitalwas contentious and resulted in fractured relations between the city's appointed andelected leadership.

District of Columbia Financial Condition

The District of Columbia Financial Responsibility and Management Assistance Act of 1995, P.L. 104-8 , created the Authority and the Office of Chief FinancialOfficer (OCFO). The Authority and the CFO are charged with improving thedelivery of city services and returning the District of Columbia to a position offinancial solvency. Working in concert with the District's elected politicalleadership, the Authority and the CFO have implemented a series of financial andmanagement reforms and have improved tax collection. These reforms, federalassistance, and an improved economy have resulted in four consecutive years ofbudget surpluses. P.L. 104-8 , the act creating the Authority and the CFO, requiresthe District to produce four consecutive years of balanced budgets as a prerequisitefor the termination of the Authority and the return of home rule.

The District ended FY1997 with a surplus of $186 million. For FY1998, the city's budget surplus was $445 million. (2) After a13-week delay, the city's CFO reported an FY1999 surplus of $86.4 million after subtracting a $35 million paymentto the retirement of the city's long-term debt. For FY2000, the general fund surpluswas $241 million.

On May 19, 2000, Natwar Gandhi, the former deputy CFO to Valerie Holt and Mayor Williams, became the city's third CFO. On January 26, 2001, the CFOreleased the city's Comprehensive Annual Financial Report (CAFR) for FY2000. The report, which is a critical barometer of the city's financial health, showed the cityhad a budget surplus of $241 million. The FY2000 CAFR met the CFO's keyobjectives of producing an unqualified audit opinion and a balanced budget for thefourth consecutive year.

This year Congress and the city's elected leadership have considered legislation concerning the future role of the CFO after the restoration of home rule. The Officeof the CFO (OCFO) has played a critical role in the city's success in maintainingbudget discipline and its return to fiscal health. The city has considered legislationthat makes the OCFO a permanent part of the city's governing structure. Withoutsuch legislation, the OCFO will cease to exist beyond September 30, 2001, the endof the control period. (3) In July 2001, a conferencecommittee consideringsupplemental appropriations for the District of Columbia for FY2001 considered, butlater withdrew, a proposal regarding the District's Chief Financial Officer. Theproposal sought to strengthen the powers of the office by giving the CFO subpoenapowers and access to all city agencies' records. Further, the proposal would haveextended the OCFO's independence from the Mayor to FY2006. In addition, theplan would have permitted the mayor to appoint a CFO, and would have given thatofficial control of the agency's $68 million budget, 1,000 employees, legal counsel,and contracts. The proposal was introduced, in part, to fill an oversight void that willbe created by the departing financial control board, which ceases to exist on October1, 2001. The plan was withdrawn during conference committee consideration of thebill in deference to legislation being considered by the city council.

On June 19, 2001, the city council held a public hearing on the Independence of the Chief Financial Officer Establishment Act of 2001, B14-0254. The legislationmakes the position of CFO permanent; it provides for the appointment and removalof the CFO by the mayor, with the consent of the city council; and the act transfersto the CFO the responsibility for the management of all executive branch agenciesinvolved in managing the city's finances. The bill was approved by the Council bya voice vote on July 10, 2001 as legislative act 14-089. The act is subject tocongressional review. Congress has 30 legislative days to review the act. Alegislative day is any day in which one or both houses of Congress are in session.

Public Benefits Corporation

During the past year, city leaders and Congress have attempted to address problems and controversies surrounding the Public Benefits Corporation (PBC), D.C.General Hospital, and the restructuring of the city's health care delivery system foruninsured residents of the city. In November 2000, Congress included a provisionin the District of Columbia Appropriations Act of FY2001, P.L. 106-522 , prohibitingthe PBC from borrowing funds from the District of Columbia government. Inaddition, the act required the mayor, the city council, the Authority, the CFO, and theChair of the Board of Directors of the PBC to develop and approve a restructuringplan for D.C. General Hospital.

Reform in the city's delivery of health care to the poor was sought by Congress because of the well-documented problems of the PBC and its mismanagement ofD.C. General Hospital. Since 1997, the PBC amassed $109 million in unbudgetedloans from the city, using its power to borrow from the city's general fund inanticipation of Medicaid reimbursements. These unbudgeted loans were used by thePBC to cover deficit spending and defer mounting debt. However, the hospital dida poor job in seeking reimbursement for treatment. In addition to its poor financialmanagement, the PBC had been the subject of newspaper stories detailingquestionable hiring practices, including the hiring of friends and relatives of citycouncil members and former associates of the Executive Director of the PBC. ThePBC was also the subject of a critical report by health care consultants CambioHealth Solutions. Hired by the PBC in 2000, the consultants criticized the PBC for:(1) a lack of oversight by the PBC's board of directors, (2) poor patient care, (3)undocumented or poorly documented overtime, and (4) the lack of health careexperience among some members of the PBC's management team.

The consultants recommended the downsizing and restructuring of the hospital from a 250-bed advance trauma center to a community access hospital or urgent carefacility that treats and releases or transfers patients within 23 hours of admittance. By late August 2000, the downsizing of the hospital staff had begun with theannouncement that 550 employees of the 2,000-person workforce would be laid offbefore the end of the year.

In December 2000, the mayor, with the support of the Authority, had formalized a proposal that downsized D.C. General Hospital and provided health care servicesthrough a contract with a group of private health care providers led by GreaterSoutheast Community Hospital. The mayor's proposal was not supported by amajority of the city council. On March 6, 2001, the city council unanimously passeda resolution rejecting the Authority's recommendation for the awarding of a contractfor health care services for the uninsured to Greater Southeast Community Hospital.Several city council members expressed concern that the privatization proposalwould erect new barriers to care for the city's 65,000 uninsured residents. Themajority of the city council preferred keeping D.C. General as a full-service hospital.Their plan involved providing the hospital with $21 million in assistance that wouldhave been used to keep it open until the end of the fiscal year, which was also the endof the control period and the Authority's powers. During this time, the city couldfind a more permanent solution short of downsizing or closing the hospital. After2001, the city council would be in a strong position to override the mayor's vetowithout the threat of the control board negating their veto override.

On April 30, 2001, the Authority used its veto power to negate a city council 's override of a mayoral veto of the $21 million city council proposal that would havekept D.C. General Hospital open until September 30, 2001, the end of the 2001 fiscalyear. In addition, the Authority voted to dissolve the PBC and transferred itsresponsibilities to the city's Department of Health. The Authority signed anagreement with Greater Southeast Community Hospital Corporation and theHealthcare Alliance to provide health care services to the city's uninsured residents. The Authority's actions were controversial and represented a departure from its morerecent efforts to allow the city's elected officials--the mayor and the city council--towork out their policy differences. The action was taken after the city council rejectedthe mayor's proposal for revamping the city's health care service delivery system andvoted on April 27, 2001, to override a mayoral veto and provide $21 million inFY2001 supplemental assistance to the PBC.

The control board's constitutional authority to exercise such power was challenged in court by two members of the city council and several unionsrepresenting hospital employees. On April 30, 2001, city council members KevinChavous and David Cantania filed suit in the United States District Court for theDistrict of Columbia challenging the Authority's powers to award the contract forhealth care services and to dissolve the PBC. The council members' suit argues thatthe control board acted without statutory authority and over the objection of the citycouncil, which on March 6, 2001, unanimously passed a resolution rejecting theAuthority's recommendation for the awarding of a contract for health care servicesfor the uninsured to Greater Southeast Community Hospital. The court, which issuedits opinion on August 6, 2001, found that only the council members had standing tobring suit against the Authority. The court further found that although the councilmembers had standing to bring suit, the Authority acted within the powers grantedit by Congress under P.L. 104-8 when it overrode the city council and awarded thecontract.

School Reform

In June 2000, voters approved by referendum an amendment to the city's home rule charter. The referendum changed the structure of the Board of Education. Itabolished the 11-member board comprising one person elected from each of thecity's eight wards, and three--including the chair--elected at-large. Thecomposition of the new nine-member Board of Education includes four memberselected to represent four school districts, an elected chair of the board, and fourmembers appointed by the mayor. This new structure gives the mayor a significantvoice in determining the direction of public education, and it makes him moreaccountable, by way of his appointments, for the future success or failure of the city'spublic schools.

In November 2000, voters elected a chair and four members to the new Board of Education, and the mayor subsequently appointed four others. The city's newnine-member school board began its oversight of the school system in January 2001. Earlier this summer, the Board announced a three-year contract extension withSuperintendent Paul Vance. The move was applauded by parents, city officials, andcongressional leaders. The reform-minded Board of Education and superintendentface several challenges, including improving special education, raising academicachievement, and improving the physical facilities. The board also faces issuesconcerning its oversight of charter schools and skepticism about the effectiveness ofa school board composed of appointed and elected members, and its ability to avoidthe pitfalls that have confronted other school reform efforts.

A November 22, 2000 report by the District's Inspector General was critical of the school system's inability to provide adequate transportation services for specialeducation students. In 1999, a District court assigned a special master to monitor thesituation. In addition, an unreleased draft report by the City Council Special CouncilCommittee on Special Education (4) has detailedproblems in the District's delivery ofother special education services. The draft report is critical of District of ColumbiaPublic Schools' (DCPS) past operation of special education programs and theprocess for the evaluation of student needs for special services. Among therecommendations contained in the draft report are the following: (1) that the DCPSstrengthen its commitment to provide adequate and qualified staff in the deliveryof special education services; (2) that the DCPS improve its management oftransportation costs and the dependability of transportation services; and (3) that theDCPS improve the process used to assess and place students with special needs.

Students' performance on standardized reading and math tests again has disappointed school administrators, remaining stagnant for the second consecutiveyear. Despite this lack of progress, Superintendent Paul Vance remains optimisticthat improvement will be made in the coming years. The DCPS has hired at least 29new principals and has begun to implement its strategic plan which includes effortsto improve the DCPS's interaction with other city agencies. The plan also holdsprincipals accountable for school performance.

The lack of progress in improving academic performance in the public schools has fueled the growth of public charter schools. Nearly 10,000 students--one inevery 10 students--are enrolled in one of the approximately 34 public charter schoolsin the District. At least 17 of these schools were chartered by the Board ofEducation, with the remainder receiving charters from the Public Charter SchoolBoard, which was created by Congress when its passed charter school legislation in1996. The lack of consistency between the two governing bodies charged with granting and overseeing charter schools, and the increased costs of regulating charterschools are two of the concerns about the existence of two chartering authorities. (Foradditional information on charter schools in the District of Columbia see the DCAppleseed Center Report entitled Charter Schools in the District of Columbia:Improving Systems for Accountability, Autonomy, and Competition , April 2001.)

On September 6, 2001, city and school officials announced an $80 million budget deficit for FY2001. The overspending, mostly cost overruns in specialeducation and the failure to document properly special education expenses submittedfor Medicaid reimbursement, will be offset by hiring freezes, fund transfers, andunanticipated growth in tax revenue. Though the deficit does not jeopardize thecity's return to home rule, the unanticipated overspending was a source ofembarrassment for school officials, the CFO, and the city's elected leaders. In orderto deal with the deficit, school board officials announced that they were consideringshortening the school year by 7 days. The school board reconsidered after the ideawas criticized by congressional members and the city's elected leadership, and aftercity leaders provided an additional $10 million in funding for the remaining schoolyear.

Receiverships

During the past year the District government successfully removed four agencies from control by court-appointed receivers. In September 2000, the District'sHousing Authority and the District of Columbia Jail Medical Services were returnedto District control. Working with the courts and advocacy groups, Mayor Williamsand his administration were able to negotiate the return of the Mental Health Servicesand Child and Family Services to District control. Although the return of thedepartments was a major accomplishment for the mayor, the inability of the twocourt-appointed receivers to make significant progress in the delivery of services alsoplayed a role in the court's willingness to return administrative control to the Districtgovernment.

On October 23, 2000, District Court Judge Thomas Hogan approved a plan forreturning the Child and Family Services agency to District control by the summer of2001. The agency had been under receivership since August 1995, followingfindings in LaShawn v. Williams that the agency failed to provide adequatesupervision of children under its care, and that children under its care were abusedand neglected. The judge's consent decree of October 23, 2000, established 26preconditions and a six-month probationary period before the agency could return toDistrict control. The conditions imposed by the consent decree included: prohibitingbudget cuts and layoffs; increasing the number of home visits by social workers;passing legislation that would place the responsibility for investigating abuse andneglect cases with Child and Family Services rather than splitting the duty betweenthe police and the agency; developing licensing standards for foster care and grouphomes; and elevating the agency to cabinet-level status.

The Child and Family Services Agency Establishment Act of 2001 was passed on April 4, 2001, elevating the agency to cabinet-level status and fulfilling one of thefinal requirements for termination of the receivership. On May 21, 2001, JudgeHogan entered an order terminating the receivership, effective July 15, 2001.

In addition, Congress is considering legislation that would amend and restructure the family court division of the District of Columbia Superior Court. TheHouse bill ( H.R. 2657 ) and the Senate bill ( S. 1382 ) wouldincrease to 15 the number of judges assigned to Family Court; and would requirejudges assigned to Family Court to have expertise in family law, agree to participatein ongoing training, and serve for a minimum term of three to five years. Congressional interest in reforming family court can be traced to the tragic death ofa 23-month-old child, Briana Blackmon, who was beaten to death after a family courtjudge ordered that the child be returned to her mentally unstable mother.

In May 2001, the city council passed The Department of Mental Health Establishment Emergency Amendment Act of 2001. Passage of the act was one ofthe requirements for the transfer of the Commission on Mental Health Services backto District government control. The agency had been under the control of acourt-appointed receiver since 1997. Much of the support for returning the agencyto city control centered on the receiver's inability to manage the agency adequately. A newspaper series chronicled the agency's problems, including the deaths of 24 mentally retarded or developmentally disabled group home residents since 1999.

Future Role of the Authority and the CFO

The District of Columbia Financial Responsibility and Management Assistance Act, P.L. 104-8 , identified four conditions for the ending of a control period and thereturn to home rule. The District must demonstrate that:

(1) all obligations arising from the Authority's issuance of bonds, notes, or other obligations have been discharged;

(2) all borrowing by the District from the United States Treasury has been repaid;

(3) the District government has adequate access to short and long-term credit markets at reasonable rates to meet itsborrowing needs; and

(4) the District has achieved balanced or surplus budgets for four consecutive fiscal years.

On February 14, 2001, the Authority announced that the District of Columbia had met the fourth and final precondition for the return of home rule to the city's electedleadership and the suspension of the Authority's oversight and management powers. Congress has held hearings to explore the future role of the CFO and the Authorityfollowing the end of the control period. In addition, the District's city council passedthe Independence of the Chief Financial Officer Establishment Act of 2001, whichauthorizes the mayor to appoint a CFO, with the advice and consent of the citycouncil, to a five-year term. The legislation transfers to the CFO the responsibilityfor the management of all executive branch agencies involved in managing the city'sfinances. It requires the CFO to perform many of the functions authorized by thefederal legislation P.L. 104-8 .

Budget Request

Emergency Terrorism and Disaster Recovery Supplemental Appropriations

On September 11, 2001, the Pentagon and World Trade Center were the targets of terrorist attacks. In response to the attacks, Congress appropriated $40 billion inFY2001 emergency supplemental assistance ( P.L. 107-38 ). The costs of providingfederal, state, and local preparedness for mitigating and responding to the attacks, andrepairing public facilities and transportation systems damaged by the attacks, are twoof the eligible uses of funds appropriated under the act. According to press reports,the District requested $13 million to reimburse the District government for costincurred in responding to the attack on the Pentagon. The Bush Administration has reimbursed the District $6 million for the cost associated with responding to theSeptember 11, 2001, attacks. Additional funds may be directed to the District andthe surrounding region to assist them in upgrading and executing their emergencyresponse. The District government has been criticized for its poor execution of theemergency management response to the attack on the Pentagon. The mayorannounced that the city will accelerate work on a coordinated regional plan forterrorist attacks, and the city has rewritten a basic city emergency plan to anticipatespecific problems that may be caused by any future attacks.

On October 9, 2001, the District government forwarded a request for additional funds for emergency preparedness and economic recovery to the Office ofManagement and Budget. The mayor requested $249 million for emergency planningand response activities and $512.9 million for economic recovery activities, includingsmall business loans, unemployment compensation, and revenue lost. Additionally,the mayor's request included $182 million in economic stimulus assistance. Thisincluded assistance for street resurfacing, technology modernization, and schoolrepairs. The final disposition of the District's budget request has not yet beenannounced. However, there is an emerging concern about the use of funds foreconomic stimulus. Some members of Congress believe that economic stimulusprovided to cities affected by the events of September 11, 2001, should be part of alarger and separate economic stimulus package.

Supplemental Appropriations for FY2001

On July 24, 2001, the President signed P.L. 107-20 , the Supplemental Appropriations Act for FY2001. The act includes $107 million in additional FY2001appropriations. The primary source of the additional appropriations will be localfunds drawn from the city's surplus or reserves and used to cover cost overruns ofvarious agencies or new initiatives. The act includes a rescission of $131,000 fortaxicab inspectors and a $250,000 rescission budgeted for activities related to thesimplification of employee compensation systems, and transfers the funds to publiceducation budget function for use under the Excel Institute Adult Education Program.

The act requires the mayor to report to Congress, within 45 days of the passage of the act, on the specific authority necessary to carry out certain responsibilitiestransferred to the CFO in a non-control year and certain responsibilities relating tothe transition of responsibilities under the District of Columbia FinancialResponsibility and Management Assistance Act of 1995.

Table 2. District of Columbia FY2001 Supplemental Budget Request Included in P.L.107-20 (in millions ofdollars)

FY2002: The President's Budget Request

On April 9, 2001, the Bush Administration released its FY2002 budget recommendations. The Administration's proposed budget included $342.5 millionin federal payments to the District of Columbia. An overwhelming percentage of thePresident's proposed federal payments and assistance to the District involved thecourts and criminal justice system. This included $147.3 million for the CourtServices and Offender Supervision Agency for the District of Columbia, anindependent federal agency that has assumed management responsibility for theDistrict's pretrial services, adult probation, and parole supervision functions. Inaddition, the Administration requested $111.2 million in support of court operations,and $32.7 million for the trustee appointed to oversee the District's correctionssystem, including the closing of the Lorton Correctional Facility and the transfer ofits inmates into the federal prison system. These four functions (prisonadministration, court operations, defender services, and offender supervision)represent $325.5 million, or 95%, of the President's proposed $342.5 million infederal payments to the District of Columbia (see Table 3 ).

FY2002: District's Budget Request

On May 25, 2001, District officials transmitted the city's $5.3 billion budget for FY2002 to Congress for review and approval. The city's budget included a $150million reserve fund mandated by the District of Columbia Appropriations Act of1999, P.L. 105-277 . In addition, the budget sought to increase funding for publiceducation by $107 million, for human support services by $207 million, and forgeneral government support by $88.8 million. The budget must be approved byCongress (see Table 4 ).

FY2002: Section 302(b) Suballocation

Section 302(a) of the Congressional Budget Act requires that the House and Senate pass a concurrent budget resolution establishing an aggregate spending ceiling(budget authority and outlays) for each fiscal year. These ceilings are used by Houseand Senate appropriators as a blueprint for allocating funds. Section 302(b) of theCongressional Budget Act of 1974 requires appropriations committees in the Houseand Senate to subdivide their Section 302(a) allocation of budget authority andoutlays among the 13 appropriations subcommittees.

On June 21, 2001, the Senate Appropriations Committee approved a revised 302(b) suballocation for the District of $392 million. The House AppropriationsCommittee approved a Section 302(b) suballocation of $382 million in budgetauthority for FY2002 for the District of Columbia. On September 20, 2001, theHouse revised its Section 302(b) allocation for the District of ColumbiaAppropriations to $399 million.

Congressional Action on the Budget

Congress not only appropriates federal payments to the District to fund certain activities, but also reviews the District's entire budget, including the expenditure oflocal funds. The District subcommittees of both the House and Senate AppropriationsCommittees must approve--and may modify--the District's budget. House andSenate versions of the District budget are reconciled in a joint conference committeeand must be passed by the House and the Senate. After this final action, theDistrict's budget is forwarded to the President, who can sign it into law or veto it.

Table 3. District of Columbia General and Special Federal Payment Funds: Proposed FY2002 Appropriations (inmillions of dollars)

a Funds provided under a separate heading--Defender Services for the District ofColumbia Courts. The transfer is based on the Courts misuse of funds appropriatedfor such activities in previous years.

b Funds provided under a separate heading--Defender Services for the District ofColumbia Courts. The transfer is based on the Courts misuse of funds appropriatedfor such activities in previous years.

c In previous years, funds would be provided as part of District of Columbia courtoperations. Congress created a separate appropriation to ensure payment of attorneysrepresenting indigent persons, guardianship, and abused and neglected children incourt proceedings.

d The $5 million made available for FY2001 is a carryover of unobligated fundsappropriated in FY2000. This amount is not included in total special federalpayments for FY2001.

e Allows courts to reallocate not more than $1 million among activities funded underthis heading.

f Certified as a federal agency on August 14, 2000.

g Funds were originally targeted to cover the costs associated with providing securityfor a World Bank and International Monetary Fund meeting scheduled of lateSeptember 2001. The meeting was cancelled following the terrorist attacks on thePentagon and World Trade Center.

H.R. 2944, House Version. On September 25, 2001, the House approved the Districtof Columbia Appropriations Act for FY2001, H.R. 2944 , by a vote of327 to 88. The bill included $398 million in special federal payments andcontributions to the District. The majority of these funds were to be used for court,prisons, and offender supervision-related activities. The House bill allocatedapproximately 95% of the $398 million in special federal payments to theseactivities. In addition, the House bill included $16 million for emergency planning.The House Appropriations Committee originally recommended that the funds beused for costs associated with security for a World Bank and International MonetaryFund meeting that was scheduled for the end of September 2001, but was postponedbecause of the September 11, 2001 terrorist attacks on the Pentagon and World TradeCenter.

On September 20, 2001, the House Appropriations Committee reported out the District of Columbia Appropriations Act for FY2002 ( H.Rept. 107-216 ). TheCommittee's markup and reporting of the District Appropriations Act for FY2002,which was scheduled for September 13, 2001, was delayed following the September11, 2001 terrorist attacks on the Pentagon and World Trade Center. On September6, 2001, the House Subcommittee on the District of Columbia Appropriationscompleted its markup of an unnumbered bill containing its budget recommendationsfor FY2002 for the District of Columbia to the Appropriations Committee.

FY2002 General Provisions, House Bill. In a change from previous years, House and Senateappropriations committees pledged to review the general provisions of the Districtof Columbia with the aim of reducing the number by eliminating redundant,irrelevant, inappropriate, or arcane provisions. District officials have sought, inprevious years, to reduce the number of provisions, but without success. Theseofficials have been particularly critical of the number of social riders that have beenincluded in previous appropriations acts. These provisions have includedprohibitions on the use of federal and city funds for abortions, the use of marijuanafor medical purposes, limitations on the distribution of hypodermic needles to illegaldrug users, and domestic partners health insurance coverage.

During its consideration of the bill, the House Appropriations Committee approved an amendment, offered by Representatives Kolbe and Moran, that wouldremove the prohibition on the use of District funds for costs associated withimplementing the District's Health Care Benefits Expansion Act of 1992. The Act would allow unrelated couples to register as domestic partners, and would allow anyDistrict employee so registered to include his or her domestic partner under the samehealth insurance plan. The District employee would be responsible for paying theadditional premium for coverage of the domestic partner not employed by the Districtgovernment. For a review of the general provisions contained in H.R. 2944 , see CRS Report RL31159(pdf) , District of Columbia Appropriations Act forFY2002: Comparison of General Provisions of P.L. 106-522 , and House, Senate, andConference Versions of H.R. 2944 , by [author name scrubbed].

H.R. 2944, Senate Version (formerly S. 1543). On November 7, 2001, the Senate approved itsversion of H.R. 2944 , substituting the language contained in S. 1543 . The bill included $408 million in special federal payments andcontributions to the District. The majority of the funds were to be used for courts,including funds for a new family court division; prisons; and offendersupervision-related activities. The Senate bill also included funds for emergencyplanning activities in response to the September 11, 2001 terrorist attacks. Inaddition, the Senate bill included $1.4 million for mobile wireless interoperationallinks between the city's Chief Technology Office and three federal law enforcementagencies--the Secret Service, the Park Police, and the Capitol Hill Police.

FY2002 General Provisions, Senate Bill. During its consideration of the bill, the Senate AppropriationsCommittee included a provision that would remove the prohibition on the use ofDistrict funds for costs associated with implementing the District's Health CareBenefits Expansion Act of 1992, which would allow unrelated couples to be coveredunder the same health insurance plan. The Committee also reduced the number ofgeneral provisions included in the bill to 36. It retained a number of provisions thatDistrict officials wanted eliminated or modified, including those related to medicalmarijuana, abortion, and needle exchange programs.

During the full Senate's consideration of the bill, several amendments were offered. The Senate defeated an amendment offered by Senator Allen that wouldhave reinstated the prohibition on the use of District funds to support needleexchange programs. The vote was 53 to 47. The Senate considered and approvedan amendment offered by Senator Hutchison of Texas that would increase the cap onfunding for attorneys' fees to represent students seeking special education services. The Hutchison amendment, which was approved by a vote of 51 to 49, caps theamount of funds payable to such attorneys at no more than $150 per hour and $3,000per case. The Senate approved two related amendments. One, introduced bySenators Durbin and Boxer, exempts from the cap any attorney representing studentsin one of three categories when challenging special education placement under theIndividuals with Disabilities Education Act:

the student's family has an income of less than $17,600 per year; or

at least one of the student's parents is a disabled veteran;or

the court has determined the student is the victim of abuse orneglect.

The Durbin/Boxer amendment was approved by a vote of 73 to 26. The Senate also approved a related amendment introduced by Senator Landrieu, the floor manager ofthe bill. The amendment, which was approved by voice vote, directs the GeneralAccounting Office to submit to the Congress by January 2, 2002, a report detailingthe awards in judgment rendered by the courts that were in excess of the caps on theallowable fees an attorney may charge when challenging special education placementin the District of Columbia. For a review of the general provisions contained inHouse and Senate versions of H.R. 2944 , see CRS Report RL31159(pdf) , District of Columbia Appropriations Act for FY2002: Comparison of GeneralProvisions of P.L. 106-522 , and House, Senate, and Conference Versions of H.R. 2944 , by [author name scrubbed].

H.R. 2944, Conference Version. On December 5, 2001, a House and Senate conferencecommittee reported out the District of Columbia Appropriations Act for FY2002( H.Rept. 107-321 ). On December 6, 2001, the House approved the conferencereport by a vote of 302 to 84, while the Senate approved the act by a vote of 79 to 20one day later. The act allocates approximately 85% of the $408 million in specialfederal payments for court, prisons, and offender supervision-related activities,including $24 million for a new Family Court Division. In addition, the act includes$16 million for emergency planning in response to the September 11, 2001 terroristattacks. It reduces funding for the Correction's Trustee from $134 million in FY2001to $30 million for FY2002. The reduction is a result of the closing of the LortonCorrectional Facility and the transfer of District felons to the federal prison system.

FY2002 General Provisions, Conference Bill. As discussed above, in a change from previous years, Houseand Senate conferees agreed to reduced the number of general provisions includedin the act, focusing on arcane, redundant, or irrelevant provisions. In the past cityofficials have sought to reduce the number of social riders that have been includedin previous appropriations acts, but without success. These provisions have includedprohibitions on the use of federal and city funds for abortions, the use of marijuanafor medical purposes, domestic partners health insurance coverage, and lobbying forvoting representation in Congress, and limitations on the distribution of hypodermicneedles to illegal drug users.

The final version of the act removes the restriction on the placement of needle exchange programs near school facilities. The conference bill also removes theprohibition on the use of District funds to implement the District's Health CareBenefits Expansion Act of 1992. In approving the conference report, both chambersof Congress left intact restrictions and prohibitions on the use of federal and Districtfunds for a needle program, lobbying for voting representation in Congress, andmedical marijuana. The act also directs the GAO to report to Congress by March 31,2002, on cost issues related to the payment of legal fees to attorneys representing theschool system and special needs children in cases involving the Individuals withDisabilities Education Act. The Congress directed GAO to undertake the study afterissues were raised during appropriation and oversight hearings concerning theaccuracy of the school system's estimate of the cost of fees paid to attorneysrepresenting special needs children in proceeding against the school system. The actwas signed by the President on December 21, 2001, as P.L. 107-96 .

Table 4. District of Columbia General Funds (in millions of dollars)

Note: Brackets indicate projected saving to be achieved and not actual expenditure.

a Bill established two reserve funds: a "contingency reserve fund" into which themayor may deposit at least 3% of the total fiscal year operating budget; and an"emergency cash reserve fund" into which the mayor may deposit at least 4% of thetotal fiscal year operating budget. These reserve funds are to be established over amulti-year period and would augment the present reserve fund of $150 million.

Key Policy Issues

Needle Exchange

The continuation of a needle exchange program funded with federal or District funds is one of several key policy issues that Congress considered when approvingthe District's appropriations act for FY2002. The controversy surrounding fundinga needle exchange program touched on issues of home rule, public health policy, andgovernment sanctioning and facilitating the use of illegal drugs. Proponents of aneedle exchange program contend that such programs reduce the spread of HIVamong illegal drug users by reducing the incidence of shared needles. Opponents ofthese efforts contend that such programs amount to government sanctioning of illegaldrugs by supplying drug-addicted persons with the tools to use them. In addition,they content that public health concerns raised about the spread of AIDS and HIVthrough shared contaminated needles should be addressed through drug treatment andrehabilitation programs. Another view in the debate focuses on the issue of homerule and the city's ability to use local funds to institute such programs free fromcongressional actions.

The prohibition on the use of federal and District funds for a needle exchange program was first approved by Congress as Section 170 of the District of ColumbiaAppropriations Act for FY1999, P.L. 105-277 . The 1999 Act did allow privatefunding of needle exchange programs. The District of Columbia Appropriations Actfor FY2001, P.L. 106-522 , continued the prohibition on the use of federal andDistrict funds for a needle exchange program, and restricted where privately fundedneedle exchange activities could take place. Section 150 of the District of ColumbiaAppropriations Act for FY2001 makes it unlawful to distribute any needle or syringefor the hypodermic injection of any illegal drug in any area in the city that is within1,000 feet of a public elementary or secondary school, including any public charterschool. Provisions contained in an earlier House version of the District of ColumbiaAppropriations Act for FY2000 ( H.R. 3194 ) would have prohibited anyorganization that received federal or District funds from funding a needle exchangeprogram with private funds. This prohibition was dropped during conferenceconsideration of the bill, which was signed by the President on November 29, 1999. Presently, only one entity, Prevention Works, a private nonprofit AIDS awarenessand education program, operates a privately funded needle exchange program.

At a minimum, District officials were seeking to remove restrictions on needle exchange activities, and to lift the prohibition on the use of District funds for needleexchange programs. The final version of the act , P.L. 107-96 , lifts the restrictionthat prohibits the operation of needle exchange programs within 1,000 feet of publicelementary and secondary schools, including public charter schools. It also maintainsthe restriction on the use of federal and District funds for needle exchange programs.The bill as initially approved by the House would have continued the prohibition onthe use of federal and local government funding of needle exchange programs. TheSenate bill would have allowed the use of local government funds for needleexchange programs, but would have maintained the prohibition on the use of federalfunds.

Medical Marijuana

The medical marijuana initiative provision in the District of Columbia appropriations legislation is another issue that engenders controversy. The Districtof Columbia Appropriations Act for FY1999, P.L. 105-277 , included a provision thatprohibited the city from counting ballots of a voter-approved initiative that wouldhave allowed the medical use of marijuana to assist persons suffering debilitatinghealth conditions and diseases including cancer and HIV infection.

Congress's power prohibiting the counting of a medical marijuana ballot initiative was challenged in a suit filed by the D.C. Chapter of the American CivilLiberties Union (ACLU). On September 17, 1999, District Court Judge RichardRoberts ruled that Congress, despite its unique legislative responsibility for theDistrict under Article I, Section 8 of the Constitution, did not possess the power tostifle or prevent political speech, which included the ballot initiative. This rulingallowed the city to tally the votes on the November 1998 ballot initiative. To preventthe implementation of the initiative, Congress had 30 days to pass a resolution ofdisapproval from the date the medical marijuana ballot initiative (Initiative 59) wascertified by the Board of Elections and Ethics. Language prohibiting theimplementation of the initiative was included in P.L. 106-113 , the District ofColumbia Appropriations Act for FY2000. Opponents of the provision contend thatit and similar actions undercut the concept of home rule.

The District of Columbia Appropriations Act for FY2002, P.L. 107-96 , includes a provision that continues to prohibit the District government from implementing the initiative.

Abortion Provision

The public funding of abortion services for District of Columbia residents is a perennial issue debated by Congress during its annual deliberations on the Districtof Columbia appropriations. District officials cite the prohibition on the use ofDistrict funds as just another example of congressional intrusion into local matters. The District of Columbia Appropriations Act for FY2001, P.L. 106-522 , includes aprovision prohibiting the use of federal or District funds for abortion services exceptin cases where the life of the mother is endangered or the pregnancy is the result ofrape or incest. This prohibition has been in place since 1995, when Congressapproved the District of Columbia Act for FY1996, P.L. 104-134 .

Since 1979, with the passage of the District of Columbia Appropriations Act of 1980, P.L. 96-93 , Congress has placed some limitation or prohibition on the use ofpublic funds for abortion services for District residents. From 1979 to 1988,Congress restricted the use of federal funds for abortion services to cases where themother's life would be endangered or the pregnancy resulted from rape and incest. The District was free to use District funds for abortion services.

When Congress passed the District of Columbia Appropriations Act for FY1989, P.L. 100-462 , it restricted the use of District and federal funds for abortionservices to cases where the mother's life would be endangered if the pregnancy wastaken to term. The inclusion of District funds, and the elimination of rape or incestas qualifying conditions for public funding of abortion services, was endorsed byPresident Reagan, who threatened to veto the District's appropriations act if theabortion provision was not modified. In 1989, President Bush twice vetoed theDistrict's FY1990 appropriations act over the abortion issue. He signed P.L. 101-168 after insisting that Congress include language prohibiting the use of District revenuesto pay for abortion services except in cases where the mother's life was endangered.

The District successfully fought for the removal of the provision limiting District funding of abortion services when Congress considered and passed theDistrict of Columbia Appropriations Act for FY1994, P.L. 103-127 . The FY1994 Actalso reinstated rape and incest as qualifying circumstances allowing for the publicfunding of abortion services. The District's success was short lived. The District ofColumbia Appropriations Act for FY1996, P.L. 104-134 , and subsequent District ofColumbia appropriations acts, limited the use of District and federal funds forabortion services to cases where the mother's life is endangered or cases where thepregnancy was the result of rape or incest.

The prohibition on the use of District and federal funds is included in the House, Senate, and conference versions of the District of Columbia Appropriations Act forFY2002, P.L. 107-96 .

District of Columbia Anti-Terrorism Appropriations

The FY2002 District of Columbia Appropriations bill as approved by the Senate Appropriations Committee on October 11, 2001, and the House on September 25,2001, included $16 million in funding for emergency planning. The District's initialFY2002 budget request included a $16 million federal payment specifically for costsassociated with security support--including counter-terrorism and crowd control--for the IMF/World Bank meeting that was scheduled for late September 2001. Themeeting, which has been postponed to a date to be determined, also was scheduledto receive $17 million in funding from the IMF and World Bank for security support.

P.L. 107-96 includes a provision that reallocates the $16 million special federal payment to emergency security planning activities in response to the September 11,2001 terrorist attacks. The act allocates $3.4 million as reimbursement to theDistrict for costs associated with security planning for the World Bank/IMF meeting. Three additional budget items include funding that may be used to combat or respondto terrorist acts. However, funds for these operations are derived from local revenuesources: the Metropolitan Police Department; District of Columbia National Guard;and the District of Columbia Emergency Management Agency. Budget requests forthese operations are identified in the following table. In addition, Congressappropriated $1.4 billion in a special federal payment for the development anddeployment of a wireless telecommunication system linking the District government,the U.S. Capitol Police, the U.S. Park Service Police, and the Secret Service.

Table 5. District of Columbia Federal and LocalAppropriations That May Be Used to Respond to TerrorismThreats

Congress provided additional assistance for emergency preparedness and terrorism response activities in the Department of Defense Appropriations forFY2002, P.L. 107-117 . The act includes $200 million in special federal paymentsto District of Columbia and selected regional agencies, including the WashingtonCouncil of Governments and the Washington Metropolitan Transit Authority, foremergency response-related activities. The Defense Appropriations Act for FY2002was signed by the President on January 10, 2002.

Table 6. FY 2002 Defense Appropriations Act, P.L.107-117: District of Columbia Emergency Preparedness Funds

Health Care Benefits Expansion Act (Domestic Partners Program)

P.L. 107-96 includes a provision lifting the congressional prohibition on the use of District funds to implement the Helath Care Benefits Expansion Act. OnSeptember 20, 2001, the House Appropriations Committee approved, by a vote of 28to 21, an amendment introduced by Representatives Kolbe and Moran that wouldremove the congressional prohibition on the use of District funds for theimplementation of the city's Health Care Benefits Expansion Act. The Act, whichwas approved by the city's elected leadership in 1992, has not been implementedbecause of a congressional prohibition first included in the general provisions ofDistrict of Columbia Appropriations Act for FY1994.

The city's health care expansion act would allow two unmarried and unrelated individuals to register as domestic partners with the District for the purpose ofsecuring certain health and family related benefits, including hospital visitationrights. Under the law, District government employees enrolled in the District ofColumbia Employees Health Benefits Program would be allowed to purchase familyhealth insurance coverage that would cover the employee's family members,including domestic partners. In addition, a District employee registered as a domesticpartner would assume the additional cost of the family health insurance coverage forfamily members, which would include the employee's domestic partner.

Opponents of the act believe that it is an assault on the institution of marriage, and that the act grants unmarried gay and heterosexual couples the same standing asmarried couples. Congressional proponents of lifting the ban on the use of Districtfunds argue that the implementation of the act is a question of home rule and localautonomy. Supporters of the amendment noted that at least 115 local governments,and more than 4,000 companies offer benefits to domestic partners.

On September 25, 2001, during House consideration of H.R. 2944 , Representative Weldon offered an amendment ( H.Amdt. 310 ) thatwould have reaffirmed the band on the use of District funds to implement the healthcare expansion program. The Weldon amendment failed by a vote of 194 to 226. TheSenate bill also included a provision that allows the District to use city, but notfederal, funds to implement the District of Columbia Employees Health BenefitsProgram.

Budget Reserves

Congress passed legislation in 1999 that required the District to create a $150 million reserve fund to guard against unexpected expenditures undermining cityfinances. (5) Reserve funds may only be expendedunder three conditions:

Expenditures must be based on criteria established by the Chief Financial Officer and approved by the mayor, the city council, and the control board(during a control year); but in no case may funds be expended before all other surplusfunds have been used.

The funds may not be used for agencies under court-ordered receivership.

Funds may not be for shortfalls in projected productivity savings and management reforms.

In 2000, (6) and in addition to the budget reserve fund, Congress required theDistrict to establish two additional funds: an emergency reserve fund; and acontingency reserve fund. These funds total 7% of the District's operating revenue,or about $250 million, by 2007. The emergency reserve fund requires a 4% positivefund balance above the projected general fund expenditure level for the followingyear. The contingency fund would set aside up to 3% of each year's operating budgetfor unforeseen or nonrecurring needs such as natural disasters, federal mandates, andrevenue shortfalls.

The District government requested that Congress eliminate the $150 million budget reserve. A plan to abolish the fund was endorsed by the SenateAppropriations subcommittee on the District in June 2001. Consistent with theprovisions found in the Senate-passed measure, the final--conference--version ofact includes a provision that requires the District to maintain a budget reserve of $120million in FY2002, and $70 million in FY2003. P.L. 107-96 also requires theDistrict to maintain a cumulative cash reserve of $50 million for FY2004 andFY2005.