I am calling to order to this hearing.

This is a hearing of the committee as a whole of the Council of the District of Columbia public hearing.

And the subject of this public hearing is testimony from the City Administrator regarding two bills before the Council.

They're basically the same.

Bill 26-662 fiscal year 2026 revised Local Budget Emergency Act of 2026 and Bill 26-663, which is the temporary version.

Temporary lasts 225 days.

The emergency bill is good for 90 days after the mayor signs it.

This hearing, I don't know if this hearing is being broadcast live on cable television channel 13, but it is available on the Council's website, www.dccouncil.gov.

I don't know that we have done this in the past, but this hearing will be very helpful as we start our council starts its consideration of the budget.

Today we are focusing just on revisions to the current year budget.

The mayor on April 14th submitted a proposed budget called the Local Budget Act for FY27, which begins October 1st.

She submitted a revised budget, which is called a supplemental budget.

For the current fiscal year of FY 2026, submitted a Budget Support Act that has legislative changes theoretically only to support the budget, and a Federal Portion Budget Request Act.

The Committee of the Whole will be having a hearing on all of the legislation where there will be public testimony on May 13th, and folks can go to the Council's website to register to testify.

That will probably be an all-day hearing.

In the meantime, all of the committees have begun hearings.

There will be three weeks of hearings, this being the first week on the proposed budgets for the agencies under their purview.

The council scheduled the vote on the budget June 9th, first reading, and June 23rd, final reading.

The Budget Support Act also on June 9th, first reading, second reading will be some at a later date, but before the council recess.

The Committee of the Whole will be having, after today's hearing, we will be having a hearing on May 1st regarding the proposed budget for DCPS, where we will hear only from the Chancellor.

Public Witnesses testified earlier this week.

And we will be having hearings May 4th on the auditor, the retirement board, the Chief Financial Officer on May 6th on the Commission on Arts and Humanities, Office of Zoning, Office of Planning, Department of Buildings, and Thursday, May 7th, on the Office of the State Superintendent of Education.

With that, we have Mr.

Donahue, but I probably should turn to my colleague, Councilmember Bonds.

Did you have an opening statement?

Thank you.

So City Administrator Donahue, the floor is yours.

Thank you.

Good morning, Chairman Mendelssohn.

Good morning, Councilmember Bonds and staff from the Committee on the Whole.

I am Kevin Donahue, City Administrator for the District of Columbia, and I'm joined by Jenny Reid, the Deputy City Administrator and the Director of the Office of Budget and Performance Management.

And I am here, actually, we are here to provide testimony on the FY26 supplemental budget.

I'm going to sort of set the stage by describing the principles that we use to develop both the 26th supplemental and the 27 budget.

And then Director Reid will go into some of the details of that budget.

I want to really talk about the four priorities that Mayor Bowser set out for us as we developed both the supplemental and the permanent FY27 budget.

And there are four primary priorities that is this guideposts as we developed and looked at the choices that we had to make.

The first guidepost was to make sure we enhanced education and public safety.

DC's comeback and our growth depends on strong schools and a safe city.

This was the mayor's foundational belief that are the two pillars that led to the city's resurgence over the past 25 years.

And we're proud of the investments we have made in both areas and continue to make that have led to increased enrollment, graduation rates, test scores, teacher retention, and parent satisfaction in our public schools.

We're equally proud of the great improvements to the district's public safety ecosystem, resulting in the lowest levels of violent crime in 30 years over 2025.

The second guidepost is preserving core services.

By core services, I really mean services that every city does, no matter how large or small, picking up trash, responding to fires, having a fantastic park system, having a fantastic library system.

We wanted to make sure these services are maintained and other core services, such as inspecting buildings, are done in a way that meets resident satisfaction.

So even in both times of boom and times of difficult budgets, residents see the foundational fundamental responsibilities of any municipality anywhere in the world as being done at a very high level.

Third, we wanted to make sure we protected health care.

In this budget, that was particularly difficult, given the rise in prices in health care across the country.

The mayor's budget makes sure our residents can keep their health care coverage by both preserving Medicaid and the Alliance program, and in fact, adding new dental and vision services beginning October 1st to both.

I have called us in the budget role, and I call it today one of the most extraordinary feats that we accomplished given how difficult that hill is to climb when we started the formulation process many months ago.

And finally, and importantly, making sure we have a budget that grows our economy.

One of our biggest challenges in making sure we respond to the doge-inflicted softening of our economy.

Any budget passed by the council really needs to include strategies and tools that attract businesses, create jobs, and keep our existing employers.

What we know looking at the past 12 years of budget growth, which has been extraordinary, is that virtually all of it came from what we call organic economic growth.

In other words, keeping people and attracting new people, keeping businesses and attracting new ones, and growing jobs.

This is the key in which we can fund not just the programs that we had to cut this year, but be able to grow programs that are vitally important in the future.

So while our economy has softened, we will have a strong and solid foundations to grow from.

In fact, this week's, just this week, Moody's analytics upgraded the district's uh rating outlook.

Moody cited our very difficult our very strong fiscal governance and prudent budget budget management that will mitigate federal policy uncertainty and offset expected softer revenue.

It is a quote from that decision they made to be able to improve our outlook.

That's a testament to the hard work that we have all done to maintain our fiscal stability and make sure we are set up for long-term financial sustainability for future administrations and budget.

Before you read the next sentence, um can you say a little bit more about Moody's this was Moody's, right?

Was Moody's the one that downgraded us from triple A?

Uh we are AA and they um put a negative outlook on us based on Federal involvement and the possibility of Federal intervention and concerns about how we would manage our budget through the Doge cuts.

Uh they came out with an improvement to our outlook, which is very important, uh, noting the skill with which we both have managed the federal interest in the district and looked at the budget submission that the mayor put forward to the council as being one that they deem to be prudent and responsible.

So we're, I think double AA plus with them.

That's correct, Chairman.

And so this took us from negative watch to stable, um, maintaining the same rating.

Yes.

Okay.

Continue.

Oh, it's a thank you for asking that.

It's just it is very important to highlight, and we were all excited when they made a decision after having created a negative outlook on us to improving it after seeing the budget submission.

Uh now to go into the details of the supplemental budget and walk through the rationale and thinking behind some of the important points, I will turn to Deputy Center City Administrator Reed to carry through with the rest of the testimony.

Thank you, City Administrator.

Um, so I'll go into a little bit more detail about the supplemental budget.

Um, the supplemental budget makes adjustments to approved FY26 appropriation levels to address new costs and identify savings that can be used in both FY26 and FY27.

At a high level, uh, the supplemental budget identifies $304 million in reductions across agencies and local funds, local non-lapsing, special purpose revenue funds, dedicated taxes, and enterprise funds.

It also adds $191 million in local funds to address mid-year funding needs, repay contingency cash usage, and cover new expenses.

And it also shifts $132 million in capital funds amongst projects and creates three new capital projects.

As part of the budget submission requirements, our office prepares a narrative that describes these changes in greater detail.

A copy of that narrative has been included as an attachment to our testimony.

The $191 million of additional funds falls into three high-level buckets.

First, $49 million was added to the Department of Public Works, Department of General Services, and Department of Transportation to cover costs related to January Snow Creek Storm.

This includes costs for overtime, snow plowing and hauling, bobcats deployed to clear residential alleys, contracted support for bus shelter and bus stop clearing, sidewalk clearing, and salt purchases.

$103 million was added to address mid-year funding needs, including $33 million for the child care subsidy, $22 million for the local rent supplement program, and $22 million for overtime costs and $5 million for the Fair Elections program.

$7.7 million was added for new expenses, including funds to support additional maintenance work at DCPS schools over the summer, funds to replace stolen SNAP benefits, and funds to begin implementation of new EBT chip cards for SNAP recipients to help better protect them against stolen benefits.

In the capital budget, the supplemental shifts approximately $132 million amongst capital projects.

Most of those are a result of the projects being closed out.

There are some other notable shifts.

And we create three new projects in this supplemental.

First, $7.7 million to support demolition of the United Medical Center and make the space available for redevelopment.

$25 million to send to fund the acquisition of a third bridge housing site to supplement the Aston and E Street facilities, and $1 million to support children's hospital in identifying a new location for $425-bed hospital, outpatient services, and office space.

For the reductions, the more majority of reductions come from three major changes.

First, we were able to capture $95 million in debt service savings as a result of refinancings and updates to plan borrowing that were identified by the Office of the Chief Financial Officer.

Second, a $70 million reduction was made to workforce investments, which reduces funding available for new collective bargaining agreements, and was one of the toughest choices that we had to make when developing this budget.

The remaining workforce investment funds will cover costs of collective bargaining agreements that are already intact with the Washington Teachers Union and the fraternal order of police through FY26.

It will also cover step increases removed from individual agency budgets as part of the FY26 budget development and then added back into workforce investments.

And then lastly, approximately $25 million was reduced in the Department of Healthcare Finance as a result of an updated alliance enrollment forecast that showed fewer residents than anticipated were utilizing the program.

This updated forecast was also applied to the FY27 budget and throughout the financial plan.

FY27 will present many challenges, but I have full confidence in the mayor's budget that it will let us meet those challenges and keep moving our city forward.

Thank you for the opportunity to offer testimony.

We are happy to answer any questions.

Every year there are spending pressures in different agencies and some agencies, and I'm sure this year is no different.

Does the proposed supplemental address all spending pressures identified through the second quarter?

So we do not have the financial the FRP reports yet for the second quarter.

Those I think come out at the end of this month.

We did have the FRPs available to us for the first quarter, and so the supplemental budget includes partial payments to address pressures for MPD overtime, Department of Corrections overtime, DPW overtime, and the DC public charter school's increased enrollment in special education students.

It includes full funding to cover the pressure in the child care subsidy budget, the Fort DuPont operations at the Department of Parks and Recreation, overflow shelters for DHS, and all of the snow costs that we incurred.

It also fully repays contingency cash that was used that will not be repaid with another source.

It was partial for MPD, Department of Corrections, DPW, and the Charter's Special Education.

That's it was full for Fort DuPont, Childcare, Snow Creed, Contingency, and I left one out.

DHS overflow shelters.

Now, why not?

Why isn't the supplemental addressing what you know?

As spending pressures, the entirety for MPD, Department of Corrections, DPW, and charters.

When we worked with the Office of the Chief Financial Officer, they asked us to put in about 50 percent of the pressure, knowing that this is a forecast that's subject to change.

And so we were not required to put in the full amount.

It's something we will continue to watch very closely as we go throughout the fiscal year.

Um, but we did want to make sure that we were able to put in some money to begin addressing it.

And then for items where we we sort of knew what the true cost was, like we know the child care subsidy based on enrollment, we know the cost of the Fort DuPont operations, overflow shelters, those we put in the full amount.

So the CFO said for these others, the MPD overtime, for example, it's okay if it's just 50 percent.

That's correct.

Now I understand in putting together the budget, you um there wasn't enough money.

So you're not interested in putting in any more money than you have to.

But why is it okay for the CFO to say only 50 percent?

Well, it I think would be a better question for the CFO, but mm the discussions that I had were that these were projections, uh and so we were looking at you know what we sort of knew to be true, and then there's some amount that will come later.

I would also add that as part of the 27 budget development, it does include full funding for overtime for all of the public safety agencies, and it includes increases in overtime for all the non-public safety agencies.

Um just to be clear, are there any spending pressures that you know of that are not addressed?

Well, I'm not aware of any others.

I wouldn't be surprised though if some others popped up throughout the course of the fiscal year.

Sure.

As you noted in your testimony, Ms.

Reed, you proposed cutting 70 million from workforce investment.

How much does that leave in the account for FY 2026?

Um for FY2026.

Sorry, I'm just gonna do some quick math here.

Um it leaves the amount needed to cover um fraternal order of police, um, the Washington Teachers Union and the STEP increases, and so at a very high level.

It should be about 175 million.

About 170, 175, I do.

175 million.

And uh WTU is covered in the UPSFF for FY27.

That's correct.

But not in FY26.

So we have already allocated the $30 million to Aussie to support pay raises for the public charter school teachers.

Um that was not included in the formula last year.

So that's already been deducted from the workforce investment account.

I believe we've also uh made deductions for the attorney's collective bargaining agreement uh that was um passed.

And then for FY27 and beyond, all of the agencies have been increased to cover those costs.

So that's why we don't need to show additional funds in workforce investment in 27 and beyond.

So MPD, the costs are built in, schools, the costs are built in, Office of Attorney General, the costs are built in.

So what's not covered in FY27 are the CBAs that are under negotiation now.

That's correct.

So this is a delicate area.

And I think the way I want to approach this is could you follow up one of you with what the unions are asking in those CBAs?

If I ask you what you what you think they will cost, you don't want to do that because you don't want to play your hand in terms of what could be available, although maybe there's nothing available.

But what they're requesting would give me both an itemization of what is at issue as well as some order of magnitude.

What we can do is we can provide the um what the cost would be for essentially if the agreements that each union had that just expired were say replicated.

So that's sort of it's it's not speculating on what it where it might land.

It's just saying if if we had identical agreements for each union going forward, what would the cost be?

And that's something that we can provide you with.

That's analysis that we have done ourselves internally.

And that will give you a maybe a benchmark to go off of when you think about we are in leaner times of those agreements were all done during the post-COVID boom.

So I you know, my while I think the unions might disagree, I would say this is a good benchmark to look at.

And given the context of our current economy, there is probably something that might be somewhat less to be.

So I would get a aggregate figure.

And then also I would like an itemization.

We could provide an itemization for each union.

Yeah, which ones are in negotiation.

So you don't want to put I as I'm understanding you don't want to put a number next to any of them.

That's why I think using the prior agreements might be some neutral basis to give you some itemized sense as to what it would be.

And that does not get in any speculation about a negotiation that's taking place.

Yes.

So that would be helpful to get.

And I assume you could get that to us by Monday.

Uh Monday or Tuesday.

We we've done it our we did it internally ourselves.

We have to go and make sure we don't need to refresh it.

Um but you know, early next week we can get that to you.

Okay.

Um the proposed fiscal year 2026 supplemental budget, you propose reducing the early childhood educator pay equity fund by $3.4 million.

What specific legislative and administrative changes are being made in fiscal year 2026 to ensure that the proposed reduction does not create a spending pressure.

Could have asked that differently.

Why do you think $3.4 million is available and why won't that create a spending pressure?

When we worked with the Office of the State Superintendent for Education based on the legislative changes that were made to the pay equity fund and the salary costs, um, they anticipate not spending that full amount based on awards that have been given.

So we do not think that it will lead to a pressure in FY26.

Because of what we adopted.

Mm-hmm.

And if I ask another question, I will go over my time, which is fine with me.

Councilmember Vonis.

Thank you very much, Chairman, and thank you to the city administrator and the deputy administrator for being here today.

I have a couple of questions, but I will start by saying I too would like to have an opportunity to look at the documents that you mentioned for the chairman because I am concerned about where we are with the workforce investment fund.

And particularly I'm concerned with some of the unions that are currently in arbitration, like the firefighters that talk with us kind of regularly.

So I would like to know if you have a public statement about where we are with the firefighters in particular.

What we can provide will make sure your office gets the materials that were I described to the chairman.

So if it'll you'll know then the cost of replicating the prior agreements.

It doesn't mean the new agreements will reflect that, but it's a useful benchmark to start from.

And then I will also make sure with that OLRCB shares any information that is publicly available about where we are in the arbitration process in terms of dates or any other information that um is appropriate to be able to get.

Yes, thank thank you very much.

So we talk about our police and we're very much focused on that, but also with the fraternal order of police and of course the Department of Corrections.

But I really also want to make sure that we are on target as it relates to our firefighters.

Thank you.

And I just something that the mayor highlighted during our roll out of the budget a couple of weeks ago.

It was the on the the our final slide, which had sort of if there's additional funding identified, it was the very first bullet she put in that slide.

It really was one of the last cuts that we made when we really had few other options to be able to balance the budget.

Unfortunately, at the end to be able to make the file balancing happen, we had to dip into that fund.

All right, thank you very much.

I wanted to ask a little bit about Department of Healthcare Finance, the category reductions 25 million non-personnel savings through updated alliance enrollment calculations.

What does this really represent?

And the number, is it a number of enrollees?

Is that what this is primarily counting?

It reflects the number of enrollees that that department has seen not recertify that you know, from what the deputy mayor and his staff's observation probably reflect the broader federal environment that we're in, um individuals who may either uh no longer be in DC or be concerned about taking the steps necessary uh to recertify.

It it also reflects too, in addition to that, the utilization of the program.

So if you recall, this is the first year we went to fee for service for the alliance program, so we're just also not seeing people utilize um the service as much as we thought they would.

And would that be reflected in the reduced contingent revenue for personal needs allowance?

What is that?

Um that is there were two items for health care finance that were on the council's contingent revenue list.

One was about 21 million for the alliance.

We did undo that.

The other was 500,000 for the personal needs allowance, and I believe it um provides an increase in um basically their subsidy for people who are enrolled in the program.

Okay, a subsidy to their health plan or it's uh it helps them, I think, with just sort of activities of daily living, but I can follow up and get a little bit more specificity.

I I would really like to know.

Um I suspect that um some of our senior population might be included in this group.

So I'm just very very curious as to we've been busy looking at senior population and all the different services that they receive, um, trying to um provide more with services, but the only way we can do that is to reduce any duplication that we may have.

Um I find that our population they know about many of the different programs and take advantage of them all.

And so want to make sure that importantly that since this had not yet taken effect, um folks won't feel a decrease.

Okay, excellent.

Thank you so much for that.

Um then um I um note that the five million that has been added for the FAIR elections program.

Um also must ask um I know that the Board of Elections had a request of $2.4 million in order to go through, I'll say as the mayor says the tape for uh ranked choice voting in particular.

Is that included in the budget and will it be there?

It is.

So we provided those funds via contingency cash just because of the urgent nature of the need from the board, and we have uh repaid the use of that contingency cash in that budget submission.

Thank you for that, because I believe at a recent discussion with the board, there was some reference that implied that they did not have the money that they needed.

So I now know how to check up on that.

So thank you very much.

I just wanted to get a correction on that.

Then I want to talk a little bit about the capital budget.

The 7.8 million for the campus.

What is that for?

For the United Medical Center.

Yeah, the reduction of the RFK campus project.

Oh, the RFK campus project.

I'm sorry.

So what we did was in the budget, we um true up the sort of funding going to the RFK project by keeping in DemPed what is needed for the project management as well as a replacement of a sewer pipe and some other incurred costs.

We shifted the money that was in there for roads and utilities.

Um that is now out in DDOT's budget in the CIP.

So overall, it's not a reduction to the investments in RFK.

We're actually investing more in the infrastructure surrounding the campus in the proposed budget, but some of that just shifted elsewhere.

All right.

So this 7.8 is now in DDOT.

Yeah.

Okay.

That's what I wanted to understand.

And then the $3.5 million for streetscapes and beautification.

What's that?

So for that where you're seeing a decrease.

What we did, we always work with agencies, particularly like DDOT, DGS, DCPS, right, who have a lot of the large capital projects to see where they are in terms of project completion.

And so these would have been projects that are finished or had changed in scope somehow, and so we no longer needed the funds for the project.

Oh, excellent.

Okay, thank you for that.

I'm always interested in us saving a buck or two if we can.

Um what is the third bridge housing location?

This is the um addition at 25 million.

What is that?

Uh that is money that we set aside to allow the city to be able to purchase a location that would be similar to the first two.

Um one is the Aston uh in the foggy bottom area, uh, and the second one is near uh sort of near um on E Street near North Capitol Street.

Uh and they both uh house we call them bridge housing sites, so for their individuals who have been matched to housing but don't yet have the housing.

And there are studio apartments, um, often with kitchens.

Uh and about two-thirds of the folks who go there come right from encampments in the street.

And we find it's one of the only ways we can convince someone who does not want to go into shelter to be able to come into housing from an encampment is through the bridge housing sites.

So they have had a significant impact on the number of homeless individuals that we see in encampments.

Uh they're a very humane innovative tool.

Uh we have two, and they show enough promise in our evaluation of them that we set aside funding for a third.

Uh they typically are buildings of about 100 unit occupancy, so they're not very large buildings.

Uh they're not built new.

They're typically buildings that are already part of the fabric of that neighborhood uh that are for sale or are vacant uh and have a structure that makes them one better or vacancies or studios.

Thank you.

I think that's a very important housing uh process that we're engaged in.

We really need that.

Thank you.

Thank you, Chairman.

I'm exhausted my time.

Thank you.

Um the proposed fiscal year 2026 supplemental budget, you propose adding $32.8 million to the child care subsidy program for a total revised budget of $135.2 million.

That contrasts sharply with the program's fiscal year 2027 proposed budget of $114.2 million.

I believe you previously stated that um the $114.2 million is intended to support 6,000 families, or maybe that's 6,000 children.

6,000 children.

Due to implementation of a wait list.

Do you know how many um what the current enrollment level is?

When we um had to finalize that aspect of our formulation, um, there was about 7500 kids in the program.

Uh so we looked at two elements.

One was what the expected attrition is on a monthly basis going forward through the course of the year.

And the second is that in response to feedback from advocacy groups, they created the wait list at a date, I think in early May around.

They didn't do it immediately.

They wanted time for people to plan for a wait list.

So we also had to estimate how many families would enter prior to the imposition of a waiting list.

So those are two assumptions that are based on a target number of getting to 6,000 kids in the program.

What we did not know when we finalized the budget was how many would in fact sign up prior to the wait list, and obviously what the actual attrition will be over the course of the year, but we made assumptions based on uh an evaluation and assessment of the program.

That led to the funding number we put in the budget itself.

That led to that led to the um the equation that led to the funding we put in the budget itself of the program.

But those are the two variables, which is what's the attrition rate and how many do we will sign up, believe will sign up prior to the um the wait list.

Uh and finally we did adjust the um payment tiers to um only have the single standard um rate.

That's sort of the third variable that factored into what the formulation amount was.

And my recollection is the payment tiers are 70 percent, 72 percent, 76 percent.

No, 78 percent.

So they'd all be at 70 percent.

That's correct.

So 7500 at the time of formulation, less attrition, plus new enrollments before the wait list equals 6,000.

An average of 6,000 for the course of the year, yes.

That was our estimate.

And do you know how many are enrolled today?

I don't.

That's something that we can certainly get to you.

Um if I ask how many families do you anticipate will age out, opt-out, fail to recertify?

Um I'm not sure that matters so much as it just gets you to 6,000.

Yes, and I think that when I know when you have your hearing, what will be known now that was not known when we had to put pencils down was how many did sign up prior to the creation of the wait list and what um participation looked like.

And I would say we finished our budget after February.

We use February, had to use February data for it.

So you'll you'll have the benefit of knowing more up-to-date information than we did when we had to put pencils down.

But I think um the factors that we would consider that you would consider are probably identical, which is what's attrition really looking like and what's enrollment looked like at the time the wait list kicks in.

So my impression is that.

Uh in your calculations, and I don't know if it is you or ASI, somebody, that the annual attrition would equal about 100 to 125 children leaving per month.

And my impression is that right now ASI is experiencing about a 1 percent attrition rate, which is 75 children per month.

Do you have any sense of that?

Um I do on on it's about 1 percent, I understand, in a typical month, but they also have months of where people, kids graduate into DCPS or schools, so they do have August, September where it is not one percent.

It's something more significant that they typically say.

Then I understand it sort of averages about one percent throughout a typical month.

So whatever it is today, it's uneven from month to month, especially right before the start of the school year.

And then those numbers are higher, which pulls up the average.

The attrition is higher before the school year begins, correct?

So my understanding is that there is a sibling enrollment still being permitted, and that children in protective custody or experiencing homelessness are not subject to the upcoming wait list.

You were aware of all this when you were doing your calculations.

That's correct, yes.

So let me ask this.

If year-over-year enrollment remains on its current trend, which I am told is 19.34 percent, remains on its current trend through May, we are looking at roughly 8,500 children enrolled in the subsidy program when the wait list goes into effect.

And my sources are telling me that this means the subsidy program could be on track to require closer to 149 million dollars to support current enrollment.

Is that the actual amount we should be trying to fund in the supplemental?

For the current fiscal year, that that's not my understanding.

We believe that the 139 subsidy amount should be sufficient.

If there is additional enrollment data provided, we can look at that, but that's not something that I have been provided.

You said 139 million, and I have 135.2.

I have 139 million available for the subsidy budget.

Hold on one sec.

I have a total budget of 148.7, and then when you remove about 8 and 0.6 million of admin costs, um, 139.9.

I can follow up with the table breakout of all the different puts and takes so we can compare numbers.

Did I do that right?

Uh 139.9?

That's correct.

That's the number I'm tracking.

And that's what you think is budgeted?

Mm-hmm.

Why isn't it 148.7 since you mentioned the admin costs?

Oh, so what's available for subsidy?

So what's the total budget, including right Federal sources and the intradistrict is $148.7.

But about $8.6 million of that split between Federal and local is used for administrative costs.

So not available to make like a subsidy payment to a child care center.

So that's why I was using the $139.9.

And I guess that's what we're talking about.

Everybody is talking about is the amount available for the child facility center.

Right.

Yeah.

Um.

Is it possible to reduce the admin costs?

Um Aussie did put forward some uh proposals to reduce the admin costs for FY27.

Uh so there is a about a million dollar reduction in local, and then there's also about a 1.2 million dollar reduction in federal.

Um, but I'm not I'm not sure if they could do that in the current fiscal year.

So that's actually reducing admin costs by 2.2 million for FY27.

For FY27.

The 148.7 is all sources, not just local.

That's correct.

And the 8.6 is all sources, not just local.

That's correct.

When I send you the chart, it breaks all of this out by funding source uh, as well as sort of what bucket it came through.

Okay.

So you'll send that.

And also how many children are currently enrolled?

Yes, we can find that out.

The proposed fiscal year 2026 supplemental budget includes a $19.7 million increase for LRSP vouchers.

How many, if any additional vouchers does this fund and what types of vouchers are being funded?

So it unfortunately does not fund new vouchers.

What it does is trues up the cost for um existing vouchers.

And it supports five different types of vouchers.

So about $1.4 million is going to shore up the cost for targeted affordable housing for families.

How much?

$1.4 million.

$1.2 million is for tenant-based vouchers.

1.5 million is for project sponsor-based, I'm sorry, project-based vouchers.

$9.7 million is for sponsor-based vouchers.

And $6 million is for permanent supportive housing for families.

This funding also is included in FY27, so it recurs.

So the targeted affordable was for families?

That's correct.

And the tenant-based and project-based and sponsor-based is whatever the mix is.

Yeah.

My understanding tenant-based is basically LRSP that where folks would get pulled off the housing authority wait list and then project sponsor attached to the units and they would be coming online, and then PSH for families would be people who are in the process of searching for a unit.

So if this is to true up the cost, how can we be so far off?

I think it's a couple different things.

One, I think it's in years past, we'd prorated vouchers when they would first come online because they wouldn't necessarily go through the whole leaseup process in one year.

So there would always be some kind of money that would fall to the bottom line.

I think secondly, um, you know, we're we're often tied to a number of vouchers that we fund.

It's really hard though, because we budget at an average voucher cost, and then you don't know what the makeup of the family is, and that can change the overall cost.

So I think some of this is is catching up on those two things.

Particularly for the project and sponsor-based.

Um this is a little complicated, but many years ago, project sponsor-based vouchers used to be funded in the year that they were awarded, but not the year that they were actually being utilized.

And so we used to have really big surpluses that would fall to the bottom line every year.

We changed that working with um OCFO and DHCD and the housing authority, so that we would budget for them when they would actually come online in the financial plan.

And so right now the process is the first two years of funding lives in DHCD, and then it moves over to the housing authority to continue on uh in perpetuity.

What we discovered this year when we were putting together the budget is a good chunk of the money that had been sitting in DHCD was no longer was not shifted to DCHA.

And so as a result, there was a bigger gap there that we had to fill in order for them to have the money to support the units.

You'll also see a small increase in DHCD.

I think it's 1.2 million, and that will be for new units that are coming online in FY27.

But it's not that many.

New units, but you said there are no new vouchers.

There's no new vouchers.

I mean, I think that the the units, and we can break this out, but the units coming online.

So they're not new new.

They're already planned for.

Okay.

But we could look at how many are like actually, you know, people are in versus units that are available.

I'm not sure this is budget, but did in the process of looking at this, was there also a look at how long it takes to get units rented.

We have looked at that um over the course of several years.

I think uh we've done some work with both the housing authority and DHS on ways that we can speed up the process.

Um one of the things that we did two years ago was we actually redid um through our lab at DC team the entire voucher application form that had been quite long, uh, often asking for duplicative information.

And so we worked with the housing authority and with DHS and providers and clients to streamline that form uh and make it more user-friendly and you know, make it easier for people uh to complete.

I think this is still something that warrants attention, and we still need to continue to work with both agencies on you know how we can make the process go faster.

Um I I don't think we've shortened it to a time frame where everyone is satisfied, but I think we're making incremental progress.

Because I recall going on a tour of a building that has since come online, but it was under construction, and in the course of the tour, it was mentioned to me as an oh by the way.

It's hard to get these leased, these units leased because an eligible tenant gets to look at units and then gets to decide.

And a unit can't be leased until it's been inspected, even if it's a brand new unit.

And so and it has to be inspected within like 30 days.

I think it's 30 days.

So this is put it in first person.

I get to look at three different units.

I decide to not take yours, but I decide kind of at the end of my time to look.

And so your 30 days is up, it's now going to get reinspected before somebody else can look at it.

And so it can be months before the units actually occupied.

You're nodding your head like you know what I'm talking about.

I think I think that does happen.

I think that you know, people also are allowed to look at as many units as they would like.

And then we certainly want people to have choice, but I think there need to be limits and guardrails put around all aspects of the process.

And so absolutely, I think it's something we should all continue to work on.

You look like you were about to say something.

The proposed fiscal year 2026 supplemental budget includes an increase of $790,833 for SNAP error rate improvements at the Department of Human Services.

I could ask why it wasn't $135 or $850 or $100, but it's $790,833.

What specific actions will this funding enable DHS to take to reduce its error rate?

I understand that funding is for automating some of the paper documentation that reduces the prospect of human error as a result of individuals typing in mismatching information.

So it's automating some of the manual processes that are in place right now.

It also purchases Equifax software so we can have better income verification.

It will also allow DHS to realign some of their internal controls, so really updating manuals and policies and procedures and also expand data analytics to help identify data errors faster.

So this should reduce our error rate.

It should help us take some steps to reduce it, yes.

It's a um it's a big challenge.

I know DHS is very, very focused on it, and it's something that we'll need to keep looking at year after year.

I think as you know, starting an FY 30 will start to be penalized potentially based on our error rate, based on Federal legislation that was passed last year.

Aren't we already being penalized as in the ratio for subsidy has I want to say not gone our way, gone reduced?

Well, we're already required to pay more in administrative costs.

That's not based on the admin or the error rate.

That's all states were being asked to contribute a larger share of the administrative cost based on the Federal legislation.

And then there are penalties that we do get for high error rates.

Those are in the you know $3 to $4 million range.

The penalties that we're looking at for error rates that are on the higher end if we get to closer to FY29 or 30 would be tens of millions of dollars based on how the Federal legislation was crafted.

It's also very difficult because the error rate that they're going to use to calculate your penalty is two years old.

So the process is quite convoluted.

I think it's quite unfair to the agency, and it will be very difficult to predict what we will be penalized for.

And that was probably intentional.

So it doesn't sound like it's very positive toward the program or the people who need the uh the um supplemental assistance.

But um it means it's in our interest to reduce that error rate as quickly as possible.

Yes.

This in particular, as Jenny said, because of the delay in the penalty being delayed from the year in which they take the error rate, uh, we really have to make sure the error rate goes as low as possible over the course of the next 18 months.

Uh this investment alone won't get it there, um, but it makes improvements.

It's an area I think that in which I've asked Octo to work with DHS to explore the uses of artificial intelligence to be able to scan documents, read documents, scan for errors that are processes that may not have been available to us a few years ago to be able to drive down our error rate.

Our error rates also in part a byproduct of because there was not a significant penalty for it.

But there's a trade-off that we were looking at at speed compared to accuracy.

And I think even after the application of all these innovations and technology, it's the agency may have to start to uh more deliberate, move at a more deliberative pace to assess the accuracy of the information prior to awarding the um uh the benefit.

So they may have to slow down some.

What is the current error rate?

It's over 15 percent.

And what where does it need to be that we don't get these penalties?

I think around 6%.

Yeah.

I think it's around five or six percent.

So there has to be a very substantial reduction.

I think to um just want to make sure that that residents and others watching know the way the error rate is calculated, it's off a very small sample of actual cases that are processed.

So when we talk about a 15 percent error rate, it's not like DHS is um making mistakes on 15 percent of the total caseload, right?

It's a it's off a small sample.

Um so just want to point that out.

Well, but the sample is scientifically selected.

I think we would I think we would all benefit from hearing a little bit more from the agency about how the error rate is calculated, what goes into it, and sort of the specifics of it, because it um honestly sounds a lot worse than it is in practicality.

Are you ready?

I'll have a few more.

I'll have a few more questions, but I'm gonna turn to Councilmember Nindo.

Thanks, Chairman.

Hi budget director, high budget director.

Look at that.

Uh hi, City Administrator.

Um I have some questions for you all actually about my portfolio, because I want to get your insights too.

Um specifically with DPW.

Let's see what we can get to.

Um I noticed there are some shifts between the Department of Public Works capital projects for different categories of vehicles, but on the whole, about a 1.5 million dollar net increase for DPW vehicles.

Is that your understanding, Director?

Uh yes, that is my understanding.

Most of this was shifts of projects and then also being able to take some of the costs based on the overall amount that we were able to shift in the capital budget.

We were able to take some costs that we would have had to budget for new debt service in 27 and put them in 26 to help keep the agencies right going, um, but avoiding the debt service because we had savings in other projects that we could take off.

Got it.

Okay.

So I'm I um maybe this explains that, but I'm looking further out in the capital plan.

I'm seeing zero dollars in capital for all of the agencies' fleet-related projects starting in FY28.

So how can we possibly expect no capital spending for the waste collection fleet when even the tens of millions of dollars currently available in these project balances is turning out to not be enough?

It's a great question.

I think that um as we build the budget every year in the capital budget, we are often constrained by the district's debt cap, um, which does eventually typically change and grow as the years move on.

We are always very focused on making sure we're funding the agency's full request in FY20 in the upcoming fiscal year, in this case for 27, so they don't lose um progress that they've made on updating the fleet.

In some cases, we reduce or zero out the out years.

Um but then we go when we approach the budget for the following year, we go with the same approach to make sure that they're fully funded.

What's the risk to that approach?

The risk would be if um there was a like significant contraction in the district's economy that reduced the overall debt cap, that would put pressure on all of the projects that were funded in the CIP, and you potentially would have to make um different choices uh based on what resources are available.

Are we in a moment like that now?

I don't think we're in a moment like that now because our revenues, they are still growing.

They're just growing much more slowly.

But I think if you recall the 12-year look back presentation that we did, we showed how the revenue forecasts, we often beat the revenue forecast expectation each year.

And when you look over the four years pretty significantly.

And so we have used this as a strategy for many, many years.

Did I see that our moody's rating was upgraded today?

The outlook of the Moody's was upgraded.

They had put us on a negative outlook based on federal interest in DC and the DOEGE reductions.

They modified that last week to neutral stable as a reflection of two elements.

One is observing the way in which we've effectively managed the federal interest in our local economy and budget and assessing the mayor's budget submission as one in which they deem to be prudent in their words.

Got it.

Thank you.

Appreciate that explanation.

I want to talk about snow.

So the proposed supplemental budget would shift about 49 million dollars in additional funds to snow removal costs, including about $36.6 million at the Department of Public Works.

I know you both know one of the issues that exacerbated both the snow removal itself and the subsequent trash and recycling pickup backlogs was the fact that our plow equipment wasn't robust enough for the so-called snow creat that formed this year.

So I get that we can't budget for the worst case scenario snow events every year, but I do think we need to be at least somewhat realistic about uh our out-year capital planning for actual core government services, no matter how big a stadium we're trying to bankroll.

Um I'm going to be asking about this in DPW's hearing, but I also wanted to put it on your and my radar and see if you had any reflections on that.

Um happy to get an answer from both of us here because we have each might have different not contrary but different perspectives.

So I think from a fleet standpoint, in the immediate years, um DPW needs to look at purchasing different types of equipment that are better suited for some of the narrower streets.

So my observation is that in DC, we don't get a lot of snow very often.

So infrequently we actually name them.

Other parts of the country, it's every month, every couple of weeks.

So the drivers, we have plows that for our narrower streets probably take a driver who does snow on a pretty regular basis to be able to know how to navigate that kind of equipment with a pretty small margin of error on each side of the truck to be able to get through.

Um so DPW needs to look into, and we've spoken with them about this having different equipment that's narrower and better suited for some of our smaller streets, particularly in Ward One, um, where it gives the drivers that may not do this but twice a year, uh, more margin of error between the cars that are parked and their vehicle.

So that's one.

And the second area, and I think from a procurement standpoint, we've asked them to look at existing year money to be able to start um having at least some equipment that is going to be more effectively handle some of our more historic narrower streets.

Uh the second area that sometimes is capital, not always, is just from a technology standpoint.

Um, the agency um we need to have much more consistent um awareness of where our vehicles are, if we're procuring contracted fleet into our own fleet, we need to make sure they're in the same system, uh, and we know if the plow is up or down.

Uh and we had inconsistent enough performance from a technology standpoint uh that it made it more difficult for residents to understand were they really plowed, and if they saw something go down the street, why is there snow still there?

Maybe the plow couldn't put its um uh its its um plow down.

Um in terms of the uh Jenny, I want to sort of allow you to sort of add anything to my response though.

Oh I agree with your response.

I think the only thing I would add is um through this snow event, we also did things that we'd never done before.

Um so we put bobcats down alleys um because nothing was melting.

And so that was a significant cost that um we hadn't incurred before, we hadn't tried before.

Um I think it might be something the district may want to consider using for significant snowstorms in the future.

Uh but now that we've gone through that experience, we can obviously um plan better for how to execute that.

Um I'd like an itemized list of the specific snow removal costs that are in the supplemental, including how much has been spent on agency overtime, salt purchase, alley clearing, contracts, and so on.

And I I like that for all agencies, not just DPW.

Um how soon could I get that?

We can get that to you early next week.

Is there and this is a day next week you need it by, we can make sure we get it to you prior to when you need it by uh uh by end of day Wednesday would be.

Yeah, we'll do it Monday or Tuesday then.

Okay, great.

And um, council member, this would be for DPW, D dot, and DGS.

Yeah, great.

Okay, just want to make sure.

Anybody else that was removing snow?

Not removing snow.

Um OCP had a few costs just procuring some hotel rooms in the beginning, but not those are the three big ones for removing snow on the sidewalks or the roads.

Okay.

Um great.

Thank you.

Um but include in the answer include procurement.

Okay, hotel costs.

Absolutely.

Yeah, that is a category we're tracking um salt, contract plows, sidewalk and bus shelter clearing, alley clearing, scooping and hauling, hotels, parking, food, fuel, personnel over time.

Let me say bike lanes.

I'm sorry, bike lanes also.

Is that on there?

That would probably that's D D dot.

That would be in their um bus shelter clearing sort of bucket.

Okay.

So do either of you know why the snow removal zones are split up the way they are between DPW and D dot?

Um I've been here long enough to know when that happened.

When did that happen?

Um so DP I started in DC government in 2002 at the end of 2002.

DPW and DA had just split up.

So it all was one agency.

So the first my first year there is the first snow when they had separate agencies.

So in the early days, they tried it both ways.

Um and there's a trade-off in which there's no clear right answer to, but make your best judgment.

Uh it is clearly more efficient from an operational chain of command in some ways to have just one agency manage of the whole city, so you don't have different standards, uh, different chains of command.

Um so why do we split it up?

Well, when the city first split it up, and they had they did have DPW having a uniform command of the whole city, um, they found that the plow drivers and the frontline supervisors for the snow event would be in a different chain of command going up to DPW, if they're D dot drivers, than they do when there's not snow.

And they were not as responsive to individuals giving direction who are not in their typical chain of command.

So the decision was made that um given the trade-offs to have to prioritize in that decision, splitting them so the chain of command when it's not a snow event was reflective of the chain of command when you had a snowstorm.

Now that was a decision made a while ago.

Um, and I think it's one that probably ought to get revisited even if the the judgment or outcomes not different.

Um but that was why D dot got about a third, quarter to a third, and DPW got the rest of the city.

That's very interesting.

So you essentially tried it the other way.

Yes.

Where D dot staff were deployed for the snow event, but reporting to DPW.

Yeah.

And it was at some point that chain of command for the snow event switched.

So the the plows maybe the frontline supervised the same, but it switches it switched to DPW at some point in that chain of command.

And the experience was not an effective one.

So the two agencies decided to have it be split up, and then it remains such for the past 20 years.

I have um two more questions.

Would you like me to keep going or do you gonna do your next round?

Okay.

Thank you, Chairman.

Is there any component of the hold on a second?

Really?

What is it meant to say?

Oh got it.

Okay.

In the supplemental, where we're shifting 49 million dollars in additional funds.

Um is any of that money going to something unrelated to snow?

No, that is all for snow.

Okay.

Um and that's across the three agencies.

So when we share the breakdown, we can share.

It'll be inclusive of what was spent, right?

Between the supplemental and the contingency cash allocation.

Thank you.

The supplemental narrative shows a $22 million contingency repayment.

How much were emergency or contingency reserve funds used for snow removal?

So there was about 20 million, just under 20 million, um, wherein we did our initial projections for what was needed for the storm.

Um the other 2.1 million is was for the Board of Elections.

Um, a separate contingency letter related to getting ready for this election cycle.

Is that to address the ballot length issue they were talking about?

There were a number of uh issues that they were um trying to address, uh including additional education and outreach, um ballot length.

So it was a variety, more overtime needs, things like that.

And are we on track to replenish those reserves as required?

We are, yes.

Great.

So we the only um contingency cash allocation that is not repaid was the one that we did for SNAP early in the fiscal year, because we were waiting for federal reimbursement for that.

Okay.

Thank you.

Thank you, Mr.

Chairman.

Could I add just one addendum to the snow because I feel you're gonna have a hearing next week?

One of the questions that I think is really fundamental to a what you we purchase from a capital standpoint, what we plan for operationally, is what is the expectation of what the city ought to do from uh when we have unusual snow events.

I was sitting next to one of my counterparts in the cog area, I won't say which one, and I just I asked him, I I saw his number first.

I said, what did you how'd you do that?

Like he didn't spend as much as we did.

And he said, my metric that I live by is within three days after the end of the snowstorm to have one lane plowed within a quarter mile of each house.

And so he had very little.

So in this snowstorm, we did things that we hadn't done before because of the ice.

We we cleared alleys to try to allow for trash to go more quickly.

We also really moved and hauled, hauled, scooped and hauled snow at a rate we hadn't done since 2016.

And to be able to clear the through lanes so people can move throughout the city.

Um and those were when we give you the the data around spending, those were very meaningful costs.

And sometimes, you know, um today's hard won achievement is tomorrow's basic expectation.

And I think a valid conversation is that I know we are held to a much higher standard, as we should be.

Um we have more eyes on us.

Um but from a budget standpoint, how do we what is the expectation that we ought to budget for going forward?

I think that's a valid discussion that we talk about that I'm sure you'll talk about next week.

Do you uh do you have an after action report for this snow for the snow creep um we um uh had asked HCMA to develop an after action report?

Um uh then we had the Potomac Interceptor happen and other events, so I don't uh I don't it's not complete yet, but we do have an after action report that's in it's in process.

That will talk about snow creek.

Yes, yes, it is specifically about snow creek.

And will it include what if anything can be done differently in the future to ensure the district does not spend this amount of money?

Uh it will include what we ought to do and plan for in the future.

I can't promise spending levels, but what we can and and and ought to do in the future when we have unusual snow events.

And when will this be ready?

Um as in shareable with us.

I don't I will make sure I provide that answer.

I don't know yet.

But it's not something you'll be able to share next week.

No, no, we we it was I think mid midway through formulation and the folks doing it had to get pulled to the Potomac Interceptor response.

It's not DPW HCMA, so you'll share it when you get it.

In your testimony, you mentioned $5 million additional for fair elections.

How much does that bring fair elections to in FY26?

If you give me a minute, I might be able to get that answer for you.

Let's see.

It might take me just a minute, Chairman.

So if you want to um throw out another question, I'll keep looking.

Well, I could, but I don't believe in multitasking, so I don't want to detract from Washingtonian came out with the hundred most influential people.

I think it was more than a hundred, and it was interesting because nobody, I mean, who heard of any of the most of these people.

But um for some of them it had uh like a little note like uh lessons learned.

What lessons did you learn, or what would you say to yourself as an 18-year-old?

And at any rate, one person said I don't believe in multitasking.

It's not doesn't happen.

Just say for what it's worth, I don't believe in what's that?

For what it's worth, I don't think multitasking.

I think it's an illusion.

I think people just switch between activities when they believe they're multitasking.

But the director read is fully focused on the one question you have, though.

Uh so the estimated cost during last uh was 23.6 million, and then we added an additional five million.

So it should be uh twenty-eight point six.

And I'll after the hearing just um verify that and circle back.

But that's what I'm tracking.

For FY26, a total with a supplemental of twenty-eight point six million.

Yes, um I had earlier asked you about a reduction to pay equity of three point four million, you answered that.

There's a reduction of three million to ERAP?

That is from the um council contingent revenue list.

So how much is in the budget for ERAP for FY26?

Should be eight point six million.

And how much of that have we spent, but I might be able to figure that out while we're here.

I don't have that handy, but we might be able to get it before the end of the hearing.

Uh so actually I'm gonna go back to fair elections for a second.

How did you determine 28.6 is what's needed?

I'm guessing because the Board of Elections and Ethics told you that.

Uh the Office of Campaign Finance.

Okay.

And did you double check the number or I mean they they shared with us based on the number of candidates that had filed and what their spend rate was that they were anticipating needing an additional five million.

Uh and then we also, I believe, added three million for FY27 and some amount.

I think it was 12 million in FY28.

Um those out year numbers come from working with the Office of Revenue Analysis who works with the agency to determine what the contribution should be.

Do you remember offhand what the FY28 number is?

I think it's 12 million in additional.

No, total.

Total, yes.

So 28.6 million in FY26 and 28 million and execute and 12 million in FY28.

I guess there are fewer offices.

There are not the chairman and there's not the mayor.

Right.

And I think that the additional 3 million and 27 is based on like the timing of the payouts.

And I think they were thinking since there will probably be some special elections that are held.

Correct.

Yeah.

Um and you're gonna hopefully get back to me during this hearing about how much has been spent of ERAP.

Yes.

And there's a five million dollar reduction to CFSA for out-of-home child placement.

That is a reduction based on so CFSA, um, I'm and I'm gonna forget the name of the grant, but they they got their federal grant plan approved, which provided an additional five million dollars for the current fiscal year.

So they were able to apply that funding to um rental payments, and then we were able to take a corresponding reduction.

So federal dollars are replacing local dollars.

Um you also reduced uh the research practice partnership by 400,000.

We did.

Which leaves zero.

Why did you do that?

In a tight budget, we were looking for things that um we didn't think are the highest and best use of resources.

Uh Chairman, for ERAP, the latest data I have is from February.

Um as of February, the agency had issued 1.2 million in payments with 85,000 of payments in process.

To date, they've had 9.4 million total requests and 1.3 million denied.

The remainder are under review.

I will never be able to read these notes.

So there have been 9.4 million dollar requests.

What is as of February mean?

February 1st, February 28th?

Um probably February 1st, I can confirm.

Um we can also follow up um with more recent data.

That's just the last that we have on hand.

Um we we track it and watch it um, but we haven't done an update yet.

So that's a third of the way through the year if it's February 1st.

A third of the way through the year, there's 8.6 million budgeted.

Um there was 9.4 million dollars in requests.

There was 1.2 million paid, 1.3 million denied, and the remainder under review.

Yes, and there were about 85,000 of payments that were in process, but hadn't yet gone out the door.

Yeah, I left that off because it seemed it was less than a hundred.

I'm not sure I'm right to leave it off.

But I rounded down to zero.

Okay.

But that answers the question.

Um if you get updated information if you would share that.

Sure.

Uh in your testimony, you said uh there were capital budget shifts, approximately 132 million was shifted among capital projects.

Is that for FY26 or FY27?

That's for FY26.

Um I would say too, that there are a couple um notable changes in capital that have out year implications or current year implications.

So one noticeable change you would see is a $61 million reduction to the H Street Bridge project.

That is replenished in the 27 CIP, I believe in FY28.

It will not disrupt the um the status of the project being able to move forward.

The reason that we made that change was there was a request from Capital One Arena to move forward 40 million dollars that was budgeted from the 27 allotment into 26 based on their spend rate.

So that was increased.

And then additionally funding for the bridge housing site and some other things.

So that's a noticeable change, but the money is still in the CIP.

It's just not in 26 anymore, it's in 28.

I think you're aware, because City Administrator, you've been in the meetings or invited to the meetings on the HP Bridge and what's going on there.

Or not.

I can add you if you want.

I'm sure there's very qualified people who attend right there.

A lot of qualified people.

It's a room full of people.

I I I get we do get briefed, um uh, and I think the the notable briefing was I guess about um the movement of the pylons onto the bridge versus the cost of the resurfacing of the bridge itself.

We don't call them pylons, which suggests it's just little plastic things.

We're talking about the whole footings for the bridge, whether the bridge gets rebuilt or whether it's just redecked.

And uh, we're trying to work our way through that, and I'm actually going to come back to that in a minute with another question.

Um, you were talking about uh a couple of notable changes in the out years, and you mentioned H Street.

Was there any anything else?

That's the most notable one that comes to mind from what we did in the changes in the supplemental that are reflected elsewhere in the CIP is H Street Bridge.

So in your testimony, you mentioned $7.7 million to support demolition of UMC.

We had not contemplated that when we a year ago and we adopted the CIP.

Uh it was not included in the CIP from last year.

And uh based on, I mean, part of it was, you know, as the hospital uh is winding down, there was some time that was really needed to get all of the things out of the hospital, right?

Surplus them, um, really work on closing it down.

So we weren't sure of the timing.

And now um we know that they're they're ready to um begin this fiscal year.

And so that's why we added the funding in FY26.

Um is the total demolition going to cost 7.7?

Yes.

And when are they gonna start?

Um we don't have a specific date.

Um we can follow up with the agency.

I mean, I think there we'll have to wait for the supplemental to pass, right?

So the funds can be loaded in the agency's budget so they couldn't let out for contract.

So it wouldn't be until after that.

But we can follow up with DGS and find out what a timeline might look like given the adoption of the supplemental.

And the third bridge housing site.

Uh when is that supposed to be acquired?

Uh DGS and DHS are on a regular basis right now, um, working with brokers to identify sites.

They have visited a number of sites, uh, and they're I think um uh you know hope to identify one that fits all the criteria they have uh in the coming couple of months.

It's a high priority for the mayor for them to find a third site uh uh in time to the and in condition to be able to open it during this calendar year.

You know, there was some controversy about the E Street site that it the price paid by the district government was considerably higher than the assessed value based on an appraisal that are uh appraised valued as a hotel.

I don't know if you know that.

Uh I understand there was some conversation about the appraised value.

I think it's a fantastic location and uh uh and the purchase price also included the full renovation of the building to meet the um specifications of DHS.

Well, that might be a relevant point that it included renovation, but the fact that it's a fantastic building doesn't mean that we paid too little or too much or the right amount.

Uh oh, I think that for a purchase price that included renovations to meet DHS's standards was um uh an outstanding purchase that we made.

Well, there was controversy around it.

Uh the million dollars to support children's hospital, um which I think is important and a good idea, but how'd you come up with a million and why is it needed in FY26?

So um we would follow up with we can follow up with Demped, um, who was the one who is working on the number based on what they thought it would cost to do kind of the the feasibility work.

Why it's in 26 is we wanted uh to be able to get started right away.

I have a few more questions, but we've been joined by another council member.

This could there are 13 of us, so I'm sorry to uh reno your parade.

No, I'm glad you're here.

Nice to have company.

Sorry, I'm late, I was sharing my own hearing.

Oh, floor is yours.

What's that?

The floor is yours.

Thank you.

Um good afternoon, uh city administrator.

Um I want to uh start as sort of a follow-up.

So the committee on of the whole held a series of hearings in the fall on budget execution, um, and we discussed the FRPs and the budget formulation process.

Um and I want to follow up on a couple of things there.

So as it relates to the FY26 supplemental, the supplemental would reprogram about um 119 million uh across the government.

How much of this is a matter of the money has already been spent?

So for instance, DPW snow removal versus we know this particular program will face a cost pressure.

Um it's a good question.

Um so in the funds that were added in the supplemental, what I would say is that there's funding for MPD and DOC overtime.

That's a partial payment for the pressure.

There is funding for the public charter schools, additional special education student enrollment.

That's uh partial payment for that pressure.

There's the full amount that we believe is needed to support the child care subsidy payments through the end of the year.

Uh same for the Fort DuPont Ice Arena operations and um DHS overflow shelters.

The snow money has already been spent.

Um what I would consider like truly sort of like new things um that would not have been spent yet, would be the summer work orders for DGS, which is roughly six million, and then the roughly 1.7 million at DHS for SNAP uh error rate improvements and the beginning of the EBT chip cards.

Okay.

Um a noticeable patter pattern in the supplemental and even seeing it in some of the agencies is around like we're realizing savings through vacancy savings.

Um the trouble of doing vacancy savings in a mid-year, essentially in some it it can essentially um render that position as not being able to be hired.

Um there are um we're adding about 1.1 million in in FTE and and fringe accounts in the district-wide accounting services in the office of the chief financial officer.

Are those new positions?

Or are we backfilling positions that they now want to hire that we took vacancy savings from?

Um CFO would have to answer for certain.

My understanding is that these are not new positions.

Well, I'm sorry, these are new positions and they are tied to new compliance initiatives that the CFO would be undertaking that would generate additional revenue that is captured in the revenue forecast.

Anybody thinks that their little special snowflake can like generate money?

Sorry, I just went through this with Disby.

They're like, that's a revenue generating position.

Do we believe it?

There are um having been through many budgets, there's um there this is not the there's a historic practice of sometimes the CFO meeting their marks of revenue.

Okay.

This would not be an unprecedented um investment in which they score revenue for it, but they they are uniquely positioned to be able to assess the revenue impact of their budget submission.

Okay.

I'm sorry if I missed this earlier, but in the supplemental the reprogramming piece that it's with regard to DGS.

So this is for the public education facilities, public safety facilities, parks and rec.

There's about 13.8 million that's being reprogrammed.

Um are these around work orders, or is this to deal with overtime or some other types of contractual services?

Um you are looking at reductions in the Department of General Services.

It says reprogrammed to various divisions within.

So it's a reprogramming within DGS.

That's before you right now.

Yeah.

Okay.

Give me a sec.

No, no, no.

This is the FY26 one.

The supplemental.

The supplemental.

Okay.

Yeah, sorry.

So Department of General Services.

So there's one reduction of approximately 825,000 for security savings.

That is based on a realignment of security that will happen in FY27.

So they'll start some of those realignments earlier.

There's about 9 million that's added for snow costs that were above and beyond the contingency cash.

Okay.

5.6 million for summer readiness.

Okay.

And those are the work orders.

Was summer readiness unanticipated?

We do summer readiness every year.

We do summer readiness every year, and we usually put it in the supplemental based on work the agency does throughout the year with DCPS to identify need.

There is more need than this amount.

This is what we were able to fund in a tight budget year.

Okay.

The Office of the Mayor is getting a mid year grant budget increase of 65,000.

Who's the grant for?

I will have to get back to you on that.

Sorry, that was so specific, but so is the 65,000.

That also very specific as well.

All right.

So DPR.

Just sorry.

Yep.

There is an $80,000 addition to the executive office of the mayor that's for snow response costs that they incurred.

I'm not aware of a grant, but I will follow up just to make sure.

Okay.

Since I'm taking notes.

As well as other people.

They're going to get back to you about a 65.

I I thought it was 60, but I I we believe it's 65.

She's saying there's 80, so it's an increase in the mayor's office for a grant.

For a grant.

What's the grant?

We don't know.

That's what we asked.

Keep going.

Yeah.

What's that?

I should keep going.

Oh, keep going.

Okay, great.

All right.

So DPR.

Um lots of moving pieces that have been occurring in the Department of Parks and Rec.

And I am not opposed to them receiving more funding in terms of fiscal year 26.

Um this would have them as an increase of 1.6 million in recreation services and programming.

Is this to address some new types of programming that they're planning to do in the summertime?

I I'd asked DPR Director Freeman for the cost of just one teen spring jam.

And I don't know what I was expecting, but I definitely wasn't expecting 186,000.

But nonetheless, here we are.

So I'm assuming that this additional funding is to address some of the future planning pieces on that front.

This is actually to operate the Fort DuPont Ice Arena.

Oh, we took that over after the fiscal year started.

So we added those costs for that as well as in FY27.

Okay, so then how is DPR playing for all the new and fun activities that you all are tasking them to do now?

They have an existing budget for uh youth programming uh that they will run youth programs on weekends weekly throughout the summer, starting the first week of June.

Um so they have an existing budget to be able to pull from for those activities.

But if I recall last budget season, we did not talk about weekly programming all summer long, like the spring jams was new.

That's that's not a prior something that DPR would have done.

The activities done, because we're not obviously not in June yet.

The activities done now may not come from the same bucket of funding, or they may be stretching it to be able to stretching it early to be able to last into the spring, and it may have some and if it has an impact on their ability to continue it throughout the summer, that's not something that they have flagged to us.

In fact, this morning, anticipating a question like this, I wanted to make sure they had sufficient funding to be able to have weekly programs through their normal schedule of June through August, and they confirm that they do.

Okay.

You know, as you all are uh considering various programming opportunities uh for our uh teens and tweens.

I went to the Department of Employment Services hearing at some point earlier this week.

Who knows what day it was?

I think it was Wednesday.

And um a couple of years ago, we worked with uh director Morris Hughes on a middle school career exploration program.

It's now called I think career early scholars.

Got 5,000 applications for 625 slots in FY25.

And then the budget got reduced.

But the need has not gone away.

And while the jams are cool and they're interesting in it, but there's still very much a need for families who are looking to match their young people to good programming, and this has been a very successful program.

This summer they only have 400 slots.

She's got a wait list out the WASU.

Um, and so as we're thinking about various things in terms of directing budgets, et cetera, let me just offer that up as an opportunity to increase the slots even for this summer where there is a wait list.

Um at least for something that we know has been successful and um the the community is sort of clamoring for.

I I know I'm over time.

And um, so I'll just mention this.

Um I wasn't coming here prepared to talk about the um United Medical Center closeout because we've still been asking some questions to the office of the chief financial officer.

But I'm skeptical because last year, there that last year, last budget season, so this fiscal year, there's eight million dollars that's sitting in that account, and nobody can tell us how it's been spent.

And it's for some of the very same things that now OCFO slash you all are saying you need the money for, whether it be storage, document destruction, X, Y, or Z.

Um I would love to know what we're doing with the asset.

I'm very curious why the utilities are still on the asset, which has probably ruined some of the inside, because I don't know if you know, but there was a pipe that burst uh this winter that um flooded part of the hospital that was not in use, but now we have to deal with the to ensure that mold does not develop over the summer and that warm months.

Um so I think we all just need to get very clear about what's the real close out and then close it out because I feel like we're dragging this out.

But um, so we have some questions into the OCFO on on some of that.

Thank you.

If I could just add just two things.

One is um in the budget, so there's about 10 million of revenue coming in from UMC that um will not be utilized um in their closeout.

Then we net out like the 1.6 million that OCFO needs across um FY26 and FY27.

We also include 7.7 million in the supplemental to demolish UMC so that we can um use the um land for other economic development.

Okay.

I guess I'm suggesting that I don't I'm not convinced that the CFO actually meets the 1.6, considering we just gave them eight, and nobody can tell us how that was spent.

And you're gonna ask that question at the CFO hearing coming up in theory.

Or I'll just talk to the former board chair.

And if you can't make the hearing, give it to us.

So is the CFO the one who's in charge of the building right now?

No, DGS is in charge of the building.

Um there's shared responsibility between CFO and the Department of Healthcare Finance in terms of all of the window.

Um there was monies that we about 1.5 million remains in health care finance budget for UMC closeout activities in this fiscal year.

And then there's the 1.6 split across 26 and 27 for OCFO.

And then there's a net probably 8 million addition to the general fund of revenue, like because they had about 10 million of revenue that they weren't gonna spend.

And is that recognized that revenue?

It is.

Are you spending it?

Yes.

Not necessarily on health matters, but that's fine.

What doesn't matter?

As I I it was it would have been nice to know that the eight million from a hospital was actually going back into health services.

Well, you do know first come first dibs.

Sure.

But we did add nine million for dental envision.

Okay, but that nine million from dental vision should have come from contingency, which I don't have time to talk about right now, but you got it.

Okay.

So DGS is in charge of the building in a pipe burst.

Um, you know, one of the challenges that we run into with facilities that aren't being occupied or used is things do break down.

I'd have to look into the circumstances in which the pipe burst.

I don't know if it was during Snow Creek.

It was.

Okay.

But still, the idea though that the hospital had not been in use, but we're still paying utilities for the facility.

So that's a cost that the district is incurring, as you know, at a higher rate, because utility costs.

Yeah, we we've looked at in years past, like completely mothballing buildings that were not using the challenges, then you get even worse problems than like a pipe burst if everything is completely shut off.

So I think once we have a clearer plan on the demolition timeline, then it's probably a good idea to relook at like when should we cut this off?

Yeah.

If we're just gonna tear down the building.

Yeah, yeah.

Well, the only way a pipe bursts during snow creed is if there isn't a sufficient heat.

I would I would have to look into it.

Just saying.

I mean, I see this with school buildings.

When I say that, it sounds like I mean I just saw it recently or current, but we've had school buildings where there's damage done, nothing's done to take care of it, and it just gets worse.

But uh pipes freeze because they pipes burst because they freeze.

And they freeze because there's no heat, but you're saying there's utilities, so then there would be heat.

I don't know why you you can shut off the water.

Those are questions we'll follow up with.

We call this risk management.

Sorry.

The other part, although we have asked DGS via OCFO around the cleanup, because it did flood part of the property.

And we want to make sure that even in the course of yes, we're gonna demo we don't want m mold uh flourishing on the inside of the facility.

I want to follow up on a question about Fort DuPont.

You you were done with your questions.

Um how much is in the budget for FY26?

It's 1.7 million dollars, and that's for um operations for the full fiscal year.

So we had DPR utilize other resources, um, allowable resources to cover the cost, knowing we would be adding money so they wouldn't run into a deficit by the end of the fiscal year.

1.7 in FY26 or F 1.7 in FY27?

Both.

It didn't open until last December.

So why would the full year cost be for 26?

I thought it opened before December.

We'll we'll get back to you on that.

Okay.

How much were we paying in previous years for Fort DuPont Ice Arena?

I think that we were paying 250 or 300,000 because it was the grant to the friends of Fort DuPont.

They were originally supposed to program the space and then things changed.

Correct.

Because there was a DC rec decided they didn't like Fort Friends of Fort DuPont because somebody who was not part of Friends of Fort DuPont wrote a really nasty racist email.

And because Fort DuPont was very frustrated that the facility was not delivered in time for the season without a clear explanation from DGS, I would say that we're looking at what uh if we were giving them a grant of 300,000, we're looking at now spending 1.4 million dollars more per year because of it's a testiness between Parks and Rec and Friends of Fort DuPont.

Uh I think that this is the cost of maintaining and running the facility.

And even if they had the most perfect relationship, I don't believe that the nonprofit would have the financial resources to be able to sustain this level of investment in it.

So I think the relationship is separate and aside from the fact that we would be absorbing the cost of a beautiful facility that's very popular, uh even if there was still a a closed relationship with the nonprofit.

They were fundraising.

I'm not aware that they're I'm not aware that there was the ability to fundraise to the extent that's needed to be able to maintain a new facility.

I don't agree.

So let me ask you, um in your budget formulation.

The um were there issues with access to revenues in your budget formulation.

If you want me to phrase it differently, I will.

If you could that would be helpful to clarify sort of the intent of the question.

Well, my understanding is that with the budget before us, the Chief Financial Officer is indicating that revenues that he recognized in conjunction with legislation, tax legislation we adopted last uh fall is not being recognized in that uh the level of reserves, which I think are higher than they need to be, cannot be diminished.

Uh were you seeing the same problems?

The um the two things that that we saw, and certainly one um uh perhaps most directly answered your question, is that um as a result of the decoupling uh decision, uh there is about 180 million dollars in revenue that is getting collected that was not reflected in the revenue estimate that is the basis for balancing our budget.

Uh the purpose of that revenue is to be set aside for legal risk in the event that someone sues over the district staying decoupled from the big beautiful bill.

Uh and that is revenue that um 180 million dollars would have been a meaningful would have had a meaningful impact on our ability to fund some of the um priorities that the mayor had listed on our last slide of her presentation, being the union contracts uh uh child care, uh, and being able to um possibly even look at how long the pause is for the universal pay leave program.

Um about 180 million.

Yes.

You are welcome to speak freely and elaborate and um embellish.

Well, I I mean just the the to elaborate a bit more, um, it is important that every jurisdiction be able to have a strategy for being able to manage this legal risk.

Uh and typically that's done through options given that allow elected officials to weigh um the merit of different options, either setting revenue aside or agreeing to come back and be able to address it in the event of a lawsuit.

To my knowledge, there's not yet been a lawsuit.

Now, there might be one, but there's not been one to date.

Uh if there is one, we would then know the scope of what the legal risk is, but without a lawsuit, we don't know the scope of that.

Uh so those are questions that um by not including the revenue in the forecast itself, by law, we are bound by the revenue forecast.

So by not reflecting that, uh, that is actual revenue coming in that we are actually collecting, uh, that I don't think options are really provided to being able to assess different ways to be able to manage that legal risk we have.

Um at this point, you know, we had to address this or just respond to it early when it was unknown and maybe assumed there would be quickly be a lawsuit.

Um the council now has the budget when more time has gone by uh in which perhaps there's an ability to assess that if there's not been one to date, there might be one, but it is notable that um uh in terms of assessing the legal risk, um, that there's not been a lawsuit to my knowledge to date around that decision.

Uh you have been around a while.

The um district has been sued all the time.

We have been sued in the past.

I seem to remember, not specifically the case, but that there was a large judgment or settlement against a district, tens of millions of dollars in the past.

Um have we not been able to manage how we pay that?

We have always managed the largest lawsuit in my time in D.C.

was the fire union suing the city over how we counted overtime.

And that settled uh for uh I believe in about 2015, a multi-year lawsuit uh for the amount that I think was between 50 and 70 million dollars.

I am sorry, 15 million.

I think it was in the order of 50 to 70 million dollars is a very, very large lawsuit.

That controlling for inflation isn't that far off of 180 in 2026.

And at that time, um we were at a time in which we did not yet have 60 days of cash on hand.

Now we were growing revenue-wise, um that we had to find funding sources to be able to resolve the lawsuit.

And what that led to really was we had to backpay thousands of firefighters, um, oftentimes thousands, some of them hundreds of thousands of dollars.

We owed individuals $200,000 or more to give us sense of it.

And so we had to do back pay for overtime that should have been spent for thousands of individuals all in a very short span of time.

And we just had to factor that into how we manage our money.

So what did you do?

Reprogram or spread it over two fiscal years?

Or supplemental budget?

If I my memory serves me correctly, that I believe there was a supplemental budget, and I think we had to slow down our spend rate because it was not a surprise that we lost it.

So there was time in advance to know between the time that it was clear that we were not going to win the lawsuit and the full settlement of sort of the exact terms and conditions.

And there may have been a supplemental.

That's sort of a question I'll look into.

But it was a very sizable lawsuit.

And I think, again, on if our revenue has just about doubled since 2015, you can then more or less double the 50 to 70 million.

You know, you get in the ballpark of something approximating the risk we have associated with the um with the decoupling, the prospect of a decoupling lawsuit.

And um I would just follow up to note in this supplemental that we presented, there's a net $113 million cut.

So the notion that the district can't respond during the fiscal year to meet unmet needs and particularly one on the order of $180 million in magnitude, I just don't think is true.

So you mentioned reserves back in 2015, weren't at 60 days.

What is one day's operating expense?

I think it's around $30 million, $28 to $30.

And so if we're at $66 days, and I'm kind of amused, we always count this in terms of September 30th.

So that's like five and a half, four months or we'll go.

But nonetheless, that's what we count how we count it.

Um if we're at 66 days, that would be six times 30 is 180 million on the reserves?

So the reserves overall is about $2.2 billion across the four um key reserves.

That's about $66 days.

Yes.

So did you ask the CFO who well, maybe not asked, but did you want to reduce the reserves to 60 days?

We did ask to go back to the original law of the 60 days.

Um we were uh told that we would not be able to do that.

But how much money would that have made available?

I think we thought that would make about close to 200 million available, 180 to 200.

And I just confirmed the fire lawsuit was about $50 million, 50 in 2015 it settled.

And that's the largest one you remember.

Yes.

Were there any other sources that you looked at that the CFO said no?

In terms of revenue or cash?

Maybe I shouldn't ask revenue, but in terms of cash.

The primary ones are uh the um the revenue we are in fact collecting, but not being reflected in the revenue estimate of the potential lawsuit uh and the ability to modify days of cash on hand, which is both looking at the six days of cash on hand beyond the 60 days, which is always the standard that we sought after for many years, uh, but also um at least the conceptual possibility of being able to utilize more of the fiscal stabilization reserve or changing local law to reflect a different use of that reserve.

But the um we weren't able to uh tap into any of those sources of cash for formulation purposes.

And there weren't any other pools of cash that the CFO said no.

No, there was a new requirement to add money to the supplemental budget to cover the year-over-year growth in the emergency and contingency reserve and the school advance.

That added about $52 million to our supplemental that we've not had to do in the past.

I'm sorry, explain that again.

The year over year growth.

So every year when we um you know, when we go through the year-end close, we adjust the amount of the reserves, and we need to make sure to fulfill to fill them right with either underspending or revenue.

Um the contingency and emergency reserves are based on a percent of expenditures.

And so as expenditures go up from year to year, the amounts that are required to keep those reserves full also grow.

So not just the money we take out in the year and repay.

This is just like there's a year-over-year delta.

That was about 25, 26 million between the two.

Then there's emergency and contingency reserves.

And those are both the federal funds?

Those are both federally required.

Um then there's the school advance, um, which as school budgets grow, the advance um, because it's a percent of their upcoming budget also grows.

So there's a year-over-year growth in the school advance.

All of those things are required to be, you know, sort of paid from year-end close uh each year.

And we have always done that through the year-end close process.

This year, they asked us to put it in the supplemental uh as a new expenditure.

And my sense is they will ask that of you and the new administration going forward.

So the supplemental that we have funds the Federal Reserves as of October 1st at the FY27 level.

Um of September 30th, because it is fiscal year, you said it's in the supplemental.

So as of September 30th fully funds them at the FY27 level based on the FY27 budget.

The FY26.

Because it's the current year when we close out the reserve will be required to go up a little bit based on the expenditure.

So it's based on the current FY26 budget.

For FY27, the amount actually could go down depending on the level of budget that is passed, right?

The requirement could actually go down.

Um That's for the reserves and then the school advance.

Right.

So there's a um year-over-year growth in the school advance.

Because the school budgets grow, um, the the advance amount also grows, and that is required to be sort of repaid through the close process.

That was also about 25, 26 million.

And so the combination of the two, you'll see in the financial plan, there's a line at the very bottom about, I think, you know, required for replenishment of reserves of about 52 million.

So that was that was a new expense.

It's not like revenue that was denied, but a new expense that we had to add into this year's budget formulation.

The $52 million is replenishing the reserves plus the school and and the school advance, or $52 million is just replenishing the reserves?

It's both.

It's the reserves, just the emergency and contingency.

Um it doesn't involve fiscal stabilization or cash flow and the school advance for both DCPS and charters.

So it's roughly 50 percent to each, to the reserves and to the school advance.

And the in the past the practice has been that we uh replenished reserves out of UN surplus.

That's correct.

And uh and we replenish them in the order of the Federal Reserves and then the uh local reserves.

That's correct.

And um actually in the past, sometimes we've decided not to replenish the reserves uh to the level that we could, and to instead in the mayor's proposed budget to spend some of that money on operating.

Um that is true.

And um in years past, I think importantly, you know, we always try to repay, particularly contingency in the year that we use it so that it's available.

But the requirement is actually that it's repaid in two fiscal years.

So there is more time.

Um it's just been our standard practice to try to replenish it in the same fiscal year.

But I think that's makes some sense.

Yeah, I agree.

Um I think in 25, 24 or 25, we were not able to fully replenish it, but we did by the following year.

Um But this is so the CFO required you to budget the replenish it, not the replenishment, but the um increase in the reserves that would be required based on projected spending this year.

Of course, the projected spending could fall short.

And we've had surpluses every year.

Correct.

Now they're not huge.

It's like maybe $100 million surplus.

I think this year for agencies it was maybe $200 million surplus.

I can't remember, $150 million surplus?

It was low.

It was like just over one percent.

But I think the revenues, you know, last year.

I actually did the calculations, so maybe my question is whether I got the numbers wrong.

And that was I looked at the projected revenues for FY25.

That's the year we just finished.

The projected revenues at the time that the budget was formulated.

Budget for FY25 was formulated in calendar year 24.

Yes.

And the revenue would have been based on revenue estimates for April for February 28th 2024.

So I took that number.

This was actually because I kind of brought this up with the mayor's presentation.

I took that number and I compared it to the actual revenues in FY25, which we now know because of the ACR.

And the difference was if I remember correctly, $850 million.

I I think that sounds about right.

And then I would add, when we were formulating the budget that we submitted, right, we updated the 25 based on the latest revenue estimate in February, and revenue still came in, I think $5 to $600 million higher after that February revenue estimate, so within that same year, um, which led to a much larger year-end uh surplus, right, that went in to fill those reserves than we had anticipated.

And so when we were beginning this formulation uh process discussion in the fall, you know, I had thought, well, the year end is getting tighter, like maybe this does make sense to do this.

But when we saw the ACFAR and how much additional money just spilled over, then you know we began to question whether or not this was needed.

Um but it was something that the CFO felt very strongly about.

We felt very strongly about getting you all a budget to consider.

Uh and so we did add it.

And the CFO has to certify your budget.

And uh so you're kind of a little bit at his mercy.

The budget would not be submitted to council if he does not certify it.

So it's not like we can send uncertified budget.

The budget would just have never have gone to the council, is my understanding.

So it is a requirement for us.

I just the contact, and this is of all this, and I think this is I'll say the most important issue in the budget that doesn't get talked about enough.

Uh is the foundation of of this for us, if we were to look at what would have been the case in the sixty days of cash on hand.

It was about a $400 million swing for us.

The $180 from the decoupling uh and then the six days of cash on hand.

It is about $350 to $400 million.

It is a very significant amount of swing in our budget.

So the foundation of it is this idea of how much cash is needed to be able to pay the district's obligations, how much liquidity is needed.

There's no question that we must pay our bills.

We are unique in DC that we can have a control board trigger in ways that other jurisdictions don't have quite the same perhaps implication for missing a payment, but we do.

And so that is sacred and it's not to be touched.

However, the two components is that it's vital that therefore, if the question of having enough cash is for us a $400 million swing in what we could fund, it's really vital that information about cash available, projected cash needs is both as transparent but also as known to the members of the council as the details of the pay equity fund or the details of the child care subsidy.

Like it's that important.

And understanding the root causes of what is appropriate for a jurisdiction of our size.

And then ultimately what are options available to decision makers to be able to manage cash risk and liquidity risk.

And you were there and I was there where there were days usually we didn't have that kind of cash on hand.

And as a jurisdiction, we have to get very effective at managing thinner margins of liquidity to be able to pay bills.

We have to be able to do really accurate long-term forecasting of cash needs if we're doing four-year financial plans that also include being cash flow positive.

And ultimately provide options for how to manage it.

That would legally normally be available to us to be able to put into a budget.

And so it wasn't as if we were given three options and we chose this one.

We just had one option, which is to not be able to change any local laws that are in which it would and then free up funding to put in formulation was not an option available to us because I believed it would have risked a certification challenge, nor was it the option to be able to budget for the uh the 180 from the decoupling, because it was not reflected in the revenue forecast, even though this revenue that is actually being collected by the city.

So it's vital that there be options presented to elected officials to be able to choose how to manage this sacred question, which will always stay sacred of how to avoid a control board trigger being activated.

And the transparency in providing options is what has been absent.

And the only option forward for us was to respect the rules, which we did that we were given.

And the consequence of that for us was having a swing that had a meaningful impact for things that were important.

But you have the budget now, and it's important that there be openness about cash needs and options given for how to be able to appropriately manage it.

So a couple of minutes ago, I went through how I thought that for FY25 between the initial revenue estimate and the actual revenues after the year was over, about an $850 million difference.

Is that unusual?

To have the actual revenues come in significantly higher than the revenue estimates.

We typically do beat the revenue estimate projections each year.

There were, of course, notable swings during COVID, but I think it was very difficult to predict what was going to happen in the economy as COVID was unfolding.

But the uptick in FY25 was not expected and was larger than what we've seen in other years.

Well, actually the year before it was even higher.

And actually during COVID, uh the revenues came in much higher than the projections because you'll recall that we got a revenue estimate in May that was substantially less.

So we budgeted based on revenues that turned out to be very much below what came in.

Yeah, I would just I would caveat with COVID that it would have been impossible for anyone to know in May what the next six or eight months would look like.

It just it was so wild.

Sure.

But uh I think actually the point about COVID is that uh this all can be managed.

Because it got managed.

We delayed the budget.

We got revised revenues, a revised revenue estimate, uh budgeted according to that, and as usual, the revenue estimates were conservative.

And I don't think anybody begrudged that because it was difficult to figure out what was going to happen.

But the revenue estimates come in conservative.

Is there ever a year when revenues have been less than the estimates?

The the two years and there have been two years.

Um if you go uh I think uh twelve two thousand nine, two thousand ten or oh eight-oh nine, but the two recession years, they came in meaningfully under the estimate.

Uh I would say there's three.

But you finished sort of where I was going to go.

There have really been three moments in my time, which is overlaps with your time where there have been unexpected negative um uh corrections.

The recession, and you just laid out there was a supplemental budget and changes made to be able to manage to that.

Um the second was COVID before we got the bounce after of of Federal aid, where we had to make adjustments.

And the third one was just a year ago, where we had to be able to, it was not pleasant, but we had to be able to suddenly slow spending down as due to the CR on Congress.

So and what was this?

What ultimately, how much did we have to actually cut?

Ultimately, we had to cut like two to three hundred million, but we had to find a way to eliminate one billion of budget authority.

So there have been three moments at sort of over the past, say 20-year time span where there have been meaningful sudden unexpected negative impacts.

And all three, the mayor, the legislative branch work with the CFO to be able to figure out a path forward.

So I want to go back to the advance.

Um the school advance is a percentage of the ensuing year's budget for schools.

So whatever the budget is for this year for schools, and I'm going to say $3 billion, if it's $3.5 billion next year, then it would be, I think the percentage is 30 percent of the $3.5 billion.

And we pay that, we we give advance that to the schools, or we budget to advance it to the schools in July, I believe.

Um DCPS doesn't take advantage of the full advance.

The but you were required to budget the full amount for DCPS?

Um we, if I think back to the chart that I saw, I believe the amount for DCPS is very small.

I can follow up with you, but I don't I don't I want to follow up and look at the number to know if it's the full amount.

I'm thinking it's less than $9 million.

Um, but I I will follow up with what the exact amount was and what the amount for charters was.

The amount for charters would be higher, because I've said they get the full amount.

Um in the long run, isn't budgeting that advanced uh better because it then takes some pressure off the following year?

Well, what it does is it takes pressure off the year-end close so that if there's additional surplus, more money would more readily flow into the reserves or into HPTF and pay-go if all the reserves were full?

Because it comes out of the year end closed, the Delta.

Okay.

I think I'll leave it there.

I have one other line of questioning.

This is not in the questions they gave me.

Uh so the President of the United States has proposed a budget to the Congress, and for the district, he has $403 million at the U.S.

Department of Transportation for the District of Columbia, and then he has $10 billion in the National Park Service or Department of Interior for the District of Columbia.

Has there been any look on your part or discussion with regard to how that could be used for the district?

I I think that um I first of all, we we always welcome investments for the Federal Government in infrastructure as the host of the nation's capital here.

And there was I would say at best, like very informal internal conversation.

But until something like that advances further and we have more clarity as to what is gonna what might come out of the Congress is not something that we would begin planning around.

It's not something it's not something we would plan around until we really got a better sense as to what might come in a final budget.

But we certainly welcome and there's opportunities to be able to make DC invest in the infrastructure in a way that uh makes us even more uh beautiful and fantastic.

So I mean, uh for instance, the 403 million at USDOT, some or all that could go to the H Street Bridge, which has a connection to the upgrade for Union Station and improving rail service on the eastern corridor.

But there hasn't been a discussion there.

No, and and 400 or so million is roughly what we get in federal grants in a typical year from USDOT.

So we'll have to look into that to see if it's something special above and beyond.

I believe it's something special above and beyond.

But really, the answer here is that um this has come from the president, and it's not something that you've done any planning around.

No, but as the city administrator said, if if it advances further, um we would absolutely be thrilled, first of all, and then second of all, um, would work and and I uh and start engagement on how to use those funds.

You all seem pleased with all the questions.

They're getting tired of all the questions, so I'm gonna move and say I have no more questions.

Thank you.

Thank you.

So I think we're good.

Um this has been a hearing on, I'm closing this out.

This has been a hearing on the um revised budget request for the current fiscal year.

And I don't even know if we had a hearing notice, so I guess uh you all are gonna get back, you took notes on what you're getting back to us with.

And um I may close out the hearing.

Time is 1.44 p.m.

and this hearing is adjourned.