Chairman Gray and members of the Committee, thank you for the opportunity to speak today. My name is Jenny Reed, and I am a Policy Analyst with the DC Fiscal Policy Institute. DCFPI engages in research and public education on the fiscal and economic health of the District of Columbia, with a particular emphasis on policies that affect low- and moderate-income residents.
I am here today to testify on improvements that have been made to the District’s budget over the past year, and also to provide suggestions for ways to improve the transparency of the budget for the public.
The Office of Budget and Planning has made several improvements to the District’s budget over the past year that has helped improve its transparency to the public. I’d also like to note that FY 2009 — FY 2010 were incredibly difficult budget years that required the District to amend its budgets a number of times. We appreciate all of the hard work OBP had do over the course of this year to produce a number of amended budgets in such a short timeframe. One of the most critical improvements was to include more thorough and accurate descriptions of the programs and services and agency provides, in the agency’s budget chapter. Because many of the District’s budget line items are large and arbitrary, the descriptions can help the public to determine where funding for a particular program or service they care about, it located. In addition, the baseline budget was put online for the first time and the FY 2010 budget volumes were indexed. These are small changes but both help the public to be able to find and locate more easily, the budget information they are searching for.
However, there is still room for improvement in the transparency of the District’s budget. A transparent budget ‘ one that provides accurate, clear and timely information ‘ is critical to helping the public understand how its tax dollars are being spent, and to enable the public and elected officials to hold the District accountable for the delivery of services. My testimony will focus on ways to improve transparency in three key areas: helping the public to locate critical budget information, helping the public to understand and track changes from the prior year approved budget, and to help the public understand how programs and activities are funded and ultimately where their tax dollars go.
Helping the public to locate critical budget information. Part of the challenge with the budget is finding all of the critical information. The budget for each agency is contained in thick volumes that make it difficult to locate a particular agency. Furthermore, many members of the public may not be aware of the operating appendices or capital budget for agencies. We recommend that OBP bundle each agencies budget information (budget chapter, operating appendix, and capital budget) and have them available to view by agency rather than large unclear volumes.
Helping the public understand and track changes to the budget from its approval in the prior year. Many people may think that the budget approved by the Council in the spring in the budget an agency spends for the upcoming fiscal year. The budget passed by the Council is after all, the result of months of hearings, advocacy and debate over what the Districts priorities should be. However, changes are often made to the budget by the Mayor’s office over the course of the year. And many of these changes can be significant. In fact, the Council budget office recently reported over $650 million in changes to the budget in 2009 alone. Therefore, the Office of Budget and Planning should take the following steps to help the public understand what changes were made to the budget in the course of a year:
- Use revised budget figures. The Districts budget contains not only the proposed budget figure for upcoming fiscal year but also the approved budget figure from the prior year’s budget. These figures can be used to make year-to-year comparisons of funding changes for critical programs and services. However, many times these figures are not useful because the budget has been changed over the course of the year. DCFPI recommends that OBP use revised budget figures as of a certain date’for example as of February 1st‘that would provide a more accurate snapshot of the budget for the agency.
- Make CFO Source available to the public. CFO Source is a powerful online tracking tool that allows users to see the actual spending of an agency over the course of the year. Yet, this software is limited to only certain users and there is no public component. OBP should release CFO Source to the public so that they can track how funds are being spent within an agency.
- Improve the transparency of reprogrammings and intra-District transfers. The Mayor’s office has the authority to make changes to an agency’s budget during the year through reprogrammings’changes that move funding from one purpose to another’and through intra-District transfers’changes that move funding from one agency to another for the same purpose. Giving the executive the flexibility to make changes to the budget makes sense however, all changes should be made in a transparent manner and substantial changes should come before the Council for review. Bill 18-559, the “Reprogramming Policy Reform Act of 2009″’introduced by Chairman Gray’would, among other things, require additional reporting by the OBP to make these changes more transparent. DCFPI testified in support of this legislation and we recommend the OBP undertake the new reporting requirements.[1]
Help the public better understand how programs and activities are funded. One of the biggest problems with the lack of transparency in the District’s budget, is the way that information about the budget is displayed in the budget books. Often times, there is not enough spending detail so that public knows how funds are being spent on critical programs and services. DCFPI suggests that the Office of Budget and Planning take the following steps to increase the transparency of spending on programs and services.
- Expand Table 40 so that activities can be tracked by funding source. It would be useful if the public could see not only how programs are funded, by funding source (such as local, federal, or special purpose funds), over time, but also how activities are funded, by funding source, over time. Table 40 in the operating appendices currently displays this information at the program level but not the activity level. DCFPI suggests that the OBP provide an expanded table 40 to show this information broken out for activities. This table could be made available online so that it does not further constrain the available space in the published budget books.
- Include more detailed information on federal and special purpose funds. Federal funds can be a large portion of an agency budget. The HIV/AIDS Administration and the Department of Housing and Community Development are examples of two agencies that receive significant amounts of federal dollars that are used for many critical programs. Yet, the DC budget contains very little information on how these federal dollars will be spent. DCFPI published a paper called “10 Ways to Improve the Transparency of the DC Budget” that included suggestions for displaying the use of federal based, based on other states ways of displaying information.[2] I have attached this paper to my testimony and we recommend that OBP include new tables in the budget that provide a narrative description of the federal funding source, the carryover or balance of the fund, additional revenue expected into the fund, and on what programs and activities the funds will be spent on.
Special purpose funds, or o-type funds, are separate from the general fund are funded through the collection of fines and fees and often their use is restricted for a particular purpose. Despite the number of special purpose funds, their large dollar amount, a the critical functions they can serve, there is very little financial detail in the budget on how the funds are used and what the revenues are that are deposited into the funds. DCFPI suggests that OBP provide an additional table that displays a brief narrative of each special purpose fund, the sources and amounts of revenue into the fund, and which programs and activities the funds will be used on.
Organizational-Based Budgeting. The District’s current performance based budget structure results in many large, arbitrary line items that make it difficult to determine how funds will be spent on real programs and services. Starting the in FY 2011 budget, the District will begin to move towards and organizational-based budget structure that should display program and services in a more meaningful way to the public an ultimately result in greater spending detail. DCFPI supports the new budget structure but we suggest that the OBP ensure that detailed crosswalks are provided so that the public can better understand where funding has been moved and be able to make year to year comparisons. In addition, much of line item detail will be finalized between the FY 2011 and FY 2012 budgets. We encourage both OBP and the Mayor’s office to work with the public on suggestions for how programs and services are broken out and displayed in the budget.
Thank you for the opportunity to offer testimony. I am happy to answer any questions.
[1] See testimony of Jenny Reed, Policy Analyst, DC Fiscal Policy Institute, at the Public Hearing on B18-559, the “Reprogramming Policy Reform Act of 2009,” available at: http://dcfpi.org/?p=1368
[2] See DCFPI, “10 Ways to Improve the Transparency of the DC Budget” February 2009, available at: http://dcfpi.org/?p=285