2026-10-29 - Committee of the Whole

BUT I'M GOING TO ORDER THIS HEARING. THIS IS A PUBLIC HEARING OF THE COMMITTEE OF THE WHOLE OF THE DISTRICT OF COLUMBIA. TODAY IS THURSDAY, OCTOBER 29. WE ARE IN ROOM 500 OF THE JOHNNY WILSON

BUILDING. THE SUBJECT OF THIS ROUNDTABLE IS THE TOPIC OF BUDGET FORMULATION, EXECUTION, AND AGENCY OVERSPENDING. THE PURPOSE IS TO EXPLORE THREE INTERRELATED ISSUES. FIRST, WE WILL EXAMINE THE PROBLEM

OF AGENCY SPENDING BEYOND WHAT WAS APPROPRIATED IN THE ANNUAL BUDGET APPROVED BY THE COUNCIL. EACH YEAR, AGENCY BUDGETS GROW BY MILLIONS OF DOLLARS AFTER THE START OF THE FISCAL YEAR THROUGH

SUPPLEMENTAL BUDGETS. THE ROUNDTABLE WILL INVESTIGATE HOW THE EXECUTIVE AND FORCE THE BUDGET APPROVED BY THE COUNCIL. GIVEN REPEATED INCIDENCES OF SPENDING. WE WILL DIG DEEPER INTO THE FINANCIAL

OFFICERS BUDGET RULES WITH AN TO UNDERSTANDING VARIOUS CONSTRAINTS THAT WILL BE PLACED ON THE NEW ADMINISTRATION. THIS HEARING WAS LIMITED TO INVITED WITNESSES AND AGENCY REPRESENTATIVES. ANYONE MAY

SUBMIT TESTIMONY. THE HEARING WILL CLOSE IN TWO WEEKS. ANYONE WHO WISHES TO SUBMIT COMMENTS IS WELCOME TO DO SO. YOU HAVE TWO WEEKS. WE HAD ASKED FOR WITNESSES FROM THE EXECUTIVE BRANCH. THE FIRST

WITNESS WILL BE PARTICIPATING VIRTUALLY. YOU ARE OUT. GOOD MORNING. I FIND THAT I DO HAVE MORE QUESTIONS THAN ANSWERS TODAY. I APOLOGIZE FOR BEING VIRTUAL. YOU OFFERED HOPE FOR BETTER COMMUNICATION

AND SPENDING. YOU PROMISED TO SHARE TEMPLATES USE TO TRACK SPENDING PATTERNS AT THE DEPARTMENT OF HUMAN SERVICES. WE RECEIVED AN EMF FROM THE CHIEF FINANCIAL OFFICER OFFERING TO ARRANGE MEETINGS FOR

INDIVIDUAL COUNCIL MEMBERS TO TALK ABOUT WHAT ADDITIONAL INFORMATION MIGHT BE HELPFUL IN COUNCIL OVERSIGHT. I HOPE TO LEARN TODAY THAT THE COUNCIL HAD FAR MORE VISIBILITY IN BUDGET EXECUTION THAN WAS

THE CASE A YEAR AGO. HAS COLLABORATION IMPROVED? WERE THERE MORE MEETINGS AND COMMUNICATIONS ON THE EXECUTION OF THE BUDGET? HAS A FINANCIAL REVIEW CIRCULATED? DID THE SPENDING THROUGHOUT THE RECENTLY

ENDED THE YEAR TRACK MORE CLOSELY WITH THE APPROVED BUDGET AND WAS THE CASE A YEAR AGO? I REMAIN CONCERNED THAT THE ANSWER TO THE LAST QUESTION MIGHT NOT BE YES. THERE HAVE BEEN LARGER PROGRAMS OF

FUNDS. ON OCTOBER 19, THERE WAS 4.2 MILLION TRANSFERRED FROM THE OFFICE OF THE CHIEF TECHNOLOGY OFFICER TO THE OFFICE OF THE CHIEF FINANCIAL OFFICER. PRIMARILY FOR PERSONAL SERVICES COSTS. I RECOMMEND

ASKING FOR MORE DETAIL ON THE NEED FOR MORE BUDGET AUTHORITY TO COVER VALERIE'S -- SALARIES AND FRINGE BENEFITS. THERE WAS $2 MILLION TRANSFERRED FROM THE DEPARTMENT OF BUILDINGS . THIS WAS FROM

PERSONAL SERVICES ACCOUNTS. BASED ON FILIAL -- FAILURE TO HIRE VERY IMPORTANT ROLES. MORE THAN $8 MILLION WAS MOVED FROM MULTIPLE AGENCIES TO THE FIRE AND EMERGENCY MEDICAL SERVICES DEPARTMENT FOR

OVERTIME. ONE OF THE FACT IS WAS THE COSTS WERE NOT ABLE TO BE COVERED THROUGH MEDICAID REIMBURSEMENTS. $3 MILLION WAS PROVIDED TO THE DEPUTY MAYOR FOR ECONOMIC DEVELOPMENT TO FUND EXPENDITURES

ASSOCIATED WITH A CAPITAL PROJECT. A SCHOOL PROJECT. BECAUSE THE BUDGET WOULD NOT BE ABLE TO MOVE FORWARD WITHOUT IT. THIS LANGUAGE WAS USED IN VARIOUS DOCUMENTS BEFORE THE COUNCIL BUT NOWHERE IN THE

MATERIAL PRESENTED TO THE COUNCIL WAS THERE AN EXPLANATION ON WHY COSTS ACTUALLY WERE. NO EXPLANATION FOR WHAT THE CAPITAL PROJECT WAS NOT CONSIDERED APPROPRIATE FOR BOND FUNDING. I HOPE THE COUNCIL

WILL ASK FOR A DESCRIPTION OF THAT. APPROVED OPERATING BUDGETS AND INTO THE YEAR ACTUAL EXPENDITURES NEVER MATCH PERFECTLY. THAT IS NORMAL. THE CAREFUL MONITORING AND OVERSIGHT WILL KEEP THE BOOKS

BALANCED AND PRECLUDE THE NUMBER AND VALUE OF THE KINDS OF REPROGRAMMING'S WE CONTINUE TO SEE AT THE END OF THE FISCAL YEAR. THERE REMAIN SERIOUS ISSUES WITH THE DISTRICT FINANCIAL PLANNING BUDGET AND

HOW FUNDS ARE ALLOCATED. THIS IS ANOTHER ISSUE WE HAVE RAISED IN PREVIOUS BUDGET TESTIMONY. AT A RECENT FORUM THE CFO WAS ASKED IF THE BUDGET IS STRUCTURALLY BALANCED AND HE ANSWERED THAT IT IS. WE

HAVE ALSO TESTIFIED TO THAT POINT. I WOULD LIKE TO QUOTE FROM THE GOVERNMENT FINANCE OFFICERS ASSOCIATION. MOST STATE AND LOCAL GOVERNMENTS ARE SET -- SUBJECT TO THIS REQUIREMENT. BUT IT MAY NOT BE

INTACT STRUCTURALLY SUSTAINABLE. IT COULD INCLUDE THE USE OF NONRECURRING RESOURCES TO FUND ONGOING EXPENDITURES. AND THUS NOT BE IN STRUCTURAL BALANCE. A TREE STRUCTURALLY BALANCED BUDGET IS ONE THAT

SUPPORTS FINANCIAL SUSTAINABILITY FOR MULTIPLE YEARS INTO THE FUTURE. THE GOVERNMENT NEEDS TO MAKE SURE IT IS AWARE OF THE DISTINCTION BETWEEN SATISFYING THE STATUTORY DEFINITION AND ACHIEVING A TRULY

STRUCTURALLY BALANCED BUDGET. THE DISTRICT'S BUDGET HAS BEEN BALANCED. BUT I WONDER HOW MANY CONVERSATIONS THE COUNCIL HAS ENGAGED IN DEVOTED TO TALKING ABOUT WHAT THE D.C. PS BUDGET OR THE HUMAN

SERVICES BUDGET OR THE POLICE BUDGET WILL BE IN FUTURE YEARS AND HOW IT CAN BE BALANCED FROM HERE. THE POINT OF HAVING A MULTIYEAR FINANCIAL PLAN IS TO FORECAST THE NEED FOR ACTIONS TO MAINTAIN

BALANCE. THESE BUDGETS RELY HEAVILY ON ONE-TIME FUNDING. FOR FEDERAL COVID FUNDS. TODAY OUR MULTIYEAR PLAN SERVES NO USEFUL PURPOSE. IT IS NOT PREVENTED THE DISTRICT FROM USING LARGE AMOUNTS OF ONE-

TIME RESOURCES. THE CURRENT BUDGET USES ONE-TIME RESOURCES FOR THE STUDENT FUNDING FORMULA AND IT DOES NOT FORECAST A REMOTELY REASONABLE VERSION OF THE FUTURE. THE MULTIYEAR PLAN ASSUMES A CLIFF OF

$552 MILLION. SPECIFICALLY, THE BUDGET THAT WAS APPROVED INCLUDES A 35 PERCENT CUT TO THE OFFICE OF VICTIM SERVICES. A 50% CUT TO NEIGHBORHOOD SAFETY AND ENGAGEMENT. $95 MILLION CUT FROM PUBLIC

SCHOOLS. ALMOST $40 MILLION CUT FROM THE DEPARTMENT OF ENERGY AND ENVIRONMENT. AND THE LIST GOES ON. NEXT YEAR'S BUDGET WILL NEED TO CONSIDER REDUCTIONS OF THIS MAGNITUDE IN THE AGGREGATE BUT SUCH A

STATE FISCAL CLIFF SHOWS THAT A STRUCTURAL BALANCE IS A GOAL THAT HAS NOT BEEN ACHIEVED. WHAT STEPS WERE TAKEN IN THIS CYCLE AND THE NEXT CYCLE TO PREPARE FOR THOSE ACTIONS? WHAT STEPS HAS THE COUNCIL

TAKEN TO IDENTIFY EXPENDITURES TODAY THAT MERIT REDUCTION IN THE FUTURE? I WOULD LIKE TO CONCLUDE MY TESTIMONY BY SHARING MY OWN TAKE AWAY FROM THE VERY USEFUL ROUNDTABLES YOU'VE HAVE HAD ON

OVERSPENDING. I BELIEVE THE INDEPENDENCE OF THE CHIEF FINANCIAL OFFICER HAS OUTLIVED ITS USEFULNESS AND THE DISTRICT SHOULD BRING BUDGET AND FINANCE BACK UNDER THE CHIEF EXECUTIVE. YOU TOOK EXTENSIVE

TESTIMONY FROM THE CITY ADMINISTRATOR IN THE CFO. THEY MADE IT CLEAR THAT THERE ARE TWO FULLY STAFFED BUDGET OPERATIONS. THE CFO REPORTS QUARTERLY ON THE STATUS OF AGENCY SPENDING BUT FAILS TO OBSERVE

ANY VISIBLE DISCIPLINE WHEN AGENCIES SERIOUSLY UNDER SPENT -- AND THEIR BUDGET. THOSE REPORTS DID NOT APPEAR TO BE OR READILY AVAILABLE TO YOU OR ANYONE ELSE. THEY REPORT OUT THROUGH DATE AGENCY

DIRECTORS TO THE MAYOR. THESE AGENCIES DRAFT THE QUARTERLY FRP'S THAT ARE SIGNED BY AGENCY DIRECTORS. THE DOCUMENTS ARE SUPPOSED TO HAVE A PLAN WHEN ONE IS NEEDED. OUR TAXPAYERS TODAY ARE PAYING FOR

TWO DIFFERENT BUDGET STRUCTURES. THEY ARE NOT COMMUNICATING EFFECTIVELY AND DO NOT APPEAR TO WORK IN TANDEM AND FAILED TO CONTROL SPENDING. THE INDEPENDENT CFOS SERVED A PURPOSE. IT GUIDED ALL PARTIES

TOWARD BALANCED BUDGETS. THAT INDEPENDENCE HELPED THE DISTRICT'S BOTTOM LINE. ON THE FIRST INDEPENDENT CFO WAS ELECTED MAYOR THIS COUNCIL DEMONSTRATED FINANCIAL PRUDENCE TO THE POINT WHERE THE CONTROL

BOARD WAS SENT 10. WE HAVE SEEN IN SUCCESSIVE CFOS INCREASINGLY SEPARATING THEMSELVES FROM THE GIVE AND TAKE OF ELECTED POLICYMAKERS TO THE POINT WHERE THAT INDEPENDENCE APPEARS AS A HINDRANCE AND NOT

HELP. AN EXPENSIVE HINDRANCE. IT IS TIME TO BRING THIS BACK UNDER THE CHIEF ELECTED OFFICER. WHICH IS ALMOST UNIVERSALLY THE CASE IN CITIES AND STATES AROUND THE COUNTRY. THIS COULD SIGNIFICANTLY

IMPROVE ACCOUNTABILITY. WE RECENTLY PUBLISHED A REPORT ON THE DISTRICT RESERVES. BOTH OF OUR EXECUTIVE BRANCHES ARE RESPONSIBLE FOR VIOLATIONS AND USING RESERVES THAT VIOLATED DISTRICT LAW. THE MAYOR

ASKED TO SPEND INAPPROPRIATELY IN THE CFO FACILITATED THE SPENDING. EVERYONE IS RESPONSIBLE IN THIS SITUATION. I BELIEVE A UNIFIED EXECUTIVE COULD ENCOURAGE OF THAT FORCE THE LEGISLATION TO TAKE CARE

AND GREATER INDEPENDENCE IN BUDGETING. SUCH AS DRAFTING A FISCAL IMPACT STATEMENT FOR WHICH YOU CURRENTLY RELY ON THE CFO. REVISITING THE CFO STRUCTURE WILL REQUIRE A CHANGE IN THE HOME RULE CHARTER.

I HOPE YOU CAN START A CONVERSATION WITH A CFO NEXT TO THAT WOULD UNDERSTAND THAT THIS IS A MAJOR TASK FOR REFORM. THANK YOU VERY MUCH FOR THE OPPORTUNITY TO SPEAK WITH YOU TODAY AND I'M HAPPY TO

RESPOND TO ANY QUESTIONS. THANK YOU. CHAIR MENDELSON: THANK YOU. WE WILL HAVE A 10 MINUTE ROUND FOR QUESTIONS. I WAS A LITTLE INTRIGUED BY YOUR TESTIMONY AT THE END. LET ME SEE. IN YOUR TESTIMONY,

BEFORE I GET TO ASKING ABOUT THIS POINT OF VIEWERS ABOUT THE INDEPENDENT CHIEF FINANCIAL OFFICER, THAT YOU SAY THE OFFICE OF THE AUDITOR TRACKS SPENDING WITH ITS OWN SYSTEM OF TEMPLATES AND REPORTS

THAT DID NOT APPEAR TO BE READILY AVAILABLE TO MY OFFICE OR ANYONE ELSE. CAN YOU ELABORATE? THIS WAS FROM EARLIER TESTIMONY IN YOUR ROUNDTABLE A YEAR AGO. HE HAD A FAIRLY EXTENSIVE EXCHANGE ON HOW THE

CITY ADMINISTRATOR TRACKS SPENDING. HE EXPLAINS THE KIND OF TEMPLATES THEY USE AND THAT INFORMATION ATTRACT AND HE SAID THEY WOULD SHARE THOSE TEMPLATES WITH THE COUNCILMEMBER. THE POINT TO MAKE IS IF

THERE WAS A PROMISE MADE TO THIS COMMITTEE A YEAR AGO TO HAVE BETTER COMMUNICATION BETWEEN COUNCIL AND THE OFFICE OF THE CITY ADMINISTRATOR AND THAT BUDGET TEAM, I AM CURIOUS AS TO WHETHER THAT WENT

FORWARD. WHETHER THOSE TEMPLATES WERE SHARED AND THEY WERE USEFUL AND SO FORTH. CHAIR MENDELSON: THANK YOU. I MISS THAT SENTENCE. I THOUGHT YOU HAD DEVELOPED A SYSTEM OF TEMPLATES. WE DO GET THE FRP'S

ON OCCASION. BUT THEY TEND TO BE PRETTY BADLY DELAYED. CHAIR MENDELSON: YOU WERE FORMERLY ON THE COUNCIL BUT HE CAME ON THE COUNCIL IN 1994. THAT WAS AFTER THE ADMINISTRATION. I THINK YOU WOULD

REMEMBER THOSE DAYS WHEN THE CHIEF FINANCIAL OFFICER WHO WAS NOT INDEPENDENT WOULD TESTIFY REPEATEDLY BEFORE THE COUNCIL AND THERE WAS NO SENSE OF CREDIBILITY. IN ANYTHING SHE WAS SAYING OR

PROJECTING. DO YOU REMEMBER THAT? I REMEMBER THAT WAS HER REPUTATION. AND THE MAYOR AND COUNCIL TOOK A NUMBER OF ACTIONS THAT MAST OF THE SERIOUSNESS OF THE PROBLEMS OF THE DISTRICT. LIKE THE FIFTH

QUARTER FOR TAXES AND BORROWING HEAVILY. I USED THE GOVERNMENT ACCOUNTABILITY ACT REPORTS ON THOSE ISSUES IN MY FIRST CAMPAIGN FOR THE COUNCIL. CHAIR MENDELSON: I WAS NOT THINKING ABOUT THAT POINT. I

WAS THINKING MORE THAT THE CHIEF FINANCIAL OFFICER WHO WAS NOT INDEPENDENT WOULD TESTIFY AND ASSERT THAT THINGS WERE IN BETTER SHAPE THAN THEY ACTUALLY WERE. I HAD FORGOTTEN ABOUT THE FIFTH QUARTER.

IT WAS ACTUALLY FINANCIALLY BALANCED AND THERE WAS NOTHING WRONG THERE. I THINK PART OF THE IMPETUS FOR EIGHT INDEPENDENT CHIEF FINANCIAL OFFICER WAS THAT THERE WAS AN ADVANTAGE TO NOT HAVING ONE IN

TERMS OF OUR REVENUE ESTIMATES THAT WOULD SUPPORT THE MAYOR'S PROJECTIONS FOR SPENDING. ULTIMATELY I THINK THERE WAS A FEELING THAT THE INDEPENDENT CFO WAS A CREATURE OF CONGRESS. AND THAT HAVING

INDEPENDENCE AROUND ANALYZING WHAT THE FISCAL IMPACT IS OF LEGISLATION AND DETERMINATE WHAT REVENUES ARE AVAILABLE TO SUPPORT THE BUDGET, IT WAS BETTER TO HAVE THAT INDEPENDENT THAN TO HAVE THAT BY A

SUBORDINATED WHO COULD COME TO A CONCLUSION THAT WOULD BE FAVORABLE TO HIS OR HER BOSS. I RECALL THAT REPUTATION. THERE WAS ALSO IN SOME OF THE CLAUSE IS A CANDIDATE FOR CFO. I AM NOT REMEMBERING IF

THIS WAS A CONTROL BOARD CANDIDATE OR PRIOR TO THE INDEPENDENT CFO. BUT THERE WAS A CANDIDATE WHO WE BOTH FELT WAS NOT QUALIFIED FOR THE CHILD. TO THE COURSE OF THE CONFIRMATION HEARINGS WE DETERMINED

THAT THEY COULD NOT BECOME CFO. THE PERSON WAS WITHDRAWN BY THE MAYOR. IF I AM RECALLING CORRECTLY. THERE ARE OTHER LEVERS THAT CAN BE APPLIED WHEN THERE IS A CHIEF FINANCIAL OFFICER WHO IS DEEMED NOT

TO BE TRUSTWORTHY. THAT IS WHERE COUNCIL OVERSIGHT COMES IN. USING THE ENORMOUS CAPABILITIES OF THE BUDGET OFFICE TO SHOW WHERE THERE ARE SHORTCOMINGS. THAT IS WHAT ALL OTHER CITIES DO. IN TERMS OF

HAVING A FINANCIAL OFFICER UNDER THE MAYOR. I THINK THE INDEPENDENCE OF THE CFO WAS ABSOLUTELY HELPFUL. AS I LOOKED BACK AND THINK HOW IT ACTUALLY WORKS, WE HAD A MAYOR WHO HAD BEEN CFO. THE CFO WAS

THE PERSON HE BROUGHT ON BOARD TO BE THE TAX DIRECTOR AND THEN BECAME CFO AND THERE WAS A MUCH CLOSER WORKING RELATIONSHIP IN A MUCH MORE COOPERATIVE WORKING RELATIONSHIP WITHOUT PULLING ANY PUNCHES.

IN THOSE YEARS THERE WAS A FAR GREATER APPRECIATION FOR THE IMPORTANCE OF THE CREDIBILITY BECAUSE THE MAYOR HEDGES HELD THAT OFFICE. LOOKING BACK AT THE PERSONALITIES I THINK THERE WERE SOME OF THE

THINGS INVOLVED THAT ENABLED THAT STRUCTURE TO WORK AS EFFECTIVELY AS IT DID. CHAIR MENDELSON: LET ME TURN TO MY COLLEAGUE. DO YOU HAVE ANY QUESTIONS? COUNCILMEMBER FELDER: YES. IT IS ALWAYS A

PLEASURE TO SEE YOU. THANK YOU. COUNCILMEMBER FELDER: I AM INTRIGUED BY YOUR TESTIMONY. I WANT TO DIVE A LITTLE DEEPER INTO THAT. JUST A GENERAL QUESTION FROM YOUR OBSERVATION AS THE AUDITOR, WHAT DO

YOU THINK THE EMPHASIS IS BEHIND SO MUCH OVERSPENDING YOU ARE SEEING ACROSS THE DISTRICT? I THINK IT IS AS MUCH OF FAILURE OF BUDGET DELIBERATION ON THE EXECUTIVE PART AS IT IS BUDGET EXECUTION. WHAT

WE FOUND IN LOOKING AT SEVERAL YEARS OF THE FINANCIAL REPORT, OVER A 20 YEAR TIME AS WE HAVE WHICH IS AVAILABLE ON OUR WEBSITE, THERE ARE AGENCIES THAT OVERSPEND YEAR AFTER YEAR AFTER YEAR AND YOU

HAVE TO ASK YOURSELF, HOW CAN THAT BE AND IF WE ARE ALL GOING TO AGREE THAT THEY ARE GOING TO SPEND THAT MUCH MONEY AT THE END OF THE YEAR, WHY IS THAT NOT PART OF THE CONVERSATION A YEAR PREVIOUS.

DHS WAS ANOTHER ONE. I THINK THE OVERSPENDING IS A SERIOUS ISSUE THAT NEEDS TO BE EXAMINED BUT THE ROOT CAUSE IS FAILING TO COME TO TERMS WITH WHAT SOME OF THE UPCOMING COSTS MIGHT PROVE TO BE. AND

FRANKLY A FAILURE TO UNDERSTAND WHAT SOME OF THE CONSTRAINTS COULD BE. WE HAVE A WHOLE REPORT ON STAFFING THAT POINTS OUT THERE IS NOT A LOT OF DISCIPLINE OVER OVERTIME FOR EXAMPLE. COUNCILMEMBER

FELDER: THAT IS A SEGUE TO MY NEXT QUESTION. WHAT ROLE DO YOU THINK CULTURE OR AGENCY LEADS TO A LEVEL OF COMFORTABILITY WITH THE FACT THAT THERE MIGHT NOT BE ANY CONSEQUENCES OF THE OVERSPEND THERE

BUDGET? I'M NOT SURE IT IS A CULTURAL ISSUE. I THINK VIRTUALLY EVERYONE IN DISTRICT GOVERNMENT IS NOW SUFFERING FROM THE FACT OF HAVING HAD A VERY HEALTHY ECONOMY FOR A COUPLE OF DECADES. I THINK THE

SPENDING HAS GONE UP AND UP AND UP IN PART BECAUSE THE REVENUES HAVE GONE UP AND UP AND UP. I THINK IT IS ALWAYS SIMPLER TO HAVE DISCIPLINE WHEN YOU HAVE LESS MONEY. I THINK THE CHAIRMAN FOR HAVING

BEEN ON THE COUNCIL BACK IN THOSE TOUGH OLD DAYS. I HAVE THE MEMORY OF MAKING VERY SERIOUS BUDGET CUTS, CAUSING PEOPLE TO LOSE THEIR JOBS. WHEN YOU HAVE THAT KIND OF EXPERIENCE IT ENABLES YOU TO BE

TOUGHER ON EVERY DOLLAR SPENT. TO KNOW IT WAS DIFFICULT TO REDUCE THAT SPENDING AS WAS DONE EARLIER. COUNCILMEMBER FELDER: I APPRECIATE THAT. I WANT TO SHIFT GEARS FOR A SECOND. GIVEN THAT THERE WERE

A NUMBER OF FEDERAL EVENTS THAT TOOK PLACE IN THE DISTRICT WHETHER IT WAS THE FREEDOM 250 OR THE CELEBRATIONS, HOW MUCH DO YOU THINK THAT THE DISTRICT IS NOT AND IN A LOT OF REGARDS WE HAVE TO DEAL

WITH VISITORS COMING TO THE CITY AND MAKING SURE THAT THE AGENCY, I KNOW THERE WERE SOME ROLES THAT NEEDED TO BE REPAIRED. HOW MUCH DO YOU THINK THAT PLAYS A ROLE INTO OVERSPENDING. ONE OF THE THINGS

TO KEEP IN MIND IS WHEN THERE ARE POLICE DEPARTMENT OVERTIME EXPENDITURES MADE NECESSARY BY FEDERAL EVENTS LIKE INAUGURATION OR A FOURTH OF JULY CELEBRATION OR WHATEVER THE CASE MAY BE, WE RECOUP

FUNDS FROM THE FEDERAL GOVERNMENT. IT IS A HEFTY AMOUNT EVERY YEAR. I THINK WE CAN MAKE THE CASE THAT THAT ISN'T ENOUGH BUT I WOULD COME BACK TO OUR OWN AGENCIES AND THE EXECUTIVE BRANCH OF THE

GOVERNMENT TO SAY IF WE ARE NOT CAREFULLY AND NOT OF TRACKING THE ACTUAL COSTS THAT SHAME ON US. WE SHOULD BE GIVING THE FED'S APPROPRIATE, CORRECTIVE BILL. WE SHOULD BE ABLE TO BE TRACKING IT SO THAT

IF WE ARE NOT GETTING A SUFFICIENT AMOUNT OF FUNDING AND RECOUPMENT FOR THAT POLICE OR FIRE DEPARTMENT OVERTIME THING WE NEED TO BE DOING A BETTER JOB OF THAT. I THINK IT IS AN ABSOLUTE ISSUE. WELL IT

TO THE LAST CENTURY I WAS A NEWSPAPER CORRESPONDENT WRITING FOR A NEWSPAPER IN KANSAS CITY AND ONE OF THE THINGS THAT SAID HE DID AT THAT POINT IN TIME WHEN THERE WAS A MAJOR FEDERAL EVENT THEY WERE

ALSO ABLE TO RECOUP SOME THAT CAUSED BY BILLING THE FEDERAL GOVERNMENT. THAT IS SOMETHING THE FEDERAL BUDGET DOESN'T ACCOUNT FOR. I'M NOT SURE WE CAN USE THAT AS A REASON FOR OVERSPENDING. FINDING

HISTORICALLY WE HAVE NOT DONE A GREAT JOB OF GETTING ALL OF THE MEDICAID REIMBURSEMENTS WE SHOULD HAVE HAD. THAT IS A TRACKING CHALLENGE. COUNCILMEMBER FELDER: YOU TALKED A LOT IN YOUR TESTIMONY ABOUT

COUNCIL HAVE A OVERSIGHT ABILITY TO MAKE SURE WE ARE HOLDING AGENCIES ACCOUNTABLE. IF I AM A RESIDENT TUNING INTO TODAY'S HEARING AND I AM TRYING TO FIGURE OUT WHAT MECHANISMS ARE IN PLACE TO HOLD

AGENCIES ACCOUNTABLE FOR OVERSPENDING, FROM YOU BEING AN AUDITOR, CAN YOU SPEAK TO WHAT HAVE BEEN SOME OF THE CONSEQUENCES OF ANY THAT AGENCY HEADS HAVE FACED COURT OVERSPENDING? THAT ANOTHER THERE

HAVE BEEN ANY CONSEQUENCES. MAYBE SOME HAVE NOT HAD THAT JOB IN THE FUTURE. BASED ON BEING TERMINATED BY THE MAYOR. THAT CERTAINLY CAN HAPPEN ON THE MAYOR'S AUTHORITY BECAUSE THEY'LL SERVE AT THE

PLEASURE OF THE MAYOR. I THINK FROM A COUNCIL PERSPECTIVE THERE ARE THINGS THAT COULD BE CONSIDERED THAT HAVE HAPPENED LIKE THE REPROGRAMMING THAT COMES THROUGH ROUTINELY. THE COUNCIL CAN BLOCK THOSE

BUT THEY ARE PASSIVELY APPROVED SO THE COUNCIL HAS TO PUT A HOLD ON SOMETHING AND THEN GIVE IT FURTHER CONSIDERATION. I THINK THE COUNCIL TO CHANGE THE BUDGET LAW TO MAKE IT THAT REPROGRAMMING OVER A

CERTAIN AMOUNT HAS TO HAVE AFFIRMATIVE ACTION, NOT JUST TACIT APPROVAL. ONE OF THE THINGS GOING BACK IN TIME TO MY OWN TIME IS A COUNCILMEMBER, I MET REGULARLY WITH THE AGENCY PERSONNEL, THE BUDGET

DIRECTOR, AND THE CFO TO TALK ABOUT AGENCY OVERSPEND. I HAD OVERSIGHT OF THE CRIMINAL JUSTICE AGENCIES THAT ROUTINELY HAD CHALLENGES. IF YOU ARE AN OVERSIGHT CHAIR, YOU SHOULD KNOW WHAT YOU'RE

AGENCIES ARE DOING. YOU SHOULD KNOW WHAT THE AGENTS -- BUDGETS LOOK LIKE MONTH BY MONTH. AND HAVE THAT CONVERSATION AT THAT TIME. COUNCILMEMBER FELDER: THANK YOU FOR THAT. YOU MENTIONED THE

REPROGRAMMING. FROM THE WORK YOU HAVE DONE TO PRODUCE THIS 20 YEARS WORTH OF SPENDING, WHERE DO YOU SEE AGENCIES WHO OVERSPEND THERE BUDGET TAPPING INTO -- LET ME ASK IT DIFFERENTLY. DO YOU SEE

AGENCIES USING REPROGRAMMING AS A TOOL TO COMPENSATE FOR OVERSPENDING OR DO YOU SEE AGENCIES USING THROUGH THE DIRECTION OF THE MAYOR THE BUDGET SUPPORT ACT TO HELP COMPENSATE FOR BUDGET SHORTFALLS OR

OVERSPENDING THEY MAY HAVE IN THEIR AGENCY? I DON'T THINK THE BUDGET SUPPORT ACT IS A TOOL. WHEN YOU LOOK AT THE FINANCIAL REVIEW PROCESS ON A QUARTERLY BASIS, WHEN YOU READ THOSE AND YOU SEE THAT AN

AGENCY HAS SPENT 10 MONTHS WORTH IN THE FIRST SIX MONTHS OF THE YEAR, THEY'RE SUPPOSED TO BE A PLACE IN THAT FORM TO SAY WHAT ARE YOU GOING TO DO TO BRING COSTS BACK DOWN? IF THERE IS ANYTHING THERE

WHAT YOU SEE IS WE WILL GET MORE MONEY IN THE SUPPLEMENTAL BUDGET. SO WHEN THE MAYOR APPROVES THE SUPPLEMENTAL BUDGET, THAT IS WHEN A LOT OF AGENCIES GOT THE PUMP TOUGH MONEY. THEY SAID WE WILL GET

MORE MONEY WHEN WE REDO THE BUDGET IN THE MIDDLE OF THE BUDGET YEAR. THAT IS THE NUMBER ONE TOOL AGENCIES ARE USING TO GET ADDITIONAL FUNDING. AND THEN THE REPROGRAMMING SWING WE ARE SEEING HAPPENED

AFTER THE END OF THE FISCAL YEAR. SO BOTH OF THOSE TOOLS ARE USED. COUNCILMEMBER FELDER: THANK YOU SO MUCH. CHAIR MENDELSON: I WAS BEING GENEROUS. I MAY COME BACK TO THIS ARGUMENT THAT YOU MAKE THAT

KIND OF THREW ME ABOUT THE INDEPENDENT CHIEF FINANCIAL OFFICER. I WAS LISTENING VERY ATTENTIVELY TO THAT DIALOGUE. I WAS THINKING ABOUT THE FACT THAT AN IMPORTANT FEATURE OF OUR LEGISLATING PROCESS

OVER THE LAST 26 YEARS MAYBE SINCE THE REVITALIZATION ACT IS THAT WE HAVE FISCAL IMPACT STATEMENTS THAT ACCOMPANY EVERY BILL. IF IT IS NEGATIVE, THE BILL HAS TO BE APPROPRIATED. WE FIND REPEATEDLY

THAT AS WE ARE GOING THROUGH THE LEGISLATIVE PROCESS THAT AS THE BILL GETS DRAFTED AND IT IS SENT TO THE OFFICE OF REVENUE ANALYSIS FOR A FISCAL IMPACT STATEMENT, THE AGENCY WILL COME BACK AND SAY WE

WILL INFLATE WHAT THE COST OF THE BILL IS. WHAT WE SEE IT IS PRETTY COMMONLY IF THE EXECUTIVE OR THE AGENCY DOES NOT SUPPORT THE BILL, IT REPORTS THAT THERE WILL BE A SIGNIFICANT FISCAL IMPACT AND

WHAT WE FIND IS WITH THE INDEPENDENT CHIEF FINANCIAL OFFICER THAT THE OFFICE OF REVENUE ANALYSIS WILL PUSH BACK ON THE AGENCY. WE HAVE TAKEN TO CHOKING HERE AT SOME OF OUR MEETINGS THAT TO MOVE THE

DATE FOR SOME APPLICATION WHICH THE EXECUTIVE DOES NOT WANT TO DO WILL REQUIRE A BUILDING TO BE BUILT. THAT IS AN EXAGGERATION BUT THEY WILL PUSH BACK. WE FREQUENTLY GET FISCAL IMPACT STATEMENTS THAT

SHOW THERE WILL BE A FISCAL IMPACT BUT IT IS SIGNIFICANTLY LESS THAN WHAT THE AGENCY CLAIMED. IT ALL CORRELATES TO IF THE AGENCY OR THE MAYOR SUPPORTS WHAT IS BEING PROPOSED. YOU ARE FAMILIAR WITH

EXACTLY WHAT I'M TALKING ABOUT. IF WE DIDN'T HAVE AN INDEPENDENT OFFICE OF REVENUE ANALYSIS THEN WE WOULD BE AT A SIGNIFICANT DISADVANTAGE. IN OUR LEGISLATIVE DRAFTING. I AM ALSO THINKING ABOUT THE

REVENUE ESTIMATE. I HAVE BEEN CRITICAL OF THE CHIEF FINANCIAL OFFICER BECAUSE I THINK HE IS TOO CONSERVATIVE IN HIS REVENUE ESTIMATES. I WOULD RATHER THAT HE WAS CONSERVATIVE SO WE DID NOT FIND THAT

AT THE END OF THE YEAR WE HAVE A CRISIS BECAUSE WE DID NOT GET THE REVENUES WE NEEDED TO SUPPORT THE BUDGET. IF WE END THE YEAR OUT OF BALANCE, THAT WILL TRIGGER THE RETURN OF THE CONTROL BOARD, WHICH

WE DO NOT WANT. I DON'T WANT TO BE SEEN AS COMMENDING CONSERVATIVISM. I WOULD RATHER THAT WE HAVE A CHIEF FINANCIAL OFFICER WHO IS OVERLY CONSERVATIVE THEN ONE WHO IS OVERSTATING REVENUES. THAT IS

WHAT WE SAW BEFORE WE GOT THE CONTROL BOARD. I WAS TRYING TO REMEMBER WHO THE CHIEF FINANCIAL OFFICER WAS. IT WAS A FINANCE OFFICER. SHE WOULD OVERSTATE THE REVENUES ON WHICH THE BUDGET WAS BASED. SHE

WOULD UNDERSTATE THE SPENDING NEEDS. YOU CAN SAY THAT THEY COUNCIL THROUGH ITS OVERSIGHT PROCESS COULD RECTIFY ALL THAT. I THINK SHE WAS A PRETTY GOOD CHAIR. HE UNDERSTOOD THE BUDGET BETTER THAN OTHER

MEMBERS OF THE COUNCIL. AND YET I REMEMBER HIM STRUGGLING TO UNDERSTAND THE FIFTH QUARTER. IT WAS QUITE SEDUCTIVE. I REMEMBER THAT EVERY YEAR HE WOULD ISSUE A REVENUE REPORT WHICH WAS HIS BEST GUESS

AT WHAT THE REVENUES WOULD BE. AS A GOVERNMENT WE HEADED RIGHT INTO NEAR BANKRUPTCY FOR OUR CONTROL BOARD BECAUSE IT WAS NOT WORKING. I THINK A LARGE PART IT WAS BECAUSE WE DID NOT HAVE AN INDEPENDENT

CHIEF FINANCIAL OFFICER. YOU MAY REMEMBER BECAUSE THIS MIGHT'VE BEEN YOUR FIRST YEAR ON THE COUNCIL THAT WHEN MARION BARRY RETURNED AS MAYOR ONE OF THE FIRST THINGS HE DID WAS SHOCKED EVERYBODY WAS HE

WROTE OFF SOMETHING LIKE $100 MILLION IN MEDICAID RECEIVABLES. THIS HAD BEEN FICTION THAT THE FINANCE DIRECTOR FOR THE CITY HAD MAINTAINED THAT WE HAD SIGNIFICANT MEDICAID RECEIVABLES WHEN IN FACT WE

DID NOT. THAT WAS A BIG PART OF OUR FINANCIAL CRISIS. LAST YEAR WHEN WE HAD THIS HEARING I WAS VERY CRITICAL OF VERY SIGNIFICANT OVERSPENDING BY AGENCIES AND I TOOK THE POSITION THAT THE CHIEF

FINANCIAL OFFICER BECAUSE OF HIS INDEPENDENCE IS IN A POSITION TO DENY AGENCY SPENDING WHEN THE AGENCY IS OUT OF BALANCE. I THINK THAT IS STILL AN ISSUE. THE CHIEF FINANCIAL OFFICER IS NOT AS

AGGRESSIVE IN CONTROLLING SPENDING. IT IS MORE LIKELY THAT AN INDEPENDENT CHIEF FINANCIAL OFFICER WILL SAY NO TO AN AGENCY THAN THE MAYOR WILL SAY IT TO HERSELF BECAUSE THE AGENCIES BELONG TO HER. IF

THE MAYOR WANTS TO SPEND THE MONEY OR DOES NOT WANT TO GO THROUGH THE PAIN OF SAYING NO, SHE IS NOT GOING TO DO IT. THAT IS PART OF WHAT LED TO THE CONTROL BOARD AS WELL. WHILE I THINK THAT LAST

YEAR'S HEARING AND EVEN TODAY THERE WILL BE DISCUSSION OF CONTROLLING SPENDING, I WOULD RATHER HAVE THE ABILITY TO CONTROL SPENDING WITH AN INDEPENDENT OFFICER THEN BY THE AGENCY THAT IS DOING THE

OVERSPENDING. I WILL NOTE THAT TODAY'S HEARING IS ABOUT AMONG OTHER THINGS SPENDING OR OVERSPENDING AND I HAVE A NUMBER OF QUESTIONS SUCH AS WHY DPW ENDED THE YEAR WITHOUT REPROGRAMMING WITH A

DEFICIT. THERE WAS A SIGNIFICANT DEFICIT. I WOULD LIKE TO ASK THEM WHAT IS GOING ON. THE MAYOR DECIDED NOT TO SEND WITNESSES WHEN I FOLLOWED UP AND ASKED AGAIN IF WE WOULD HAVE WITNESSES, THE ANSWER

WAS NO. OUR MAYOR DOES NOT WANT TO BE HERE AND BE ACCOUNTABLE FOR AGENCY SPENDING. SO THE IDEA OF PUTTING CONTROL OF SPENDING TO GET RID OF THE INDEPENDENT CONTROL OF SPENDING AND PUT IT BACK WITH THE

SPENDING PERSON JUST AS EVIDENCED BY TODAY'S NO-SHOW SEEMS TO ME LIKE THAT IS THE WRONG WAY TO GO. YOU'RE WELCOME TO RESPOND. I WOULD BE DELIGHTED TO RESPOND. I WOULD STRONGLY RECOMMEND THAT YOU ASKED

THE CFO AND HIS OFFICERS EACH AND EVERY ONE OF THE QUESTIONS YOU HAVE PREPARED. TO YOUR POINT, IF YOU BELIEVE THAT AN INDEPENDENT CFO CAN BRING ABOUT BALANCE THE SPENDING, ASK THEM WHAT THEY DID IN

EACH AND EVERY ONE OF THOSE CASES. WHAT DID YOU DO WHEN DPW WAS OVERSPENDING? IF WE ARE NOT GETTING THE BENEFIT OF INDEPENDENCE IN A CFO BY BRINGING ABOUT DISCIPLINE WITH THESE AGENCIES, THAN WHAT IS

THE POINT OF HAVING AN INDEPENDENT CFO? I TAKE YOUR POINT THAT AGENCIES OR OVERSPENDING. IF YOU BELIEVE THE CFO HAS THE POWER TO HAVE THAT STOPPED, PLEASE ASK WHAT DID YOU DO IN THIS SITUATION? IN

TERMS OF THE INFORMATION YOU ARE SHARING, I AGREE WITH YOU, THEY DO A VERY GOOD JOB. THEY HAVE DONE AN AWFUL LOT OF FISCAL IMPACT STATEMENTS THAT SIMPLY TAKE THE WORD OF THE AGENCY AND THIS COUNCIL

HAS BEEN BLOCKED FROM DOING MANY INITIATIVES OVER TIME BY VIRTUE OF FISCAL IMPACT STATEMENTS WERE THEY SIMPLY LISTEN TO THE AGENCY BECAUSE THERE IS NO COUNTERVAILING INFORMATION. YOUR INFORMATION YOU

SHARE TODAY IS VERY GOOD NEWS. THAT THE COUNCIL BUDGET STAFF IS PUSHING BACK WITH THEIR OWN INFORMATION AND UNDERSTANDING AND THEY ARE ESSENTIALLY HOLDING THEM ACCOUNTABLE IN TERMS OF COMING UP WITH A

STATEMENT THAT IS MORE REALISTIC. THAT IS GOOD PROGRESS BUT I DON'T THINK IT REALLY HAS ANYTHING TO DO WITH INDEPENDENCE. I THINK THAT HAS TO DO WITH HAVING INFORMATION AND USING IT EFFECTIVELY. CHAIR

MENDELSON: I WILL LET YOU HAVE THE LAST WORD. THANK YOU. YOUR TESTIMONY IS HELPFUL AND I THINK THIS DISCUSSION HAS BEEN HELPFUL SO THANK YOU. I WILL TURN OUT TO THE ONLY OTHER WITNESS THAT WE HAVE. IN

CASE ANYBODY MISSED THE POINT THAT THE EXECUTIVE DID NOT SEND ANY WITNESSES. AS YOU ARE SITTING DOWN I WILL ASK YOU ABOUT WHAT YOUR OFFICE TO IT WITH SOME OF THE UNDER -- OVERSPENDING. I THINK IT

WOULD BE HELPFUL IF THE AGENCY DIRECTORS WERE HERE TO ANSWER. GOOD MORNING. I THINK I WILL READ MY STATEMENT NOW IF YOU DO NOT MIND. THANK YOU FOR THE OPPORTUNITY TO PROVIDE COMMENTS FOR YOUR PUBLIC

OVERSIGHT ROUNDTABLE ON BUDGET FORMULATION AND EXECUTION. I AM THE CHIEF FINANCIAL OFFICER OF THE GOVERNMENT OF THE DISTRICT OF COLUMBIA. A CORE VALUE OF OUR OFFICE IS CONTINUOUS IMPROVEMENT. WE ARE

ALWAYS EVALUATING THE SYSTEMS THAT SUPPORT OUR MISSION. NO AREA HAS RECEIVED MORE FOCUSED ON BUDGET FORMULATION. WE ARE HAPPY TO EXPLAIN SOME OF THE NEW RULES WE HAVE INSTIGATED IN ORDER TO ADDRESS

THE ISSUES THAT HAVE COME UP EARLIER. WE HAVE REFINED OUR FORMULATION PRACTICE TO ENSURE THAT ALL OF THE DISTRICT ANTICIPATED EXPENSES ARE FULLY REPRESENTED BY APPROPRIATIONS IN THE BUDGET. KNOWN AND

REASONABLY PREDICTABLE EXPENSES MUST BE INCLUDED IN THE BUDGET AND FINANCIAL PLAN IN ORDER FOR THE CFO TO ATTEST THAT THE FUNDS ARE EFFICIENT. THIS INCLUDES ADJUSTING APPROPRIATIONS FOR PROGRAMS AND

SERVICES WITH CHRONIC SPENDING PRESSURES. WHICH HAVE BEEN REPEATEDLY SUPPORTED BY THE CONTINGENCY RESERVE. WE HAVE IMPLEMENTED NEW BUDGETING SYSTEMS THAT ALLOW US TO BETTER INCORPORATE PENDING TRENDS

AND OUR FORMULATION. DURING BUDGET EXECUTION, FISCAL OFFICERS ARE CONTINUOUSLY WORKING WITH PROGRAMS TO ENSURE THAT EACH AGENCY ADHERES TO ITS APPROPRIATION. THE OFFICE OF BUDGET AND PLANNING IS A

PARTNER IN THIS EFFORT BY REVIEWING QUARTERLY FINANCIAL REVIEW PROCESS REPORTS THAT DOCUMENT AGENCY BUDGET EXECUTION AND ANY SPENDING PRESSURES THAT NEED TO BE ADDRESSED. WHEN THE EXECUTIVE BRANCH

CHOOSES TO REQUEST A SUPPLEMENTAL BUDGET, WE ALSO REVIEW THESE REQUESTS TO ENSURE THEY ADHERE TO APPLICABLE LAWS REGARDING REPROGRAMMING OF THE FUNDS REQUESTED ARE AVAILABLE. THE TOPIC FOR THIS

ROUNDTABLE IS IMPORTANT BECAUSE THE DISTRICT IS FACING FISCAL STRESS NOT EXPERIENCED SINCE THE 1990'S. WE ALL KNOW THAT THESE ARE DRIVEN BY VERY SHARP DECLINE IN FEDERAL EMPLOYMENT AND SPENDING IN THE

DISTRICT AND THE LINGERING EFFECTS OF POST-PANDEMIC OFFICE WORKERS. THIS INCLUDES REDUCTIONS IN EDUCATION AND SOCIAL SERVICES. IMPROVED BUDGET FORMULATION IS ESSENTIAL TO ENSURE ACCURATE FISCAL

PLANNING AS THE DISTRICT ADDRESSES THE SIGNIFICANT CHALLENGES. WE STAND READY TO ASSIST THE COUNCIL IN ITS BUDGET AND OVERSIGHT RESPONSIBILITIES. THANK YOU FOR THE OPPORTUNITY TO PROVIDE COMMENTS FOR

THE RECORD. CHAIR MENDELSON: THANK YOU. I ASSUME THAT YOU DO NOT HAVE A STATEMENT? I DID NOT. CHAIR MENDELSON: I DON'T THINK I HAVE A COPY OF YOUR STATEMENT. I BELIEVE WE SUBMITTED IT APPROPRIATELY.

MY STAFF WILL HAVE IT LOADED. IT SHOULD HAVE BEEN. CHAIR MENDELSON: THIS HEARING IS ABOUT BUDGET FORMULATION, AGENCY OVERSPENDING, AND EXECUTION. I THINK MOST OF MY QUESTIONS WILL DEAL WITH

OVERSPENDING. I DO WANT TO ASK A QUESTION ABOUT BUDGET EXECUTION. I THINK THIS IS AN EXAMPLE OF WHERE THE PRESENCE OF THE MAYOR AND HER AGENCY HEADS WOULD BE HELPFUL. IN PRIOR BUDGETS THE COUNCIL HAS

INCLUDED FUNDING FOR SPECIFIC PROGRAMS THAT HAVE NOT BEEN SPENT BY THE EXECUTIVE. WE INCLUDED $100,000 IN THE BUDGET FOR THE YEAR THAT JUST ENDED IN THE OFFICE OF THE DEPUTY MAYOR FOR PUBLIC SAFETY

AND JUSTICE TO STUDY OR PROPOSE HOW WE WOULD DEVELOP A UNIFIED JUVENILE JUSTICE SYSTEM PLANNED. MY UNDERSTANDING IS THAT FUNDING WAS NEVER USED FOR THAT. EVEN THOUGH THE DEPUTY MAYOR INSISTED AS PART

OF OUR CONSIDERATION THAT THERE SHOULD BE A UNIFIED JUVENILE JUSTICE SYSTEM. ALL THE FEDERAL ASPECTS OF IT WOULD BE UNIFIED WITH LOCAL ASPECTS. SO WE PUT MONEY INTO THAT STUDY. AND IT HAS NOT BEEN

SPENT. WHAT CAN THE CFO DO TO MAKE SURE THAT FUNDS ARE SPENT PURSUANT TO THE LAW? WE BELIEVE THAT WE NEED TO HAVE THE AUTHORITY NOR THE ABILITY TO FORCE AGENCIES TO SPEND MONEY. VERY SPECIFICALLY WE

CANNOT HIRE. WE CANNOT EXECUTE THE HIRE. IF IT WAS A PROCUREMENT OF CONTRACTUAL SERVICES, WE CANNOT EXECUTE THE PROCUREMENT. WE PROCESS IT AND MAKE SURE THAT EMPLOYEES ARE PAID PROPERLY BUT WE CANNOT

EXECUTE THOSE. WE DON'T BELIEVE WE CAN RESOLVE THIS ISSUE AS YOU ARE DESCRIBING. WE CANNOT FORCE SPENDING. WE DO NOT HAVE THE TOOLS IN PLACE. TO BE HONEST WITH YOU, THE SCENARIO IN QUESTION BRINGS A

GOOD POINT. THIS IS AN ACTUAL MANDATE FOR SPENDING? I THINK THAT RESOLVING THAT ISSUE IS A MATTER OF ALTERING OUR LAWS OR IT IS A POLICY PROBLEM OF OVERSIGHT BETWEEN THE TWO BRANCHES OF GOVERNMENT.

BETWEEN THE LEGISLATIVE AND EXECUTIVE. WE ARE CERTAINLY HAPPY TO PARTICIPATE IN DISCUSSIONS ON HOW TO ADDRESS THIS ISSUE. ON OUR OWN WE ARE NOT ABLE TO FORCE SPENDING. QUITE HONESTLY THIS IS A POLICY

DISPUTE. IT IS NOT A TACTICAL FINANCIAL DISPUTE. I THINK THAT IS WHERE IT NEEDS TO RESIDE. WE CAN HELP TO SOLVE A RESOLUTION OR THINK THROUGH POTENTIAL APPROACHES BUT IN THE AND THIS IS A POLICY

DISPUTE. CHAIR MENDELSON: YOUR TESTIMONY IS THAT YOU CANNOT FORCE THE AGENCY TO SPEND MONEY? IT IS MY VIEW THAT YOU CAN BLOCK THE AGENCY SPENDING THE MONEY ON SOMETHING ELSE. DO YOU AGREE? IN SOME

CIRCUMSTANCES, YES. CHAIR MENDELSON: THAT WAS A LITTLE QUALIFIED. THAT WAS A BROAD STATEMENT. IT IS A VERY BROAD QUESTION. I AM NOT DISAGREEING CONCEPTUALLY WITH YOUR POINT. I JUST CANNOT

CATEGORICALLY SAY THAT. CHAIR MENDELSON: WE PUT MONEY IN THE BUDGET FOR THIS STUDY. SHE DID NOT SPEND IT. SHE DID NOT DO THE STUDY. I DON'T KNOW IF THE MONEY WAS USED FOR SOMETHING ELSE BUT LET'S JUST

ASSUME THAT IT WAS. OR IT MIGHT'VE BEEN. YOU COULD BLOCKED THAT. I DON'T LIKE HOW I PHRASED THE QUESTION. THE MONEY WAS OUTSPENT FOR THE PLAN. YOU COULD BLOCK IT BEING SPENT FOR SOMETHING ELSE.

CERTAINLY IF IT IS REPROGRAMMED. AS DEFINED BY THE CODE. OR A TYPE OF EXPENSE. THAT EXPLICITLY VIOLATES THE REPROGRAMMING AUTHORITY EITHER WITH US FOR THE COUNCIL. CHAIR MENDELSON: THIS WAS UNDER 100

THOUSAND DOLLARS. SO WE WOULD NEVER SEE IF THERE WAS REPROGRAMMING. I ASSUME BECAUSE IT WAS A COUNCIL INITIATIVE THAT YOU DID NOT APPROVE IT. ABSOLUTELY WHETHER IT IS UNDER OR ABOVE A THRESHOLD IT CAN

BE APPROVED. FUNDING WAS IDENTIFIED FOR SPECIFIC PURPOSES BY THE COUNCIL. WE DO NOT ALLOW THAT TO OCCUR. THEY CAN SUBMIT IT BUT WHEN IT COMES TO US WE DO TWO THINGS. FIRST WE SAY ON THE FORM IT ASKS

THAT YOU IDENTIFY, EVEN IF YOU SAY IT DOESN'T WE STILL CHECK. WE SAY NO YOU CANNOT DO THIS UNDER THE CURRENT LEGISLATION AROUND REPROGRAMMING FUNDS THAT WERE SET ASIDE FOR A SPECIFIC PURPOSE

LEGISLATED BY THE COUNCIL. THE SECOND THING WE DO IS REACH OUT TO THE COUNCIL BUDGET OFFICE. WE SAY TO THEM THIS IS WHAT IS GOING ON. WHAT DO YOU WANT TO DO WITH IT? BECAUSE WE ARE GOING TO SAY NO. WE

WAIT TO SEE IF IT IS SOMETHING THEY WANT TO TALK ABOUT. WE WORK WITH YOUR BUDGET OFFICE TO ADDRESS THIS. FLAT OUT, WE DENY IT. IF THEY GET HERE IT IS BECAUSE MAYBE WE COLLABORATED WITH YOUR BUDGET

OFFICE AND DECIDED IT SHOULD HAPPEN. CHAIR MENDELSON: WHAT IF ANYTHING SHOULD WE BE DOING DIFFERENTLY WHEN DRAFTING THESE TO MAKE SPENDING HAPPEN? FROM OUR PERSPECTIVE WE THINK THIS IS A FUNDAMENTAL

ISSUE OF SEPARATION OF POWERS THAT REQUIRES A CONSENSUS BETWEEN THE ATTORNEY GENERAL, YOURSELF, AND THE EXECUTIVE ON HOW TO APPROACH THIS ISSUE. WE ARE HAPPY TO COLLABORATE WHEN OUR EXPERTISE HELPS

STRUCTURED CHANGES IN CODE THAT ARE AGREED UPON. SO WE CAN EXECUTE IT. SO IT IS CLEAR ENOUGH TO EXECUTE. TO GIVE YOU A SPECIFIC LIST OF THIS PARAGRAPH OR THAT PARAGRAPH AND SAY THIS IS REALLY A POLICY

CONSENSUS THAT NEEDS TO OCCUR OR WHETHER IT IS A CONSENSUS BETWEEN THE LEGISLATIVE AND EXECUTIVE OR JUST WITHIN THE LEGISLATIVE BODY. THAT IS WHERE THIS KIND OF PETITION NEEDS TO BE DETERMINED. CHAIR

MENDELSON: I HAVE USED THE EXAMPLE OF THE 100,000 DOLLARS FOR THIS DEVELOPING A PLAN FOR THE JUVENILE JUSTICE BY THE DEPUTY MAYOR. IF THERE IS SOMETHING WE COULD HAVE DONE AND HOW WE DRAFTED THE LOCAL

BUDGET ACT OR THE SUPPORT ACT. TO FORCE THE SPENDING. THE OTHER EXAMPLE THAT COMES TO MIND IS THE SNAP BENEFITS. A COUPLE OF YEARS AGO WE HAD IN THE BUDGET SUPPORT ACT AS A CONTINGENCY SPENDING IF

REVENUES CAME IN HIGHER THAN WAS BUDGETED , I DON'T REMEMBER THE AMOUNT. I WAS GOING TO SAY 40 IN THE I THOUGHT THAT WAS TOO HIGH. WE WILL GO WITH 39. IT HAD TO GO TO SNAP BENEFITS. WE GOT TO A POINT

WHERE THE MAYOR SAID SHE WAS GOING TO DO IT. THE COUNCIL VOTED OR I PUT ON THE AGENDA AUTHORIZATION TO FILE A LAWSUIT AND I DON'T KNOW IF THE MAYOR BACK DOWN OR WE KNEW WE WERE CONFIDENT THAT THE

MAYOR HAD TO SPEND THIS MONEY. CLEARLY WE DRAFTED THAT IN SOME WAY THAT THE MAYOR HAD NO CHOICE BUT TO SPEND THE MONEY. WHAT DID WE DO THERE THAT WORK? YOU ARE ASKING WHAT COULD HAVE BEEN DONE TO

ENFORCE THE FUNDING TO BE SPENT? CHAIR MENDELSON: WE DID SOMETHING. SOMEHOW THE WAY WE PROVIDED FOR THAT FORCED THE SPENDING. DON'T YOU REMEMBER? I KNOW THERE WAS LANGUAGE THAT AUTHORIZED THE SPENDING

OF THAT MONEY. CHAIR MENDELSON: IT FORCED THE SPENDING OF IT. WHAT DID WE DO THAT FOR US TO THE SPENDING WHEREAS WITH THE JUVENILE JUSTICE PLAN? I CANNOT SPEAK FOR THE EXECUTIVE. BUT POTENTIALLY THAT

WAS A POLICY THEY AGREED WITH IN THE END. I THINK YOUR QUESTION IS FAIR. WE WILL RESPOND TO IT IN WRITING. TO SEE WHAT IT REALLY WAS. IN THE END, I THINK SHE IS CORRECT. THERE WAS A POLICY DECISION.

WE CANNOT SPEAK FOR THE MAYOR'S OFFICE BUT THAT MAY HAVE FACILITATED THE OUTFLOW OF THOSE DOLLARS. THE EXPENDITURE OF THOSE DOLLARS. CHAIR MENDELSON: GIVE ME A SECOND. THAT WOULD BE GREAT IF YOU COULD

GET BACK. MY RECOLLECTION IS THE MAYOR HAD NO CHOICE BUT TO SPEND THE MONEY. SHE TRIED NOT TO WHICH IS WHY WE THREATENED A LAWSUIT. BUT SHE HAD NO CHOICE. WHEREAS WE DID NOT DRAFTED THE SAME WAY WITH

THE JUVENILE JUSTICE PLAN. IF YOU WOULD LOOK AT WHAT IT WAS THAT ENABLED US TO FORCE THE SPENDING AND GET BACK TO US. I WILL ASK ABOUT OVERSPENDING AND THEN I WILL HAVE SOME QUESTIONS ABOUT BUDGET

FORMULATION. JUST SO YOU CAN THINK ABOUT THIS, ONE OF MY QUESTIONS IS WHAT RULES WILL YOU HAVE FOR THE FORMULATION OF THE BUDGET. SO YOU CAN BE THINKING. DON'T ANSWER THAT NOW. YOU WILL BE THINKING

ABOUT IT. THERE IS A LIST. WE ARE WORKING ON THE LIST. CHAIR MENDELSON: THAT IS WHAT I'M ASKING YOU. BEFORE WE GO THERE, I WANT TO ASK ABOUT OVERSPENDING. MY QUESTION IS WHAT WAS THE TOTAL AMOUNT OF

OVERSPENDING IN FISCAL YEAR 2026? A ROUGH ESTIMATE IS FINE IF YOU DO NOT HAVE A PRECISE NUMBER YET. WHAT I AM REALLY LOOKING FOR IS AGENCY OVERSPENDING BECAUSE THERE IS A LOT OF OTHER SPENDING. A

ROUGH ESTIMATE IS FINE IN TERMS OF WHAT THE TOTAL NUMBER WAS. ALSO, MY QUESTION IS I'M GETTING AT BEFORE YEAR IN THE REPROGRAMMING. MY QUESTION IS ABOUT OVERSPENDING BEFORE ANY YEAR-END REPROGRAMMING.

I THINK THERE WAS SOME OF REPROGRAMMING TO BALANCE THAT. MY QUESTION IS WHAT THE OVERSPENDING WAS BEFORE THE REPROGRAMMING. I THINK IN GENERAL IT IS IMPORTANT TO DEFINE WHAT OVERSPENDING MEANS. IT IS

SPENDING MORE THAN WHAT IS APPROPRIATED FOR AN AGENCY. THAT IS WHAT THE APPROPRIATIONS ARE. WE WANT TO BE REALLY CLEAR. WITH THE REPROGRAMMING CENTER AND PLAY RIGHT NOW, THAT OF COURSE WILL BE ZERO.

THERE WILL BE NO OVERSPENDING RELATIVE TO THE FINAL ACTIONS THAT ARE TAKING BY COUNSEL. THE AMOUNT RELATED TO LOCAL FUND OR GENERAL FUND RESOURCES THAT ARE IN THE LAST PHASE OF REPROGRAMMING, THEY

TOTAL ABOUT $21 MILLION. THEY REPRESENT JUST A SMALL PORTION OF THE BUDGET. THERE IS ANOTHER REPROGRAMMING WITHIN THE AGENCIES. THAT IS A DIFFERENT BUT SIGNIFICANT ISSUE. THAT IS NOT UNCOMMON. WE

BELIEVE THAT BY THE TIME THE ACTIONS ARE TAKEN, THERE WILL BE NO OVERSPENDING. I WANT TO BE VERY PRECISE WITH OUR DEFINITION. APPROPRIATIONS ARE CHANGED THROUGHOUT THE YEAR. REPROGRAMMING SUCH

SUPPLEMENTAL. SEMI AUTOMATIC. WE BRING WE BRING FORWARD $50 MILLION IN CARRYOVERS FROM PRIOR YEARS. EVERY DIME THAT IS SPENT THAT HAS TO BE COVERED BY AN APPROPRIATION AND WITH THESE FINAL

REPROGRAMMING'S, THERE WILL BE NO SPENDING OVER THE APPROPRIATIONS GIVEN TO DEPARTMENTS. CHAIR MENDELSON: MY QUESTION WAS OVERSPENDING BEFORE THE REPROGRAMMING. I GUESS I COULD HAVE PHRASED THAT

DIFFERENTLY AND SAID WHAT IS THE TOTAL AMOUNT OF YEAR END REPROGRAMMING TO COVER AGENCY OVERSPENDING? THE REPROGRAMMING'S THAT ARE IN FRONT OF THE COUNCIL RIGHT NOW ARE WORTH $21 MILLION. IT IS 0.2%

OF THE BUDGET. CHAIR MENDELSON: TO YOUR KNOWLEDGE, WHICH AGENCIES OVERSPENT THE MOST IN FY-2026? THIS WOULD BE BEFORE THE YEAR-END PROGRAMMINGS. WE CAN DESCRIBE WHAT THE PROGRAMMING RECIPIENTS ARE BUT

THE QUESTION IN THE AIR IS ONE OF THE REASONS FOR THOSE REPROGRAMMINGS? WE CAN DESCRIBE WHAT THEY ARE FOR YOU. OK, SO THIS QUESTION IS A LITTLE DIFFICULT TO ANSWER. BECAUSE I CAN LOOK AT IT A LOT OF

DIFFERENT WAYS. IF I LOOK AT IT FROM THE PERSPECTIVE OF WHICH AGENCY REQUIRED THE GREATEST AMOUNT OF YEAR-END REPORT -- REPROGRAMMING -- CHAIR MENDELSON: WHICH IS WHAT I THINK I AM LOOKING FOR. WHICH

I THINK YOU MAY BE GETTING AT. AND I BELIEVE THAT WE HAVE BEEN -- LET ME PULL SOMETHING UP. I HAVE IT HERE -- WE DID MULTIPLE REPROGRAMMINGS OR MULTIPLE WERE DONE. JUST GIVE ME A SECOND. JUST TO

CONFIRM SOMETHING. OK, THAT WOULD BE MPD. $13.3 MILLION IN TOTAL. THAT WOULD BE ONE OF THE LARGEST REPROGRAMMINGS THAT WE HAD TO DO THIS YEAR TO KEEP THEM IN LINE -- KEEP THEM FROM GOING INTO DEFICIT.

$13 MILLION. THAT WOULD BE THE LARGEST. CHAIR MENDELSON: WHAT ELSE? OUTSIDE OF THAT, THAT I THINK WE ARE LOOKING AT POSSIBLY -- WE CAN PUT DYRS IN THERE. CHAIR MENDELSON: HOW MUCH? $4.2 MILLION -- OH,

YOU SAID BEFORE. IF I ADD THEM TO DYRS, WHAT IS IN FRONT OF YOU RIGHT NOW IS ROUGHLY 6.7 MILLION DOLLARS, I BELIEVE. IF I REMEMBER CORRECTLY. WE ARE HAPPY TO PROVIDE A SUPPLEMENTAL SUMMARY TO THESE

ADJUSTMENTS AND THAT COULD BE TO YOU TODAY. THAT IS VERY STRAIGHTFORWARD. I THINK WHAT I WOULD LIKE TO DO IS STEP BACK A LITTLE BIT AND TALK ABOUT PROCESSES THAT MAY NOT WORK FOR YOU ANY LONGER THAT

ARE WITHIN CURRENT CODE AND HAVE BEEN EXECUTED FOR YEARS, FAR BE IT -- BUT BEFORE MY TIME. THAT IS THE NOTION OF MOVING APPROPRIATION AUTHORITY ACROSS DEPARTMENTS, AS WE DEFINED,, TO DEAL WITH THEIR

PHYSICAL ISSUES. A COUPLE OF POINTS -- THERE ARE SEVERAL REASONS WHY YOU WOULD MOVE -- WHY A DEPARTMENT WOULD FACE STRESSES. THEIR ACTIVITY OR CASELOAD IS UP. COST PER UNIT OF EFFORT IS MORE THAN WHAT

WAS FORMULATED IN THE BUDGET. THE TIMING OF EXPENSES COULD PAY AND YOU EITHER ASK OTHER GREAT IT OR SAW SOMETHING DOWN FROM A FACTOR YOU DIDN'T KNOW ABOUT. YES, AT TIMES, THE SPENDING CONTROL MEASURES

MAY HAVE BEEN ADEQUATE. THE TIMING OF REPROGRAMMING, WHAT WE PROCESS AS REPROGRAMMING AUCTIONS AND PROVIDE TO YOU OR ALL CONSISTENT WITH CODE AND PRACTICE. CHAIR MENDELSON: I AM NOT QUESTIONING THAT.

I UNDERSTAND. IF WE WANT TO MOVE TO A DIFFERENT FRAMEWORK, WE ARE HAPPY TO HELP THINK THAT DEAL WE UNCERTAINTIES THAT HAPPEN. I GUESS I AM COMING DOWN TO A QUESTION -- I UNDERSTAND YOUR QUESTION. WE

WILL PROVIDE THE DETAIL, THAT IS NOT AN ISSUE. A SUMMARY TODAY. HOW DO WE ENVISION CHANGING THIS PROCESS, THAT IS WELL ESTABLISHED AND EXECUTED IN THE REPROGRAMMING CODE? WE ARE HERE TO SUPPORT A

CONSENSUS ON A POLICY CHANGE SO WE ARE NOT DEFENDING -- WE ARE FOLLOWING THE LAWS AND WE WOULD LOVE TO ENGAGE ON A MORE STRUCTURAL LEVEL OF WHAT IS NOT WORKING, WHAT YOU WOULD LIKE TO INCREASE

ULTIMATELY WITH OVERSIGHT OF THE EXECUTIVE. CHAIR MENDELSON: I THINK THERE IS AN ELEMENT OF DEFENSIVENESS HERE, AND I WOULD LIKE MR. KENNEDY TO GO THROUGH THE REST OF THE LIST. THE PUBLIC IS WATCHING

THIS HEARING. I WOULD LIKE FOLKS TO HEAR WHAT AGENCIES SPENT, OVERSPENT WHAT WE HAD PREVIOUSLY APPROPRIATED AND REQUIRE FIXING THROUGH THE YEAR-END REPROGRAMMING PROCESS. BEFORE YOU DO THAT, BECAUSE

YOU SET A LITTLE BIT MORE, MR. LEE, I DON'T -- MY VIEW IS IT IS A PROCESS THAT'S NOT WORKING. YOU JUST LISTED FOUR REASONS WHY THERE COULD BE A REPROGRAMMING. I THINK THE FIRST TWO YOU MENTIONED,

WHICH WAS THAT THE PER UNIT FIGURE WAS WRONG. OR THAT, I THINK YOU ALSO SAID THAT THE DEMAND WAS GREATER. BOTH OF THOSE -- DID WE GET THE BUDGET WRONG? AND I COULD ASSURE YOU, BECAUSE I HAVE HEARD

THIS FOR TWO DECADES, THAT EVERY MAYOR AND EVERY SUBORDINATE AGENCY HEAD ANSWERED TO THE QUESTION AT BUDGET TIME. THE BUDGET SUBMITTED IS ADEQUATE FOR OUR NEEDS. SO, WHEN WE SUBSEQUENTLY FIND OUT,

ACTUALLY THE NUMBER OF CLIENTS WAS GREATER, THAT SUGGESTS THAT MAY BE THE BUDGET WAS NOT ADEQUATE FOR THE NEEDS. WHEN THE GOVERNOR OF TEXAS IN THE MIDDLE OF THE SUMMER DECIDES HE IS GOING TO START

BUSSING PEOPLE ACROSS THE BORDER TO WASHINGTON, D.C., THAT IS COMPLETELY UNFORESEEN. BUT WHEN WE ARE CALCULATING WHAT WE NEED FOR HOMELESS SERVICES IN OVERNIGHT SHELTERS, THERE OUGHT TO BE AN ACCURATE

ESTIMATE OF WHAT THE NEED IS. EVEN THOUGH THE POPULATION GOES UP OR DOWN, IT IS NOT GO UP BY THOUSANDS. IT OUGHT TO BE ACCURATE WITH THE NEED IS. SO, THIS DOES IMPLICATE THE FORMULATION PROCESS. WHEN

I SEE OTHER REASONS WHY SPENDING IS GREATER THAN WHAT WAS BUDGETED, THOSE REASON OFTEN TIMES IS BECAUSE THERE WAS NOT DISCIPLINE ON NON-SPENDING. THAT IS WHAT THIS HEARING IS ABOUT. I CONCUR THAT WE

SHOULD CONTINUE TO REFINE OUR BUDGET FORMULATION PROCESSES. AS I SAID, WE HAVE MADE HUGE STRIDES OVER THE LAST TWO TO THREE YEARS ON AUTOMATION AND WHAT DOES THAT MEAN? IT MEANS WE CAN GET EXPENSES

FEEDING A LOT OF THE FORMULATION PROCESSES THAT WE HAVE NOT GOTTEN BEFORE. IN THE END, NO MATTER HOW MUCH MORE ENERGY AND ANALYTICS WE HAVE PLACED ON FORECASTING THE EXPENDITURE NEEDS, IT IS STILL AN

ESTIMATE AND THERE WOULD STILL BE VOLATILITY. NOT TREMENDOUSLY -- WE NARROW IT DOWN EVERY YEAR. CHAIR MENDELSON: I AM UNCOMFORTABLE DISCUSSING THAT TOO MUCH BECAUSE I THINK IT MISSES THE POINT. I AM

THINKING OF CHILDCARE SUBSIDY PROGRAM WHICH I REMEMBER CORRECTLY, TWO OR THREE YEARS AGO, SPENT $115 MILLION AND FOR THE NEXT BUDGETS, THE MAYOR PROPOSED $85 MILLION. THERE WAS NO WAY IT WAS GOING TO

BE $85 MILLION. I GUARANTEE IF YOU PLAY THE TAPE, NOT THAT I REMEMBER THIS SPECIFICALLY BUT IF YOU PLAY THE TAPE, THE AGENCY DIRECTOR SAID IT WAS ADEQUATE FOR THEIR NEEDS. THAT YEAR, THE SPENDING WAS

CLOSER TO $130 MILLION. THE COUNCIL WAS NOT GOING TO GO THROUGH THIS AGAIN SO WE DID A LOT OF WORK. I COMMEND THE BUDGET OFFICE. WE ENDED UP BUDGETING $150 MILLION. THE AGENCY RIGHT NOW IS LOOKING AT

WHAT THE ACTUAL SPENDING WAS AND THEY WILL BE OFF BY $1 MILLION TO THE GOOD OR $1 MILLION TO THE BAD. THAT IS THE WAY BUDGETING OUGHT TO HAPPEN. THAT IS JUST FICTION. MR. KENNEDY, CAN YOU CONTINUE

GOING THROUGH THE LIST? SO, OTHER THAN THE LIST THAT YOU HAVE -- CHAIR MENDELSON: YOU ARE JUST STRUGGLING TO ANSWER THIS QUESTION. SO, MPD. OH, THAT LIST. CHAIR MENDELSON: YOU ARE LOOKING AT IT. CAN

YOU GIVE ME YOUR LAPTOP AND I WILL LOOK AT IT? I THINK IT WOULD BETTER SERVE YOU BY GOING BACK -- FOR EXAMPLE, WHEN I TALKED ABOUT MPD. THAT PARTICULAR PROGRAMMING YEAR-END IS NOT WHAT IT IS. YOUR

RENT FOR ME STARTS IN AUGUST. THAT IS A CULMINATION FROM AUGUST TO NOW. I WOULD RATHER FRAME IT APPROPRIATELY FOR YOU. WHEN YOU TALK ABOUT WHO OVERSPENT OR WHAT YOU ARE CALLING OVERSPENDING AND A

YEAR-END RO REPROGRAMMING, I WOULD RATHER PUT IT IN A SUMMARY FORM OTHERWISE I WOULD BE ALL OVER THE PLACE. I LOOK AT ALL REPROGRAMMINGS, NOT JUST THAT REPROGRAMMING. I WANT TO MAKE SURE I GIVE YOU

EXACTLY WHAT YOU ARE ASKING FOR. IN OTHER WORDS, SOME OF THE DATA HE'S LOOKING AT COMBINES DIFFERENT CONCEPTS. NOT WANTED TO THROW AN ANSWER OUT, LOOKING AT A SPREADSHEET THAT COMBINES CONCEPTS AND WE

HAVE TO SAY NO, WHEN WE ANSWER YOUR QUESTION SPECIFICALLY, IT IS 10 RATHER THAN EIGHT OR SEVEN RATHER THAN EIGHT. IT IS MORE IMPORTANT THAT WE GET THIS RIGHT. CHAIR MENDELSON: I AM NOT LOOKING FOR

PRECISE NUMBERS BUT I THINK THE PUBLIC WATCHING THIS, THEY ARE HEARING YOU CANNOT GIVE ME A LIST OF AGENCIES THAT OVERSPENT THEIR BUDGETS. SO -- I WILL GIVE YOU A LIST OF THE REPROGRAMMINGS THAT ARE

BEFORE YOU KNOW. YOU HAVE -- THESE ARE ACROSS AGENCIES. I USE AGENCY CODES. CJ GOING TO -- AGAIN, I USE AGENCY CODE. CHAIR MENDELSON: BOARD OF ELECTIONS. BH, WHICH IS UNEMPLOYMENT COMPENSATION. HY,

WHICH IS THE SUBSIDY. YEAH. THERE IS AN FB. DYRS AND THE WMATA SUBSIDY. LET ME CLARIFY A FEW THINGS. WMATA SUBSIDY -- CHAIR MENDELSON: IS BECAUSE THE PARKING REVENUES CAME INTO LOW. ABSOLUTELY. THERE

IS ANOTHER REPROGRAMMING BEFORE YOU BUT THIS IS NOT ABOUT OVERSPENDING. THIS WAS TALKED ABOUT BY THE AUDITOR FROM OCTO TO AT0, OR THE OFFICE OF CHIEF FINANCIAL OFFICER. WE HAD INCREASED SPECIAL-

PURPOSE REVENUE. THAT INCREASE WHICH WAS NOT ANTICIPATED, IT WAS USED TO COVER SOME ADDITIONAL CONTRACTUAL COSTS THAT WERE NOT NECESSARILY ANTICIPATED BUT HAD TO BE PAID BECAUSE IT WAS A CONTRACT.

THEY COLLECT THE REVENUE FOR US AND WE PAY THEM A PERCENT. SO, WE NEEDED BUDGET AUTHORITY IN ORDER TO DO THAT. THERE WERE SOME COSTS, BUT THAT WAS NOT THE BULK OF ITS. THIS WAS SIMPLY A SIGNING A

BUDGET AUTHORITY TO COLLECTED REVENUE. I WOULD NOT SAY IT IS THE WAY YOU DEFINED IT, I WOULD NOT CATEGORIZE IT THAT WAY. CHAIR MENDELSON: BECAUSE THAT WAS NOT A REPROGRAMMING OF DOLLARS. THAT IS JUST

BUDGET AUTHORITY. THOSE ARE THE REPROGRAMMING'S THAT ARE SITTING IN FRONT OF YOU. RIGHT NOW. FROM AGENCY TO AGENCY. CHAIR MENDELSON: YOU DID NOT LIST DPW OR DHS OR SETTLEMENTS AND JUDGMENTS OR OSSE.

SO, SETTLEMENTS AND JUDGMENT, YOU WOULD NOT SEE A REPROGRAMMING IN THAT PARTICULAR INSTANCE BECAUSE, ONE, THESE WERE FOR THE APPEALS. SOME OF THOSE EXPENDITURES WERE ACTUALLY TRANSFERRED TO THE

AGENCY, LIKE MPD FOR EXAMPLE, WHERE THE APPEAL OCCURRED FOR MPD. THE ADDITIONAL EXPENDITURES WERE MOVED TO SECTION 801 AND THAT IS A CODE THAT ALLOWS US TO ESTABLISH BUDGET AUTHORITY SO WE CAN PAY A

SETTLEMENT OR JUDGMENT WITHOUT INCURRING ADDITIONAL FEES OR FINES FOR BEING LATE. WHAT WE TEND TO DO IS COVER THAT AND UNDER SPENDING IS 2.1 MILLION DOLLARS LEFT TO RESOLVE BUT THAT WILL EASILY BE

RESOLVED THROUGH UNDERSTANDING. WHAT WAS THE OTHER ONE? CHAIR MENDELSON: DPW, DHS. DPW, I AM ONLY AWARE OF REPROGRAMMING -- I THINK IT WAS $5 MILLION WHERE IT WAS AN INTERNAL REPROGRAMMING. I AM NOT

AWARE OF ANOTHER REPROGRAMMING FOR DPW. IF THERE IS ONE, I AM FORGETTING IT. CHAIR MENDELSON: DHS. DHS, SO LET ME GO THERE. I KNOW SPECIFICALLY WHAT YOU ARE GETTING AT -- OK. I AM NOT AWARE OF THE DHS

REPROGRAMMING. CHAIR MENDELSON: GIVE ME A SECOND. MR. CHAIRMAN, WE HAVE THE DETAILED INFORMATION. WE ARE HAPPY TO COMPILE IT, BOTH IN TERMS OF WHEN THE REPROGRAMMINGS CAME TO COUNCIL AN ATTACHMENT OF

THE REASONING FOR IT. I THINK THAT WOULD BE A FAR MORE EFFICIENT THING TO DO THAN TO REVIEW RIGHT NOW. I UNDERSTAND YOUR POINT. WHAT YOU ARE TRYING TO ISOLATE ARE THE YEAR AND REPROGRAMMINGS. A COUPLE

OF CONCEPTUAL ISSUES THAT WE WANT TO SORT OUT FOR YOU SO IT DESCRIBES THE REPROGRAMMING SEWER FACING IN THE CORRECT CONTEXT. HAPPY TO DO THAT. CHAIR MENDELSON: I WILL TAKE YOU UP ON THAT OFFER. YES,

PLEASE DO. I WANTED TO HAVE ON THE RECORD HERE FOR THOSE THAT ARE WATCHING WHAT SOME OF THE AGENCIES ARE. I WANT TO NOTE THAT MY QUESTIONING HAS BEEN FOCUSING ON YEAR-END. THERE WAS OVERSPENDING WE

COVERED IN THE SUPPLEMENTAL AND THAT IS STILL OVERSPENDING. I GAVE THE EXAMPLE OF THE CHILD CARE SUBSIDY. AND THE SPENDING FOR THE YEAR COMPARED TO WHAT WE INITIALLY APPROPRIATED IS DIFFERENT OF ABOUT

$63 MILLION. THE FACT THAT WE COVERED SOME OF IT IN THE SUPPLEMENTAL DOES NOT IN MY VIEW WIPE AWAY THE FACT THAT THE AGENCY EITHER OVERSPENT ITS BUDGET OR BETWEEN THE MAYOR AND THE AGENCY, THE COUNCIL

WAS LED TO BELIEVE THAT A BUDGET THAT WAS 63 MILLION DOLLARS TO LOW WAS ADEQUATE. EITHER WAY, IT IS A PROBLEM BECAUSE WE WANT TO BE BUDGETING AS ACCURATELY AS POSSIBLE. THERE WAS NOT A QUESTION IN

THERE, I AM JUST NOTICING -- NOTING WHILE I AM FOCUSING ON THE YEAR END, THE CONCERN INCLUDES THE SPENDING THAT GOT FIXED WITH THE SUPPLEMENTAL. LET ME SHIFT TO TALK ABOUT THE FRP'S. I THINK IT IS A

FINANCIAL REVIEW PROCESS. IT WAS REQUIRED BY LAW, ADOPTED BY THE COUNCIL 20 YEARS AGO. IT MIGHT HAVE BEEN WHEN KATHY PATTERSON WAS A COUNCILMEMBER AND THE IDEA WAS THAT THIS WAS TO GIVE A BETTER

HANDLE CONTROLLING SPENDING. MY OFFICE REVIEWED THE FRP'S TO THIRD QUARTER. WHY THE THIRD QUARTER? BECAUSE WE ARE DONE WITH THE FISCAL YEAR FOR THE THIRD QUARTER IS NOT AVAILABLE UNTIL THE END OF THE

MONTH. THE FOURTH QUARTER IS NOT AVAILABLE UNTIL WE CLOSE OUT THE YEAR BECAUSE WE ARE MAKING CHANGES SO WE DON'T USUALLY PROVIDE THE FOURTH QUARTER. CHAIR MENDELSON: WHILE I DON'T THINK THAT IS GREAT,

THE PURPOSE OF IS TO IDENTIFY SPENDING PRESSURES EARLY TO FIX THEM DURING THE YEAR. NOW THAT WE ARE DONE WITH THE FISCAL YEAR, THE FOURTH QUARTER IS NOT EXACTLY GOING TO HELP US FIX ANY PROBLEMS.

NONETHELESS, WE LOOKED AT THE THIRD QUARTER FRP'S AND JUST TO GIVE YOU A HIGHLIGHT -- DPW THIRD QUARTER FRP PROJECTED BUDGET PRESSURE FOR PERSONAL SERVICE IS MOSTLY DRIVEN BY OVERTIME WITH SIX-WEEK --

$6.4 MILLION. IT ONLY ADDRESSED 1.3 MILLION DOLLARS, LEAVING 5.15 MILLION DOLLARS IN SPENDING PRESSURES ON RESOLVED. DHS THIRD QUARTER APPROXIMATELY 4.4 MILLION DOLLARS IN SPENDING PRESSURES WERE

COMPLETELY UNADDRESSED. THE THIRD QUARTER FRP FOR SETTLEMENTS AND JUDGMENTS FORECASTED A GAP OF $3.4 MILLION WHICH DOES NOT INCLUDE THE COST OF ANY APPEALS AND THERE WAS NO GAP CLOSING PLAN OR

ANALYSIS. THE THIRD QUARTER STATES THAT 1.5 MILLION DOLLARS IN SPENDING PRESSURES WILL BE RESOLVED THROUGH CLUSTER WIDE YEAR-END REPROGRAMMING. THE THIRD QUARTER FRP FOR DYRS DID NOT EVEN ATTEMPT TO

ADDRESS THE 6.4 MILLION DOLLARS OVER TIME AND DIRECT SERVICES SPENDING PRESSURES. WHY IS THAT OK? I DON'T THINK THAT IS ADEQUATE. THE POINT OF THE FRP IS TO IDENTIFY A SPENDING PROBLEM. I HAVE A $100

BILLION BUDGET, I AM SPENDING AT THE RATE OF 110 MILLION P MILLION, WHAT I GOING TO DO ABOUT IT? YOUR OFFICE IS SUPPOSED TO LOOK AT THAT -- I ASSUME IT IS YOUR OFFICE, AND SAY WHAT I CAME UP WITH

SOLVES THE $10 MILLION PROBLEM IN MY EXAMPLE IS BS OR YES, IT WILL WORK. MAYBE EVEN IDEALLY BETWEEN YOUR OFFICE AND THE COUNSEL OVERSIGHT COMMITTEE, WE WORK WITH THE AGENCY OR PUT PRESSURE ON THE

AGENCY TO TRY HARDER. WHAT I JUST CITED TO YOU LEFT THESE GAPS THAT WERE UNADDRESSED. WHY IS THAT OK? THAT IS NOT OK. I WILL SAY THAT IN THE EVOLUTION OF IMPROVING THE FRP PROCESS, WE HAVE MADE GREAT

STRIDES. I HAVE HAD A COUPLE OF EMAIL CONVERSATIONS WITH THE D.C. AUDITOR ABOUT THE CHANGES THAT ARE COMING FOR THE SCHOOL YEAR, FISCAL YEAR 2027. THAT FORCES SOME OF THE PROBLEMS WE'VE HAD, IT FORCES

OR PREVENTS THAT FROM HAPPENING. WE SHOULD BE LOOKING FOR 100% SUCCESS RATE. WE DID NOT HAVE IT IN 2026. IT IS NOT OK. IT IS NOT OK. CHAIR MENDELSON: I APPRECIATE THAT ANSWER. BECAUSE THAT MEANS YOU

ARE WORKING ON IT. YES. CHAIR MENDELSON: GIVE ME A SECOND WHILE I AM LOOKING AT SOME OF THESE FRP'S. DHS, LOCAL RENT SUBSIDY PROGRAM. FOR THE THIRD QUARTER, THEY PROJECTED BUDGET PRESSURE OF $6

MILLION. GAP CLOSING ACTION. BUDGETS WERE PRORATED FOR FY 2022 THROUGH 2026 AS THE PROGRAM RAMPED UP. NOT SURE WHAT THAT HAS TO DO WITH FY 2026. THE PROGRAM IS OPERATING AT FULL CAPACITY IN THE RENTAL

PAYMENTS MUST BE ANNUALIZED. NOT QUITE GETTING WHAT THAT IS ABOUT BECAUSE WE BUDGETED WHAT WE BUDGETED WHICH I AM SURE WE WERE TOLD WAS ADEQUATE. THIS SOUNDS LIKE I AM THROWING SHADE AND I DON'T MEAN

TO BUT AS YOU KNOW, WHEN WE ARE WORKING ON THE BUDGET, WE WORK CLOSELY WITH YOUR OFFICE AND THERE ARE BUDGETING PROPOSALS THAT YOU SAY WE CANNOT DO AND THE REST OF THEM YOU SAY WE CAN DO. WE DON'T

ADOPT ANYTHING WE HAVE NOT BEEN TOLD WE CANNOT DO. THE GAP CLOSING ACTION FOR THIS WAS THE GAP WILL BE CLOSED WITH LOCAL FUNDS VIA THE FY 2026 SUPPLEMENTAL. THIS WAS WRITTEN MAYBE TWO MONTHS AFTER WE

ADOPTED THE BUDGET. AFTER WE ADOPTED THE SUPPLEMENTAL. IT WILL BE CLOSED, FUTURE STENTS. THE GAP WAS NOT ENTIRELY CLOSED. IT WAS SUPPLEMENTAL FUNDING. I CAN WALK THROUGH IT IF YOU'D LIKE BUT THERE

WERE INTERNAL SOLUTIONS TO REDUCE THE GAP, THE TOTAL GAP WHICH AT THAT TIME WAS $12.2 MILLION. 6.1 MILLION DOLLARS OF THAT WAS ELLIS RP. 4.4 BILLION -- MILLION DOLLARS WAS WITH CASH. 907,000 WAS SNOW

EMERGENCY. WE ENDED UP DOING THE SUPPLEMENTAL FOR ROUGHLY $7.7 MILLION AND THE OTHER COST ASSOCIATED WITH CLOSING OR THE OTHER STRATEGIES FOR CLOSING THE REMAINING GAP HAD TO DO WITH MOVING AROUND

EXPENDITURES THAT WERE ALLOWABLE, MOVING THEM ONTO GRANTS AND OTHER KINDS OF ALLOWABLE ACCOUNTING STRATEGIES. CHAIR MENDELSON: WHEN I ASKED YOU EARLIER FOR AGENCIES THAT ARE OVERSPENDING, YOU DID NOT

LIST DHS SO IT SOUNDS LIKE THE STRATEGIES WERE ULTIMATELY SUCCESSFUL. YES. CHAIR MENDELSON: HOWEVER, WHY IS SOME OF WHAT YOU DESCRIBED NOT IN THE FRP? THAT SOUNDS LIKE IT WAS YOUR RESPONSIBILITY. HOW

COME THE AGENCY GETS BY WITH NOT GIVING MORE EXPLANATION? I MAY NOT WRITE THEM BUT I DO REVIEW THEM. WHEN YOU GET AN FRP, IT STOPS WITH MY OFFICE. IF YOU GET AN FRP WITHOUT A GAP CLOSING PLAN, THEN

THERE WAS A BREAKDOWN IN MY OFFICE. SO WE WILL DO BETTER. CHAIR MENDELSON: THE FRP PRESUMABLY IS WRITTEN BY -- I AM GUESSING BY THE DIRECTOR BECAUSE THIS IS FROM RACHEL PIERRE AND HAYDEN BERNARD. THE

COLLABORATION BETWEEN THE AGENCY FISCAL OFFICER AND THE AGENCY PROGRAM STAFF AND THE AGENCY DIRECTOR ALSO -- ULTIMATELY SIGNS OFF. HERE SHE AGREES WITH WHATEVER THE DOCUMENT SAYS. CHAIR MENDELSON: I

AM LOOKING AT -- WITH THE CASH ASSISTANCE STOLEN BENEFITS, THEY GAP STOLEN ACTION INCLUDES -- LOOKS LIKE IT IS MORE OF AN EXPLANATION OF WHY IT IS A GAP, NOT HOW IT WILL BE RESOLVED. RESTORATION OF

BENEFITS IS AN UNBUDGETED INITIATIVE FOR FY 2026. HOW COME THEY GET TO DO AN UNBUDGETED INITIATIVE? THAT PART, I CANNOT ANSWER. I CAN ONLY TELL YOU THAT OUR ROLE IS ALWAYS TO GATEKEEPER AND PREVENT

ANY AGENCY FROM SENDING FUNDS ON INITIATIVES THAT DON'T HAVE FUNDING. I DON'T KNOW -- 100% OF THE TIME THAT WE CAN BE SUCCESSFUL BECAUSE SOMETIMES YOU LEARN THAT SPENDING HAS OCCURRED THAT DOES NOT

NECESSARILY GO THROUGH THE PROCESS AND THEN YOU HAVE TO ADDRESS IT. I AM NOT SAYING THAT HAPPENED HERE. ONLY GIVING YOU THE LAY OF THE LAND. CHAIR MENDELSON: I WILL SAY THAT EVEN THOUGH THE AMOUNT OF

OVERSPENDING IS DRAMATICALLY REDUCED, IF THE ROUGHLY $21 MILLION THAT YOU IDENTIFIED EARLIER WAS ACTUALLY AVAILABLE, THAT IS 21 MILLION DOLLARS MORE THAN WE WOULD HAVE FOR OTHER NEEDS. THERE WAS A --

ANOTHER UNBUDGETED INITIATIVE. IT SOUNDS LIKE A GOOD THING, DEALING WITH THE SNAP ERROR RATE TO EXPAND SOFTWARE BUT AGAIN, UNBUDGETED INITIATIVE. I CANNOT SPEAK TO THAT INTIMATELY BUT IF IT HAS TO DO

WITH THE ERROR RATE, SOMETHING MUST HAVE CHANGED BETWEEN THE TIME THE BUDGET WAS FORMULATED IN THE TIME THE BUDGET GOT EXECUTED IN TERMS OF WHAT THE ERROR RATE, HOW TO CALCULATE IT. IT DOES HAPPEN. I

WOULD NEED TO TALK TO THE DIRECTOR. BUT THAT HAPPENS. CHAIR MENDELSON: THE FRP AT $1.5 MILLION PRESSURE DUE TO AN INCREASE IN FRINGE COSTS. FRINGE, AS YOU KNOW, WHEN WE CALCULATE FRINGE, IT IS AN

ESTIMATE A BUDGETING FRINGE CALCULATION. I USED TO WORK WITH YOUR BUDGET DIRECTOR ALL THE TIME BECAUSE YOU ASKED FOR THAT INFORMATION AND ASKED HOW WE CAME UP WITH THAT QUICKLY ACROSS THE DISTRICT

USUALLY LESS THAN 1% OFF. THERE ARE OCCASIONS WHERE YOU MAY HAVE AN AGENCY WHERE THEY MAKE HIRES AND THE PEOPLE WHO COME AND TAKE THE MORE EXPENSIVE HEALTH CARE PLANS. YOU CANNOT ACCOUNT FOR THESE

THINGS UP FRONT. AGAIN, NOT SAYING THAT WAS THE CASE BUT THAT IS LIKELY PART OF THE EXPLANATION. CHAIR MENDELSON: THE DPW, PART OF THEIR CHALLENGE WAS THE SNOW REMOVAL. THE SNOW STORM, ONE SNOWSTORM

COST $50.5 MILLION. I MAY REPEAT THAT A COUPLE TIMES BECAUSE THAT'S A LOT. HAVING GROWN UP IN CLEVELAND WHERE IT SNOWS A LOT. I HAVE SOME VIEWS. IS THERE ANY PROCESS IN A SITUATION LIKE THAT TO TRY TO

CONTROL COSTS? I GET THAT THE SNOWSTORM WAS UNEXPECTEDLY SEVERE. IT IS ALSO MY IMPRESSION THAT THE CITY WAS NOT -- DID NOT APPROPRIATELY -- EVEN THOUGH IT WAS A SURPRISE SOME FOREWARNING AND THE CITY

DID NOT GET APPROPRIATELY PLANNED FOR IT. BE THAT AS IT MAY. THERE WAS SNOW REMOVAL GOING ON A WEEK LATER AFTER THE STREETS HAD BEEN CLEARED. WHAT DOES YOUR OFFICE DO -- MR. KENNEDY BECAUSE THIS MIGHT

BE USED -- WHAT DOES YOUR OFFICE DO TO TRY TO CONTROL THE COST -- THERE HAS TO BE SOME KIND OF CONTROL OVER IT. I THINK IN GENERAL, THERE IS ALWAYS A GRAY AREA ABOUT HOW DO WE STEP IN. AND IDENTIFY AN

EXPLICIT EXPENDITURE THAT IS NOT SUPPORTED VERSUS THAT DISCRETION THAT THE EXECUTIVE NEEDS TO MAKE THEIR DECISIONS. ULTIMATELY, THEY MADE A SERIES OF DECISIONS ON ANY SITUATION, SNOW OR WHATEVER, THAT

FROM OUR PERSPECTIVE IS IN THEIR REALM TO MAKE THAT DECISION. IT DOES NOT MEAN THEY ARE NOT ACCOUNTABLE TO OVERSIGHT JUST LIKE WE NEED TO BE ACCOUNTABLE FOR OVERSIGHT AS WELL. WHEN IT COMES TO AN

OPERATIONAL DECISION ON THE MARKET LIKE THAT, IT IS DIFFICULT FOR US TO WAIT A JUDGMENT. THE REALITY IS THERE IS PUBLIC SAFETY NEEDS WE WILL NOT BE RESPONSIBLE FOR THAT THE EXECUTIVE HAS TO CONSIDER

IN THAT SPECIFIC SITUATION. I JUST WANT TO SAY THAT THE POINT IS THERE IS THIS VERY FINE LINE BETWEEN ENSURING THAT THERE IS NOT -- THAT THERE IS RESOURCES AVAILABLE FOR A PROGRAM IN A SPECIFIC STEP

IN A PROGRAM VERSUS THOSE KINDS OF MARGINAL DECISIONS THAT THE EXECUTIVE CLEARLY HAS DISCRETION TO MAKE. CHAIR MENDELSON: BUT IT FEELS TO ME LIKE THIS IS AN EMERGENCY AND SO IN THE MOMENT, WE GET TO

SPEND WHATEVER WE WANT, HOWEVER WE WANT. THERE OUGHT TO BE STILL SOME CONTROL OVER IT. I HEAR WHAT YOU ARE SAYING, IT IS DIFFICULT BUT IT SHOULDN'T BE -- I DON'T WANT TO SAY FREEWHEELING, NO CONTROL

AT ALL. ULTIMATELY, THE CITY WAS GIVEN A BILL OF $50 MILLION. MAYBE $40 MILLION WOULD HAVE BEEN SUFFICIENT. I AM GUESSING IN CLEVELAND, THEY DON'T SPEND $40 MILLION ON EVERY SNOWSTORM. I THINK THAT IS

AN EXCELLENT SET OF QUESTIONS TO ASK DPW. HOW DO THEY PREPARE FOR THESE EVENTS? WHAT IS THEIR STRATEGIES TO SET ASIDE RESOURCES, TO SET ASIDE EQUIPMENT? THOSE ARE ALL REALLY GOOD QUESTIONS THAT IS

PROPER OVERSIGHT. CHAIR MENDELSON: OF THE AGENCY DIRECTORS WHO DIDN'T COME TODAY, IT IS A BETTER REQUEST. I DON'T KNOW IF I MENTIONED THAT. MPD'S THIRD QUARTER FRP SUGGEST THERE WILL BE $22 MILLION IN

ADDITIONAL OVERTIME SPENDING THAT WAS NOT BUDGETED. WHY WHERE THE FORECAST USED TO FORMULATE THE OVERTIME BUDGET THE PROPOSED FY 26 BUDGET SO FAR OFF AND HOW CAN IT BE MORE ACCURATE PROJECTING

OVERTIME COSTS? IN THE CASE OF MPD, AS YOU ALL KNOW, THEY ENDED UP HAVING TO DEAL WITH THE SAFE AND BEAUTIFUL ACT TASK FORCE INITIATIVE. WHICH NO ONE CODE -- NO ONE COULD PERCEIVE THAT. THE GOOD NEWS

IS THAT $22 MILLION INITIALLY, IT WAS THOUGHT THAT MPD WOULD HAVE TO FIGURE THAT OUT AND ABSORB IT REPROGRAMMING, WHATEVER. AS IT TURNED OUT AND WE DIDN'T LEARN UNTIL JULY OR AUGUST, THAT IN FACT,

THOSE FUNDS COULD ACTUALLY BE CHARGED TO EPSF. EMERGENCY PLANNING. THAT IS WHAT HAPPENED. THOSE EXPENDITURES WERE MOVED TO THE APPROPRIATE PLACE AND -- THAT REDUCED MPD'S PROJECTED PRESSURE. CHAIR

MENDELSON: CAN YOU SAY AGAIN, WHAT WAS THE INITIATIVE ANYBODY COULD FORESEE? THE SAFE AND BEAUTIFUL ACT TASK FORCE, THE INITIATIVE THAT CAME OUT OF THAT. ALL THE THINGS THAT OCCUR AS PART OF THAT. I

CAN SAY FOR CERTAIN SEA THAT ARE ASSOCIATED FOR THAT CLUSTER SPENT MAYBE DAYS, EVERY DAY WORKING WITH THE FOLKS WHO MONITOR WHAT THE SAFED TASK FORCE WAS GOING TO DO TO TRY TO ESTIMATE COST. I KNOW

THE CITY ADMINISTRATORS BUDGET DIRECTOR WAS INVOLVED IT IS VERY DIFFICULT TO GET AN ESTIMATE OF WHAT THOSE COSTS ARE POTENTIALLY GOING TO BE. ABSENT OF THE DATA, WE JUST HAVE TO BASE IT ON THE

OBSERVATION WHICH WAS DONE. BUT AGAIN, THE HIGHLIGHT HERE IS THAT THAT MONEY WAS ABLE TO BE CHARGED TO THE FEDERAL GOVERNMENT. CHAIR MENDELSON: THE AUDITOR NOTED IN HER TESTIMONY REPROGRAMMING ON

OCTOBER 16 PROVIDING $3 MILLION TO THE DEPUTY MAYOR ECONOMIC DEVELOPMENT TO FUND EXPENDITURES ASSOCIATED WITH THE FLETCHER JOHNSON CAPITAL PROJECT WITHOUT THE FUNDS, THE PROJECT CANNOT MOVE FORWARD.

THE LANGUAGE IS USED IN VARIOUS DOCUMENTS. NOWHERE IS THERE AN EXPLANATION OF WHAT THE COSTS ACTUALLY ARE. NO EXPLANATION OF WITHIN THE SCHOOL MODERNIZATION PROJECT AND CONSIDERED NOT APPROPRIATE FOR

BOND FUNDING. CAN YOU SPEAK TO THAT? SORRY, YOU MOVED KIND OF FAST FOR ME. WHAT EXACTLY AGAIN, WHAT CHANGES ARE WE TALKING ABOUT? CHAIR MENDELSON: THE REPROGRAMMING MOVING $3 MILLION TO THE DEPUTY

MAYOR FOR ECONOMIC DEVELOPMENT. I THINK THIS CAME FROM DCPS. IT ACTUALLY CUT INDIVIDUAL SCHOOLS. OK, I ACTUALLY DON'T HAVE THAT INFORMATION IN FRONT OF ME. BUT MAYBE I CAN, IF YOU WALK ME THROUGH IT

-- I DON'T HAVE IT IN FRONT OF ME BUT IF YOU WALK ME THROUGH IT AGAIN, I CAN MAYBE -- CHAIR MENDELSON: I AM READING FROM THE AUDITOR TESTIMONY BUT THIS WAS A REPROGRAMMING, $3 MILLION TO DEM PED TO

FUND EXPENDITURES ASSOCIATED WITH FLETCHER JOHNSON. THE COSTS ARE NOT SUITABLE FOR BOND FUNDING. WHAT IS THAT? SHE SAYING THAT THE MONEY WAS REVERSE PAY, IT WENT FROM CAPITAL TO OPERATING? OH, DCPS

LOCAL. OK. I SUSPECT THE COST, THE TERM AND SHOULD BE WITH -- CHAIR MENDELSON: IF YOU COULD FOLLOW-UP IN WRITING. THERE WAS MORE TO IT. WHAT COSTS WERE NOT SUITABLE FOR BOND FUNDING -- WITHOUT THE

FUNDS, THE PROJECT WILL NOT BE ABLE TO MOVE FORWARD. IF THAT CAN BE EXPLAINED. THIS LANGUAGE IS USED ON VARIOUS DOCUMENTS AND REPROGRAMMING MATERIAL. THAT IS IN THE LEGISLATIVE INFORMATION MESSAGING

SYSTEM ONLINE. NOWHERE IS THERE EXPLANATION OF WHAT THE COSTS ACTUALLY ARE. THERE IS NO EXPLANATION OF WHAT IS IN THE SCHOOL MODERNIZATION CAPITAL PROJECT WAS NOT CONSIDERED APPROPRIATE FOR BOND

FUNDING. IT IS A LITTLE CONFUSING BUT WE WILL FIGURE IT OUT. CHAIR MENDELSON: AND THEN GET BACK TO US ON THAT. GIVE ME A SECOND. THE OTHER REPROGRAMMING I WANT TO ASK ABOUT IS MOVING SOME MONEY FROM

AUTO TO CFO. THAT IS THE ONE I DISCUSSED EARLIER WHERE IT WAS MOVING BUDGET AUTHORITY, SPR BUDGET AUTHORITY 20 CFO BECAUSE WE COLLECTED MORE REVENUE THAN ANTICIPATED BECAUSE OF THE CONTENTIOUS

CONTRACT WE HAD WHERE THEY PROVIDE A SERVICE AND THEN WE PAY THEM A PERCENT OF WHAT THEY COLLECT. THEY DID A GOOD JOB. WE COLLECTED MORE REVENUE THAN WE ANTICIPATED. WE NEEDED BUDGET AUTHORITY TO

APPLY THAT REVENUE TO BE ABLE TO PAY OUT FOR THOSE COSTS. UNITS -- WHO WAS COLLECTING MORE REVENUE? I DON'T REMEMBER SEEING THIS IN THE REVENUE ESTIMATES. AGAIN, IT WOULDN'T BE IN A REVENUE ESTIMATE

IF IT IS ABOVE -- IF IT HAPPENED DURING THE YEAR. WE HAVE SPR'S, SOMETIMES WE SAY WE WILL COLLECT $100 AND THEN IT TURNS OUT WE COLLECT $125. THE PROJECTION OVERSHOOT TO ORIGINAL PROJECTION. CHAIR

MENDELSON: IT WAS $4.22 MILLION FROM OCTO TO OCFO. YES, STRICTLY BUDGET AUTHORITY. SO, I AM STILL THINKING THIS IS CENTRAL COLLECTION. WHO ELSE COLLECTS REVENUE FOR YOUR OFFICE? THIS MAY WELLW VERY

WELL BE THAT BUT I DON'T HAVE THE INFORMATION. CHAIR MENDELSON: I AM BEING TOLD CLAIM PROPERTY ALSO HAS A CONTINGENCY. COLLECTING MORE REVENUE, YOU PAY A COMMISSION, THE COMMISSION WAS HIGHER. $4

MILLION. THE DISTRICT IS IN A BETTER FINANCIAL POSITION OVERALL. BECAUSE MOORE WAS COLLECTED. CHAIR MENDELSON: THAT IS WHAT THAT WAS ABOUT. YES. YOU MADE A POINT EARLIER ABOUT THE $21 MILLION FIGURE I

WAS DESCRIBING TO YOU. PART OF WHAT WE WANT TO DESCRIBE AND PROVIDE MORE DETAIL IS THAT NOT ALL OF THAT 21 MEN DID -- $21 MILLION IS FUNGIBLE. 20% IS THIS COMPLICATED ARRANGEMENT THAT IF IT IS NOT

EXECUTED, IT DOES NOT MEAN A SAVINGS OCCURS. THAT IS WHY THIS AFTERNOON, WE WANTED TO ORGANIZE THE CONCEPTS BEHIND THESE LAST ROUND OF REPROGRAMMING SO WE ARE CLEAR WITH WHAT THEY ARE TRYING TO DO.

CHAIR MENDELSON: I UNDERSTAND. THE ONLY ONE I WANT YOU TO FOLLOW UP -- I DON'T NEED YOU TO FOLLOW-UP ON THIS REPROGRAMMING BUT THE OTHER ONE WITH FLETCHER. FLETCHER JOHNSON. THE AUDITOR ALSO TALKED

ABOUT THE FINANCIAL PLAN. AND THAT LEADS ME TO ASK A QUESTION WHAT WE CAN DO ABOUT THIS. WHAT AM I TALKING ABOUT? I THINK YOU KNOW. THE SO-CALLED FISCAL CLIFF, THE MAYOR'S CRITICISM ABOUT ONE-TIME

SPENDING WHEN SHE WAS MORE THAN 50% OF THE ONE-TIME SPENDING IN THE BUDGET WE ULTIMATELY ADOPTED. SHE CALLS IT -- SHE CALLS WHAT SHE DID AS REDUCTIONS. IT IS ALL KIND OF THE SAME THING. FISCAL CLIFF,

ONE YEAR REDUCTIONS. SHE TALKS ABOUT A 95 MILLION DOLLARS REDUCTION FOR D.C. PUBLIC SCHOOLS AND $78 MILLION REDUCTION FOR CHARTER SCHOOLS BUT THERE ARE OTHERS. I WANT TO SAY WHAT DO WE DO TO PREVENT

THIS? I AM KIND OF SECOND-GUESSING WHAT YOUR ANSWER MIGHT BE AND I AM NOT SURE I LIKE YOUR ANSWER BEFORE YOU GIVE IT. THE CHALLENGE HERE IS THAT THERE MAY LEGITIMATELY BE A REDUCTION IN THE OUT YEARS

-- OR AM THINKING LIKE HBTF, WHERE THE MAYOR PUT $400 MILLION IN, WE KNEW IT WAS NONSUSTAINABLE YEAR AFTER YEAR. SO, IT IS PUT IT AS A ONE-TIME. THERE'S NOTHING WRONG WITH THAT, BUT NOBODY SERIOUSLY

WANTS TO CUT FUNDING TO SCHOOLS. MR. CHAIRMAN, I WOULD LIKE TO BE REALLY CLEAR. WE ATTEST THAT THE BALANCE -- THE BUDGET IS BALANCED NOT BASED ON THE DIFFICULTY OF DECISIONS AHEAD OF YOU, BUT RATHER

DOES THOSE DECISIONS ADD UP CORRECTLY TO ASSURE WE ARE NOT SPENDING MORE RESOURCES? WE ATTESTED TO CONGRESS AND ARE CURRENTLY DESCRIBING TO WALL STREET THAT THESE TOUGH DECISIONS ARE AHEAD OF US TO

IMPLEMENT THE PLAN. YOU HAVE MANY OPTIONS STILL. YOU CLEARLY HAVE REVENUE OPTIONS, BOTH TOPLINE REVENUES -- CHAIR MENDELSON: ARE YOU SAYING YOU WANT US TO RAISE TAXES? SAYING THAT WE WILL ASK YOU WHAT

YOU WISH BUT WE ESTIMATE WHAT RESOURCES ARE COMING IN AND HOW LONG IT TAKES TO IMPLEMENT THOSE. THE SECOND THING YOU CAN DO IS THERE ARE DOZENS OF FEES AND OTHER CHARGES THAT THE DISTRICT HAS THAT

COULD BE INCREASED. A THIRD AREA IS TO LOOK AT EXPENSES THAT -- EVERY DOLLAR YOU SPEND HAS A CONSTITUENCY ON THAT. I AM NOT NAIVE TO THAT BUT THERE ARE EXPENDITURES THAT WE ALL CAN IDENTIFY WHERE THE

EVERYDAY ACTIVITY OF AGENCIES IS NOT IMPINGED. THE ABILITY OF THE FIRE OPERATION TO HAVE SO MANY PARAMEDICS ON 24/7, STAFFING FOR HAZMAT AND WHATNOT, CAN THEY GET ANOTHER 1% OUT OF THE BUDGET? THAT IS

ONE SET OF REDUCTIONS. THOSE OTHER ONES EVERYONE IS LOOKING FOR. WE LOOK FORWARD TO WORKING WITH BOTH THE NEW EXECUTIVE AND YOU TO IDENTIFY THOSE BUT THERE'S ALSO OPPORTUNITIES TO THINK ABOUT

ACTIVITIES THAT MAY NOT BE PRODUCTIVE ANY LONGER. THAT THERE IS A WILL WITHIN THE EXECUTIVE AND COUNCIL TO SAY, WE COULD REDUCE THOSE 10%. MAYBE THEY ARE BEING COVERED BY OTHER ACTIVITIES. ALL OF

THOSE ARE STRATEGIES THAT CAN CHANGE THE ACTUAL IMPLICATION OF THE FISCAL YEAR 2028 BUDGET. OR YOU CAN CHOOSE TO DO SOMETHING AND WE WILL HELP YOU EXECUTE A BUDGET AS IT IS. NONETHELESS, WE KNOW WE

HAVE A VERY DIFFICULT WINTER AHEAD OF US, SPRING AHEAD OF US TO ADDRESS THESE ISSUES. AS I SAY PUBLICLY AND FREQUENTLY, I AM GLAD I AM NOT IN ELECTED OFFICIALS -- POSITIONS TO CHOOSE BECAUSE IT WILL

BE DIFFICULT. NONETHELESS, I REJECT THE NOTION OF A CLIFF BECAUSE THE REALITY IS YOU HAVE MADE PRELIMINARY DECISIONS WHICH YOU CAN REVERSE THROUGH A VARIETY OF WAYS AND I GAVE YOU SEVERAL. THE REALITY

IS -- CHAIR MENDELSON: DID I HEAR YOU SAY YOU REJECT THE NOTION OF A FISCAL CLIFF? BECAUSE WE HAVE A FOUR YEAR BUDGET THAT IS BALANCED. YOU HAVE MADE PRELIMINARY CHOICES FOR 2028, 2029 AND 2030 ABOUT

HOW YOU ALLOCATE RESOURCES. YOU MAKE CHOOSE TO INCREASE RESOURCES, YOU MAY CHOOSE TO REALLOCATE THE REDUCTIONS. THAT IS FINE, THAT IS THE PART OF THE BUDGET PROCESS BUT RIGHT NOW, WE HAVE A PLAN TO

DEAL WITH ARE VERY SIGNIFICANT REVENUE CHALLENGES BROUGHT ABOUT BY HER ECONOMIC DOWNTURN. -- OUR ECONOMIC DOWNTURN. CHAIR MENDELSON: THIS MAY NOT BE A QUESTION, IT IS JUST A STATEMENT. I THINK OUR

FINANCIAL PLAN IS PROBLEMATIC. I DON'T AGREE WITH THE STARKNESS OF THE AUDITOR'S TESTIMONY THAT IT IS NOT BALANCED BUT IT IS NOT REALISTIC THAT WE ACTUALLY ARE GOING TO CUT PUBLIC EDUCATION BY $200

MILLION OR WE CAN CUT -- IT SAYS THE STATE OFFICE OF STATE SUPERINTENDENT BUT I AM GUESSING THAT HIS CHILD CARE AND PAY EQUITY BY $100 MILLION. AND THOSE ARE JUST A COUPLE OF EXAMPLES. WHAT I'VE BEEN

STRUGGLING WITH IS, FIRST OF ALL, WE GET A BUDGET THAT HAS THESE ENORMOUS AFTER YEAR REDUCTIONS AND THE ONLY WAY WE COULD HAVE FUNDED THEM WHERE WE WOULD LIKE TO SEE THEM AND WHERE I THINK EVERYONE

WOULD LIKE TO SEE THEM WOULD HAVE BEEN IF WE PASS THE TAX INCREASE. TWO YEARS AGO -- AND SO, SOME PEOPLE WANT A TAX INCREASE. I WOULD RATHER WE DON'T. I DON'T SEE THAT AS ACCEPTABLE BUT EVEN IF WE

WERE TO DO THAT, TWO YEARS AGO, WE DID RESTORE THE MAYORS, I THINK 100% CUT TO THE PAY EQUITY FUND. IT WAS $70 MILLION. WE FOUND 280 MILLION DOLLARS TO THE FINANCIAL PLAN. PUT THAT INTO THE BUDGET AND

THE NEXT YEAR, THE MAYOR TOOK IT ALL OUT. I AM NOT WILLING TO RAISE TAXES TO FULLY FUND THE FINANCIAL PLAN AT A CONTINUING SERVICES LEVEL ONLY TO SEE THAT THE NEXT YEAR THAT MONEY IS TAKEN OUT AND

USED FOR SOMETHING ELSE. BECAUSE THAT HAS BEEN OUR EXPERIENCE. I SAID THIS IS MAY BE MORE OF A STATEMENT BECAUSE I'VE HEARD YOUR ANSWER THAT THE FINANCIAL PLAN IS BALANCED AND IT IS BALANCED BASED ON

CHOICES AND YOU ARE NOT GOING TO SECOND-GUESS THOSE CHOICES. I DON'T THINK THAT IS OUR ROLE. CHAIR MENDELSON: I HAVE SOME QUESTIONS ON BUDGET FORMULATION. IN THE FY-2027 BUDGET, THE GROWTH RATE WAS

AROUND 2% WHICH WAS LOWER THAN OVERALL INFLATION. IN SOME SECTORS SUCH AS ENERGY AND HEALTH CARE, 2% WILL BE SIGNIFICANTLY LOWER THAN THE ACTUAL GROWTH RATE. I SENT ENERGY AND HEALTH CARE, WHICH MEANS

WE WILL HAVE ADDITIONAL SPENDING PRESSURES TO ADDRESS THE FY 2028 BUDGET. HOW DOES THAT CFO DETERMINE THE APPROPRIATE GROWTH RATE AND WHAT CHANGES WILL BE MADE TO THE PROCESS FOR DETERMINING THE

APPROPRIATE GROWTH RATE FOR FISCAL YEAR 2028? WE WORK WITH THE OFFICE OF REVENUE AND ANALYSIS TO ENSURE THAT THE GROWTH RATE WE USE IN THE PLANT IS ALIGNED WITH THE CPI RATE THAT THEY PROJECT SHOULD

BE USED BY THIS AREA. CHAIR MENDELSON: CPI IS? CONSUMER PRICE INDEX. IT IS JUST INFLATION. WE WILL CONTINUE TO DO THAT. THAT NUMBER DOES CHANGE. IT WAS JUST UPDATED. I THINK IT IS AROUND 2.6% OR SO

RIGHT NOW AND THAT IS THE NUMBER WE WILL BE USING IN THE FINANCIAL PLAN FOR 28 THROUGH 31. THAT IS IT. CHAIR MENDELSON: I SAID INFLATION AND YOU SAID CPI BECAUSE WE ARE ALL HEARING IN THE NEWS EVERY

DAY THAT THE INFLATION RATE RIGHT NOW IS LIKE 3.7%, WELL ABOVE THE FEDERAL RESERVE'S BENCHMARK. HOW DO YOU RECONCILE 2.6% WITH THREE POINT 7%? DR. LEE WILL HAVE TO DESCRIBE THAT. I DO KNOW THAT THERE

PROCESSES ARE FOCUSED ON THE REGION, NOT NATIONALLY. LIKE EVERY INFLATION ESTIMATOR HAS TO INCORPORATE THE VERY LARGE SPIKE ASSOCIATED WITH ENERGY PRICES. THAT IS A COMPLICATED QUESTION. IN THE END,

THEY ARE ESTIMATES AND THE CONSULTANTS TO USE, COST PRESSURES WILL BE FOUND WHICH IS REFLECTED ON THE CPI CHANGE IT IS A REASONABLE BASIS TO DEVELOP A BUDGET. AND APPRECIATE RELATIVE TO FISCAL YEAR

2028 THROUGH THE FINANCIAL PLAN 2031, WE WILL HAVE TWO MORE FORECASTS. IF WE SEE THAT THE LEVEL OF INFLATION WILL TREND UP, THEN THAT WILL BE A TRIGGER FOR OUR BUDGET OFFICE TO MAKE ADJUSTMENTS TO

EXPENSES NOT ONLY IN 2028 BUT IN THE OUT YEARS AS WELL AND POTENTIALLY IN 2027. CERTAINLY FOR 2028 AND BEYOND. FROM OUR PERSPECTIVE, THESE ARE ALL BEST ESTIMATES NOW BUT WE ARE NOT DONE YET. WE DON'T

HAVE THE BUDGET YET SO THERE IS TIME TO ADJUST IF THAT NEED BE. CHAIR MENDELSON: MR. KENNEDY, YOU SAID 2.6%. IS THAT ACROSS THE BOARD IN THE FINANCIAL PLAN OR IS IT TAILORED THAT DPW, FOR INSTANCE,

WHICH I ASSUME HAS A FAIRLY HIGH GAS PURCHASE THAT MIGHT BE HIGHER FOR THEM -- IT IS 2.6% ACROSS THE PLAN. IF THE PROJECT AND IS BY YEAR, THEN WE USE IT BY YEAR. CHAIR MENDELSON: BUT YOU DON'T CHANGE

IT -- WE DON'T GO DOWN TO THE AGENCY LEVEL TO DETERMINE, FOR EXAMPLE, DGS, FUEL COSTS, ELECTRICITY. WE DON'T GET TO THAT GRANULAR LEVEL. CHAIR MENDELSON: OK. EACH YEAR WHEN THE EXECUTIVE IS

FORMULATING THE BUDGET, YOU HAVE RULES THAT THE EXECUTIVE MUST FOLLOW. WHAT RULES DID YOU IMPOSE ON THE EXECUTIVE FOR FY 2027 BUDGET FORMULATION AND WHAT IF ANY NEW RULES DO YOU ANTICIPATE IMPOSING ON

THE EXECUTIVE FOR FY 2028 FORMULATION? I WILL START HERE WITH MY OPENING STATEMENT. THIS HAS BEEN A FOCUS OF THE LAST THREE YEARS, TO REALLY EVALUATE HOW WE ARE FORMULATING THE BUDGET. FIRST AND

FOREMOST TO ENSURE ALL EXPENSES WE KNOW ABOUT OUR APPROPRIATED RATHER THAN END OF YEAR IF WE HAVE SURPLUS APPROACH. CHAIR MENDELSON: THAT IS ONE RULE. IT IS A CONCEPT AND THERE ARE SEVERAL RULES THAT

COME OUT OF THAT. IN ADDITION, BECAUSE OF OUR TECHNICAL CAPACITY, WE ARE ABLE TO BE MORE SOPHISTICATED ABOUT OUR ESTIMATING OF EXPENSES WORKING WITH OUR PROGRAM PARTNERS. ALL OF OUR EFFORTS ARE TO

MINIMIZE THE UNEXPECTED EXPENSES AND THE ACTUAL EXECUTION HERE. THAT IS THE PURPOSE OF FORMULATION AND I THINK YOU WILL SEE HERE WHILE WE DO HAVE ISSUES TO RESOLVE STILL, YOU WILL SEE THERE'S A LARGE

IMPROVEMENT IN ACTUAL NEED FOR ADJUSTMENTS RELATIVE TO THE BUDGET THAN IN PRIOR YEARS. I ATTRIBUTE MY TEAM, BOTH THE FIELD FOLKS, CLUTCH -- CLUSTER BUDGET DIRECTORS AND AS WELL AS ERIC'S TEAM FOR

REALLY FOCUSING ON IMPROVING OUR CAPACITY TO PLAN THE BUDGET. THAT IS THE CONTEXT OF THIS. INDIVIDUALS WHO ARE OUR CLIENTS MAY NOT LIKE THESE RULES BECAUSE THEY HAVE TO ACCOUNT FOR EXPENSES THAT WE

DID OR DID NOT PRECISELY ESTIMATE WELL ENOUGH OR WERE UNDERESTIMATING. YOU CANNOT HAVE IT BOTH WAYS SO WE ARE CHOOSING TO REALLY RATCHET UP CAPACITY. WE WILL HAVE MORE RULES NEXT YEAR THE YEAR AFTER

THAT. AS THINGS CHANGE WE HAVE TO ADOPT AN ABILITY NOT TO DO THE SAME THING EVERY YEAR BUT FIGURE OUT THE BEST WAY TO GET A HOLD OF THE BUDGET. THE BOTTOM LINE IS ALL FORMULATION AS WE SAID AND YOU

SAID AS WELL IS AN EFFORT TO MINIMIZE THE KINDS OF CHANGES YOU HAVE BEEN ASKING ABOUT. THERE IS A POINT OF A MILLION-DOLLAR TYPE OF EXPENSE THAT IS HARD TO PIN DOWN BUT THE MULTIMILLION DOLLAR ISSUES

WE ARE TRYING TO MINIMIZE BY STARTING WITH FORMULATION CORRECTLY. WANT TO GIVE MY TEAM, ERIC AND OUR FIELD, CREDIT. FOR THIS WORK. I'M TAKING FROM THE ANSWER NO RULES OTHER THAN THAT BUDGET WILL

INCLUDE EXPENDITURES THAT PREVIOUSLY WERE NOT BUDGETED. THAT IS THE CONCEPT. THE ENFORCEMENT OF THAT WOULD INCLUDE, AS YOU KNOW, FOR EXAMPLE, BECAUSE IT IS A LONG LIST -- I HEARD YOU SAY LONG LIST?

AND MIGHT BE LONGER TO READ HERE. IT IS NOT THAT LONG. WE ONLY ADDED TWO THINGS DIFFERENT FROM LAST YEAR. FOR EXAMPLE, ONE OF THE THINGS THAT IS EXTREMELY IMPORTANT FOR US TO MAKE SURE THAT WE HAVE A

BALANCED BUDGET AND FINANCIAL PLAN IS THAT WE ARE NOT -- IF WORKFORCE INVESTMENT, LET'S SAY COLA FOR NONUNION, THAT TYPICALLY IS PUT IN WORKFORCE INVESTMENT. NONUNION FROM NOW ON, WE WANT THAT IN THE

AGENCY BUDGET WHEN IT COMES TO YOU. SO YOU CAN SEE IT IN THE BUDGET AND ASK QUESTIONS SPECIFICALLY ABOUT THE CALCULATIONS RELATED TO THAT SO THAT IS ONE OF THE NEW CHANGES OTHER THAN WHAT WE DID LAST

YEAR BUT -- WHAT IS THE OTHER NEW CHANGE? THERE COULD BE MORE. BUT WHAT IS THE OTHER ONE? WE ARE STRUGGLING ABOUT HOW TO HANDLE A DEAL LIKE THIS ONE. HOW TO DEAL WITH THE CHARTER SCHOOL STUDENT

ENROLLMENT CHANGES. THAT OCCUR WHERE ONCE THE ENROLLMENT IS DONE ALL OF A SUDDEN WE HAVE MORE COSTS THAN WE KNEW AND THAT RESULTS IN SPENDING PRESSURE OFTEN SO WE ARE TAKING A STRATEGIC APPROACH TO

HOW TO -- WE ARE TRYING TO STRATEGICALLY LOOK AT HOW WE CAN MINIMIZE THAT SO WE WANT SOME FUNDING SET ASIDE FOR THAT. WE HAVE NOT GOTTEN TO HOW WE ARE GOING TO DO IT YET. SO THAT IS ONE RELATIVELY BIG

CHANGE, AS YOU KNOW. YOU COULD ESTIMATE WHAT IT COULD BE AND PUT IN WORKFORCE INVESTMENT WITH A RESTRICTION THAT IT IS ONLY AVAILABLE. WE HAVE NOT GOTTEN THERE YET, BUT THANK YOU FOR THE SUGGESTION.

WE HAVE NOT GOTTEN THERE YET. I KNEW YOU WOULD LIKE THAT. I TEND TO PREFER BUDGETS THAT YOU RECEIVE FROM AGENCIES BEING A TOTAL LOOK AT THE RESPONSIBILITIES SO I UNDERSTAND WHAT YOU'RE SAYING. THAT IS

A VIABLE OPTION. WE WILL LOOK AT THAT, BUT I TEND TO FAVOR IN TERMS OF HAVING YOU AND YOUR COLLEAGUES LOOK AT AN AGENCY AND SEE ALL THE RESPONSIBILITIES WERE EXPENSES. IT IS LIKE SETTING ASIDE A

CONTINGENCY FOR UNDERESTIMATING ACTUAL ENROLLMENT AND I DO NOT KNOW WHERE YOU WOULD BUDGET HEARING YOU COULD PUT IN A CONTINGENCY FUND BUT FOR WORKFORCE OUR FUND IS WORKFORCE INVESTMENT. WE HAVE TRIED

THAT FOR OTHER KINDS OF THINGS, WITH FIXED COST AND IT NEVER WORKS OUT. THANK YOU FOR THE SUGGESTION. WE ARE LOOKING AT THIS AND WE WILL COME UP WITH A SOLUTION THAT HOPEFULLY WORKS. CHAIR MENDELSON:

IF YOU SET IT ASIDE, WE ARE GOING TO DO OUR OWN ENROLLMENT CALCULATION AND WE MAY TAKE THE MONEY FOR OTHER PROGRAMS. BUT IF IT IS IN WORKFORCE INVESTMENT AS A CONTINGENCY FOR THE WORKFORCE, IT MIGHT

STAY IN WORKFORCE INVESTMENT. THERE YOU GO. OK. BECAUSE WE LIKE WORKFORCE INVESTMENT AND YOU DO NOT KNOW WHAT THE UNION CONTRACTS WILL COME IN AT OR IF THERE ACTUALLY WAS NONUNION, WHICH THERE SHOULD

BE. YOU DO NOT KNOW WHAT THAT NUMBER WOULD BE SO HAVING MONEY IN WORKFORCE INVESTMENT COVERS ALL OF THAT. I AGREE. AT THIS TABLE, THAT IS A GREAT SUGGESTION AND WE ARE GOING TO THROW IT IN A POT OF

IDEAS. I DO -- WHEN YOU GET A CHANCE, I DO HAVE ANSWERS TO SOME QUESTIONS THAT I COULD NOT ANSWER EARLIER, IF YOU WANT TO REVISIT. SO THE MONEY, THE $3 MILLION WE TALKED ABOUT IN DCPS WAS IDENTIFIED

AS A SURPLUS. IT WAS SENT FOR AN AGREEMENT OR CONTRACT THAT THEY ARE DOING WITH UNITED HEALTH SERVICES. IT WAS SENTENCED -- AND WENT TO PAY AND IT WILL -- THAT IS WHY I WAS CONFUSED BY WHAT WAS SAID.

THESE COSTS WERE DETERMINED TO NOT BE CAPITAL ELIGIBLE. THIS IS WHAT I FIGURED WAS HAPPENING SO -- YOU SAID HEALTH CARE? FLETCHER-JOHNSON IS A DEVELOPING PROJECT. THIS IS FOR UNIVERSAL HEALTH

SERVICES. WE WILL PROVIDE A WRITTEN ANSWER. I HEAR YOUR CONFUSION SO LET'S WRITE IT DOWN. YOU SAID DO NOT WORRY ABOUT THIS BUT THE OFFICE OF CHIEF FINANCIAL OFFICER, THAT WAS CCU. GIVE ME A SECOND. 'S

POLICY IS IRRELEVANT. WE DON'T. SPEAKING HYPOTHETICALLY, BUT THIS IS WHAT HAPPENS, WHEN THE COUNCIL GETS THE BUDGET, WHICH IS BEGINNING OF APRIL, END OF MARCH, IN APRIL THAT IS A FULL MONTH AFTER

REVENUE ESTIMATES ON WHICH THEY MAYOR CALCULATED THE BUDGET. AND I THINK THE FORECAST IS THE END OF FEBRUARY. CORRECT. GIVE ME A SECOND. I WAS CONFUSING MYSELF BECAUSE TWO YEARS AGO WE GOT THE BUDGET

AT THE END OF MAY AND SO WE STILL HAD THE BUDGET WHEN THE MAY-JUNE REVENUE ESTIMATES CAME OUT. ORDINARILY WE GET THE BUDGET AT THE END OF MARCH SO THE MAYOR HAS THE BENEFIT OF THE FEBRUARY REVENUE

ESTIMATES. WE DO NOT HAVE THE BENEFIT OF REVISED REVENUE ESTIMATES SO IF THE COUNCIL HAS THE SAME REVENUE ESTIMATES THE MAYOR HAD -- HOWEVER AS WE ARE GOING TO THE BUDGET, WE WILL IDENTIFY AGENCY

SAVINGS THAT WERE NOT AVAILABLE TO THE MAYOR. BECAUSE WE WILL KNOW IN EARLY MAY WHERE SPENDING IS, WHICH THE MAYOR DID NOT KNOW IN EARLY MARCH. SO WE WILL FIND SAVINGS IN THE CURRENT YEAR. FOR

PURPOSES OF ILLUSTRATION, I DO NOT KNOW THAT IT IS THIS MUCH, LET'S SAY WE FIND 100 MILLION DOLLARS IN SAVINGS IN THE CURRENT FISCAL YEAR. TO THE NEXT FISCAL YEAR -- DIVIDED IN FOURTHS AND PUSH 25

MILLION DOLLARS TO EACH OF THE SUBSEQUENT FISCAL YEARS SO THERE WILL BE FUND BALANCE THAT WE WOULD BE ABLE TO PUSH THROUGH THE FINANCIAL PLAN. THIS YEAR WE WERE RESTRICTED TO TWO YEARS. THE YEAR

BEFORE WAS THREE YEARS, FY 26, 27, AND 28. FOR CASH FLOW PURPOSES, IT HELPS IF THERE IS FUND BALANCE BEING PUSHED THROUGH THE ENTIRE FINANCIAL PLAN AND THAT WAS MY QUESTION. OVER THE LAST FEW YEARS

YOU HAVE RAISED CONSISTENT CONCERNS ABOUT CASH FLOW. ONE OF THE WAYS THIS COULD BE ADDRESSED, I'M NOT SAYING FULLY ADDRESSED BUT COULD BE ADDRESSED, WHEN FORMULATING THE BUDGET, IS ALLOWING THE

EXECUTIVE AND COUNCIL TO PUSH FUND BALANCE THROUGHOUT THE FINANCIAL PLAN. IN PRACTICE IT HAS BEEN RESTRICTED WHY? OR WILL THEY CONTINUE? AS THE AUDITOR DESCRIBED, THEY KEEP BUDGET BALANCING IN THE

PRIVATE SECTOR TO HAVE YOUR OUT YEARS HAVING BEEN SUPPORTED BY ONGOING REVENUE. AND IN THE PAST THE PUSH THROUGH WAS FOR A LOT MONEY BECAUSE WE HAD A HUGE AMOUNT OF UNRESERVED BALANCE AVAILABLE. AS WE

ARE NOW IN A CONSTRICTED ENVIRONMENT, HAVING WHATEVER SMALL AMOUNTS YOU DO NOT WANT TO SPEND NEXT YEAR AVAILABLE TO YOU THREE YEARS FROM NOW GETS US BACK INTO A SITUATION WHERE OUR FINAL YEAR OF THE

PLAN IS DEPENDING ON ONE TIME REVENUES FOR POTENTIALLY IN ONGOING SERVICES. IF YOU SET I WILL SET ASIDE $50 MILLION FOR A PAYGO OR UNIQUE EVENT WE KNOW IS GOING TO HAVE BEEN TWO YEARS FROM NOW, THAT

IS A DIFFERENT MATTER, A ONE-TIME EVENT, BUT THE FUNDAMENTAL ISSUE HERE IS MATCHING ONGOING EXPENSES WITH ONGOING REVENUE AND USING FUND BALANCE ESPECIALLY OUT IN PLAN MEANS YOU ARE NOT DOING THAT.

UNLESS THEY ARE ALL DESIGNATED TO ONE-TIME PURPOSES. THAT IS THE PHILOSOPHY. SO I CONCUR WITH THE AUDITOR ON THAT POINT. SHE IS RIGHT ON. I AGREE WITH THAT. SO IT IS OK TO BALANCE NEXT YEAR'S BUDGET

WITH ONE-TIME FUNDING BUT NOT OK TO BALANCE THE FY 30 BUDGET IN THE FINANCIAL PLAN WITH ONE-TIME FUNDING? I DON'T THINK THAT MAKES SENSE. FROM A CASH FLOW PERSPECTIVE, YOU WANT CASH AND PUSHING MONEY

THROUGH THE PLAN GIVES YOU CASH. OUR SPENDING MONEY NEXT YEAR MEANS YOU DO NOT HAVE THAT CASH TWO YEARS FROM NOW. AND I HAD ANOTHER THOUGHT. I UNDERSTAND WHAT YOU'RE SAYING. WE ARE TALKING ABOUT IS

IMMATERIAL. WE WILL HAVE NO ACCUMULATED SURPLUSES BY THE END OF THIS YEAR AND WE HAVE TALKED ABOUT THE IMPLICATION ON THE REVENUE FORECAST AND WE HAVE SAID PUBLICLY WE ARE HAVING -- WE EXPECT ABOUT A

1% SAVINGS OVERALL AT LEAST. THAT IS THE AVERAGE. BUT WE NEED ALL OF THAT MONEY TO GET THROUGH THE 27 PLAN SO IT WILL BE SURPRISING, A GOOD SURPRISE, TO FIND THAT WE WILL IDENTIFY OPERATING SURPLUS IS

AVAILABLE FOR FUTURE YEARS. BUT TO THE EXTENT YOU WANT TO REASSIGN AND NOT SPEND MONEY IN FISCAL YEAR 20 H TO SPEND IT IN 31, I AM NOT SURE THAT IS A PRACTICAL SCENARIO GIVEN THE CONDITION WE ARE IN.

THREE YEARS AGO, FOUR YEARS AGO, ABSOLUTELY. RIGHT NOW BUT YOU HAVE 5% ROUGHLY ISSUED BUT THE BOTTOM LINE IS OUR CONCERN ABOUT THE INTEGRITY OF THE FOUR YEAR PLAN WHERE YOU ARE STILL DEPENDING ON ONE-

TIME RESOURCES LONG INTO THE PLAN PERIOD TO SUPPORT ONGOING EXPENSES. I DO NOT THINK YOU ARE GOING TO MAKE THAT CHOICE GIVE THE STRESS WE ARE IN. I WANT TO PURSUE IT MORE BECAUSE I GET THE POINT YOU

MADE A MINUTE AGO, THAT IF THE FINANCIAL PLAN IN FY 30 IS BALANCED WITH MONEY BEING PUSHED FORWARD THAN WHAT WE ARE SAYING IN THE FINANCIAL PLAN, WHAT YOU SAID, IS THAT SPENDING IN FY 30 IS NOT GOING

TO BE BALANCED BY REVENUE IN FY 30 AND THAT IS A PROBLEM, BUT THAT IS NOT WHAT IT IMPLIES WE ARE TALKING ABOUT FY 30 OR FY 27 OR FY 28. WE ARE SPENDING MORE MONEY IN THE CURRENT FISCAL YEAR THAN WE

ARE RAISING IN THE CURRENT FISCAL YEAR BECAUSE THE MONEY WE PUSHED THROUGH FROM 2026 TO 2027 AND THAT WAS SEVERAL HUNDRED MILLION DOLLARS AND I STAND BY THAT AND YOU ARE NOT OBJECTING TO THAT. BUT IT

IS THE SAME THING IN FY 30 SO ARE WE GOING TO -- IF WE BALANCE EQUITY AND CHILDCARE SUBSIDY, WHICH TOGETHER ARE ABOUT 220 MILLION DOLLARS, WITH ONE-TIME MONEY IN FY 30, THAT IS A PROBLEM FOR FY 30 ONE

BUT THAT IS WHAT WE DID FOR FY 27 AT EIGHT IS A PROBLEM FOR FY 28 SO I THINK THERE'S SOMETHING TO BE SAID FOR THE PRINCIPAL THAT YOU WANT TO SPEND -- YOU DO NOT WANT YOUR SPENDING ONE YEAR TO BE

GREATER THAN YOUR REVENUE IN THAT YEAR. I WILL SAY WHAT YOU DO WITH THAT EXCESS MONEY? DO WE FIND OTHER THINGS TO SPEND IT ON? I THINK WE COULD FIND ONE-TIME THINGS. NOW I FEEL I AM RAMBLING BUT THERE

IS THAT PRINCIPLE OF SPENDING NO MORE IN A YEAR THEN YOU ARE BRINGING IN IN THAT YEAR AND THERE IS SOMETHING TO BE SAID FOR THAT PRINCIPLE, SOMETHING TO BE SAID FOR THE NEED FOR LIQUIDITY IN PUSHING

MONEY THROUGH GIVES YOU LIQUIDITY AND THAT IS IMPORTANT. RIGHT NOW, VERY IMPORTANT. AND THERE'S SOMETHING TO BE SAID FOR THE REALITY THAT FOR THE LAST SEVERAL YEARS, NOT JUST THE CURRENT YEAR, WE HAVE

BEEN SPENDING MORE IN A YEAR THEN WE BRING IN IN THAT YEAR BECAUSE WE HAVE BEEN ABLE TO PUSH MONEY FROM ONE YEAR TO THE NEXT. SO ALL THINGS ARE TRUE. GOOD DISCUSSION. IN THE FY 27 TO FY 32 CAPITAL

IMPROVEMENT PLAN THERE ARE SEVERAL YEARS WERE BORROWING COSTS ARE CLOSE TO THE DEBT CAP. IN 29, IT SHOWS 11.93%. GIVEN INCREASES IN CAPITAL COSTS AND INTEREST RATES, HOW MUCH, IF ANYTHING, WILL WE

HAVE TO CUT TO STAY UNDER THE DEBT CAP FOR THE NEXT BUDGET? OUR TEAM DID SOME INITIAL MODELING, AS YOU CAN READ IN THE PAPER. ALL DEBT COSTS ARE GOING UP SEEN IF GATELY FOR A VARIETY OF REASONS. WE DO

NOT NEED TO GO INTO THOSE NOW BUT A BENCHMARK WE LOOK AT IS A PROXY FOR HIGH-GRADE DEBT FOR MUNICIPALITIES AND WE ARE HARD -- HIGH-GRADE DEBT. IT CLIMBS ABOUT 5%. IT HAS NOT BEEN THAT HIGH SINCE 2011.

IT IS A MATERIAL CHANGE UPWARDS. SO THE LAST COUPLE WEEKS, IT IS STARTING TO GO DOWN BUT NOT GET TO WHERE WE WERE ESTIMATING IN THE LONG RUN. SO WE WOULD EXCEED THE 12% DEBT CAP IF WE LEFT CIP THE

SAME. THE TEAM ESTIMATES THAT FOR FISCAL YEAR 2029, NO LATER YEAR -- NO LATER THAN FISCAL YEAR 29, WE NEED TO SPEND ROUGHLY 350 TO $400 MILLION LESS THAT IS IN THE CIP. THERE WILL BE OTHER REDUCTIONS

BUT IT TAKES A WHILE FOR US TO PLAN THOSE BECAUSE ONCE YOU MAKE A DECISION ABOUT 2029 IT CAN AFFECT THE CAPITAL PLAN IN THE FUTURE SO IT WILL NOT BE A COST OF -- A REDUCTION IN 30 OR 31 OR 32 BUT IT

IS STILL A SUBSTANTIAL REDUCTION SO THANK YOU FOR THE QUESTION. PART OF OUR WORK AND BUDGET FORMULATION IS TO RECALCULATE THESE CAPACITIES WITH THE LATEST INFORMATION ON CONSTRUCTION COSTS AND

INFLATION AS WELL AS INTEREST RATES SO WE WILL HAVE OUR BEST AND UPDATED ESTIMATES FOR YOU WHEN THE BUDGET IS INTRODUCED BUT THE BOTTOM LINE IS WE ARE IN A SITUATION WITHOUT RADICAL REDUCTION IN RATES

ARE CIP WILL BE COMPROMISED AND YOU WILL HAVE MORE TOUGH DECISIONS TO MAKE. AS IN THE CIP WILL NOT BE ABLE TO GROW AND WE MAY HAVE TO REMOVE THINGS. LIKELY. IN THE LAST SEVERAL YEARS, HOW MUCH AS A

PERCENTAGE HAS THE GOVERNMENT SPENT IN THE CIP? SO THE ACCOMPLISHMENT RATE, WE ARE SAYING. OFF THE TOP OF MY HEAD, I DO NOT THINK THE TWO OF US CAN TELL YOU BUT WE DO TRACK IT. MY IMPRESSION IS ABOUT

60%. MY IMPRESSION IS WE HAVE BEEN IMPROVING IN THE LAST TWO YEARS, CREDIT TO THE EXECUTIVE FOR THAT AND SO RATHER THAN MISQUOTE OR GAS I WOULD LIKE TO PROVIDE YOU THE SPECIFIC NUMBERS. BECAUSE THERE

IS A GOOD TREND HERE . SO YOU WILL FOLLOW UP ON THAT. SINCE YOU ARE GOING TO FOLLOW UP, CAN YOU GIVE THAT FOR THE LAST FIVE YEARS? I DO NOT KNOW THE DATA. THERE IS A PRE-NEWS FINANCIAL SYSTEM AND A

POST AND FIVE YEARS IS BACK INTO THE OLD SYSTEM. I'M NOT SURE HOW EASY IT IS FOR US TO ASSEMBLE THAT INFORMATION. THE NEW SYSTEM IS STRAIGHTFORWARD. SO WE WILL TRY. WE WORK ON SOMETHING BECAUSE YOU

SAID FIVE YEARS. THAT STARTED BECOMING SOMETHING WE TALKED ABOUT A LOT OVER THE LAST FIVE YEARS OR FOUR. I MEAN COME ON THE SIDE. SO I'M TALKING TO MY CAPITAL BUDGET DIRECTOR NOW. WE WILL SEE. YOU ARE

GIVING A SEVERAL THINGS IN WRITING SO INCLUDE THAT IN WRITING. SO WE OFFER LIES BORROWING IN THE CURRENT YEAR, DO WE ACTUALLY BORROW $1 BILLION OR DO WE BORROW 600 MILLION DOLLARS? AND SO YOU WILL GET

ME THE RATE. I WAS GOING TO END MY QUESTION BUT THERE WAS ONE OTHER THING THAT CAUGHT MY EYE. SHE TALKS AT ONE OF THE REPROGRAMMING'S" RECOVER OPERATIONAL OVERTIME COSTS THROUGH MEDICAID

REIMBURSEMENT. ARE WE DOING OK WITH MEDICAID BILLING OR CAN WE DO BETTER? AS FAR AS I KNOW, WE ARE DOING GREAT. AS FAR AS I KNOW, WE HAVE NO PROBLEMS. I RECALL OUR TESTIMONY WAS $99 MILLION MANY YEARS

AGO -- WE ARE SO FAR PAST THAT. WE ARE DOING A GREAT JOB WITH PROVIDER AGENCIES. WE HAVE FIRE AND EMS ON BOARD NOW. WITH MEDICAID BILLING FOR AMBULANCE SERVICES. WE ARE DOING SO FAR FROM AS FAR AS I

KNOW, FINE. SO THEY DO SO MEDICAID BILLING. I DO NOT REMEMBER IF DCPS DOES. AS FAR AS YOU KNOW, THEY ARE DOING THAT WELL. WE DO NOT GET REIMBURSED IF WE DO NOT BILL AND WE HAVE TO BUILD PROPERLY SO

THAT IS TWO THINGS COME OUT TO BILL AND TO BILL PROPERLY AND AS FAR AS WE KNOW THAT IS HAPPENING. AND IT DOES MEDICAID BILLING. THEY DO ROUGHLY THE SAME APPROACH. THEY ARE DOING GREAT. I HAD NOT HEARD

ANY ISSUES, ESPECIALLY TRANSPORTATION LIKE WE USED TO HAVE. I DO NOT SEE THAT WE HAVE PROBLEMS WITH IT. IF THERE ARE, I'M NOT AWARE OF THEM. WHICH SUGGESTS THEY ARE NOT SUBSTANTIAL. MR. LEE? LIKE

EVERY PROCESS, WE CAN IMPROVE. I THINK THE IMPROVEMENT ARE DRAMATIC SO IT IS NOT AS IF WE ARE PERFECT OR NEVER PERFECT. WE HAVE TO STRIVE TO BE BETTER. WE REALLY IN THE HUMAN SERVICES AREA AND SHE IS

A BULLDOG. SO WE WILL -- WE ARE MAKING TERRIFIC IMPROVEMENTS AND WE WILL CONTINUE TO DO SO. I DO NOT HAVE FURTHER QUESTIONS. SOMEBODY TOOK NOTES ON WHAT YOU ARE GETTING BACK TO US ON. THANK YOU. I

WILL WIND DOWN THE HEARING. THIS HAS BEEN A HEARING ON BUDGET FORMULATION, EXECUTION, AGENCY OVERSPENDING. THE RECORD WILL CLOSE AT 5:30 P.M. ON THURSDAY, NOVEMBER 12. WE LIMITED WHO WOULD TESTIFY

TODAY, THOUGH WE DID INVITE THE EXECUTIVE. THEY DECLINED TO SEND WITNESSES. THE -- ANYONE WHO WISHES TO SUBMIT COMMENTS IS WELCOME TO DO SO AND WE WILL INCLUDED IN THE RECORD IF WE RECEIVE IT BY 5:30

P.M. THURSDAY, NOVEMBER 12. THE TIME IS 12:56 P.M. AND THIS HEARING IS ADJOURNED.