Mary M. Levy
Testimony before the Committee of the Whole, District of Columbia Council, on the DC Public Schools 2009-10 Equalization Process, Budget Reductions, and Reductions in Force
October 16, 2009

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TESTIMONY BEFORE THE COMMITTEE OF THE WHOLE, DISTRICT OF COLUMBIA COUNCIL,
ON THE DC PUBLIC SCHOOLS 2009-10 EQUALIZATION PROCESS, BUDGET REDUCTIONS, and REDUCTIONS-IN-FORCE

Mary M. Levy

October 16, 2009

Good morning.  Ever since the October 2 announcement of the DCPS equalization and firing of 388 employees, I have pored over various budget documents seeking to answer questions such as how the situation came about, who is responsible, where the money was going and now is going, whether the firings – six weeks into the school year – were necessary.  I have only a limited number of answers due to:

· Repeated major changes in the DCPS budget document numbers over many months

· Inconsistent numbers among official sources for FY 2008, 2009, and 2010

· No financial reports for FY 2009, and limited information for FY 2008

· Lack of any updates to local school budgets issued last March

· Most individual local schools’ receiving much more or less than they were entitled to by the DCPS official staffing formula.

Saying that the fiscal documents lack transparency is a huge under-statement.  Those publicly available are downright bewildering.  Some limited and tentative answers to common questions:

(1) What was, and is DCPS’ budget?¹

NOTE that about $57 M of the FY 2010 budget consists of federal Stimulus funds -- $39.3 M in state stabilization funds and $17.6 M in extra Title I and IDEA funds.  The former are unrestricted, and the latter, though restricted to Title I and IDEA functions, contrary to the usual rules, may be used to supplant local funds.  They will be available in FY 2010 and FY 2011, but thereafter are scheduled to stop, raising a serious question as to the sustainability of current funding levels. 

(2) Where did, and does the money go?  This question is hard to answer at this time, for reasons cited above.  Examples of major budget shifts in the course of FY 2009 (see Appendix):

· The spring-summer 2009 reprogramming reduced local school budgets by $32 M, explaining local school complaints of denial of access to budget funds they had planned on using.

· Cuts in textbooks and athletics also occurred.

· $6 M was added to the local food service subsidy, raising it to a total of $11 M.  Most school districts spend no local taxpayer funds on food service.

· Special education LEA funds rose from $91 M to $96 M to $109 M, less an unknown reduction in local schools’ special education budgets.

· Special education state funds rose from $0 to over $8 M.  State expenses?

· Budget levels for information technology jump all over, from $14 M to $20 M to $17 M, then in FY 2010 to $12 M and down to $0.

· “Performance management” (what is it?) goes from $0.5 M to $7.6 M to $8.7 M, then in FY 2010 to $2.0 M.

· Fixed costs were reduced from $43.6 M to $36.2 M, although in the previous year they actually cost $49.4 M.

(3)  How do FY 2010 allocations compare with the most recent FY 2009 allocations?

Some expenditures that one would expect to be similar seem very different, for example:

            (4)  Are employee pay increases built into the FY 2010 budget?  Apparently not.  The average costs of salary + benefits used in preparation of FY 2010 local school budgets was lower than in FY 2009 for most categories of employees, including teachers.  If they are there, they are well hidden.

            (5)  How many teachers (ET 15-teacher, counselor, librarian, etc.) did DCPS have?

Apparently DCPS budgeted to keep the same number of ET15 teachers, counselors, librarians, etc. in this school year as were on the payroll last school year.

            (6)  What is the cause of the FY 2010 $40 M budget shortfall reported by DCPS – the $820 M in expenditures vs. the $780 M in the budget?  Since the total DCPS budget did not decrease from either FY 2009 or initial Council FY 2010 levels, possibilities are:

· Costs of teachers who were excessed from their schools due to enrollment decline or school reconstitution at the end of school year 2007-08 or school year 2008-09, but kept on the payroll even though no other schools hired them.  The number is not public.

· Over-hiring of teachers for the FY 2009-10 school year.  936 were hired, many more than in previous years.

· FY 2009 over-spending on personnel or contracts, which would carry over into FY 2010 unless reduced.

· Actual planning on a budget higher than $780 M.

· An unbudgeted assumption of employee pay increases.

· DCPS preference for spending available funds on functions other than some of the personnel currently on the payroll.

None of these possibilities can be fully evaluated without more information.  But it seems that since DCPS budgeted for the number of teachers already on the payroll that the excessed teachers (bullet 1 above) were covered by the budget.  The other possibilities, except the last, entail spending above budget.

Recommendations: 

· Arrange an audit to untangle the incomplete and conflicting data on budget, expenditures and staffing and to make recommendations on remedies.  Unfortunately, I believe that we need to determine whether the DCPS budget and spending are effectively under anyone’s control. 

· Mandate that the CFO and DCPS establish a meaningful set of program codes in the budget, subject only to changes in program but not re-organization, and publish them with full definitions; mandate the additional publication of a budget including all organizational units.

· Require monthly financial reports in full detail.

· Identify means of enforcing existing laws in this area

· Investigate the lack of compliance with existing laws requiring reporting and public information, for example the DC FOIA requirement that all public bodies post on the Internet, inter alia (6A)

Budget requests, submissions, and reports available electronically that agencies, boards, and commissions transmit to the Office of the Budget and Planning during the budget development process, as well as reports on budget implementation and execution prepared by the Office of the Chief Financial Officer, including baseline budget submissions and appeals, financial status reports, and strategic plans and performance-based budget submissions  (DC Code § 2-536. Information which must be made public, subsection 6A).

Given the DC Code provision just cited, the Council should not have to do any of this – but the need for fiscal transparency and adherence to the rule of law requires some action.

            Thank you for this opportunity to testify.

* Illustration of problem: officials NOW say $797.1 M. Figure not available to the public until Oct. 16, 2009. 

1. FY 2008:  $949.1 M less State Special Education ($216.8 M) and Other State ($3.0 M).  The latter functions were transferred out of DCPS as of FY 2009.  FY 2010:  The May/June number reflects the transfer of $3.5 M out, held in reserve.  Additional federal funds were put in sometime i