- The Washington Times - Friday, March 31, 2000

Questions about the District government’s use of its $150 million reserve fund and the recent fiasco involving the resignation of the emergency board of trustees overseeing reform at the D.C. Public Schools highlight the flawed leadership and unfinished business of the financial control board.

When the five-member panel was created by Congress and appointed by the president, residents hoped fiscal discipline and efficient management systems would be installed, replacing decades of cronyism, financial gimmicks and political shenanigans. For a while it seemed their hopes were being realized. Working with then-Mayor Marion Barry, the payroll was reduced by nearly 8,000 positions. Where there had been little or no fiscal oversight, a new chief financial officer (CFO) instituted rigorous systems; spending came under control and revenue collection improved significantly. With dramatic fanfare a few poorly performing agency directors including the Department of Human Services’ Vernon Hawkins, Metropolitan Police Chief Larry D. Soulsby, and Department of Consumer and Regulatory Affairs head David Watts were removed. And, using its congressionally invested powers, the control board seized authority for the school system.

But while some of the changes instituted with, or because of, the prodding by the first-term control board yielded impressive results, others fell flat, demonstrating a need for more aggressive, thoughtful and creative reform actions. Unfortunately this second-term panel, guided by its new chairman Alice Rivlin, has operated under an unspoken edict of not intruding on Home Rule, permitting local leaders a wide berth. The result has been that the city’s aggressive reform agenda as been slowed or completely halted.

Take, for example, the questions raised this week by Sen. Kay Bailey Hutchison. A year ago, the Texas Republican, in her role as chairman of the Senate Appropriations Subcommittee on the District, pushed through a requirement that the city set aside a $150 million reserve to be used for one-time emergencies. Now District officials have indicated they want to use much of the money during this fiscal year 2000 to cover a projected $77 million in overspending. Which begs these questions: Where was the control board when the District was opening the door to violations of the federal Anti-Deficiency Act? Where was independent CFO Valerie Holt? What happened to the fiscal controls instituted under the previous CFO?

When the city began to show budget surpluses, largely because of the national economy and the good work of the folks in the Finance and Revenue cluster headed by Natwar Gandhi, everyone thought the District was out of fiscal trouble. But the mayor’s recent budget developed by the CFO, the CFO’s failure to complete on time the city’s fiscal 1999 end-of-the-year audit, and now continued reports of agency overspending, suggest that the District’s fiscal management still is woefully inadequate. And, while the control board may claim it is monitoring these issues, it has done nothing to resolve the problems or to ensure they are not repeated.

Why is it still holding on to Ms. Holt when she repeatedly demonstrates her incompetence? History provides examples of how swiftly the previous control board cut its losses when there was doubt sometimes unfounded about the readiness of an agency director. Consider former Inspector General Angela Avant.

Why has the control board highlighted the limited nature of the city’s revenue base, but shied away from raising the very critical questions of a federal Payment in Lieu of Taxes (PILOTS)? Why has it completely abandoned a previous proposal to negotiate PILOTS with nonprofit organizations and universities, especially those that continue to take valuable property off the tax rolls?

Equally troubling is the mess the control board has made of the school crisis. When it fired then-superintendent Franklin Smith and relegated the elected D.C. Board of Education to a sub-advisory level, the board tapped into the perfect model to rescue the school system: It would appoint a chief executive officer in charge of management, a superintendent in charge of academics, and a board of trustees with some expertise. Unfortunately, it made bad appointments. Rather than acknowledge this, the control board abandoned its own model, merging the CEO and superintendent roles. Last week, after the mass resignation of its own trustees following the decision to turn over a building to a new charter school, it was ready to further erode that model; it considered appointing members of the elected board as the new trustees. Which was absolutely absurd, since, long before the D.C. Council or Mayor Anthony Williams began to raise cogent questions about school governance, the control board concluded the elected Board of Education was a major obstacle to reform. And yet, the control board during the recent governance debate failed to demonstrate any leadership, other than to say that Congress ought not have the opportunity to decide.

Thus far, this second-term control board has made its mark on nothing. It has been complacent about the city’s fiscal management and solvency. It has failed to pursue its own school-reform agenda aggressively; and has watched passively as large-scale management issues in District government agencies fester. For this kind of service from the congressionally approved panel taxpayers fork over $3.1 million a year. Talk about a waste of money.

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