District of Columbia Issues: D.C. Workforce Reductions and Related Funding Issues

Correspondence issued by the General Accounting Office with an abstract that begins "This report reviews whether the DC government had the authority to use $18 million from the Financial Responsibility and Management Assistance Authority for severance payments during fiscal year 2000. GAO concludes that the District lacked the authority to use the $18 million in Section 157 funding for the fiscal year 2000 workforce reduction. District officials told GAO that they believed that they had the Financial Authority's approval to use 157 funding and, consequently, spent $14.3 million during fiscal year 2000 on workforce reduction activities. However, the District could not document that the Financial Authority had certified compliance with the requirements of Section 157 to authorize the use of the funds. The Financial Authority maintains that it did not approve the use of the funds by the District and had denied in writing the District's request for reimbursement for severance payments. The District accounted for the workforce reduction costs during fiscal year 2000 as if it had access to the Section 157 funding. The District concluded that, had the Section 157 funding been unavailable, one agency would have ended fiscal year 2000 with an operating deficit and two agencies would have experienced increases in their existing operating deficits. As a result, the District may have potential Anti-Deficiency Act violations.