fy 2012 budget overview

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FY 2012 BUDGET OVERVIEW• Total General Operating

Budget $9.6B– Local Funds at 57.7%

($5.5B)– Federal Funds at 27.3%

($2.6B)– Special Purpose Revenue

at 4.4% ($0.4B)– Dedicated Tax at 4.0%

($0.4B)

Local Funds; $5,537.5

Dedicated Taxes; $386.6

Other Funds; $418.8

Federal Funds;

$2,620.3

Private Funds; $23.2

Intra-District Funds; $616.1

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FY 2012 BUDGET OVERVIEW

• FY 2012 shows a reduction of 170.5 FTEs compared to FY 2011.

• This represents a 0.5% reduction year over year.

FY 2010 Actuals FY 2011 Approved Budget

FY 2012 Proposed Budget

30,200.0

30,400.0

30,600.0

30,800.0

31,000.0

31,200.0

31,400.0

31,600.0

31,800.0

Full Time Equivalents (FTEs) - Gross Funds

MAYOR GRAY’S FOUR GOALS IN THIS BUDGET

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Mayor Gray has focused on four key priorities in his Fiscal Year 2012 budget:(1) Fiscal Stability;(2) Quality Education;(3) Jobs and Economic Development; and(4) Safe Communities.

FISCAL STABILITY

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Mayor Gray’s Fiscal Year 2012 budget closes a $322.1 million budget gap through:• $187.0 million in expenditure cuts from the CFO’s Fiscal Year

2012 Current Services Funding Level budget (58%)• $127.2 million in revenue increases (39%)• $7.9 million in additional income from leasing, expanded

sales, and advertising (3%)

FISCAL STABILITY

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• The Mayor’s Fiscal Year 2012 budget is structurally balanced without the use of any of the District’s fund balance, meaning that for the first time in four years the District will pay for its expenditures within its available revenue.

• The Mayor’s budget lives within the District’s 12% cap on all General Fund tax-supported debt.

• The Mayor’s budget transfers $47.1 million of staff and operating maintenance dollars that were inappropriately placed in the capital budget in prior years, back to the operating budget, to accurately account for these costs and to free up $235.5 million of additional capital borrowing authority under the District’s debt cap over the next five years.

FISCAL STABILITYSummary of Expenditure Reductions

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Dollars in Millions

The FY 2012 budget contains $187 million of expenditure reductions from the Chief Financial Officer’s Current Services Funding Level Budget. These reductions are broken out by appropriation title in the chart above, and close 58% of the $322.1 million FY 2012 budget gap.

Budget Cluster

CFO Current Services

Funding Level Budget

Capital Shift to

Operating

Special Purpose Revenue

Shifts

Recurring Programs Funded as One-Time

Inter-Agency Budget

Transfers

Mayor's Adjusted CFSL

Budget Baseline

Mayor's Policy

DecisionsFY12 Mayor's Policy Budget

Government Direction & Support 409.8 28.3 23.9 8.5 37.8 508.3 (14.6) 493.7Economic Development & Regulation 72.8 1.5 11.9 30.8 (0.8) 116.2 (22.0) 94.2Public Safety and Justice 891.1 1.0 26.9 14.6 1.8 935.4 (18.0) 917.4Public Education System 1,569.1 0.2 1.6 11.8 (27.1) 1,555.6 (18.2) 1,537.4Human Support Services 1,497.2 0.7 8.5 44.7 (12.3) 1,538.6 (113.4) 1,425.2Public Works 371.0 15.5 (12.6) 22.7 (1.3) 395.2 (9.2) 386.0Financing and Other 682.2 0.0 (9.0) 0.0 2.0 675.2 8.4 683.6TOTAL LOCAL FUNDS BUDGET 5,493.1 47.1 51.2 133.0 0.0 5,724.5 (187.0) 5,537.5

QUALITY EDUCATION

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• The Public Education System appropriation title has a Fiscal Year 2012 local funds budget of $1,537.4 million, which is 27.8% of the District’s local budget.

• Education Reform has been, and will continue to be, the Mayor’s number one priority.

QUALITY EDUCATION:DCPS and DCPCS

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• Increased revenue projections allowed an increase in DCPS funding of $51.2M and Charter school funding of $25.7M versus FY 2011.

• The Mayor’s budget restores, with local funds, the $11.0M to DCPS and $8.0M to DCPCS that was lost when Edujobs stimulus funding expired.

• The Mayor’s budget maintains funding for the DC Public Charter Schools facility allotment at its FY 2011 level of $3,000.

• Capital improvements to education facilities will total $310.2M in FY 2012.

District of Columbia Public Schools will use the additional $51.2M to• Maintain teacher-to-student staffing ratios between 1:20 and 1:22;• Continue summer school, afterschool, and evening credit recovery

programs; and• Maintain special education coordinators at most schools.

QUALITY EDUCATION: Special Education Reform

• The Mayor covers the impact of the ongoing $31.7M DCPS budget pressure by increasing the special education formula to incentivize DCPS and DCPCS to actively recruit children with special needs from expensive non-public placements.

• This will allow the District to continue to reduce costly non-public tuition and special education costs, which totaled, $239.0M in FY2012. The FY2012 budget for these areas represents a reduction of $12.6M from FY 2011.

• The Mayor’s capital budget has set aside funds for ensuring that renovated schools include inclusive classroom settings to education children with special needs in their neighborhood schools.

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QUALITY EDUCATION• The Mayor’s FY2012 budget provides an additional $4.5 million for the

University of the District of Columbia, of which a minimum of $4 million is directed to the Community College of the District of Columbia.

• The budget for OSSE maintains funding for adult literacy at the FY 2011 level. OSSE’s childcare budget is reduced by $2.2 million to reflect a shift of children to DCPS and DCPCS.

• OSSE’s budget also includes $1.1 million for the Career and Technical Education Fund as a new initiative to support extended hour vocational education programs that were prior funded from Neighborhood Investment Funds

• The Mayor’s budget maintains 6-day a week service at libraries, but closes MLK on Sundays and reduces funding for purchasing additional books.

JOBS AND ECONOMIC OPPORTUNITY

The Economic Development & Regulation appropriation title has a Fiscal Year 2012 local funds budget of $94.2 million, which is 1.7% of the District’s local budget.

Job creation is one of the four key priorities in the Mayor’s FY 2012 budget. Despite reductions to federal funding and special purpose revenue the Mayor maintained full funding for adult job training in his Fiscal Year 2012 budget by increasing local funds by $2.6M in the Department of Employment Services.

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Housing Fund Transfers• The Mayor’s FY 2012 budget maintains funding to support all current

recipients in the Local Rent Supplement Program and Housing First, but prevents further program expansion.

• Funding is secured through a transfer of $18M in new certified revenue from the Housing Production Trust Fund that will be utilized to maintain rent supplement slots at the D.C. Housing Authority. This appears as a $18M reduction to local funds, because funding for rent supplement is now coming from dedicated taxes.

• As revenue rebounds, deed recordation and transfer taxes will likely increase, and allow additional creation of new housing units through the Housing Production Trust Fund in the future.

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• Other significant cuts in the Economic Development and Regulation Cluster include:– DOES: Summer Youth Employment ($4.1M)– DSLBD: Healthy Grocery Initiative ($300K) and Main

Streets Clean Teams ($1.5M) – DHCD: Small Business Technical Assistance ($1.7M)– DMPED: Neighborhood Investment Fund grant

program ($2.4M)

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• The Mayor’s budget fully funds the Real Property Tax Appeals Commission. This Commission will ensure tax appeals are handled effectively.

• The Mayor provided full funding for the Office of the Tenant Advocate to ensure tenants’ rights are protected in the District of Columbia.

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SAFE COMMUNITIES• The Public Safety and Justice appropriation title has a Fiscal Year 2012

local funds budget of $917.4 million, which is 16.6% of the District’s local budget. This represents a reduction of $18 million or 2.0% from the baseline budget. Most of this reduction comes from holding public safety agencies to their FY 2011 budgets and requiring them to absorb inflation increases.

• The Mayor’s budget will continue the commitment to protect the lives and property of the people of the District of Columbia.

• The creation and revitalization of the Deputy Mayor for Public Safety – provides guidance and coordination to the Public Safety agencies– oversees the Access to Justice and Poverty Lawyer Loan Repayment programs

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SAFE COMMUNITIES• The Metropolitan Police Department’s budget was

held constant to FY 2011, while providing funding for 120 additional recruits.

• The Mayor’s Call Center, 311, remains the District’s primary information source. It will be staffed 24 hours a day, 7 days a week. The Office of Unified Communications was budgeted at its FY 2011 level.

• The Fire and Emergency Medical Services had no change from its FY 2011 budget.

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SAFE COMMUNITIES• Funding for the Office of the Chief Medical Examiner

remains at a level that supports keeping accreditation by the National Association of Medical Examiners.

• Department of Corrections has budgeted based on historical spending patterns for inmate healthcare, pharmaceuticals, and food provisions.

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HEALTH AND HUMAN SERVICES

• The Human Support Services appropriation title has a Fiscal Year 2012 local funds budget of $1.4B, which is 25.7% of the District’s local budget. This represents a reduction of $113.4M or 8.0% from the baseline budget.

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HEALTH AND HUMAN SERVICESThe Mayor’s Fiscal Year 2012 budget seeks to preserve core functions of the social services safety net, while responsibly reducing dependency on permanent government support through:• Ensuring the availability of job training programs for all TANF

participants that allow people to graduate out of TANF into permanent employment

• $4.9M reduction in TANF Cash Assistance based on additional 20% reduction for 60+ month participants, followed by further reductions of 25% and 35% in the following two years.

• $3.0M savings in implementing Full Family Sanctions for TANF participants who do not enroll in work programs

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HEALTH AND HUMAN SERVICESThe Mayor’s FY2012 budget maximizes use of federal funds by:• Implementing year one of the Department of Health

Care Finance’s three-year strategy for maximizing collection of Medicaid revenue.• Requiring the Department of Human Services to enroll

eligible individuals in SSI, rather than supporting them through 100% local funds in the POWER program. ($1.5m in savings)

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HEALTH AND HUMAN SERVICESThe Mayor’s FY2012 budget recognizes savings by tightening eligibility screening and compliance enforcement by:• Requiring face-to-face 6 months re-certifications in the D.C.

Healthcare Alliance Program, and limiting program eligibility to DC residents not eligible for Medicaid through agency rulemaking ($11.7m in savings)

• Requiring re-certification for individuals within the Disability Compensation program and increasing eligibility compliance enforcement, while establishing a return to work program with the Office of Risk Management ($10m net savings)

By limiting these programs to eligible District residents, cuts to other important safety net programs for those most in need will be avoided.

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HEALTH AND HUMAN SERVICESOther cost reductions to human services programs include:Department of Human Services• $1.5M savings by suspending the

Interim Disability Assistance Program

• $4.0M savings from moving participants from Housing First units into Federal Voucher units

Unemployment Compensation Fund• $12.0M savings due to a

reduction to the number of employees claiming unemployment

Department of Mental Health• $2.0M and 18.6 FTEs for

streamlining services and staffing

• $3.1M reduction in Mental Health Rehabilitation Services

• $1.2M savings in the Office of the Chief Clinical Officer

HEALTH AND HUMAN SERVICESThe Mayor’s Fiscal Year 2012 budget resolves the funding crisis in homeless services at DHS by partially restoring $14.2 million of a $25 million gap created by non-recurring federal funds that were used to balance the FY2011 budget.– Funding of Permanent Supportive Housing at $21.9M and

Emergency Rental Assistance at $2.7M.– $4.0M savings by shifting Housing First participants into Federal

voucher based units and project-sponsored housing found at DC Housing Authority.

– Limiting case management cost within the homeless services continuum to $9M.

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HEALTH AND HUMAN SERVICES• Child and Family Services

– Grandparent Subsidy included at FY 2011 levels at $3.7M– $2.2M increase to the Adoption and Guardianship Subsidies– Rapid Housing services maintain FY 2011 funding level at $1.0M

• Department of Parks and Recreation– $3.0M invested to staff new facilities and properly fund summer

programs• Department of Youth Rehabilitation Services

– $16.7M additional funding to meet expected growth in the number of committed youth

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HEALTH AND HUMAN SERVICES• Agencies funded fully at FY 2011 levels

– D.C. Office on Aging– Office of Human Rights– Office of Latino Affairs– Office of Asian and Pacific Islander Affairs– Office of Veterans Affairs

• Creation of the Deputy Mayor of Health and Human Services– Charged with increasing coordination between agencies within

cluster– Key for future Medicaid revenue capture

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PUBLIC WORKS & TRANSPORTATION

• The Public Works appropriation title has a Fiscal Year 2012 local funds budget of $386 million, which is 7.0% of the District’s local budget. This represents a reduction of $9.2 million or 2.4% from the baseline budget.

• The Mayor’s FY 2012 budget consolidates all local transportation function under the District Department of Transportation:– School transit subsidy ($6.1M)– Non-regional bus service ($32.7M)– Circulator bus ($12.2M)This change will greatly increase the transparency of the local transportation budget.

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PUBLIC WORKS & TRANSPORTATION

• WMATA budget reflects 4.7% increase in District subsidy to match the budget proposed by Maryland.

• District Department of the Environment maintained funding for the Low-Income Home Energy Assistance Program (LIHEAP) at FY 2011 level ($4.6M)

• Department of Motor Vehicles & DC Taxicab Commission maintained FY2011 budget levels

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EFFECTIVE GOVERNMENT MANAGEMENT

The Government Direction & Support appropriation title has a Fiscal Year 2012 local funds budget of $493.7 million, which is 8.9% of the District’s local budget. This represents a reduction of $14.6 million or 3.0% from the baseline budget.

Creation of the Department of General Services • Creates a new cabinet-level agency that will manage the capital construction program

for District government facilities and the District’s real property assets, consolidating the following agencies into one agency:– Department of Real Estate Services– Office of Public Education Facilities Modernization– Municipal Facilities Non-Capital (paper agency)– Capital construction and Real Property Management functions of other subordinate executive

agencies• Benefits include:

– Ensures alignment with strategic objectives– Improves facility maintenance and allows other agency directors to focus on program delivery– More accurate budgeting for capital projects – Ensures standardized performance measures– Efficient use of limited public dollars

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EFFECTIVE GOVERNMENT MANAGEMENT

Office of Open Government• New agency will monitor the District’s compliance with the Freedom of Information Act

(FOIA), promote effective use of the District’s FOIA, and resolve disputes between agencies and requesters regarding access to government records.

• Both the Executive Office of the Mayor and the Office of City Administrator took a 6% cut to their CSFL budget.

Office of Risk Management (ORM)• Established new Return to Work Program

– Will return employees to the workforce based upon their abilities and medical outcomes

– Cost offset by $12.0M savings in the Disability Compensation Program through increased compliance enforcement initiatives

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REVENUE INITIATIVESMayor Gray’s Fiscal Year 2012 budget includes $127.2 million in tax and fee increases. Revenue enhancements close 39% of the $322.1 million gap in FY 2012.

The Mayor’s budget also accounts for $7.9 million in additional revenue from leasing, expanded sales, and advertising, which close the remaining 3% of the budget gap.

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REVENUE INITIATIVES– Raise parking garage tax from 12% to 18% ($18.2M)– Tax marginal income above $200,000 at 8.9% and decouple

from Federal tax cut (itemized deduction limitation) ($35.4M)– Tax cigarettes at wholesale level, rather than retail ($1.1M)– Increase off-premise alcohol tax from 9% to 10% ($2.9M)– Expand sales tax base to include live theater($2.3M)– Enact streamlined bank attachment ($3.0M)

This subtitle allows the CFO to request quarterly from financial institutions information on individuals with a tax lien in the District of Columbia for the purposes of recovering assets owed to the Government of the District of Columbia.

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REVENUE INITIATIVES– Implement combined reporting ($22.6M)• Combined reporting requires multi-state corporations to report the combined

income of all related businesses when filing taxes in a jurisdiction in which they do business; and apportion that income to the jurisdiction as a consolidated business.

– Apportion using double-weighted sales ($7.2M)• Currently, multi-state corporations filing taxes in the District of Columbia

apportion their income to the District by equally weighting the proportion of their sales, payroll and property that occur in the District of Columbia and applying the resulting ratio to their income. The proposed apportionment formula would weight the proportion of District sales to total sales twice as heavily as the payroll and property ratios in calculating the apportionment ratio, thus reducing taxes for companies with headquarters or major facilities within the District. Conversely, the double weighting increases the tax burden of those companies that have no economic activity or payroll in DC, but strictly limit their activity here to sales.

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REVENUE INITIATIVES– Increase minimum franchise tax to $250, or $1,000 for

firms with gross receipts > $1 million ($12.0M)– Reflect fee increases enacted by the Department of

Motor Vehicles ($3M)– Increase Circulator fare from $1 to $2 ($1.1 M)– Tax Administration Changes - Adjust withholding and

estimated tax accounting rules ($19.0M) in fiscal year. • These accounting changes also generate $46M in one-time revenue that is

being used to solve a portion of an overdesignation of fund balance in Fiscal Year 2010.

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REVENUE INITIATIVES• $7.9M in additional certified revenue:– Memorandum of Agreement with Washington

Convention and Sports Authority ($5.0M)– Allowing off-premise liquor sales until midnight ($2.4M) – Advertising on bike sharing ($0.5M)

• Financial Plan Revenue Changes:– The Mayor repeals the sunset of the sales tax increase

and makes the Ballpark Community Benefits Fund “subject to appropriations” in order to balance the financial plan.

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CONSEQUENCES OF FAILING TO RIGHTSIZE THE DISTRICT’S BUDGET

Failure to make financially responsible decisions to rightsize the structural gap in the District’s budget could result in:• A downgrade in the District’s bond ratings;• Increased Congressional interference in District

affairs; or• Loss of Home Rule and the return to a Financial

Control Board.

DISTRICT’S CAPITAL BUDGET

• Total FY2012 Capital Improvement Plan is $844.8M• Planned FY2012 - FY2017 CIP ensures we remain

under the 12% debt cap • Capital plan priorities: school modernization;

economic opportunities; and public transportation

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DISTRICT’S CAPITAL BUDGETCapital Budget Highlights for FY2012• School Modernization ($267M)• Department of Transportation ($255.5M)• WMATA ($126.7M)• University of the District of Columbia ($43.2M)• Expansion of Streetcar lines ($25M)

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DISTRICT’S CAPITAL BUDGETCapital Budget Highlights for FY2012• St. Elizabeths East Campus Phase 1• Redevelopment of the McMillan Plant• Redevelopment of Walter Reed Medical Center• Redevelopment of Skyland Shopping Center• Renovation and modernization of DC Community

College at former P.R. Harris School• Construction of Kenilworth-Parkside Community

Pedestrian Bridge

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DISTRICT’S CAPITAL BUDGET• School Modernization Projects scheduled for FY 2012 start

include:– Anacostia, Cardozo, and Dunbar High Schools– Classroom additions at Hearst, Mann, and Turner Elementary Schools– Special education students will be accommodated in every

modernized school classroom• School Modernization Planning scheduled for FY 2012 include:

– Ballou, Ellington, and Roosevelt High Schools• Renovation and modernization of UDC and CCDC facilities will

also be enhanced in FY 2012

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SUMMARY OF FY 2012 BUDGETMayor Gray’s Fiscal Year 2012 budget rises to the challenge of addressing the District’s budget shortfall and advances forward his four goals of:(1) Fiscal Stability,(2) Quality Education,(3) Jobs and Economic

Opportunity, and (4) Safe Communities

fy 2012 budget overview

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