- The Washington Times - Tuesday, March 6, 2012

A budget battle involving Mayor Vincent C. Gray and D.C. Council Chairman Kwame R. Brown has raised serious questions about the efficacy of the city’s chief financial officer and whether Mr. Gray is delivering on promises to improve the handling of the city’s budget.

At issue is a budget maneuver facilitated by CFO Natwar M. Gandhi that Mr. Gray’s office requested and later denounced as the type of fiscal mismanagement practiced by his predecessor, Mayor Adrian M. Fenty.

On Jan. 17, Eric Goulet, deputy chief of staff and budget director for Mr. Gray, asked Mr. Gandhi to “set aside” more than $42 million restricted for special purposes that would be redesignated back to their specific purposes at a later date on approval of the council.

Of that $42 million, which came from several restricted funds, $13.4 million was in the Workers’ Compensation Administration fund, according to Mr. Brown’s office.

Workers’ compensation claims examiners and administrators, who spoke with The Washington Times on condition of anonymity because they fear retaliation by the Gray administration, say the District is prohibited from using funds from the program, which includes money contributed by private companies in the city. They further say that the practice is longstanding, and that they have been complaining to the city for years.

An internal email obtained by The Times shows that senior staff at the Department of Employment Services (DOES), which oversees workers’ compensation, were told in 2009 that “the City will be taking excess workers’ compensation money from our budget.” In 2010, labor unions posed detailed questions to council member Michael A. Brown, at-large independent and chairman of the Committee on Budget and Oversight, that drew attention to the practice.

In a recent email, Amy Bellanca, chief of staff to Michael Brown, said the questions prompted a review that exposed the inappropriate use of the funds for a jobs program for ex-offenders.

“As soon as this was exposed, DOES stopped the practice and used local funds to backfill the workers’ compensation funds,” she wrote. “Since that time, the committee has continued to work with DOES to ensure that workers’ comp funds have not been used to fund other programs.”

The recent workers’ compensation budget move surfaced last month during what council sources described as a “kerfuffle,” when Kwame Brown publicly accused Mr. Goulet of “hiding” funds by moving them without council approval, as reported in the blog D.C. Wire. Mr. Goulet, the blog stated, wrote the matter off as a “drafting error.”

But when asked for its position on the movement of restricted funds from the workers’ compensation program, Doxie McCoy, senior communications manager for Mr. Gray, said in an email: “The Gray administration does, in fact, consider it inappropriate for the District to access these funds for anything other than workers’ compensation. That was a practice used in the previous administration that has been discontinued under Mayor Gray.”

The Gray administration did not respond to multiple requests to interview Mr. Goulet or DOES Director Lisa Mallory.

Council staffers for Kwame Brown called the budget maneuver a “color of money issue” and an “accounting exercise” that was not intended to limit or reduce the workers’ compensation program. However, because the council already had approved the fiscal 2012 budget, which authorizes only $3.8 million of the $13.4 million in “swept” funds to be replaced in the workers’ compensation program, an “unintended consequence” of the maneuver is that the council must pass legislation to authorize the remaining $9.6 million.

Kwame Brown did not respond to numerous requests for comment.

Last week, Mr. Gandhi’s office said that pending council legislation to authorize replacement of the workers’ compensation program funds, which it insists did not include money that would affect workers’ benefits, the remaining $9.6 million cannot be accessed for general budgetary purposes.

“Such transfers of funds from restricted accounts into general funds had been approved by the mayor and council in past years,” Gandhi spokesman David Umansky said in an email. “The Workers’ Compensation Administration fund had been among those affected in the past as well.”

Asked whether the request for the budget maneuver was appropriate, Mr. Umansky wrote, “This is a policy decision for the mayor and council,” adding that the funds either will be returned to the workers’ compensation fund or deposited as unrestricted funds into the city’s cash flow and reserve fund.

As for other restricted funds that were moved at the request of the mayor’s budget director, Mr. Umansky wrote, “The mayor is now proposing to put some of the dollars back into their previous agency funds. Council will agree or disagree.”

• Jeffrey Anderson can be reached at jmanderson@washingtontimes.com.

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