- The Washington Times - Tuesday, February 13, 2001

The District of Columbia financial control board is expected to go dormant tomorrow after signing off on the city's fiscal status, ending four years of oversight and returning a portion of home rule to the nation's capital.

City officials are confident that they will regain control over the city's budget, and that the board, created by Congress, will cease its oversight role on Sept. 30, the end of fiscal 2001.

The District has recorded its fourth annual balanced budget the milestone requirement set for the District to regain control of its books and end the control board. D.C. Chief Financial Officer Natwar M. Gandhi, joined by Mayor Anthony A. Williams, D.C. Council Chairman Linda Cropp and control board Chairman Alice Rivlin, announced the "clean audit" Jan. 29, three days before the deadline. The audit was performed by KPMG Peat Marwick, LLP.

The board was scheduled to meet last Wednesday to certify the District's clean audit, but that meeting was canceled, and Mr. Gandhi has been working to ready the books for tomorrow.

Barring an unforeseen development, the board is expected to certify the clean audit and to accept revised revenue estimates for fiscal 2001.

D.C. officials could again come under scrutiny from board members over several financial problems listed in the auditor's "yellow book letter," a document that outlines concerns found during the audit.

The letter states the District did not comply with good financial practices in two major areas: spending over budget and not auditing the use of federal money by various departments or what's called "single audits."

The District is prohibited by law from spending more money than is appropriated.

"By allowing expenditures in excess of its appropriations, the District may have violated the Anti-Deficiency and Home Rule Acts," the letter states.

The overspending problem in the letter involves the city's subsidizing of the Public Benefits Corp., which has been running D.C. General Hospital in Southeast.

The city gave the PBC annual operating funds, but also "provided the PBC with cash advances of approximately $90 million over the past three fiscal years to allow PBC to conduct operations," the letter states.

Mr. Williams and the D.C. Council have been working on different plans to solve the hospital's financial crisis. The control board on Saturday recommended the hospital's contract go to Greater Southeast Community Hospital.

A majority of council members oppose that plan and are organizing a public campaign against it.

The second major problem found by the auditor is the District's failure to audit agencies that use $300,000 or more in federal grants.

The letter lists 14 city agencies or offices that failed to audit the use of federal money, some of them repeatedly.

The Department of Housing and Community Development and the Department of Consumer and Regulatory Affairs did not perform audits, or hire anyone to do them, from 1997 to 1999, the letter states.

City Administrator John Koskinen said the KPMG letter contains "important issues," most of which can be solved within a year.

"I don't see any I disagree with in terms of things we ought to pay attention to," Mr. Koskinen said. "They're all constructive suggestions."

Mr. Gandhi currently is working on those issues, especially the missing audits of individual agencies using federal funds, or "the single audits," Mr. Koskinen said.

Some agencies are two to three years behind and may not be caught up until the middle of next year but most should be fine by June 30, Mr. Koskinen said.

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