- The Washington Times - Wednesday, January 31, 2007

The release yesterday of the annual independent audit of the District’s financial records brought very good and very troubling news. The good news is that the city marked its 10th consecutive balanced budget, and has a $325 million budget surplus and $1.4 billion fund balance. Yet there remains cause for serious concern. But just as D.C. Council member Jack Evans, chairman of the Finance and Revenue Committee, caught Superintendent Clifford Janey off guard on Tuesday with more bad news on the school system, the chairman’s comments yesterday underscored the bottom line: “The District’s credibility in the bond markets is going to be very important in the year ahead. We have an ambitious agenda of projects, which includes critical improvements to schools, and we need that strength on Wall Street to get the job done.”

While the audit was indeed unqualified (or “clean”), D.C. officials are rightly concerned about two spending areas — D.C. Public Schools and Medicaid. The federal Education Department designated the D.C. system “high risk” because of its lax management and oversight of federal money while the audit cited the school system’s use of antiquated payroll and personnel systems (which the superintendent conceded on Tuesday). The school system routinely fails to rectify Medicaid spending excesses and has long been troubled by procurement and contracting inefficiencies. As Mayor Fenty put it yesterday, the school system’s spending appetite means DCPS officials “year in and out” spend more money than they budget. As for Medicaid, suffice it to say that problems include questionable eligibility decisions and reimbursements, as well as other deficiencies, including the failure to effectively vet companies that transport Medicaid patients.

Now that City Hall is keenly aware of the shortcomings it is incumbent upon officials to fix them this fiscal year to alleviate potential threats to the fiscal 2007 audit. The threat is great for new spending problems because, as Mr. Evans pointed out, the city has “an ambitious agenda of projects.” Those projects include spending $3 billion over the next several years to modernize schoolhouses, spending close to a billion to build a new baseball stadium, as well as financing a new soccer stadium, various housing initiatives and new mass-transit projects. The mayor, the council and School Board President Robert Bobb simply cannot trust the school system to efficiently spend hundreds of millions of dollars every year to renovate schools.

Yesterday’s audit (with a special thanks due Chief Financial Officer Natwar Gandhi) clearly spells out some of the problems that threaten the District’s bottom line (and home-rule standing). As lawmakers and Mr. Bobb heard the day before, DCPS has yet to embrace the fix-the-schools-now mandate. The proof? It took the school system three-and-a-half months to replace two lightbulbs at one school.

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