Yesterday, DC Council Chairman Kwame Brown and his colleagues affirmed the top priorities for DC residents by restoring money in next year’s budget for affordable housing, healthcare and shelter for our most vulnerable residents. In one of the quickest deliberations in recent memory, the Council voted unanimously to approve the fiscal year 2013 Budget Request Act and Budget Support Act, making some significant and important changes to Mayor Gray’s initial proposals. A second vote on the Budget Support Act is scheduled for June 5th.

DCFPI wants to take a moment to thank Chairman Brown, Council budget director Jennifer Budoff and her staff, and the Council members and their staffs for working hard to craft a budget that truly moves our city forward. The decisions the Council made these past few weeks will keep our residents healthier, safer, and more productive.

So what happened yesterday? Here’s a rundown:

AFFORDABLE HOUSING: $18 MILLION RESTORED TO THE HOUSING PRODUCTION TRUST FUND

The Council restored $18 million of the $20 million cut from the trust fund in Gray’s proposed budget by redirecting money from the sale of DC-owned property in the NOMA neighborhood. DC’s supply of affordable housing is vanishing, and the trust is one of our best mechanisms to maintain and create affordable units down the road. Mayor Gray had proposed using funds from the sale of the property to create needed greenspace and parks in the surrounding NOMA neighborhood. The Council decided that parks for NOMA should be prioritized for any additional revenue and placed the $18 million as number 4 on the contingency revenue list.

HEALTH CARE: HOSPITAL SERVICES FOR DC HEALTHCARE ALLIANCE FULLY RESTORED

Committee on Health chairman David Catania and his staff worked very hard to keep hospital-based services for the DC HealthCare Alliance. Mayor Gray had proposed cutting hospital coverage for the Alliance, which provides health insurance for low-income DC residents who do not qualify for federal Medicaid. The Committee developed a proposal and then modified it in collaboration with the office of the Mayor. Here’s how they agreed to fund these important services:

• $5.3 million from additional Medicaid funds made available this year from activities at District nursing homes
• $3 million in unanticipated savings from managed care drug rebates
• $2.6 million by moving effective date of the hospital Diagnostic Related Groups (DRG) rate changes to Oct.1, 2012, instead of Jan. 1, 2013
• $1.8 million by reducing Department of Healthcare Finance cost settlements budget for FY 2013
• $1.4 million by revising provider fees for nursing homes, a portion of which is dedicated to the Nursing Home Quality of Care Fund
• $252,000 in personnel vacancy savings within the Department of Health Care Finance
• $103,000 in personnel savings within the Office of the Deputy Mayor for Health and Human Services

HOMELESS SERVICES: $4 MILLION ADDED TO LOCAL RENT SUPPLEMENT PROGRAM

The Council’s actions yesterday take a big step toward a better approach to sheltering our homeless residents. Starting in June, between 200 and 300 families will be moved from shelters and motels into homes through the rapid re-housing program. Then, in October, these families will be able to stay in stable housing due to the $4 million in additional funding to the local rent supplement program. This action is significant for two reasons: It will help families move from emergency shelter into long-term housing and allow more families in desperate need of shelter to take advantage of DC General’s emergency shelter, which has been filled to capacity.

The Council’s budget does not restore the $7 million cut from homeless services due to a loss of federal funding, but it keeps the money as number one on the contingency revenue list. The Council also put $1.7 million to add beds for homeless youth on the contingency revenue list.

The Council—through the actions of the Committee on the Judiciary and the Committee of the Whole—restored $2.1 million to the Office of Victims Services. This office provides critical emergency shelter and services to victims of crime, including domestic violence.

EDUCATION: $2.6 MILLION FOR COLLEGE PREP AND A DIRECTIVE TO RIGHT-SIZE UDC

The Council voted to put $2.6 million to fully fund the Raising the Expectations for Education Outcomes Omnibus Act. This legislation includes four programs, including a Community Schools Incentive Initiative, a pilot teacher incentive program, plan to ensure all students apply to a college as a requirement for graduation and to assist students with information on applying to college, as well as a pilot early warning and support system to identify students who are off track in grades four through nine.

The budget also mandates several important reports. The fiscal year 2013 budget establishes a charter schools admissions taskforce to study providing a neighborhood preference in charter school admissions for the 2013-2014 school year. As well, the Council asked for a comprehensive food services plan to help reduce the cost of providing food services in DCPS. And by October 1, 2012 the University of the District of Columbia is expected to develop a right-sizing plan that outlines the steps that the university shall take, starting in fiscal year 2013, to bring the university’s costs, staff, and faculty size in line with other comparable public universities.

TAXES: EXTEND ALCOHOL SALES THE NIGHT BEFORE HOLIDAYS AND MAJOR HOLIDAY WEEKENDS

The approved FY 2013 budget scales back the mayor’s proposed expansion of alcohol sales. Instead of making last call an hour later every day, the approved budget allows bars to stay open until 4 a.m. the night before federal and District holidays. As well, for Memorial Day and Labor Day—and if New Year’s and July 4^th create a holiday weekend by falling either on a Saturday, Sunday or Monday—extended hours apply to the entire weekend.

By a seven to five vote, the Council placed restoring the tax break for interest earned on out-of-state bonds as last on the contingency revenue list. This means that unless the District sees an uptick of $119 million in revenue next year, the exemption will not be restored and interest earned on out-of-state bonds purchased in 2012 and beyond will be subject to the income tax. DCFPI has noted that limiting the income tax exemption to DC bonds creates an incentive for DC residents to purchase DC bonds, and the city’s recent bond sale suggests this is true.

CONTINGENCY REVENUE LIST: SOME SUBTRACTIONS AND ADDITIONS

The Council altered the Mayor’s proposed contingency revenue list. If the District receives additional revenue in fiscal year 2013, the below programs will be funded in the following order:

1. $7 million for homeless services
2. $14.7 million for TANF employment program
3. $9.5 million to fund South Capitol Street Memorial Amendment Act
4. $18 million for NOMA parks and recreation
5. $1.7 million for youth homelessness prevention
6. $1.6 million for human services, i.e., emergency shelter
7. $2.9 million for Home Purchase Assistance Program
8. $2.6 million for Office of Victim Services
9. $8.6 million for toddler and infant slots
10. $5 million to the Office of the State Superintendent for Education  for special ed
11. $15 million to the Department of Employment Services for adult job training
12. $10 million for reduction of commercial property tax rate
13. $3 million to the University of the District of Columbia
14. $1.5 million for the Ward 8 pilot budget challenge
15. $77,000 to Office on Aging
16. $500,000 to DC Fire and Emergency Medical Services cadet program
17. $320,000 to Capital City Fellow program
18. $10 million to Office of Motion Picture and Television Development
19. $220,000 to Department of Small and Local Business Development
20. $150,000 to Boxing and Wrestling Commission
21. $150,000 to Office of Motion Picture and Television Development study
22. $1.5 million for Takoma Theater
23. $5 million for Douglas Recreation Center
24. $1.1 million to restore out of state bond tax break

The DC Council will take its first and only vote on the fiscal year 2013 Budget Request Act today, and the first of two votes on the Budget Support Act. Chairman Kwame Brown released his proposal at about 11 p.m. last night, after the council spent weeks reviewing the proposed budget Mayor Gray released on March 23rd. DCFPI applauds Chairman Brown, Council Budget Director Jennifer Budoff and her staff, and members of the Council—particularly Councilmember David Catania (I-At-Large) and the Committee on Health staff—for finding resources to fund affordable housing, healthcare and other programs that will make the District a better city.

The Council’s Committee of the Whole will discuss the Chairman’s recommendations starting around 11 am today. The Council will then re-convene in a legislative session, make any further amendments, and cast the first and final vote on the Budget Request Act, the legislation that allocates dollars for next year. The Council will also cast the first of two votes on the Budget Support Act, the legislation that includes any new laws which need to be implemented for the budget. The second vote is scheduled for June 5.

Here’s a quick highlight reel of the Chairman’s proposal:

AFFORDABLE HOUSING: $18 MILLION RESTORED TO THE HOUSING PRODUCTION TRUST FUND
The chairman’s proposal restores $18 million of the $20 million cut from the trust fund in Gray’s proposed budget by redirecting money from the sale of DC-owned property into the fund. The Mayor had proposed using funds from the sale of the property to build parks in the surrounding neighborhood, now known as NOMA. The Chairman’s proposal puts $18 million in funding for NOMA parks as number 4 on the contingency revenue list.

HOMELESS SERVICES: $4 MILLION ADDED TO LOCAL RENT SUPPLEMENT PROGRAM
Starting in June, under the chairman’s proposal, between 200 and 300 families in need of a place to live will be moved into stable housing through the rapid re-housing program. Then, in October, these families will be transferred to the rent supplement program, which provides housing subsidies. This will help alleviate the overcrowding at the DC General family shelter and hopefully allow the shelter to accept new families in need of emergency shelter.

The chairman’s budget also puts as number 5 on the contingency revenue list $1.7 million to add beds for homeless youth. It does not restore $7 million cut from homeless services due to a loss of federal funding, but keeps it as number one on the contingency funding list.

HEALTHCARE: $23 MILLION FOR THE DC HEALTHCARE ALLIANCE
The chairman’s proposal restores $23 million cut in the Mayor’s proposed budget from the DC HealthCare Alliance, the city’s public health insurance program for residents not covered under federal Medicaid. Sources say that negotiations between the Committee on Health Chairman David Catania and his staff, Mayor Gray and his budget team, and the Chief Financial Officer are on-going today. DCFPI will update through Twitter, @DCFPI.

EDUCATION: $2.6 MILLION FOR COLLEGE PREP AND A DIRECTIVE TO RIGHT-SIZE UDC
The Chairman’s proposal puts $2.6 million to fully fund the Raising the Expectations for Education Outcomes Omnibus Act. This legislation includes four programs:  a community schools incentive initiative, a pilot teacher incentive program, a plan to ensure all students apply to a college as a requirement for graduation and to assist students with information on applying to college, as well as a pilot early warning and support system to identify students who are off track in grades four through nine.

The chairman’s proposal also establishes a charter schools admissions taskforce to study providing a neighborhood preference in charter school admissions for the 2013-2014 school year. The report will offer recommendations for how a neighborhood preference would be designed by Sept. 1, 2012. Before Feb. 15, 2013, the Office of Planning shall transmit to the Council and to the Healthy Schools and Youth Commission a comprehensive food services plan for the District that shall include the following: a plan to reduce the cost of providing food services in the District of Columbia Public Schools.

By Oct. 1, 2012, the beginning of next fiscal year, the University of the District of Columbia is expected to develop a right-sizing plan that outlines the steps that the university shall take to bring costs, staff, and faculty size in line with other comparable public universities.

TAXES: EXTEND ALCOHOL SALES THE NIGHT BEFORE HOLIDAYS AND MAJOR HOLIDAY WEEKENDS
The chairman’s proposed budget scales back the mayor’s proposed expansion of alcohol sales. Instead of making last call an hour later every day, the Chairman’s proposal allows bars to stay open until 4 a.m. the night before federal and District holidays. As well, for Memorial Day and Labor Day—and if New Year’s and July 4^th create a holiday weekend by falling either on a Saturday, Sunday or Monday—extended hours apply to the entire weekend.

The Council also removed a tax proposal from the revenue contingency list that would have restored the tax break for interest on out-of-state bonds.  The Council’s budget thus leaves in place last year’s compromise, which maintains the tax break for investments made prior to this year but eliminates the tax break for investments made in 2012 and beyond. The response to the city’s recent boost in DC bond sales suggests that demand to buy DC bonds among DC residents has increased, presumably as a result of this change.

Stay tuned to @DCFPI on Twitter throughout the day!

District Dime readers, we are less than 24 hours from the Council’s first vote on the fiscal year 2013 budget. Once the budget is released to the public, DCFPI will do a quick analysis and post it here.

So as we wait, a few highlights from last week:

*District high school senior Chris Feaster–who currently lives at DC General family shelter but will be moving to East Lansing, Michigan, this fall to study at Michigan State University–talks directly to the DC Council about housing for families like his: http://www.dcfpi.org/the-budget-priority-list-future-michigan-state-freshman-and-dc-family-shelter-resident-chris-feaster

*DCFPI Policy Director Jenny Reed talks about DC’s vanishing low-cost housing: http://thekojonnamdishow.org/shows/2012-05-10/spiraling-rents-our-region

*Read our new report, Disappearing Act: http://www.dcfpi.org/disappearing-act-affordable-housing-in-dc-is-vanishing-amid-sharply-rising-housing-costs

District Dime readers, we are in the final days before the DC Council votes on the fiscal year 2013 budget. At DCFPI, we often say that a budget is not simply a collection of numbers; it is a statement of our priorities as a city.

 Chris Feaster is one of those priorities. Since last year, Chris and his mom have been living at DC General family shelter. In a few months, Chris will move out of DC General, not because the District has an apartment for him to live in but because he will be a freshman at Michigan State University.

 You’ve heard plenty from us this budget season. Take a few minutes to hear Chris: http://www.facebook.com/video/video.php?v=605184483327&saved

Chris is grateful for having a roof over his head, but it certainly hasn’t been easy to study, fill out college applications, and stay positive while living in DC’s packed-to-capacity family shelter. Somehow Chris stayed on task, looked beyond the tough circumstances in the short term and envisioned a better future ahead.

He asks the DC Council to do the same for next year’s budget. By putting $6 million toward the local rent supplement program and $7 million into homeless services we can move families like Chris’s family forward:

• $7 million toward homeless services fills a gap in human services budget that, if not filled, would lead to serious cuts in services including shutting down 750 shelter beds.
•  $4 million to tenant-based rent supplement will serve 250 homeless families and $2 million to project-based rent supplement will create 200 permanent supportive housing units.
• If the DC Council devotes $4 million to local rent supplement in the FY13 budget (not just the wish list) to serve 250 homeless families, the Department of Human Services believes it will be able to start placing families into housing immediately. This will create enough space this summer to stop using motels and start sheltering families with no safe place to sleep.

But if the DC Council funds neither:

• Shelters will close: DHS says without this funding, they’ll have to close shelters, amounting to half the beds for single men and women next spring. Food, transportation, job training, outreach and other supportive services will be cut.
• No families will get into shelter except when it is below 32 degrees. More families will be referred for neglect investigations because of concerns that their children are at grave risk staying in cars, parks, or other unsafe settings.
• There will be little movement out of emergency shelters. DC will have to depend even more on expensive motels next winter.

Yesterday, the DC Council met off the dais to discuss the fiscal year (FY) 2013 budget. The discussions were televised, though we were once again disappointed to find out that the room didn’t have seats for the public. Each counci lmember reviewed the budget actions in their committee; a copy of the PowerPoint presentation is here.

Here is a quick summary of some of the major discussion topics.

DC HealthCare Alliance: David Catania (I-At-Large), chairman of the Committee on Health, discussed his committee’s actions to fund the cuts Mayor Gray proposed to the District’s public health insurance program. An explanation and rundown of the committee’s recommendations are here. Catania said that he and his staff are in talks with the Office of the Chief Financial Officer to make sure the actions can be approved. DCFPI congratulates the Committee for finding ways to fund this important health care program. If the actions are approved, this will also move the Alliance off Mayor Gray’s contingency revenue list and possibly help programs below it on the list to receive funding if revenues exceed current projections.

Homeless Services: Jim Graham (D-Ward 1), chairman of the Committee on Human Services, discussed the funding shortfall in homeless services. Mayor Gray’s proposed FY 2013 reduces homeless services by $7 million due to a loss in federal funding that the mayor chose not to replace with local funds. Graham said the reduction will likely mean closure of some city shelters, even while demand is rising. A Metropolitan Washington Council of Governments study shows homelessness rising six percent in the District, and family homelessness increasing 18 percent in just one year.

Affordable Housing: Various members expressed support for the Housing Production Trust Fund, the city’s main mechanism for maintaining and building affordable housing. Mayor Gray’s budget proposal cuts $20 million from the trust fund and puts it toward another housing program. Funding for the Housing Production Trust Fund is number four on the mayor’s contingency revenue list. Councilmember Michael Brown (I-At-Large), chairman of the Committee on Housing and Workforce Development, discussed his proposal to use additional revenue from the current year, FY 2012, to help replenish funds in the housing production trust fund.

Temporary Assistance for Needy Families: One issue that didn’t get discussed a lot yesterday is TANF, Temporary Assistance for Needy Families. Last week, the DC Council tabled the Temporary Assistance for Needy Families Time Limit Amendment Act of 2012 after receiving a letter from the Mayor giving assurances that the bill is not needed. We appreciate the mayor’s stated interest in protecting TANF families, but are deeply concerned that important protections, such as putting time limits on hold for families fleeing domestic violence, are not in place at this time.  Some 36 states offer time limit exemptions to families in certain circumstances.  We strongly urge the Council to support this bill to put these protections into place and provide time for all parents to access the new improved TANF services.

Under current law, families who have received TANF for more than 60 months will face a 25 percent benefit reduction in October. This follows a 20 percent reduction that these families already experienced in April 2011 and will bring benefits to just $257 per month for a family of three. Because DC does not offer exemptions to the time limit, all families, even those dealing with serious issues such as domestic violence or illness, will face this steep decline in benefits. DC currently exempts these individuals from work activity requirements while families are accessing services to deal with these issues. But DC does not disregard these months from the time limit, meaning that parents who are dealing with the biggest issues receive decreased benefits and have little time to prepare for and train for work once they have addressed these issues.  The bill before the Council would provide reasonable, temporary exemptions that most states have to protect these families. 

 Alcohol Tax: Chairman Brown presented a new proposal. Instead of keeping bars open an extra hour year-round, the Chairman recommended on federal and District holidays, bars can serve alcohol until 4am and serve food 24 hours. In addition, on four holiday weekends–New Year’s, Memorial Day, Labor Day and Independence Day–the extended service hours would apply all weekend long. This would generate $2 million in revenue.

Yesterday, the DC Council met off the dais to discuss the fiscal year (FY) 2013 budget. The discussions were televised, though we were once again disappointed to find out that the room didn’t have seats for the public. Each councilmember reviewed the budget actions in their committee; a copy of the PowerPoint presentation is here.

Here is a quick summary of some of the major discussion topics.

DC HealthCare Alliance: David Catania (I-At-Large), chairman of the Committee on Health, discussed his committee’s actions to fund the cuts Mayor Gray proposed to the District’s public health insurance program. An explanation and rundown of the committee’s recommendations are here. Catania said that he and his staff are in talks with the Office of the Chief Financial Officer to make sure the actions can be approved. DCFPI congratulates the Committee for finding ways to fund this important health care program. If the actions are approved, this will also move the Alliance off Mayor Gray’s contingency revenue list and possibly help programs below it on the list to receive funding if revenues exceed current projections.

Homeless Services: Jim Graham (D-Ward 1), chairman of the Committee on Human Services, discussed the funding shortfall in homeless services. Mayor Gray’s proposed FY 2013 reduces homeless services by $7 million due to a loss in federal funding that the mayor chose not to replace with local funds. Graham said the reduction will likely mean closure of some city shelters, even while demand is rising. A Metropolitan Washington Council of Governments study shows homelessness rising six percent in the District, and family homelessness increasing 18 percent in just one year.

Affordable Housing: Various members expressed support for the Housing Production Trust Fund, the city’s main mechanism for maintaining and building affordable housing. Mayor Gray’s budget proposal cuts $20 million from the trust fund and puts it toward another housing program. Funding for the Housing Production Trust Fund is number four on the mayor’s contingency revenue list. Councilmember Michael Brown (I-At-Large), chairman of the Committee on Housing and Workforce Development, discussed his proposal to use additional revenue from the current year, FY 2012, to help replenish funds in the housing production trust fund.

Temporary Assistance for Needy Families: One issue that didn’t get discussed a lot yesterday is TANF, Temporary Assistance for Needy Families. Last week, the DC Council tabled the Temporary Assistance for Needy Families Time Limit Amendment Act of 2012 after receiving a letter from the Mayor giving assurances that the bill is not needed. We appreciate the mayor’s stated interest in protecting TANF families, but are deeply concerned that important protections, such as putting time limits on hold for families fleeing domestic violence, are not in place at this time.  Some 36 states offer time limit exemptions to families in certain circumstances.  We strongly urge the Council to support this bill to put these protections into place and provide time for all parents to access the new improved TANF services.

Under current law, families who have received TANF for more than 60 months will face a 25 percent benefit reduction in October. This follows a 20 percent reduction that these families already experienced in April 2011 and will bring benefits to just $257 per month for a family of three. Because DC does not offer exemptions to the time limit, all families, even those dealing with serious issues such as domestic violence or illness, will face this steep decline in benefits. DC currently exempts these individuals from work activity requirements while families are accessing services to deal with these issues. But DC does not disregard these months from the time limit, meaning that parents who are dealing with the biggest issues receive decreased benefits and have little time to prepare for and train for work once they have addressed these issues.  The bill before the Council would provide reasonable, temporary exemptions that most states have to protect these families. 

DC budget season is entering the home stretch. Council members are meeting this afternoon to discuss parts of the fiscal year 2013 Budget Request Act and Budget Support Act which will be voted on next Tuesday. DCFPI thanks Chairman Kwame Brown for televising today’s proceedings, but once again, there are no seats for the public in the meeting room. Members have tough decisions to make, but ultimately the choice is between moving our city forward or back to the past. We hope Council members choose to move forward and fund programs that will make our city more healthy and productive. 

Moving our city forward includes restoring the $7 million for homeless services to replace depleted federal funds and smartly putting $6 million toward Local Rent Supplement. This will allow 250 families to move from $100 a night motel rooms to stable housing. An additional $2 million would support 200 permanent supportive homes for homeless residents.  

Mayor Gray’s proposed budget includes a “Revised Revenue Estimate Contingency Priority List”, a list of 25 programs he hopes to fund if the District’s revenue collections grow beyond current projections in fiscal year 2013. It is not a list of frills but instead it would simply help maintain services that are critical to the well-being of the District, including human services programs that have been hard hit in the Great Recession.  

DCFPI urges the DC Council to keep the following items on the priority list as part of the budget: 

Number 1:  $7 million of local dollars to homeless services. If the Council cannot fund homeless services in the budget, it’s critical to keep this at number one. Without this money, shelters might close and both families and singles will be left on the street outside of hypothermia season.  

Number 2:  $14.7 million toward Temporary Assistance for Needy Families. This is critical to implementing a re-designed TANF jobs program and to making sure s parents have sufficient benefits for their children while they access the services they need to find and retain employment.   

Number 4, hopefully moved up to Number 3:  $20 million for the Housing Production Trust Fund. The trust fund is DC’s best way to maintain and build affordable units. The DC HealthCare Alliance is currently at number three, but the Committee on Health found savings within its committee to restore money to the program. DCFPI hopes the Council will move the trust up to number three. The number of affordable units in our city is quickly vanishing. As he did last year, Gray proposes in his budget to take money from the Housing Production Trust Fund to fund the Local Rent Supplement Program. Unfortunately, taking money from one good program to fund another isn’t a winning strategy for keeping our city affordable.

Last week, the DC Council’s Committee on Health took steps to restore one of the deepest reductions in Mayor Gray’s proposed fiscal year (FY) 2013 budget. The mayor has proposed cutting $23 million from DC’s publicly-funded health insurance program by eliminating hospital coverage, but the health committee restored emergency room and other hospital care by recommending saving through other avenues. However the Gray administration is pushing back against some of the savings identified by the committee, such as assumptions of slower caseload growth in key health programs. 

DCFPI believes that the committee’s actions should be carefully reviewed to make sure the savings are legitimate, and we hope these adjustments will stand up to scrutiny so an important health benefit for the 23,000 residents in the DC HealthCare Alliance (Alliance) can be maintained. 

The Alliance is DC’s locally-funded health program for uninsured residents who are not eligible for Medicaid, Medicare, or other public insurance programs. Because many DC residents became eligible for Medicaid as a result of federal health reform, the Alliance now primarily serves undocumented immigrants.  

Mayor Gray’s proposed FY 2013 budget would eliminate hospital-based services for Alliance participants, including both in-patient and out-patient services. The mayor has argued the cut eliminates a “double-payment” because many hospitals receive a lump sum from the city — known as “disproportionate share hospital” or DSH payments — to address the uncompensated care they provide, while also getting reimbursed for care to Alliance participants.  

Yet DCFPI and others have noted that eliminating hospital coverage will likely mean that many Alliance members will not be able to get needed care, and those that do are likely to be billed by hospitals, creating serious debt and credit problems for this vulnerable population. 

The Committee on Health, led by At-Large Councilmember David Catania, shares these concerns and worked to identify savings that could be used to maintain the Alliance’s hospitalization coverage. The list of savings includes: 

• $7 million in Medicaid managed care due to an adjustment in projected participant enrollment;
• $3 million from increased Medicaid pharmacy rebates;
• $2.4 million by maintaining current year enrollment levels for some community-based services, including the EPD and ID/DD waiver programs;
• $2 million in Alliance managed care due to an adjustment in projected participant enrollment;
• $1.8 million through lower projected cost settlement expenditures;
• $1.5 million due to higher use of the non-emergency transportation benefit;
• $1.4 million in additional revenue certified by the Chief Financial Officer in dedicated taxes;
• $1 million by keeping the Medicaid growth rate comparable to the current fiscal year;
• $252,000 from the Department of Health Care Finance from vacant positions; and
• $103,000 from the Deputy Mayor for Health and Human Services due to the elimination of one full-time position. 

DC’s Chief Financial Officer (CFO) would have to sign off on these changed assumptions before the savings can be certified and used to restore the Alliance cut. Since the health committee’s actions last week, committee staff has been meeting with the Gray administration and the CFO to go over the proposed savings. The Gray Administration has expressed concern about lowering some growth rate and participant enrollment assumptions, noting that the city could face fiscal problems if the projections prove to be too low. 

DCFPI agrees that projected health care costs should be based on best possible information. The Committee on Health has provided information to demonstrate why it believes the assumptions built into the proposed FY 2013 budget. We are hopeful that a careful review of the committee’s actions will show that many of the identified savings are realistic, so that funds can be used to maintain hospital coverage for the 23,000 DC residents who are only able to get health care coverage from the Alliance.

A new report out today from DCFPI shows that the District’s supply of affordable housing is rapidly disappearing. Sharp increases in rents have led to a 50 percent decline in low-cost rental units, those with rent and utility costs of less than $750 a month. At the same time, a sharp rise in home values have led to DC to lose more than 70 percent of its low-cost homes valued at $250,000 or less.  

But while housing costs are rising quickly in the District, the incomes of DC households are not keeping pace. In fact, incomes for the bottom 40 percent of DC households have remained stagnant over the last decade. 

One consequence is more DC households are now paying more than half of their income on rent, including three-fifths of DC’s lowest-income families.  When housing consumes so much of a family’s income, there is little left over to pay for other basic necessities like food, clothing and transportation.  

The impact is not just on low-income households, however. A growing number of moderate income households face severe housing burdens today than they did at the start of the decade. In fact, just over six percent of households that earned between 30 and 50 percent of area median income — about $31,000 to $51,000 for a family of four — paid more than half of their income on housing in 2000. By 2010, that number had risen to 31 percent.       

The change in the District’s housing market means that more and more low- and moderate-income families will face challenges staying in — or moving to — the District. Since the private market produces very little affordable housing on its own, it is critical that the District support the creation and preservation of affordable housing.  

The District has a variety of tools that can help address the affordable housing needs of low- and moderate-income residents, but the Great Recession really put the brakes on most local programs. Most programs have simply been maintained at their prior-year levels, meaning that there has been no progress against the dwindling supply of affordable housing in the private market.  And there have been significant reduction in DC’s Housing Production Trust Fund— the main source for affordable housing production and preservation.  Resources to the trust fund fell quickly in the recession and have faced significant cuts in both the fiscal year 2012 budget and the current fiscal year 2013 budget being debated by the DC Council. 

Mayor Gray has included restorations to the trust fund and other housing programs on his priority revenue list. DCFPI encourages the Mayor and Council to find a way to begin reinvesting in the programs DC has that can build, preserve and ultimately help the District stem the tremendous loss of affordable housing in DC. 

The DC Council faces some tough choices as it considers the fiscal year (FY) 2013 budget. Mayor Gray’s proposal adds funding in some areas, but also makes cuts that have real-life and real-fiscal consequences. 

Take homeless services. The number of residents in homeless families in DC is skyrocketing—up 75 percent since 2008—but the District’s shelter system is already over capacity. So what to do? We can put our heads in the sand but that comes with a high price tag. Right now, DC is spending $3,000 a month to put some kids and parents in need of shelter in motel rooms. When winter comes, and the District is under legal obligation to find shelter for families when temperatures dip below 32 degrees—the city will be spending a lot more. 

That is money down the drain – resources going for poor-quality services that meet needs in a short-sighted way.   

Or we can decide to work toward long-term solutions that will move families toward stability and the city as well. In homeless services, that means helping kids and parents move into apartments that are both better living environments than hotels and cheaper. We think of it as budgeting for a better future. DCFPI urges the DC Council to put our money toward a better future and preserve the top items on Mayor Gray’s revenue contingency priority list.

The options and the impacts:

Affordable housing was the top issue of concern for residents who attended Mayor Gray’s One City Summit a few months ago, so it is a bit surprising that for two years in a row Mayor Gray has cut funding in this critical area. As he did last year, Gray’s proposed budget for fiscal year 2013 would take  money from the Housing Production Trust Fund—DC’s main mechanism for maintaining and building affordable units—to fund the Local Rent Supplement Program. Unfortunately, taking money from one good program to fund another isn’t a winning strategy for keeping our city affordable. DCFPI urges Mayor Gray and the DC Council to keep the resources dedicated to Trust Fund intact and also fund the rent supplement program. 

What exactly does the local rent supplement program do? It provides monthly rental subsidies to families with incomes below 30 percent of area median income, or less than $32,250 for a family of four.  In a high cost-of-living area like DC, rental subsidies are a useful tool to help bridge the gap between housing costs and a low-income family’s meager budget.  The Local Rent Supplement program was created in 2007, after the District’s Comprehensive Housing Strategy Task Force recommended the creation of 14,600 locally-funded rental subsidies over 15 years to help low-income DC residents who can’t afford market rents. It  is administered by the DC Housing Authority, and rental subsidies are provided in three  ways: 

• Tenant-based vouchers. These families or individuals can use the voucher for any rental unit under fair market rent in the District.  The voucher stays with the family, even if they decide to move.
• Project-based vouchers. These  are provided to  for-profit and  non-profit developers for specific apartments they  make available to a low-income family.  Unlike tenant-based vouchers, these vouchers stay with the unit and are not portable.  Although not required, many project-based vouchers are awarded to developments that also provide supportive services, such as counseling. 
• Sponsor-based vouchers. These are awarded to a landlord or non-profit for affordable units they make available to low-income families.  Unlike project-based vouchers, these vouchers can be moved to another unit run by the non-profit or the landlord.  (These vouchers are only awarded to groups that agree to provide supportive services to residents.)  

Since its creation, local rent supplement has made over 1,700 units affordable for very low-income families across the District.  However, since fiscal year 2008 the program has not received an increase and funds in recent years have not been sufficient to expand the number of units. This has left the District well behind its goal of creating nearly 15,000 rental subsidies in 15 years. Additionally, Mayor Gray’s proposed budget for next year would phase out tenant-based vouchers. This would further inhibit the program’s ability to meet the Comprehensive Housing Strategy Task Force goal, and should not be passed. 

Local rent supplement is distinct from the Housing Production Trust Fund, but also works in conjunction with it. While the trust fund helps build or renovate  housing, local rent supplement provides the operating subsidy that is often needed to make homes affordable to very low-income residents.   

Since the trust fund and local rent supplement serve different purposes—both of which are important— DCFPI encourages the mayor and council to find a way to fully fund the local rent supplement with local funds, and allow the taxes that are dedicated to the Housing Production Trust Fund to provide a steady flow of funds for affordable housing construction and renovation.

Yesterday, dozens of homeless families came to the John A. Wilson Building to take part in the budget process. They asked the DC Council to restore money for homeless services that was cut in Mayor Gray’s proposed budget for next year. Their argument was simple:  There are more and more kids and parents in our city who have no place to sleep, and without a safe place to rest, our civic ambitions of improving education, getting jobs, and making DC a better city in the future simply can’t happen.

Numbers tell a big part of the story:  Since 2008, family homelessness has increased by 75 percent. According to the city’s Department of Human Services, 3,187 DC residents in families with children have no home right now. That is up from 2,688 in 2011.  This is the fourth year of significant increases. 

Demand is up, but our supply of housing and available resources is going down.  Mayor Gray’s proposed budget has a $7 million gap in funding for homeless services, due to federal funds that will not be available in fiscal year 2013.  These funds are needed simply to maintain the status quo from this past year and won’t allow the family shelters to remain open year-round. It is in our best interest—both fiscally and as a city—to fund homeless services.

As a city, we can choose to tackle this difficult issue or we can wish that the problem will go away and these families will just find a place to stay. In the end, it’s sort of counterintuitive, but “the hope the problem goes away” approach is the more expensive option. Here’s why. The District does not have a legal obligation to house families in warm weather, but when it is hypothermia season—when the temperature dips below 32 degrees—the city is required under law to house families. Last winter, hundreds of families came to the city in need of shelter. DHS expanded capacity at its DC General shelter, bringing total capacity up to 273 families.  Yet, that was not enough. The District ended up placing 200 more families in motel rooms on New York Avenue NE, at a cost of roughly $3,000 a month per family.

You read right—$3,000 a month. That’s why the dozens of homeless families at the Wilson Building yesterday asked the DC Council to put money toward housing. It is the city’s less expensive and better option to move these kids and parents toward stability. As we look to next year, the problem is likely to be worse.  Ten to 12 families request shelter each week, but DC will not shelter any newly homeless families until hypothermia season. It is likely that once the shelter opens to new families, the need will again overwhelm existing capacity.  DCFPI estimates that if the need for shelter matches that of fiscal year 2012, DHS will need to house up to 296 families per night in motels, at a total cost of nearly $7.5 million.

DC needs a plan to move families out of the shelter and motels and into stable living arrangements.  This will free up space to meet emergency need throughout the year and prevent our reliance on expensive motel rooms that do not meet the needs of families.  We can improve the lives of these families and the city’s pocketbook by making a strategic investment in homeless services. We ask Mayor Gray and the DC Council to fully fund homeless services and move these families and our city forward.

Tomorrow, the DC Council is expected to consider two significant bills: the Temporary Assistance for Needy Families Time Limit Amendment Act of 2012 and a new proposed supplemental budget for the current fiscal year. DCFPI strongly supports the TANF bill as a positive step to incentivize work while protecting our most vulnerable families. On the supplemental, DCFPI continues to push for a two-for-two: Two days repayment for the furlough days DC employees took last year and the rest toward the Housing Production Trust Fund.

The TANF bill does several important things. Current law sets a 60 month TANF time limit with current families receiving no benefits after October 2014. This bill ends benefits after October 2013, one year earlier, sending a powerful message that the District expects TANF parents to be preparing for and moving to employment.

Yet it also gives parents time to access improved TANF employment services by delaying for one year a planned benefit reduction currently scheduled for October 2012. DC has begun implementing improved, targeted employment services for TANF parents. Rather than the “one-size fits all” of DC’s TANF services up to this point, the new TANF program uses a one-on-one assessment to identify employment prospects and then provide a set of services tailored to these needs. A pilot showed promising results with parents increasing work participation ten-fold.  But most families will not be assessed or referred to services before they face the October benefit cut.  Those that have been referred have had little time to participate as vendors just stared accepting clients March 1^st.  This bill will give them the needed time to access these services. 

The bill also provides reasonable exemptions to vulnerable families, as do most states, to allow them the time to deal with serious issues that interfere with their ability to work such as domestic violence, illness, or caring for a family member with a disability.  DC currently exempts these individuals from work activity requirements during affected months with the understanding that they are accessing services to deal with these issues.  But DC does not disregard these months from the time limit, meaning that parents who are dealing with the biggest issues may have little time remaining to prepare for and train for work once they have addressed these issues.

On the supplemental budget, Mayor Gray has made several changes from an earlier version he submitted to the Council. The amount of money needed to pay back DC employees for furlough days has increased by approximately $2.5 million, to $22.4 million. DCFPI continues to push for a two-for-two, win-win: The Council should repay DC workers for two days and then help DC workers down the road by putting the rest of the money toward the Housing Production Trust Fund. This would restore about half of the resources cut this year from the trust fund, DC’s main mechanism to finance affordable housing.

Another big change is Mayor Gray’s inclusion of funding to delay plans to eliminate the tax break for out of state bonds–a tax break that no other state offers–for a year. Last year, DC joined all 50 states in not giving a blanket tax break to residents who invest in out of state bonds. The Council should hold firm in the good decision they made last year.

A reminder to District Dime readers that the DCFPI FY 2013 toolkit is live! New additions include specialized toolkits on housing and workforce development. TANF, homeless services and energy assistance are soon to come!

Highlights from the housing toolkit:

• The Mayor’s fiscal year 2013 proposed local budget for affordable housing is $89 million, which represents a decrease of one percent over the FY 2012 budget, after adjusting for inflation.  The proposed 2013 funding level is one-third lower than in 2008.
• Most programs would be funded at their prior year levels.  The exceptions are the Housing Production Trust Fund which would see a significant cut for the second year in a row, and the Department of Mental Health’s Home First program which would see a modest increase.
• The Mayor’s FY 2013 proposes a cut of $20 million from DC’s Housing Production Trust Fund (HPTF) — DC’s main source for affordable housing construction and renovation — in FY 2013 and future years.
• The budget would increase the Department of Mental Health’s Home First program by $1.2 million, providing 100 additional affordable housing units.
• The budget also proposes to start phasing out of a portion of the Local Rent Supplement Program.  LRSP is DC’s main tool to make housing affordable to very low-income residents. The FY 2013 budget would change the program so that as families leave the tenant-based side, no new families can join.

Highlights from the Workforce Development toolkit:

• Maintains overall spending on workforce development despite a decrease in federal grants. The proposed FY 2013 gross budget — $57.5 million in combined local and federal funds — is three percent higher than the approved FY 2012 budget after adjusting for inflation. The increase is primarily due to a replacement of local dollars for declining federal Workforce Investment Act funds and a $2 million federal payment.
• Mayor Gray’s proposed budget would increase local funding for adult workforce development. The FY 2013 budget replaces lost federal funds for DC Works! One-Stop career centers with $4 million in local funding. It would also boost local spending on employer services.
• The FY 2013 proposed budget continues a five-year reduction in local spending on youth workforce programs, primarily due to a major scaling back of the Summer Youth Employment Program.
• The proposed budget includes $500,000 for the Workforce Investment Council. The Council, whose members are appointed by the Mayor and come from both the public and private sectors, has oversight over federal Workforce Investment Act funds.

Last year, 33,000 District residents received life-saving services, including legal assistance and a place to live, from non-profits who receive funding from the District’s Office of Victim Services. Yet under Mayor Gray’s proposed fiscal year (FY) 2013 budget, these critical services would be drastically reduced.

According to budget documents, the Office of Victim Services—which is now part of the Deputy Mayor for Public Safety—would see a $1.2 million reduction next year. However, in a DC Council budget hearing last week, city officials revealed that actually $2.1 million  would be needed to maintain current services for next year. Mayor Gray has put the program on his “contingent revenue wish list,” a list of services that will get funded if revenues rise above expected projections.  It is  fifth on the list of 25 items and would need $67.3 million in additional citywide revenue growth in order to get funded. But wishing isn’t going to help the thousands of women, men, and children who are in danger due to domestic violence and abuse.

This is not the first year that victim services money has been cut.  Seven programs previously funded by this office had funding completely eliminated in FY 2012. In addition, all of the city’s domestic violence shelters had their funding cut by 10 percent this year. How could this happen? The Office of Victim Services receives federal and local funding and has two special purpose revenue funds: the Victim Assistance Fund and the Shelter Fund.  Each year, half of the surplus  from a crime victims compensation program is transferred to the victim assistance fund, but the transfer doesn’t occur until after the DC Council votes on the budget. That means the victim services office has to make spending decisions based on what they predict the transfer will be. Unfortunately, victim services spent more money than was actually transferred this year in order to maintain services, revealing a gaping hole that now must be plugged.  Beyond that,  funds from  the Crime Victims Compensation Fund  were never intended to be a permanent funding stream for the city’s victim services.

The Shelter Fund was intended to serve as emergency funding for the District’s three domestic violence shelters. Only  $1.4 million remains, after spending down the fund over the past two years. If depleted, the Shelter Fund can no longer secure domestic violence housing and will place housing programs in jeopardy.  

The combination of the problems in the Shelter Fund, the hole from the victim assistance fund, and a slight gap  in federal funding  results in  $2.1 gap in the budget.  This amount is needed simply maintain the current status quo, which as noted includes significant cuts from recent years. Without more money appropriated to the Office of Victim Services, the agency will have no choice but to cut funding to more non-profits, and the domestic violence shelters will be forced to decrease capacity. This will force victims of domestic violence to choose between safety for themselves and their children or homelessness. There are choices none of us should be forced to make. Victim service agencies have repeatedly been asked to do more with less, and it is imperative for the District to step up and provide $2.1 million to prevent drastic service cuts for victims of domestic violence and other crimes, and keep $2.6 million at minimum on the wish list to restore the cuts in fiscal years 2011 and 2012.

For more information, please contact Lindsey Bartlett of the DC Coalition Against Domestic Violence, lbartlett@dccadv.org.

Another addition has been made to the DCFPI FY 2013 Budget Toolkit: Interim Disability Assistance.

Highlights from the toolkit:

• Mayor Gray’s proposed budget maintains funding for IDA at $2.4 million in FY 2013. The funding levels in these two years are the LOWEST since IDA was established in 2002.
• The proposed amount means that the average monthly caseload for the IDA program will hold at 750 cases per month. This is far lower than in 2009, when nearly 2,800 residents with disabilities received IDA benefits.

A reminder to District Dime readers that the DCFPI FY 2013 Budget Toolkit is live! Today we added two parts that dig deep into Mayor Gray’s proposed revenue initiatives and the education budget.

A snapshot from the revenue toolkit:

• The proposed FY 2013 budget includes $90 million in additional revenues. Gray’s proposal largely does not raise taxes on residents or businesses, with most of the new revenues coming from improved collection and compliance efforts.
• The revenue increases include $36 million from enhanced efforts to ensure compliance with existing taxes, fees, and fines. Another $31 million would come from expansion of automated traffic enforcement. The budget would generate five million dollars by extending hours of alcohol sales
• The budget would raise $12 million by limited required inflation adjustments in three tax benefits: the standard deduction and personal exemption in the income tax and the homestead deduction in the property tax.
• The proposed budget includes two tax cuts that would go into effect if revenues rise above expected levels. This includes restoring a tax break for interest on out-of-state municipal bonds and reducing the commercial property tax rate.

A snapshot from the education toolkit:

• The proposed FY 2013 budget increases base per-pupil funding by two percent for both DC public schools and DC public charter schools.
• Projects a four percent enrollment increase in DCPS (when comparing audited figures with projectsions) and a six percent increase in charter schools
• Includes a $5.7 million funding cut for child care, which is apparently incorrect. According to OSSE, federal funding for child care is flat-funded, but $1 million more in local funding will be specifically used towards 75 infant toddler slots.  Both after school and summer school programs will see a funding cut in FY 2013
• Will cause many individual DC public schools to stretch dollars to meet needs of a growing student body and a larger special education population. The costs of core school expenses, including teacher compensation, will rise faster than the two percent per-pupil funding increase. As a result, some smaller schools may lose librarians, and class sizes may increase at middle schools and high schools.

DCFPI’s annual Budget Toolkit hits the interwebs today! We hope the Toolkit can help you dig down deep into Mayor Gray’s proposed budget for fiscal year 2013, which he released on March 23rd. The DC Council will have its first vote May 15^th, giving you a little under a month to analyze, ask questions and advocate!

There are several parts of the toolkit this year. Available today is the budget overview, which highlights the major changes the mayor proposed. The overview discusses how Gray balanced the budget, going through the major cuts as well as his proposed revenue initiatives. Toward the end of the paper is an addendum, which gives a more comprehensive view of each appropriation title. The addendum also goes through Gray’s proposed revenue contingency list, the 25-item list of programs and services he proposes to fund if revenue ends up higher than expected.

Want to delve deeper into the revenue initiatives or the housing budget? DCFPI will be rolling out subject-specific toolkit pieces all week. Tomorrow morning, we will put a spotlight on all the revenue pieces in Gray’s budget.

Want to analyze the numbers on your own? Then take a look at the budget spreadsheet. This is a comprehensive accounting of the city’s budget over the years. There are several tabs within the spreadsheet, which you can find if you look toward the bottom of the screen. DCFPI’s budget analysis adjusts for inflation, but we have a separate tab for the raw numbers too. A guide is in the spreadsheet, including notes on where we made budget shifts to make apples to apples comparisons between years and how—and what numbers we used—to adjust for inflation.

The toolkit also is a central spot for other important budget materials. You can find quick links to the mayor’s budget, questions and answers from DC Council hearings, and revenue forecasts.

DCFPI will be highlighting new pieces that will get added to our toolkit all week! Let us know if you have questions!

To be or not to be a budget cut—that is the question, and it has been a big question about the child care subsidy program within the Office of the State Superintendent for Education (OSSE). The program provides child care to about 21,000 DC kids, including infants and toddlers and older children up to age 13. OSSE says a reduction of $5.7 million in that program that appears in the budget for next year is not actually a cut and that in fact there will be the same slots available. The explanation is very confusing and certainly makes the case for why we need better transparency in DC’s budget.

 It’s not obvious to a general reader of Mayor Gray’s proposed budget for next year that child care is “flat-funded” as OSSE claims. When you look at the change from the current fiscal year to next year, it seems federal funding for child care subsidies would be reduced by $5.7 million, from $80.1 million approved in fiscal year 2012 to $74.4 million in fiscal year 2013. In the meantime, OSSE recently announced that local funding for infant and toddler child care slots would increase by $1 million in FY 2013. So how can we go from a $5.7 million decline to a $1 million increase?

 According to officials with OSSE, a number of things happened to create this confusion. First, the agency budgeted $2.4 million more federal dollars than ended up being available this current fiscal year. That was somewhat offset by a $1.4 million rollover from a fiscal year 2011 grant that was not accounted for in the fiscal year 2012 budget. Then, according to OSSE, another $2.2 million was recorded in the fiscal year 2012 when it should have gone into fiscal year 2013. One thing is clear: It certainly is confusing, and that makes it difficult for parents, providers and elected officials—as well as education budget analysts such as DCFPI—to understand this important program’s budget.

It should not be this hard to know how much money and slots are available for child care in fiscal year 2013. The agency has promised to put out an official statement explaining the true child care funding numbers, and we hope that statement will come soon.

The Shakespearian dilemma of the child care line item shows that the DC budget has a long way to go to be transparent, clear and understandable to residents who want to know what services they receive and how policy makers are setting budget priorities. For working parents of any income level, access to quality child care is critical. But this funding is especially important for low and moderate income working parents, who need this help to put their child in a safe environment while they work and earn money for their families. With such uncertainty around the important issue of child care, it is in the best interest of the District if OSSE provides an explanation about what funding is proposed as soon as possible.

It’s the DC government version of a tree falling in the forest: If a meeting is said to be open to the public, but there is no space for the public, is it truly an open meeting? That was precisely the question raised last week, when Mayor Gray briefed the DC Council on his fiscal year 2012 supplemental budget. For members of the public, trying to watch the meeting was like playing a game of musical chairs, because the public was only allowed one out of 32 seats in the room.

We hope Mayor Gray and the DC Council will change this practice so that DC residents can fully witness critical meetings in which public policy decisions are being shaped, meeting both the letter and spirit of our public meetings law.

Here’s what happened last week when the Mayor and Council met to discuss plans for the $79 million in higher than expected revenue for fiscal year 2012 and Gray’s proposal to spend it. Once the Mayor, his staff, the 12 DC council members, and their respective staffs assembled, it was standing room only in Room 502, the Chairman’s conference room. Members of the public who showed up long in advance of the meeting to snag a seat were told that space needed to be saved for staff and the press. Ultimately, after much effort, a spot was made for one member of the public—and everyone else was told they needed to be outside the door. There was no attempt to televise or broadcast the proceedings to those outside government who came to witness the proceedings.

That’s certainly not in the spirit of our open meetings law, which was updated in 2010 in order to ensure that the public could attend the meetings of government bodies. After some controversy over whether or not the DC Council attempted to exempt itself from some of the requirements of the law, the Council assured the public that its own rules would be in keeping with the spirit of the open-meetings law.

Some councilmembers say they prefer to hold these discussions off the dais and in a room where they face each other and can speak less formally. But that means the public seems to get left out.

One easy solution would be to move these budget briefings to a bigger room…

…Such as Room 412 for example…

…Or how about Room 123…

If neither of those strikes your fancy, it’s just a short walk over to Room 120…

There are several advantages to these rooms. First, they have ample room for elected officials, staff, and the public. Plus, they are equipped with television cameras, so the meetings can be televised and recorded. This practice should be extended to any official meetings where budget-related issues are discussed. The open-meetings law is intended to enable the public to listen in on these critical deliberations. Televising these meetings will enable the Council to fully comply with the spirit of the law, while leaving more than enough elbow room for councilmembers and their staffs.

This is an issue that will do doubt come up again next month when the Council holds its pre-budget vote deliberation on the fiscal year 2013 budget. We urge our elected officials to make sure these meetings meet the letter and spirit of our law—and allow the public to fully participate.

District Dime readers, it’s already been a busy Tuesday. We want to update you on Mayor Gray’s proposed fiscal year 2012 supplemental budget, and let you know about upcoming important budget hearings.

Mayor Gray’s Fiscal Year 2012 Proposed Supplemental Budget
This morning, Mayor Gray delivered a new fiscal year 2012 supplemental proposal to the DC Council. The Council already was scheduled to vote on an earlier version of the supplemental budget legislation today. Gray’s replacement made several changes, including using $1.1 million to delay for one year legislation that eliminated a tax break for out-of-state bonds.

In the end, the Council passed a slimmed down supplemental budget that only funded two items—$7 million for DC public charter schools and $8 million for Unemployment Compensation, both of which Chief Financial Officer Natwar Gandhi advised needed to be done quickly so the District was not in violation of law. The Council did not restore the out-of-state bonds tax break, but it still worth discussing why bringing back this tax exemption even for one year is problematic.

Last year, DC ended its status as one of the last holdouts to offer a tax break to residents who invest in state and municipal projects out of state.  DC and the other holdout, Indiana, eliminated the tax break for new investments while allowing current investors in these bonds to keep  the tax exemption. Right now, no state offers a blanket tax break to residents who buy out-of-state bonds. Gray’s supplemental proposal would have delayed the bond tax break by one year and leave us as the only state to offer such a benefit.

DCFPI urges the DC Council to keep its plan to eliminate the tax break for all new investments this year  and not use these additional dollars to become the lone outlier among states.

The Council declined to act at this time on several of Gray’s funding proposals, although it may revisit some of them later this year.  Perhaps most notable, the mayor had proposed using  $19.9 million of the fiscal year 2012 additional revenue to repay DC government employees for four furlough days in fiscal year 2011. Today there was a question whether the cost of repayment includes DC employees whose jobs are funded with federal dollars, so the cost may be higher.  As we noted yesterday, DCFPI continues to urge the mayor and council to use part of the $240 million fiscal year 2011 surplus money to pay for the fiscal year 2011 furloughs, which would free up fiscal year 2012 revenues for other purposes.  If the furloughs ultimately are repaid, with fiscal year 2102 funds, DCFPI supports a compromise that’s been discussed among some members to repay two furlough days and put the other money toward other critical needs that move the District forward, like financing affordable housing construction.

Another proposal in the mayor’s supplemental that was not funded by the Council would have added  $2 million to workforce training in the Office of the State Superintendent for Education’s budget. It was unclear from Gray’s transmittal letter accompanying his budget legislation what the monies would go toward.

Important Budget Hearings
Both education and human services have budget hearings this week. Check out the details below.

Deputy Mayor for Education
District of Columbia Public Charter School Board
Office of the State Superintendent of Education
District of Columbia Public Schools (Government Witnesses Only)
Wednesday, April 18, 2012, 10:00am
John A. Wilson Building Room 500

Department of Human Services
Thursday, April 19, 2012, 11:00 AM
John A. Wilson Building Room 123

Tomorrow the DC Council will take a very important vote on the budget. Not next year’s budget—the Council is still considering Mayor Gray’s fiscal year 2013 proposal and will take a first vote on that May 15th—but the current year’s budget. As District Dime readers know, DC’s revenue projections for the current year have grown $79 million since last fall, and Mayor Gray has submitted a supplemental budget to use that money now.

DCFPI urges the Council to tweak Gray’s proposal and pass an alternative supplemental proposal that could be a win-win for DC: Repaying DC government employees for two of the furlough days from last year  — rather than repaying all four furlough days as the mayor has proposed— and putting the remaining FY 2012 dollars toward a fund that helps keep housing affordable in DC, the Housing Production Trust Fund.

Mayor Gray is quite aware that affordable housing is a dire need for our city; indeed, affordable housing ranked as the number one concern among residents who attended the mayor’s One City Summit in February. It’s also true that District workers went without pay for four days in 2011 to help close a projected gap in that year’s budget. That gap actually turned into a surplus when auditors closed the books on fiscal year 2011. That’s why DCFPI argued that if Mayor Gray wanted to repay DC employees, he should do so with the 2011 surplus, the year in which the furloughs were taken.  We still support that approach, although it seems unlikely at this point to have enough support to pass.

It’s likely that another proposal, a compromise of sorts, will be presented tomorrow and DCFPI supports this as good public policy that will help move our city forward. The amendment would repay DC workers for two days of the furlough and put the rest of the money toward critical needs, most particularly the Housing Production Trust Fund. Since both DC workers and the trust fund took big cuts to make the fiscal year 2011 budget balance, it’s appropriate to use this additional money in FY 2012 to both give a boost to our public employees and to our stock of what seems like an ever-shrinking supply of reasonably priced housing in the city.

Just exactly how much money that would amount to is a bit in question. Late last week, District Chief Financial Officer Natwar Gandhi reduced by $2.4 million the current spending pressure on DC public charter schools.

Several councilmembers have expressed the desire to make funding decisions that build toward a better future for DC and its residents. Approving a supplemental that helps keep the District affordable to low-and moderate income residents—such as hard-working DC government employees—would do exactly that. DCFPI hopes the Council will pass a supplemental budget that includes money for the Housing Production Trust Fund tomorrow.

In certain parts of DC, building cranes crowd the skyline so much that a public official recently commented that the towering structures have become the District’s unofficial mascot. So just how much is the city spending on economic development? Answers can be found in the newly issued Unified Economic Development Budget (UEDB) report for Fiscal Year (FY) 2011, which was released to the public last week by the Office of the Chief Financial Officer (OCFO).  Sure, the UEDB won’t challenge The Hunger Games for favorite bedtime reading, but if you are interested in how the city leverages its resources for economic development, it’s a page-turner. 

The report identifies all economic development incentives over $75,000 given by the District in FY 2011, including tax increment financing (TIF), payments in lieu of taxes (PILOTs), tax credits, tax abatements, and expenditures on contracts and grants, among other finance tools. While the methodology remained the same from last year’s report, the presentation of this year’s report is improved and more reader-friendly with enhanced graphics and explanations. 

What are some of the highlights? According to the report, in FY 2011 the District spent $278 million on economic development-related programs. This is a 15 percent decrease from FY 2010, which totaled $327 million. The biggest factor in this drop was a sharp decrease in expenditures on contracts by the Deputy Mayor for Planning and Economic Development. These contracts include spending on activities such as construction, planning and asset management services provided by third parties. Additionally, property tax abatements and exemptions that were approved in previous years by the DC Council cost the District $28 million in FY 2011. 

Another notable fact is that the issuance of new property tax abatements and exemptions slowed dramatically in FY 2011, according to the report. In FY 2010, for example, the DC Council passed new abatements and exemptions estimated to cost the District $166 million in forgone property tax revenue. Yet in FY 2011, the Council approved abatements and exemptions worth an estimated $62 million in future revenue. Some of the slowdown might be attributed to increased scrutiny over the cost of property tax abatements triggered by the Exemptions and Abatements Information Requirements Act. The act, passed in 2011, requires more financial information about projects that are seeking abatements and exemptions. 

Once again, the report compares economic development spending by ward. According to the report, in FY 2011 Wards 2 and 6 received a combined $152 million in economic development incentives, well over half of what the District spent citywide. This figure includes the $33.5 million to pay off bonds on the convention center headquarters hotel in Ward 2 and $31 million spent to pay bonds on Nats Park in Ward 6. But even if those figures are removed, the report still indicates that over a third of economic development dollars spent by the District in FY 2011 went to Wards 2 and 6. 

So if you’re attending Opening Day at Nats Park today, and wondering how those cranes in Ward 6 relate to city spending and investment, check out the UEDB. And speaking of unofficial mascots, we’re rooting for Teddy to win (at least once) this year!

Want to learn more about how Mayor Gray’s proposed budget impacts specific agencies and programs?

Attend these upcoming agency briefings: 

We all make wishes. Sometimes we wish for something magical, like the Redskins winning the Super Bowl. Sometimes we just wish for things to work out, like hoping an unemployed friend gets that job. For next year’s DC budget, Mayor Gray has made a wish of his own, a list of 25 programs he hopes to fund if the District’s revenue collections grow beyond current projections in Fiscal Year 2013. DCFPI hopes the DC Council keeps the list as part of the budget, with a few tweaks. 

It is decidedly not a list of luxury items. Instead, the mayor’s wish list would restore services  that are on the chopping block this year or have been in recent years, including programs in health care, affordable housing, domestic violence services, and library collections. It also would provide more money for important reforms, such as boosting the employment services part of DC’s welfare-to-work program. 

The wish list is contained in the Fiscal Year 2013 Budget Support Act, under the title, “Revised Revenue Estimate Contingency Priority List.” The list has 25 items that add up to $120 million. (See the full list below.) DC Fiscal Policy Institute does not love every item on the list, but overall, we believe it reflects important priorities. Here’s what the revenue priority list would do, if improved tax collections move the list from wishes to reality: 

Restore Cuts to Important Programs. The proposed FY 2013 budget includes cuts to homeless services, even as the District struggles with a surge in homelessness among families with children. The budget also includes a deep cut to the city’s locally-funded health insurance program, DC HealthCare Alliance, and a 50 percent cut to the city’s best way to finance affordable housing construction—the Housing Production Trust Fund. The wish list would restore these and other cuts, including domestic violence services. 

• Support Critical Initiatives. The revenue priority list would provide resources for a major re-design of the city’s TANF (Temporary Assistance for Needy Families) program for families with children. The new program aims to better identify the employment needs of parents and provide better training services, but its rollout will be slowed without additional funds. The revenue priority list also would add funding for early identification of learning delays among young children, DC’s growing community college, and school-based mental health staff, and several other key programs.

The mayor’s list is not perfect. Item number six would restore a tax break for interest earned on out-of-state municipal bonds. DC just eliminated this tax break last year, with significant protections for current bondholders. If the tax break comes back, DC will be the only jurisdiction with a blanket tax break for investing in another state’s infrastructure. There is no reason to put this on the list, let alone ahead of things identifying children with developmental delays.  

The revenue priority list does not include frills. For the most part, it would not create new programs or services. It would simply help maintain services that are critical to the well-being of the District, including human services programs that have been hard hit in the Great Recession. 

That’s something we all can wish for.   

The “Revised Revenue Estimate Contingency Priority List”

1. $7 million for Homeless Services to replace loss of federal funding
2. $14.7 million for the Temporary Assistance for Needy Families (TANF) Employment Program
3. $23 million  to restore the  Healthcare Alliance
4. $20 million to restore the Housing Production Trust Fund
5. $2.6 million to restore for Victim Services
6. $1.1 million to repeal tax on out-of-state bonds
7. $8.6 million to Office of State Superintendent for infant and toddler services
8. $5 million for OSSE special education
9. $1.6 to Department of Human Services to cover loss of federal Family Services Block Grant
10. $2.9 million to Housing Production Assistance Program
11. $1.9 million for school-based mental health initiatives
12. $10 million for  business property tax relief
13. $2.4 million for contractually mandated increases in homeless services
14. $6.5 million for the Community College of the District of Columbia
15. $3.0 million  for the University of the District of Columbia
16. $1.4 million to restore the small business technical assistance program
17. $1.5 million for the Ward 8 Pilot Budget Challenge
18. $1 million to restore library acquisitions
19. $300,000 for the Department of Corrections’ Career Ladder promotions
20. $540,000 to expand the Fire Cadet program
21. $1 million for the Sustainable DC pilot
22. $3 million for the commission on Arts and Humanities
23. $77,000 for the Office of Aging, Senior Villages Coordinator
24. $1 million for Destination DC/Events DC advertising and marketing
25. $320,000 to restore the Capital City Fellows program

District Dime readers certainly know that next year’s budget process is in full swing, but do you also know that Mayor Gray and the DC Council right now are considering significant changes to the budget for the current fiscal year? At the end of last month, Mayor Gray sent what is called a “supplemental budget” for Fiscal Year 2012 to the DC Council because the District ended up with nearly $80 million more in its coffers for the current year. Much like the full-year budget proposals, Mayor Gray’s FY 2012 supplemental proposal should be thoroughly vetted by the Council to make sure that we are using our resources most effectively and leveraging this unexpected boost by putting money toward critical programs.

One way to do that is to refine a proposal in the supplemental regarding repayment of furloughs. Mayor Gray is proposing to use $20 million of the FY 2012 revenue surplus to restore pay to DC government employees who were required to take four days of unpaid leave to help close an at-the-time estimated $180 million budget shortfall in Fiscal Year 2011. Yet when auditors closed the books, we found out that the District ended up with a $240 million surplus for Fiscal Year 2011. A sensible approach would be to use $20 million of Fiscal Year 2011’s $240 million surplus to refund the furlough, given the circumstances. However, Mayor Gray has chosen to use Fiscal Year 2012 money to do that. DCFPI urges the Council to have a Fiscal Year 2011 reimbursement paid with the Fiscal Year 2011 surplus.

This sensible approach could free up a critical $20 million in FY 2012 revenue that could be used to solve a major issue facing DC right now — lack of funds for affordable housing. Attendees at Mayor Gray’s citizen summit ranked affordable housing as the number one concern facing District residents. Yet DC’s Housing Production Trust Fund—the District’s main mechanism to build affordable units—has seen severe cuts in recent years, including an $18 million cut in FY 2012 and a proposed $20 million cut in FY 2013.  The lack of investment in affordable housing has led to serious consequences.  Because of a lack of affordable housing options, many homeless families are getting stuck in more costly motels or are placed on waitlists which are not good for the families or DC. 

Tomorrow afternoon, Mayor Gray will meet with the DC Council to discuss his supplemental budget proposal. With $240 million in surplus funds in FY 2011 that haven’t been utilized, Mayor Gray and the Council could use just eight percent of those funds to re-pay DC employees for the furlough days they took.  That could free up $20 million in funds this year that could help move homeless families out of shelters and the streets and into more stable housing.  It could also help invest the production of new affordable housing units and address a serious issue facing the District. 

The biggest cut in Mayor Gray’s proposed budget is a $23 million reduction in DC’s HealthCare Alliance, which would eliminate hospital coverage for those enrolled in the locally-funded health insurance program. DCFPI is working on understanding the impact of this cut, but here’s a quick question and answer on some Alliance basics:

1. What is the DC HealthCare Alliance?  The DC HealthCare Alliance is the District’s locally-funded public health insurance program. It was started by Mayor Anthony Williams to promote primary and preventative care by offering health insurance to residents who could not afford coverage in the retail market and did not have insurance through an employer or through a public program such as Medicaid. Before the Alliance, many residents used the city’s hospital emergency rooms as their primary access to medical care, which was costly for the hospitals and for the city. Plus, it did not provide a good medical home for residents to address non-emergency health issues. 
2. How many residents does it serve?  According to recent statistics, the program serves approximately 23,000 District residents. In its initial years, the program served more residents, but many became eligible for coverage under the federal Medicaid program after adoption of federal health reform in 2010. 
3. What would be cut under Mayor Gray’s proposal?  The cut would eliminate coverage for hospital visits, including both in-patient and out-patient. 
4. Why would the Gray administration propose this?  In public briefings, the mayor and his staff have explained that they feel the hospital benefit for the Alliance ends up as a “double-payment” to hospitals because a majority of the city’s hospitals receive a DSH payment or “Disproportionate Share Hospital” payment under the Medicaid program. This payment covers the uncompensated care these hospitals give because by law hospitals must provide treatment to those in need even if the patient is unable to pay. Eight of the city’s hospitals receive DSH payments, but several with emergency rooms do not, such as George Washington University Hospital. 
5. How will the cut impact DC residents?  DCFPI along with other health-care groups are unpacking this issue. One concern is that Alliance patients may feel discouraged from going to the hospital when they truly need to do so. Another is that residents that show up at the emergency room and do not have the ability to pay for care will still get billed. And even though the care would get covered under DSH and the hospitals would receive payment, the patient might get billed, and, when the bill went unpaid, be sent to bill collectors and have other actions taken that might be detrimental to their finances. Some clinic providers also have expressed concern about limited access to services that they refer patients to hospitals to receive, such as having an MRI.

Mayor Gray’s proposed budget raises some troubling questions about special education: In the District’s push to move special needs students from expensive private schools back into our public system, are these students being shortchanged on the teachers and resources they need to achieve success? 

According to budget documents, special education within DC public schools will see a reduction of more than 200 full-time equivalent positions in school year 2012-13, as well as a $209,000 cut in local funds. This is surprising, because Mayor Gray has stated that the District will achieve $40 million in savings as a result of these students returning to the public school system, and his budget presentation notes that tuition savings would be “directly reinvested into inclusive public education.” 

So are special education students losing out while the overall public system gains? It’s unclear, and more answers are needed. Organizations that advocate for special needs students in the District raised concerns about where the savings have gone in a DC Council education budget hearing last week, including Children’s Law Center. 

There is little disagreement that the District needs to build special education capacity within our public system. For years, the District has sent special needs students to private schools because DC Public Schools and DC Public Charter Schools didn’t have the facilities and resources to meet the needs of these students. The practice of providing “non-public tuition” is expensive not only in terms of education but also in terms of transportation, because students have to be driven to schools far from their homes. In fact, Mayor Gray has a goal of reducing these types of placements by half in his term. But, in order for this to work, DCPS must also boost the capacity of local schools to handle the increased enrollment of students with special needs. 

DC Public Schools projects special ed enrollment will increase next school year by 13 percent due to these transferred students, the majority of whom will be children with the highest needs. Yet according to next year’s budget, funding for some special education programs would decline. Once again, this highlights the need for more transparency and clarity in our public school system’s budget. Was the $40 million in savings from non-public placements reinvested into special education? If so, how will it be distributed to schools? Or will schools ultimately see less special education local funding next year, as budget documents suggest? 

DCFPI will ask these questions of the Mayor and the school system, and we hope to have answers in the next few weeks.

Will DC residents pay more out-of-pocket if Mayor Gray’s Fiscal Year 2013 proposed budget and revenue proposals become adopted? For the most part, Gray’s proposals would not require DC residents or businesses to pay more in basic taxes and fees for the services they receive. But if you owe the city taxes but haven’t paid up, if you run red lights sometimes, or if you like to buy alcohol early in the morning or late at night, you will pay more. 

Mayor Gray’s proposed budget for next year would boost the city’s resources by about $90 million, as part of a balanced approach to closing a pending budget gap of $172 million.  The new revenues help limit the need for budget cuts; even with the resources, though, the budget would make some deep cuts in health care, housing, child care, and other services. 

So how does the Mayor hope to raise more without changing the basic tax structure?  

These are the ways:   

• Doing a Better Job Collecting What Is Owed — $36 million:  The District  would collect about $36 million  primarily by checking a retailer’s sales tax records against its credit card receipts and creating a new centralized team to collect non-tax revenues — primarily parking tickets issued to non-DC residents. (The city would pay $2 million to beef up these activities.) 
• Expanding Traffic Enforcement — $25 million: The Metropolitan Police Department would expand its automated traffic enforcement capacity, which is expected to generate $25 million in net revenues — $31 million in revenues offset by $6 million in additional equipment purchases and related costs.  
• Not Fully Adjusting Tax Deductions for Inflation — $12 million: Three tax benefits —  the standard deduction and personal exemption in the income tax and the homestead deduction in the property tax — are supposed to be adjusted for inflation each year. But these benefits have been frozen in place since 2008, due to budget legislation passed that year.  The benefits were scheduled to resume inflation adjustments in 2013, with adjustments all the way back to 2009.  Mayor Gray proposes to index them using 2012 as the base.  This means that residents will pay more in income and property taxes than if the benefits had been adjusted fully back to 2009. 
• Expanding Liquor Sales Hours — $5 million:  By allowing stores to sell liquor earlier in the morning and allowing bars to stay open later at night, Mayor Gray expects to generate $5 million in new alcohol taxes. 

These changes add up to a solid amount of new resources, and— outside of the limited inflation adjustments for tax benefits—  do not reflect notable changes to the city’s taxes or fees.  That doesn’t mean they all will be popular, however.  For example, some Council members and residents already have expressed concern about expanding hours for liquor sales.  

However, subtracting a revenue source from the budget means the Council needs to add an equivalent amount of revenue back— or make additional cuts. We urge the Council not to make changes to revenue that lead to even deeper budget cuts or limit the Council’s ability to restore some of the most serious cuts.

Regular readers of the District Dime know that DC is in the midst of a family homelessness crisis, with an increase of nearly half since 2008 and demand for shelter so great this that nearly 200 families have been placed in hotels most winter nights.

Given this dire situation, it is unfortunate that the Mayor’s proposed budget has a $7 million  hole in funding for homeless services, just as last year’s proposed budget failed to adequately fund these services.  The budget does not replace an anticipated loss of federal resources that are being used this year for homeless services.  The cut affects both the ability to operate shelters for homeless families and transitional housing subsidies that are used to help families move out of shelter.  It is worth noting that replacing these funds tops the mayor’s “revenue priority list,” but this will get funded only if the Council maintains the wish list and only if tax revenues rise further.

Due to rising homelessness, the District expanded capacity this year at the DC General Shelter but this has not been enough.  As of 2 weeks ago, DHS was housing 171 families in hotels.  Hotels are significantly more expensive than shelters — roughly $3,000 per month per family — and yet provide far less access to supportive services. 

As we look to next year, the problems are likely to be worse. Ten to 12 families request shelter each day, but DC has stopped sheltering any newly homeless families because of the hypothermia season.  A new assessment tool of families on TANF has revealed that more than 1/3 of TANF families are homeless or at-risk for homelessness.  Changes to TANF coming in October are also likely to increase this risk.  More than 6,100 TANF families will see a 25 percent reduction in monthly benefits, leaving a family of 3 with less than $260 per month. And cutting transitional housing funds will shut off the path out of shelters, forcing shelter population to swell even more.

Although filling the homeless services hole is first on the mayor’s proposed Revenue Priority List — the list of initiatives that will be funded if FY2013 revenue projections increase — we believe the Mayor should have found the replacement funds as he did for federal losses in public safety and WMATA support.  It would be better for families and the city’s pocketbook to make a strategic investment in homeless services than to face a spending overrun next year due to the high costs of hotel rooms. 

Affordable housing in DC is hard to come by. So it’s really not surprising that affordable housing emerged as the top priority for residents at Mayor Gray’s recent One City Citizens’ Summit. However, the mayor’s proposed budget for next year would cut by half DC’s Housing Production Trust Fund, the main tool DC has to renovate and build affordable housing.  

In fact, this is the second year in a row Gray has chosen to cut by half the trust fund. What this means is that the District could have just $9 million in FY 2013 to support housing construction and renovation, compared with close to $60 million per year in the mid-2000s.     

DC’s Housing Production Trust Fund provides financing to for-profit and non-profit developers and tenants to acquire, construct and renovate affordable housing.  After its expansion in 2002, the trust fund has helped develop thousands of affordable units across DC and leveraged millions of private dollars.  The Housing Production Trust Fund has a dedicated funding stream, which is 15 percent of DC’s deed recordation and transfer taxes. So money into the trust fund rose significantly after 2002 as DC experienced a real estate boom, but then fell sharply after 2008 as a result of the Great Recession and a slump in DC’s real estate market (see Figure 1).  Starting in FY 2011, DC’s property market began to heat up again, leading to potential increases in money for the trust fund. 

Yet Mayor Gray has decided to use the trust fund as a way to pay for other programs, leaving this critical affordable housing tool without resources. The mayor’s Fiscal Year 2013 budget proposes to cut half of the new resources into the trust fund, much like he did in 2012.  While dedicated taxes to the fund will total $37 million next year, the mayor would take $20 million and devote it to other housing purposes. 

Moreover, due to a variety of factors, the trust fund will be left with even fewer resources for construction and renovation: 

• New Communities Funding.  DC uses a portion of the Housing Production Trust Fund to borrow funding to support DC’s New Communities housing initiatives. The New Communities program tears down existing subsidized housing complexes and replaces them with mixed-income housing. Last year, DC utilized approximately $7 million from the trust fund for New Communities. 
• Administrative Costs.  A portion of the trust fund is also set aside for administrative costs to run the program.  In FY 2013, approximately $8 million will be utilized from the trust fund for administrative purposes.  

In the end, the Housing Production Trust Fund could be left with just $9 million for core purposes in 2013. If adopted by the DC Council, DC’s capacity to support new affordable housing construction, renovation or acquisition would be significantly restricted for the second year in a row.  

DCFPI urges the DC Council to restore money to the trust fund. Raiding the trust fund to find money in the short term will lead to a long-term shortage of affordable housing. DC residents disagree with that approach.

Given the hits that health and human services funding took in the Mayor’s Budget, some would say education advocates have less to complain about this year.  Even before the budget was released, Mayor Gray announced a two percent increase in the Uniform Per Student Funding Formula that is used to set overall funding for DC Public Schools and DC public charter schools.  But, is there more to the story? 

The two percent increase allowed DCPS to increase the minimum per-student allotment to individual schools for the upcoming school year, from $8,400 to $8,568, which is primarily an adjustment for inflation. Yet while this increase appears to be a solid investment in DC schools, the reality is that some individual schools will have to do more with less money. Here are a few issues that DCFPI hopes will be explored further during tomorrow’s education budget hearings.

• Costs for many core school functions, like teachers, will rise faster than the two percent funding increase.  The average cost per teacher (as well as counselors, instructional coaches, and librarians) is rising 5.4 percent.  This partly reflects the fact that teacher performance bonuses under the IMPACT evaluation system – which until now have been have been paid with private foundation fund – will have to be paid with local funds in 2013.  Higher teacher costs also reflect rising fringe benefits (like health care) and seniority-based pay increases.  Rising costs mean that the two percent increase is not adequate to maintain current school services. 
• Middle and high schools will see an increase in class sizes.  The middle school teacher: student ratio will be raised to 1:22 (from 1:20) and high school class size will be pegged at 24 (up from 22 this year).  Because some high school classes must be smaller — such as  Advanced Placement, Career and Technical Education, or smaller classes designed to improve student learning — some high school classes are likely to be far larger than 24.   The larger class sizes could be in violation of the Washington Teachers’ Union contract. 
• Smaller schools may face greater funding disparity as a result of changes to required staff positions.  Many smaller schools will no longer be allocated funds for a librarian in FY 2013.  If they choose to hire one, a smaller school will need to use its discretionary (or “flexible”) funds to do so. In this situation, many schools may opt to not have a librarian. Beyond that, other changes to required staffing limit school flexibility, which is likely to affect smaller schools the most, since they tend to have the smallest amount of flexible funds.  For example, all schools will be required to have a full-time instructional coach next year, while this year, schools currently have flexibility to have a half-time instructional coach and use the remaining funds for other purposes  (The changes in required staffing for DCPS schools from last year to this year are outlined in the table below.)  

Finally, an examination of the winners and losers in the school funding allocations shows that this is driven largely by the size of the school and whether the school is growing or shrinking, not by the poverty or other needs of the student population.  Indicators of need, such as neighborhood high schools with large truancy rates or schools with a large share of students who are low-income, for the most part do not receive dedicated funding in DC’s distribution of local school funds.  The recently completed report of the Public Education Finance Reform Commission recommended that the funding formula be revised in future years to devote extra resources to schools with students who are both low-income and academically behind, and this year’s DCPS allocations reinforce the need for this change.

Mayor Gray’s Fiscal Year 2013 budget offers a balance of cuts and revenue to close a $172 million gap and compensate for reduced federal funding, but as happened in last year’s proposal, our initial analysis shows the cuts are heavily weighted toward programs in housing and human services. As part of his proposal, Mayor Gray includes a $120 million “wish list” that would restore many of these cuts, including funding for services for homeless families , but that money would only be available if the District experiences a further revenue jump and if the DC Council agrees to Gray’s priority list.

The proposed FY 2013 budget has $103 million in expenditure cuts as well as a $20 million cut to a dedicated trust fund to build affordable housing. There is one local expenditure “cut” that DCFPI applauds Mayor Gray for making: About half of the $103 million in local expenditure reductions in the FY 2013 budget are due to a decision to forgo putting $50 million in operating dollars toward pay-go. DCFPI has been supportive of this policy decision to avoid more severe cuts in next year’s budget.

However, the remaining $53 million in local expenditure cuts disproportionately impact programs that help keep families stable, both in terms of health and housing. About half of the $53 million comes from a $23 million reduction to DC’s Healthcare Alliance. DCFPI will have more in-depth analysis of this proposal in coming weeks. In addition, several reductions in federal funding that were not replaced with local funds on initial glance seem to fall heavily in health and human services, particularly housing for homeless residents.

The FY 2013 revenue proposals do not include tax rate changes, but Mayor Gray’s budget for next year does raise $70 million through increased traffic fines, expanded sales hours for alcohol and reducing an expected inflation adjustment that impacts income and property taxes. The reduction—which would index inflation only from the past year rather than for the full five years since they were frozen—would mean residents would pay more in taxes than if the scheduled five-year inflation adjustment had gone into effect.

Revenue

The mayor’s proposed budget includes $70 million in new revenue. Although the mayor’s budget documents state there are no new taxes or fees, the four revenue options will lead to increased payments to DC government and limit the need for cuts in services. The revenue comes from four sources:

•$28.2 million comes from enhanced collection of existing taxes and fees. This includes a more vigorous collection of sales taxes and application of the vacant property tax.

• $24.8 million comes from new traffic enforcement penalties

• $5.3 million comes from expanding the sales hours stores can sell alcohol

• $12 million comes in a reduction in a legally required inflation adjustment for the standard deduction, personal exemption and homestead deduction. Instead of adjusting over a five year period, from when these levels were frozen, the adjustment would only occur for the last year.

Cuts

The Mayor’s budget also contains close to $53 million in local funding cuts, most of which would fall on human services and other programs that help low and moderate income families. This area of the budget has been hit hard during the last three years as numerous budget gap closings have relied heavily on cuts to these areas. Some of the programs that have been hit hard in this proposed budget include:

• HEALTH CARE COVERAGE FOR LOW NCOME RESIDENTS The Mayor’s FY 2013 budget includes a $23 million reduction to DC’s Healthcare Alliance, which would limit benefits to primary and preventive care and not cover hospitalization. There is also an $8 million reduction to Medicaid from reduced Medicaid reimbursement rates for certain services. The Department of Health Care Finance must get a state plan amendment approved before this can take effect.

• AFFORDABLE HOUSING Last year, Mayor Gray cut $18 million from the Housing Production Trust Fund — DC’s main source for affordable housing construction and renovation — to maintain funding for the local rent supplement program. This year, the trust fund will take an additional $2 million hit, for a total of a $20 million cut, the second year in a row the trust fund has faced significant funding reductions. This cut means that little progress will be made in building back up trust fund resources that can help DC build and renovate affordable housing in the District

• HOMELESS SERVICES The budget includes a $7 million shortfall for homeless services, due to depletion of some federal funds that had been carried over from prior years. As proposed, the budget does not provide adequate funding to operate the shelter for homeless families at DC General, or to provide sufficient transitional housing subsidies to move families out of shelter. The Mayor’s “wish list” would use the first $7 million in additional revenue to restore this

• CASH ASSISTANCE FOR FAMILIES WITH CHILDREN The proposed budget keeps in place steep cuts to income assistance for families that were adopted in last year’s budget and will go into effect in October 2012. Cash assistance benefits for 6,200 families who have received TANF assistance for more than 60 months — including 12,000 children — would be reduced to $257 per month for a family of three. While the Department of Human Services is implementing a promising re-design of its welfare-to-work services, city officials acknowledge that many families will see benefit cuts before being enrolled in the new program. It is not clear how these families, many of whom face low literacy and other barriers to work, will manage to make ends meet.

Funding Priority List

Mayor Gray included a funding wish list as part of his proposal, but this money is not currently available. According to the proposal, the programs would be funded in hierarchical order if the District experienced an uptick in revenue over the fiscal year. Many of the programs that would be restored first are services for low- and moderate-income families. The list, in order:

1. $7 million for Homeless Services loss of federal funding
2. $14.7 million for the Temporary Assistance for Needy Families (TANF) Employment Program
3. $23 million for Healthcare Alliance restoration
4. $20 million for Housing Production Trust Fund
5. $2.6 million for Victim Services
6. $1.1 million to repeal tax on out-of-state bonds 7. $8.6 million to Office of State Superintendent for infant and toddler services
8. $5 million for OSSE special education
9. $1.6 to Department of Human Services
10. $2.9 million to Housing Production Assistance Program
11. $1.9 million for mental health initiatives
12. $10 million for small business property tax relief

DCFPI will be working over the next few weeks to issue more detailed analyses of overall changes made in the FY 2013 budget, on both the revenue side and the budget cuts side. Please check our website, www.dcfpi.org, next week for more details.

Budget season is back, and we’ve updated our quick guide to the budget process for FY 2013.  Tomorrow, March 23^rd, Mayor Gray will release his proposed FY 2013 budget.  Below are some important dates and resources for District Dime readers to help you get a handle on the upcoming budget season. 

The Budget Is Released  

Press Conference, Friday March 23^rd : After briefing the DC Council in the morning, the Mayor will hold a public press conference around noon 11:30 to release the budget.  DCFPI will be there, tweeting the details as they become available.  

Mayor’s Budget Briefings Around Town: Mayor Gray plans to hold budget forums in each ward of the District.  Right now, dates and locations can be found via Susie’s Budget and Policy Corner.  We will share more details as they become available.  

Budget Documents:  These will likely be accessible online on Friday, March 23^rd or within a few days.  There are two main places to look:  

• The CFO’s website, where you will find the proposed 2012 budget, as well as budgets for 2011 and prior years.   
• The Mayor’s budget website, http://budget.dc.gov/  should have links to all of the proposed FY 2013 budget documents, including the “Budget Support Act”, an often overlooked, but critical, budget document.  The budget support act is the legislation that includes all of the statutory changes reflected in the budget, such as changes to the DC public schools per-pupil formula or changes to taxes or fees. We encourage District Dime readers to take a careful look through the budget support act because it often includes major policy initiatives.    

The DC Council Conducts Its Budget Oversight Process & Votes on the FY 2013 Budget 

Council Initial Budget Review Hearing: On March 27^th, the DC Council will kick off the budget oversight process with a hearing in which the Mayor, Chief Financial Officer, City Administrator and Budget Director will be invited to testify and answer questions about the just-submitted budget.  While the hearing does not include public witnesses, it is a good way to learn more details about the FY 2013 budget.  

Committee Budget Hearings: From March 28^th – April 27^th each committee of the DC Council will conduct budget oversight hearings for the DC agencies they oversee.  The public is invited to testify at these hearings, making them a great time to advocate for programs and services you care about.  The detailed schedule of hearings can be found here.  

Committee of the Whole Oversight Hearing on the Budget Support Act:  On April 30^th, the DC Council will hold one marathon public oversight hearing on the entire budget, including the important budget support act.  Sign up to testify early; this is usually a long one.  

Council Vote on the Budget: On May 15^th, the DC Council will take the lone vote on the budget, and the first vote on the budget support act.  The second vote on the budget support act is set for June 5^th.   

Resources to Help You Understand What is in the FY 2013 Budget  

DCFPI’s Budget Toolkit:  The FY 2013 toolkit will contain an overview of the FY 2013 budget, detailed budget analyses in key issue areas (such as housing and child care) and a massive budget spreadsheet that tracks funding from FY 2000 – FY 2013 so you can make your own budget comparisons.  Our “first glance at the budget” will be available the week of March 26^th, with most other analyses available within two weeks.  Check out DCFPI’s website for more details.  

Budget Briefings with DC Government Agencies:  DCFPI and other nonprofits are working with a number of DC agencies to hold briefings on their FY 2013 proposed budget.  These briefings give the public a chance to hear directly from the agency directors and their senior staff about the key changes to their budget for FY 2013.  Here are the briefings scheduled so far.  We will be sure to let readers know as soon as other dates have been set. 

As always, feel free to contact any of us at DCFPI with any questions on the DC budget or budget process.

There’s no question DC’s NoMa neighborhood is hot. New commercial and residential buildings – such as the mixed-use Constitution Square and Loree Grand – have transformed the area North of Massachusetts Avenue (aka “NoMa”). There’s been an infusion of $3 billion in private investment over the past six years, and construction cranes continue to dot the sky. Metro’s board of directors literally put NoMa on the map, by formally changing the name of the “New York Ave-Florida Ave-Gallaudet U” stop to “NoMa-Gallaudet U”. The new question is whether the District needs to provide any more incentive to keep the neighborhood booming.

Tomorrow, the DC Council’s Finance and Revenue Committee will consider legislation to amend a subsidy program authorized in 2009 by the NoMa Residential Development Tax Abatement Act. According to DC’s Deputy Mayor for Planning and Economic Development, this legislation was “intended to provide tax abatements as incentives for the production of new housing in the NoMa area.” It capped the amount of property tax subsidy the District could provide each year at $5 million and the total number of residential units that could qualify for the abatement at 3,000. The legislation being considered tomorrow seeks to remove the residential unit cap to allow more developers to obtain this subsidy.

DCFPI urges the council to keep the cap in place. If the council does want to put the money toward housing, it might want to consider ways to maintain and build affordable units. Clearly given the building boom in NoMa, private investors see NoMa as a good bet.

Initial indications from DC’s Chief Financial Officer are that the District is currently subsidizing roughly $4 million a year in residential property taxes in NoMa. Supporters of removing the residential unit cap want to do so in order to access the remaining $1million per year in subsidies. But there is no clear rationale why the District should do this. Clearly, the District has achieved its goal of spurring development in NoMa – so much so that there is demand from private investors to bring more residential development to the area. But just because the District reached its goal of 3,000 residential units for less money than it initially anticipated doesn’t necessarily mean that it should spend more money subsidizing market-rate housing.

Spending money simply because you can has never made for sound fiscal policy.

True or False: All DC households who earn more than $350,000 had their taxes raised last year. 

The answer is false. 

In fact, it is possible that households with incomes of up to $700,000 did not see their income tax raised one penny. 

That’s because when the DC Council decided to implement a high-income earners’ tax last year, the new 8.95 percent rate applied to individuals instead of households. So, a couple that lives together where each earns $350,000 — that is, with family income of $700,000 — is  unaffected by the new tax bracket. Yet, it seems the intention was to apply it to households with incomes above $350,000, and a majority of these residents said they were willing to pay more in a poll last year. 

A relatively simple technical change to last year’s income tax law could help close this year’s budget gap. By requiring high-income two earner couples to report their income together, Gray can put that money toward critical programs. Removing the “married filing income separately” option for high-income households could raise $2.4 million for FY 2013 and about $6 million annually after year one, keeping that many more services safe from the chopping block. 

DCFPI strongly urges the Gray administration to consider this additional revenue option along with forgoing the paygo provision. While the initial revenue generated may seem small, generating $6 million after this year may mean the difference between sustaining necessary services and making drastic cuts to programs. It reflects a balanced approach to the budget that poll respondents said they support and avoids budget-balancing that relies only on cuts, which DC voters said they don’t want.

As you know, the DC government is facing a $164 million budget gap for FY 2013, a gap that Mayor Gray must address through some combination of savings and new revenues when he submits his budget proposal this Friday.

Last week, we laid out some of our revenue ideas for closing that gap.  Today, we want to further explain the best option, in our opinion, for reducing the budget gap:  forgoing a provision requiring the city to spend $50 Million directly from its tax collections for capital projects — known as “paygo capital.” This single step would reduce the budget gap by almost one-third and limit the need for painful cuts to services — without hurting the city’s infrastructure investments.

What is Pay-Go?:  Pay-Go means that “pay as we go” for capital construction projects like libraries, schools, and sidewalks rather than using the more conventional method of financing these construction projects through borrowing.

Why Does Current Law Call for $50 Million in Pay-Go Next Year?  The budget adopted two years ago  contained a provision requiring that  one-quarter of any increase in revenues in future years  be put towards pay-go for capital projects  It is now set to go into effect in FY 2013.  Based on the increases in revenues over the past year, the pay-go amount is around $50 million.

Is Pay-Go a Good Thing to Do?  Not this year.  The answer to this question really depends on what else is going on with the city’s finances.  Pay-go makes sense when finances are strong, because paying for capital projects without borrowing is a good use of extra resources; however, when finances are tight, it makes more sense to borrow for capital projects, rather than pay-go. 

The enormity of the current budget gap makes it clear that we should forgo this provision for FY 2013, as the Mayor and Council did for FY 2012.  The District still can maintain its investments in capital projects, through borrowing, while freeing up $50 million to help preserve education, health care, public safety, housing, and other critical services. .

Mayor Gray will be presenting his budget on March 23rd.  We here at DCFPI hope that he will take this very impactful revenue option into consideration as a way to narrow the budget gap.

In the District Dime yesterday, guest blogger Amber Harding from the Washington Legal Clinic for the Homeless wrote about the huge rise in family homelessness in DC.  She suggested steps to help get families out of a shelter system that is bursting at the seams and into stable housing.  But as her blog mentioned, there is a major obstacle to achieving that goal — funding for DC’s core affordable housing programs. 

DC, like many other cities, has an affordable housing problem.  In response, the District has created a variety of affordable housing tools, each serving a specific purpose and each critical to make housing available all along the continuum of affordable housing needs — from homelessness to homeownership — for DC‘s low- and moderate-income residents.  A variety of housing programs along the continuum are critical because not all families have the same affordable housing needs.  Some families need temporary housing with wrap-around services to help them get back on their feet; others need help to secure housing that doesn’t eat up their entire paycheck each month.    

But as a result of the Great Recession, the city‘s affordable housing tools have been largely dormant and funding has been cut or used to maintain programs at prior-year levels. Most notably, resources devoted to the Housing Production Trust Fund (HPTF), DC’s main source for affordable housing construction and renovation, fell significantly when the recession hit; funding is tied to 15 percent of deed recordation and transfer taxes. Beyond that, the Mayor and Council cut $18 million from the HPTF in the FY 2012 budget. 

But DC’s affordable housing problems haven’t waned in the recession— in fact, they have grown worse.  And when programs for affordable housing are either flat-funded or cut back, the continuum stops working and a backlog results.  The consequences?  People get stuck — in shelters, in costly motels, and on waitlists — and families are kept from moving ahead.  It’s a lose-lose situation for families and DC. 

The Mayor is putting the final touches on his budget for FY 2013 right now.  He is undoubtedly, faced with difficult choices, but the costs of shortchanging affordable housing programs are becoming clear. As the city begins to financially recover from the recession, the Mayor should also begin to recover DC’s affordable housing programs. 

*This post has been updated

DC is in the midst of a family homelessness crisis.  Why is this happening?  What can we do about it? 

First, the numbers.  Family homelessness has increased by 46 percent since 2008, while across the nation the increase in homeless has been 1 percent.  Not surprisingly, DC’s shelter system for families is overwhelmed.  On March 4th, some 282 families were living in DC General — the city’s winter family shelter – the highest number that shelter has ever held.  But even that is not enough to meet the demand.  Another 128 families are in temporary shelter, 223 families have been placed in hotels, and 560 are on the pending list for shelter. 

(It’s also worth noting that the need for shelter among single adults, particularly women, also has outstripped the supply in recent years.)

Is this all the result of the Great Recession? Rising unemployment has no doubt pushed more families to the edge, but primary causes of DC’s homeless crisis are deeper and will remain after the recession recedes. Homelessness in DC is caused primarily by the lack of affordable housing and extreme poverty.  DC is quickly losing its affordable housing stock and has long had a poverty rate high above the national average.  A parent would have to work 136 hours a week at minimum wage to afford a two-bedroom apartment at the “fair market rent.”

If housing has been unaffordable in DC for a long time, why the drastic increase in family homelessness over the last few years?  A disinvestment in affordable housing programs is a significant factor.  In 2007 and 2008, DC invested considerably in long- term affordable housing, particularly through the Local Rent Supplement Program. Since then, the majority of funding for homeless families has been in the form of short-term rental subsidy programs. This has been successful in other jurisdictions where homelessness stems from temporary joblessness and where housing is generally affordable.  * However, the majority of families in DC shelters need long-term subsidies to avoid cycling back into homelessness.  For some families, short-term assistance may be the right approach, but for others it is not enough to get them to the point where they can afford DC’s very high rents.

DC is paying the cost of the increase in family homelessness both literally and in human terms. Hotels are expensive – $3,000 per month per family—and yet offer minimally supportive services,  These kinds of services leave yet another generation growing up homeless, struggling to meet even the most basic of needs.

DC can take simple and effective steps to decrease family homelessness:

1. DC could clear the hotels and the DC General shelter by placing 515 families into permanent affordable housing, at a cost of $7.7 million per year.  If this happens before next winter, it would greatly reduce the pressure on the shelter system, serve more families, and eliminate the need to place families in expensive hotels.

2. DC agencies like the DC Housing Authority and the Department of Human Services could collaborate to prevent families from losing affordable housing by connecting tenants to services that would prevent eviction.

3. DC could invest in a pilot program to provide intensive employment supports and stable housing to homeless families receiving TANF.  By pairing employment and housing help, the program would reduce homelessness and increase the success of welfare-to-work efforts.  About 150 families could be helped for $2.25 million.

4. Reinvest in core long term affordable housing programs, such as the Housing Production Trust Fund, the Local Rent Supplement Program, and the Housing First program. (For more details on these last few recommendations, see the Fair Budget Coalition’s report at www.makeonecitypossible.com.)

The final report of the Public Education Finance Reform Commission (PEFRC) has drawn some criticism from the charter school community, which feels the Commission did not address perceived inequities in funding between DCPS and public charter schools. Yet, a close look at the PEFRC report shows that the Commission deliberated all of the major  issues of uniformity as it was mandated to do, and made decisions over many of them, even if the decisions were not what the charter school supporters were hoping for. The Commission failed to work through one important issue — how to measure enrollment for the purposes of setting funding — but this reflected a lack of time and low prioritization among all Commission members, including charter school representatives. 

Take, for example, the issue of how school maintenance is funded. The PEFRC found that the Uniform Per Student Funding Formula (UPSFF) is based on outdated industry standards for maintenance and does not reflect actual costs, resulting in a formula that under-funds maintenance for both sectors.   

The commissioners ultimately came to consensus that school maintenance, utilities, and custodial services should be based on the needs of each school building.  If adopted, this recommendation would likely mean that maintenance funding would not be uniform if measured on a per-pupil basis, since different schools would have differing needs, but it would be uniform in that every school would have its maintenance requirements adequately funded. 

Charter school supporters argue that smaller charters often deal with cramped, substandard facilities and that tying maintenance funding to actual costs would not allow them to build up funds to obtain more appropriate space. While the facilities problems of charter schools are legitimate, and there should be better policies for securing right-sized facilities, the argument that charters need more maintenance funding to use it for purposes beyond maintaining the school facility does not align with the true purpose of the funds. 

The Commission also addressed the issue of mid-year supplementary funding for DCPS. Despite some qualms, the commissioners did not agree that if DCPS receives supplemental funding in the middle of the year due to a variety of reasons (bureaucracy, under-projected enrollment, etc.) charter schools should simply receive more money to equal that amount. In this case, the PEFRC rejected a recommendation for strict uniformity because most commissioners did not believe it made sense. 

The issue of creating a uniform way to measure student enrollment also came up at Commission meetings, but there was not enough time for the PEFRC to talk through it. While this was unfortunate, it is important to note that no one on the PEFRC, including charter school representatives, made it a high priority during final deliberations. Since the release of the PEFRC final report, Mary Levy has offered some good ideas for better tying funding to student enrollment on behalf of the charter school community, including the accounting of increases for DCPS, net of transfers and drop-outs. These are worth exploring, although there are still some questions about how precisely to tie funding to enrollment as it changes during the year, since frequent mid-year adjustments are no way to efficiently run a school system. 

The PEFRC report should really be viewed as a start of a longer policy conversation in DC, one that will hopefully be continued by an adequacy study with more time to dig into these issues.  

Note: While Ed Lazere served as Chair of the PEFRC, the opinions expressed in this blog are those of DCFPI and not representative of the PEFRC. 

A pilot of the TANF redesign yielded encouraging results that bode well for the program’s future success.  Conducted by the Department of Human Services in the spring of 2011, a sample of 164 TANF families went through the new TANF orientation and an in-depth assessment to identify employment barriers.  They were then connected to education, training, and work activities especially chosen to suit their unique situations.   

The five week pilot program yielded the following results: 

• The number of families participating in TANF work activities – including job training, education, barrier remediation, or other activities agreed-upon during the assessment stage – more than tripled, from 18 percent before the trial to 56 percent under the trial. 
• The number of families meeting 100 percent of required work participation hours as set by federal guidelines (20 or 30 hours per week for a single parent household) grew from just three percent to 35 percent. 
• Four parents found employment and were able to end their TANF participation.  

These outcomes are especially impressive because of the very short time period of the pilot program – just five weeks.  The results suggest that low participation rates in TANF activities in past years stemmed from inadequate assessment of client needs and ineffectiveness of the work readiness services. The pilot program’s results show that TANF families will quickly become engaged when offered meaningful services. 

But the success of the redesign is at-risk.  There is a mismatch between DC’s recently adopted time limit policy — which will reduce benefits to as low as $260 a month for thousands of families this year — and the implementation of the new TANF employment program, because many families will have their benefits cut before they can even access the new TANF services.  For each client, DHS needs to complete an in-person assessment, create an individual responsibility plan (IRP) specifying the tasks the parent must complete, and provide orientation.  The client is then able to access work preparation and job placement services.  As of February 23rd, only 12 percent of families facing cuts had been assessed, the first step in obtaining new services.

The “Temporary Assistance for Needy Families Time Limit Amendment Act of 2012”, legislation co-introduced by Councilmembers Michael Brown and Jim Graham in February, would delay the benefit cut for one year to allow all parents time to take advantage of new employment services.  It would also provide reasonable time limit exemptions for vulnerable parents to allow them the time to deal with serious issues that interfere with their ability to work such as domestic violence, illness, or caring for a family member with a disability.  This bill is a positive step towards ensuring that the new TANF program is a success by incentivizing work while protecting our most vulnerable families.  

The richest five percent of DC households have an average income of $473,000, the highest among the 50 largest cities in the U.S., according to a new report from the DC Fiscal Policy Institute. Meanwhile, the poorest 20 percent of District households have incomes averaging under $10,000.  Income inequality in DC — the gap between rich and poor — is third highest among the nation’s largest cities. 

While the District’s economy has led to economic growth and prosperity for many middle and higher income families, residents on the bottom of the income scale largely are being left behind. 

• The average income among the top five percent of DC households, $473,000, is higher than in any major U.S. city.  Among the 50 largest cities, the average top income is $292,000. 
• The poorest 20 percent of DC households fifth by income had an average income of $9,100. This is close to the average among the largest U.S. cities. 
• The gap between high-income and low-income DC households is third-highest among the 50 largest cities, after Atlanta and Boston. In DC, the average income of the top fifth is 29 times the income of the bottom fifth. Among large U.S. cities, the top-to-bottom ratio is 18. 

Addressing income inequality — lifting the incomes of those at the bottom — requires adequate funding for programs that support the city’s workforce and affordable housing supply. 

• Welfare to Work (TANF):  The District is starting to implement significant welfare-to-work reforms, which hold great promise to better prepare families for living-wage work. However, coinciding with the TANF redesign is a time limit policy that will reduce cash benefits for thousands of TANF families — to as little as $260 a month — before they have received education and training opportunities. 
• Housing:  In the midst of sharply rising housing costs, the District’s most important tools to help low-income families afford to live here—the Local Rent Supplement Program and the Housing Production Trust Fund—have experienced sharp budget cuts in recent years. DC is facing a shortage of affordable housing options, and without funding through these programs many low-income households will spend higher and higher percentages of their incomes on rent. 

To view the full report on income inequality in DC, click here.

How should Mayor Gray close the $164 million budget gap for next year? Yesterday we argued for a balanced approach, and today we present sensible ways for the Gray administration to add critical dollars to next year’s operating budget and keep our city prospering and growing. DCFPI has shared these ideas with the Mayor’s budget team, and we hope our District Dime readers will let Mayor Gray know which ones you support as he and his top staffers spend the next week finalizing the budget plan for Fiscal Year 2013.

Sensible Option #1: FORGO $50 MILLION TO PAY-GO
Pay-go is the “pay-as-you-go” approach to pay for capital projects instead of using more conventional financing through borrowing. Using yearly operating revenues for capital projects is a practice that might be sound when finances are very strong, but doing it when there are budget gaps and financial uncertainty strains resources unnecessarily, especially when borrowing rates are low. The amount we will save on capital expenditures is small compared with the human consequences and long-term budget impact of not making this money available for immediate needs, such as finding appropriate housing for 200 homeless families currently in motels. Therefore the Mayor should opt NOT to dedicate one-quarter of unanticipated revenue to pay-go, which was a provision inserted into the FY 2011 Budget Support Act, and put these dollars toward needs in the FY 2013 operating budget.

Sensible Option #2: REQUIRE HIGH-EARNING COUPLES TO REPORT THEIR INCOME TOGETHER
The Gray administration should apply the 8.95% rate for income above $350,000 to household incomes, instead of the current policy of applying it to individual income. Right now, a married couple earning $700,000—with one spouse earning $350,000 and another earning $350,000—faces absolutely no tax increase from the new rate because these high-income earners are allowed to report income separately on their joint tax return. Requiring them to report combined income is really a technical change to the high income earners’ tax last year, as the intention was to target high-income households. A Hart Research poll last year showed overwhelming support by DC voters for a higher rate starting at $200,000, even among those impacted by the change.

Sensible Option #3: REDUCE UNNECESSARY DEDUCTIONS AND EXEMPTIONS
Maryland Governor Martin O’Malley, for example, in his budget for next year proposed reducing the personal income tax exemption for higher-income households. DC also offers tax breaks that no longer need to be incentivized—such as a tax break for purchasing hybrid vehicles.

Sensible Option #4: APPLY SALES TAX TO MORE PURCHASED SERVICES
We spend more and more of our dollars on services; take pet grooming, in which Americans spent nearly four billion dollars in 2011 according to one study. Yet many of these services are currently exempt from the sales tax. In other words, if you buy shampoo and a razor to clean Fido yourself you get taxed on the purchase of these goods, but if you bring Fido to the groomer, you don’t. It’s time to level the playing field and make these types of services taxed at the same rate as goods.

Taking these options would bring a balanced approach to the Fiscal Year 2013 budget.

Last year, Mayor Gray used a mix of revenue increases and service cuts to close a $322 million budget gap, and in this way took a fairly balanced approach.  But when it came down to how the cuts were distributed, Mayor Gray’s budget was anything but balanced.  Programs for low-income residents were cut more than any other part of the budget.  

This year the Mayor needs to close a $164 million budget gap and will almost certainly need to make another round of cuts and revenue increases to present a balanced budget to the DC Council on March 23rd.  Cuts to programs that help families get back on their feet can undermine other major initiatives that the District invests in, such as education.  With unemployment still rising for many groups of DC residents, and one-third of children living in poverty, Mayor Gray should spread the pain of budget cuts more evenly among agencies this year.  

Last year, Mayor Gray cut heavily into programs for low-income residents.  The DC Council restored some of the cuts — most notably a $17 million for homeless services — but at the end of the day three out of every five dollars of cuts came from programs that help low-income residents such as funding to build affordable housing and cash assistance for low-income families with children and people with disabilities (see Figure 1).  This is despite the fact that these programs make up just over one-quarter of DC’s total local budget. Since the start of the recession funding for human services and other low-income programs has been cut more than any part of the budget other than economic development (see Figure 2). 

Those cuts were made despite tremendous increases in poverty, unemployment and homelessness due to the recession.  The cuts end up costing DC more in the long run as these families turn to more costly emergency services once they have reached a crisis point.  Take, for example, the significant amount of money the District is currently spending on sheltering homeless families in motels because of a lack of shelter space and affordable housing options to help families move towards permanency.  

There are no easy choices when it comes to cutting public services.  But this year, Mayor Gray should work to take a more balanced approach when making cuts to the budget.  Because loading them on the most vulnerable residents is not only bad for low-income families, but bad for the city as a whole.  

Tune in tomorrow when the District’s Dime will discuss how Mayor Gray can limit how deep he cuts public services by raising revenue. 

You may not know it, District Dime readers, but this is a really important week for the shaping of DC’s Fiscal Year 2013 budget. 

Mayor Gray will release his budget on March 23rd.  He and his staff need to finish their work — so-called “pencils down” — around March 13th in order to get the budget finalized by that date.  This means that many key decisions on how to meet the city’s most pressing needs while presenting a balanced budget will occur over the next week. 

This week’s District Dime will focus on the options that are likely to be laid out for the Mayor, and how we hope those discussions will go.  

So what do we know so far? 

Budget Gap: $164 million.   The city’s budget director explained last week that DC faced a gap of about $200 million between the cost of maintaining current services and expected revenues.  This reflects a widely reported $150 million gap, plus $50 million due to recent audits showing rising school enrollments.  A new revenue forecast from Dr Gandhi last week showed $36 million in additional revenues, bringing the gap down to $164 million.  

Many agencies will be lucky to get inflation increases.   The starting point for every DC government agency’s budget will be its “current services funding level,” reflecting what it needs to support existing programs.  In many cases, this mainly means an inflation adjustment.  Given DC’s tight resources, agencies should consider themselves lucky to get even this. Mayor Gray already announced he will provide a two percent inflation increase in the “Uniform Per Student Funding Formula” used to fund DC Public Schools and DC Public Charter Schools.  

What options will be on the table?  The Mayor’s challenge will be to decide where to trim agency budgets below their inflation-adjusted mark and where to raise revenues to limit the need for cuts.  If he is really lucky, the Mayor will identify options that save money without having to reduce services or raise revenues. But those are hard to come by. 

These are the tough choices that government leaders must make.  Last year, Mayor Gray’s budget reflected a reasonable balance of program cuts and revenue increases, but a closer review of the service cuts shows they fell especially hard on low-income residents.  At last week’s forum co-sponsored by DCFPI, the Fair Budget Coalition, and Think Twice Before You Slice, the Mayor’s budget director suggested that his boss probably won’t propose rate changes for the city’s major taxes, and that cuts to public safety and education are difficult to make.  Does this mean that another round of cuts to low-income programs is in store?  

DCFPI certainly hopes not.  We support the idea of a balanced approach, one that spreads the pain of service cuts as broadly as possible and that relies on a mix of revenue increases and cuts to public services. 

Stay tuned as we explore these topics in more detail.

What’s in store for the Fiscal Year 2013 budget? Yesterday we got some clues.

Late yesterday afternoon, Chief Financial Officer Natwar Gandhi released the February revenue forecast which informs city leaders on exactly how much money we have to spend. The FY2013 estimate showed that DC will collect $36 million more than was anticipated in the last revenue forecast. This was welcome news, because the additional dollars help reduce an approximately $200 million budget gap to $164 million or so to maintain current services.

The boost in revenue was due to two factors: $23 million more was from the revision of a less severe impact on DC’s economy from federal sequestration—the across the board cuts that were supposed to go into effect after the Congressional Supercommittee failed to reach agreement on deficit reduction—and $13.1 million more resulting from the revenue enhancements put in place last year. The current fiscal year also saw an uptick in revenue—an increase of $35 million—largely due to stronger than expected collections in estate and economic interest transfer taxes.

So what to do with these unexpected dollars? As Gandhi noted, he remains cautious about the future and in fact in the near future, such as FY2014 and FY2015, he sees overall revenue growing more slowly than in the current fiscal year. That means that it would be tough to spend the extra dollars on on-going programs, because when you take the cost of maintaining services into account there may not be the revenue to sustain the spending in future budgets.  But it is a reasonable approach, given the large cuts taken in the budget last year, perhaps to use this windfall to fund critical programs that have been hit by the budget ax, such as the Housing Production Trust Fund or TANF. These are programs that had severe cuts in last year’s budget.

Earlier in the day, DCFPI hosted some of the biggest players involved in the FY2013 budget for a preview discussion: Deputy Mayor for Health and Human Services Beatriz “BB” Otero; Deputy Chief of Staff and Budget Director Eric Goulet; and DC Council Budget Director Jennifer Budoff. Both Goulet and Budoff gave presentations that are available here and here.  In response to several questions about revenue, Goulet cautioned that he does not anticipate Mayor Gray proposing a rate increase on what’s known as the big three: income, sales and property taxes. He said the Mayor wants to continue to take a balanced approach and would consider additional revenue options. On the cuts side, he hinted that human services would likely see significant reductions.

DCFPI Executive Director Ed Lazere also made a presentation, emphasizing a balanced approach to the budget that included revenue and a more even distribution of cuts. Last year, about two out of three cuts came from housing and human services. And Lazere presented various options for revenue, which are found on page 6 of the presentation. They include the foregoing of spending on “paygo;” applying the income tax to households by eliminating the married filing separately option; and expanding the sales tax to additional goods and services.

Want to see What’s In Store? Catch it on DCFPI’s YouTube Channel.

“[A]rbitrary and capricious”: These are two words you do not want associated with the expenditure of our precious tax dollars. Yet that was the conclusion reached recently by the DC Contract Appeals Board regarding the District’s process in awarding a year-round youth employment contract to one Camps Springs, Md., group. It is a clear illustration of the DC’s lack of data to make informed policy choices, a deficiency discussed in a recent brief I helped co-author:  Beyond Good Intentions:  Using Data to Promote Economic Opportunity. 

The ruling is especially concerning because of the high unemployment rate among District teenagers and young adults. According to recent Census figures, nearly one out of six District residents aged 16 to 24 who were looking for work in 2011 couldn’t find a job. 

The District uses both federal and local resources to provide job readiness and training to young workers, but the Board’s ruling shows that we’re not always deploying these dollars judiciously. The Year-Round Youth Employment Program, which works with youngsters both in-school and out-of-school and is administered by the DC Department of Employment Services (DOES), received nearly $10 million in funds in Fiscal Year 2010, according to the recently released DCFPI Workforce Development Resource Map. 

It almost goes without saying that helping youngsters with good training that will place them into jobs and hopefully on the path to careers is a key investment that can pay big dividends not only for them but for the city as a whole. Yet the Contract Appeals Board found that the city’s Office of Contracting and Procurement (OCP) failed to follow proper procedures in evaluating proposals to provide workforce development services to youth. Among the many irregularities cited by the board were actions by OCP staff suggesting they wanted to award a contract to Synergistic, Inc., regardless of merit or performance. 

The DCFPI map shows that Synergistic received at least $200,000 for providing services for the year-round youth program in 2010, so the agency should have information on its outcomes, right? So how did Synergistic do?  How many young residents did it train? Did any of these youngsters receive jobs? We don’t know, because such information is not publicly available, and it does not appear the District took performance data into account when it awarded the new contracts. It calls to mind a discussion held at a recent Brookings event centered on improving youth educational and employment outcomes about why the District doesn’t do more to make sure it funds organizations that use evidence-based practices and provide data about their outcomes.  The appeals board ruling provides part of the answer:  The procurement process does not always value data or outcomes.  

Because the District uses federal Workforce Investment Act funds for some of its year-round youth programming, the city needs to meet federal performance measures, including placement in employment and/or education, attainment of a degree or industry-recognized certificate, and literacy and numeracy gains. Correspondence between the District and the U.S. Department of Labor indicates that DC has failed to meet these performance measures for several years. In order to comply with federal requirements, the city should systematically review the performance of all its contractors.  In addition to DOES, the Workforce Investment Council, recently reinvigorated by the Gray administration and with clear oversight responsibility, will have an important role to play.  One obvious way to improve the city’s performance is to examine who is doing a good job and fund them to do more of it. OCP should be a help in this regard, not a hindrance.  

To its credit, the District identified OCP’s performance as an issue, and did so before this ruling came out.  Recently Deputy Mayor for Health and Human Services Beatriz “BB” Otero and OCP Director James Staton Jr. met with a group convened by the Nonprofit Roundtable of Greater Washington to discuss necessary improvements in city contracting. The Contract Appeals Board ruling suggests they should attack the issue most urgently:  As the opinion states, the  current situation should set off “alarm bells” translating into “decisive action” to conduct lawful contract solicitation and awards, with the ultimate goal leading to improved outcomes for District youth through evidence-based  educational and job-training services. 

The District ended 2011 with an average yearly unemployment rate of 10.3 percent, slightly higher than the rate for 2010 and far higher than that for 2007 before the start of the recession. This is a sign that economic weakness continues to affect DC residents. 

Who are the District’s unemployed residents?  DCFPI’s latest look at data from the Census Bureau’s Current Population Survey shows that the increase in unemployment in DC has been widespread, but high school graduates and Black residents have experienced the highest increases in unemployment. 

Highlights of our findings include: 

• Residents with a high school diploma faced a substantial increase in unemployment. The unemployment rate for DC residents with a high school degree rose from 9.7 percent in 2007 to 25.3 percent in the fourth quarter of 2011. In 2011, unemployment for DC high school graduates surpassed that of residents without a high school diploma, 24 percent versus 22 percent. 
• Unemployment among Black residents has risen notably. The unemployment rate for Black DC residents has been rising since 2007, and increased again last year, from 18.4 percent in 2010 to 19.4 percent in 2011.  The 2011 unemployment rate for Black residents was more than double that of 2007, when the rate was 9.4 percent.
• Young workers still have a high unemployment rate. The unemployment rate for 16-24 year old DC workers stood at 17.4 percent for 2011, the highest among all age groups. However, this is a marked improvement from 2010, when the unemployment rate among this group was 19.6 percent. Young workers comprised the only DC age group to experience a drop in unemployment from 2010 to 2011. 
• Low-wage workers saw a slight decrease in unemployment rates this year. The rate for low-wage workers decreased from 19 percent in 2010 to 18.1 percent in 2011. However, low-wage workers still hold the highest unemployment rate by wage. 

High unemployment in the District has affected vulnerable populations who are having special trouble enduring these difficult economic times. The economic recovery is far from complete, so it is important to consider policies to support these populations with high unemployment rates. 

To view the full report, click here.

Don’t Forget to Attend “What’s In Store”—a preview discussion of the District’s Fiscal Year 2013 budget. It’s less than a month before the mayor presents his plan! Join us Wednesday afternoon as DCFPI teams up with Fair Budget Coalition and Think Twice Before You Slice to present several informed perspectives. Speakers include:

• Eric Goulet, Budget Director, Mayor’s Office of Budget and Finance
• Fitzroy Lee, Chief Economist, Office of the Chief Financial Officer 
• Jennifer Budoff, Budget Director, Council of the District of Columbia

The forum will be held on Wednesday, Feb. 29, from 1 to 2:30 p.m. at DCFPI, 820 First Street NE on the 4^th Floor (near Union Station Metro).  An R.S.V.P. is requested, so please email or call Tina Marshall, marshall@cbpp.org or 202-325-8786.

===============================================================

What is the most equitable way to fund DC public and public charter schools? Are we spending too much? Too little? How can we make the schools budget more readable and accessible to parents, teachers and community members? These are some of the tough questions that were tackled by the District of Columbia Public Education Finance Reform Commission, which released its recommendations report to Mayor Gray and DC Council earlier this month. 

The independent Commission was established under 2010 legislation, in large part as a response to concerns from public charter school supporters who felt they were not being funded fairly when compared with DC Public Schools. The 15-member commission, chaired by DCFPI’s Ed Lazere, was charged with examining this issue of “equity” of school funding, but also to examine broader issues, including the “adequacy,” “affordability,” and “transparency” of DC’s education finance.  The Commission had just a few months to operate and address a wide range of complex issues in order to inform the 2013 budget. So, what exactly did the Commission cover? 

Are all DC Schools Being Funded on a Uniform Basis? Local education funding is distributed to both DCPS and each charter school through a formula called the “Uniform Per Student Funding Formula.”  The UPSFF is supposed to fund programs and services for both types of schools on a uniform basis. 

Public charter school advocates said they have been at a disadvantage, because DCPS has received funding beyond the formula for building maintenance and because DCPS has benefited from mid-year funding bumps that charter schools did not receive. Yet several commissioners noted that DCPS has a different set of responsibilities that affects its funding needs. DCPS must provide a school of right to any school-age child in DC at any time of year, no matter their educational needs, while charter schools are not required to take new students after October 5 each year. Also, DCPS is responsible for a large amount of space, managing many buildings that are old and built for a larger student body. 

Ultimately, the Commission recommended that facilities maintenance funds be recalculated based on actual cost factors to schools, such as industry standard rates, building age, and amount of building space. At the same time, the Commission encouraged the city to create incentives for more efficient use of school space, including co-location of DCPS schools and public charter schools in the same building. 

The Commission expressed concerns over mid-year supplements to the DCPS budget. Ultimately, though, commissioners did not reach consensus that a situation leading to additional funding needs for DCPS necessarily should also translate into a proportional funding increase for public charter schools. 

Are we spending enough? Perhaps surprisingly, the Commission’s report found that DC spends less per student than neighboring school systems in Arlington County and Alexandria, and is comparable to spending in Baltimore. 

Due to limited time, the Commission was not able to analyze the full costs of an adequate education in DC before the report deadline, but it recommended that a full-scale adequacy study be completed to address this question. The outcomes could lead to revisions to the Uniform Per Student Funding Formula, which has not been updated since 2008. The process may take up to a year, so any findings that come out may not go into effect until FY 2014. 

In particular, Commissioners noted that DC’s current funding formula does not target any local resources to low-income students. It recommended the study look into a provision of additional funding to schools based on the number of students who are both low-income students and academically behind. 

Helping Charter Schools Find Adequate Buildings: Public charter school supporters are concerned with the way they receive funds to support acquisition or modernization of facilities. Each charter school receives $3,000 per student per year for these costs, but the level has been a bit unstable, making it hard to secure mortgage or construction loans. The charter school advocates also argued that $3,000 per student simply was not enough, especially for new schools trying to obtain adequate facilities. 

However, facilities funding was not part of the Commission’s initial charge, and there was not enough time to explore this matter in addition to the stated goals of the Commission. This important issue undoubtedly will come up again in the future.   

While not everyone got everything they wanted out of the Public Education Finance Reform Commission, the report examines several key issues related to fiscal equity and uniformity for all of DC’s publicly funded schools. It can serve as a springboard for DC’s policymakers to re-engage the public in these critical decisions affecting our schools. While the Commission’s recommendations now sit with the Mayor, it is important for the larger community to take notice of this report and weigh in on these recommendations for FY 2013 and future budget cycles. 

As District Dime regular readers know, DC recently launched a substantial re-design of Temporary Assistance for Needy Families (TANF), the welfare-to-work program for families with children, to help more families with children prepare for work and find jobs with good wages and benefits.

But the success of the redesign is at-risk.  There is a mismatch between DC’s recently adopted time limit policy — which will reduce benefits to as low as $260 a month for thousands of families this year — and the implementation of the new TANF employment program, because many families will have their benefits cut before they can even access the new TANF services. 

On Tuesday, Councilmembers Michael Brown and Jim Graham co-introduced legislation “Temporary Assistance for Needy Families Time Limit Amendment Act of 2012” to better align time limits with the new employment program.  And today, DCFPI released DC’s New Approach to the TANF Employment Program:  The Promises and Challenges, a report that reports on the potential for the employment program to help more families and also and outlines the issues that may interfere with the goal of helping parents achieve self sufficiency. 

The DCFPI report highlights the promising elements of the TANF re-design.  Rather than the “one-size fits all” nature of DC’s TANF services up to this point, the new TANF program uses a one-on-one assessment to identify each parent’s barriers to employment and then provide a set of services tailored to these needs.  In spring 2011, the Department of Human Services conducted a pilot with 164 TANF families, resulting in a ten-fold increase in the share of TANF recipients participating in work activities.  This was achieved in just 5 weeks, indicating that parents are willing to participate in activities if they are matched to their actual needs.  

But the success of the redesign is put at-risk by the looming cuts to basic assistance for families with children.  The new employment program is complex and will take time to implement.  Only a fraction of the 18,000 TANF families have been assessed and referred to an employment service provider.  It is likely that many will not be referred before the benefit cuts go into effect in October.    

Additionally, DC lacks the reasonable exemptions to time limits most states offer to protect the most vulnerable and allow them the time to deal with serious issues that interfere with their ability to work such as domestic violence, illness, or caring for a family member with a disability.  DC currently exempts these individuals from work activity requirements during affected months with the understanding that they are accessing services to deal with these issues.  But DC does not disregard these months from the time limit, meaning that parents who are dealing with the biggest issues may have little time to prepare for and train for work once they have addressed these issues.  

The “Temporary Assistance for Needy Families Time Limit Amendment Act of 2012” would provide reasonable time limit exemptions for vulnerable parents and would allow all parents time to take advantage of new employment services.  This bill is a positive step towards ensuring that the new TANF program is a success by incentivizing work while protecting our most vulnerable families. 

To view the full report, click here.

With just over a month to go before the Mayor releases his FY 2013 budget, join DCFPI, Fair Budget Coalition and Think Twice Before You Slice next week for a forum on the latest information and perspectives on the FY 2013 budget. 

Featured speakers include:

•   Jennifer Budoff, Budget Director, Council of the District of Columbia

•   Eric Goulet, Budget Director, Mayor’s Office of Budget and Finance

•   Fitzroy Lee, Chief Economist, Office of the Chief Financial Officer

•   DC Fiscal Policy Institute

The forum will be held Wednesday, February 29th.  Registration starts at 12:30 and the program runs from 1-2:30pm.  The forum will be held at DCFPI, located at 820 First Street NE (near Union Station Metro).  An R.S.V.P. is requested, so please R.S.V.P to Tina Marshall, marshall@cbpp.org or 202-325-8786.

Our goal over the past week has been to look at DC’s streetcar plans through a different lens, going beyond its transportation impact to understand that this project is really about economic development.

Today we want to focus on where the District will get the money to build the streetcar system, with estimated construction costs of $1.5 billion. Although the project is well underway, city leaders acknowledge that key financing details remain to be hammered out in a comprehensive financing plan that is still being put together. This morning, Councilmember Mary Cheh introduced the “Surface Transit Planning Task Force Establishment Act of 2012” that would create a 7-member taskforce to oversee financing for the streetcar system.

The financing of the streetcar system will be critical to determining whether the benefits outweigh the costs and whether the District will be able to help existing residents and businesses remain as property values inevitably skyrocket.

Here are some key streetcar financing issues to be considered:

Should DC Raise its Debt Limit for the Streetcars? We say “no.” Current law limits the District to spending no more than 12 percent of its budget paying off debt such as bonds. DC already is close to the limit, which means the city will need to be creative to manage the increased borrowing needed for streetcars. Mayor Gray recently signaled a willingness to explore increasing the debt cap. But given Wall Street’s word of caution regarding DC’s bond rating, it would be best to finance the streetcar within the existing debt limit.

How to Use Rising Property Values to Help Pay for the Streetcars: The Streetcar Land Use Study finds that the “increases in real estate values and development that the streetcar could spur over a ten-year period…would exceed the projected cost of creating the system by 600% to 1,000%.” The study suggests some form of “value capture,” tapping into that economic activity to finance the system. This is compelling because it would ensure that the businesses and residents who stand to gain the most from the streetcar system, directly contribute to its construction and maintenance.

Value capture methods could include a special tax or assessment on businesses and residents in the area or simply setting aside a portion of the increased property taxes within the streetcar corridors.

A special tax or assessment may make sense, but this could add pressure to small businesses currently in the streetcar corridors, which are already vulnerable to dislocation as rising property values make it more expensive and difficult for them to remain in their neighborhoods.

If the District’s “value capture” is tied to the increase in property taxes resulting from rising land values, only a portion of the new revenues should be diverted to the streetcar project, with the rest going to the general fund. This is important to ensuring that the streetcar project results in fiscal boost to the city as a whole.

Financing Needs to be Put in Place Soon: Along the H Street NE corridor, many new residents and business have arrived in anticipation of the streetcar, and  property values and rents have already risen in the area. If the District wants to capture rising property values to pay for the streetcar, it should do so sooner rather than later.

Currently, there are more questions than answers when it comes to the question of how to pay for the streetcar system. Hopefully DDOT’s financing plan will shed light on these various questions.

Not a single streetcar has started coursing down DC’s streets, yet just the presence of the tracks has jump-started development along H Street, confirming the important role streetcars will play in DC’s economic development for the next 30 years.  Land values have started to rise and new businesses are popping up.  That is good news, but it also means that housing costs will increase sharply, creating new challenges for DC’s already massive affordable housing shortfall.

How will the District manage this economic development in ways that preserve affordable housing?  That is today’s District Dime question.  Unless the District takes steps — now — to address these affordable housing challenges head-on, DC’s low- and moderate income residents may not be able to take advantage of all of the benefits a new streetcar system will bring.   

The recently published Streetcar Land Use Study makes the common-sense point that the streetcars system will lead to a significant rise in housing and land values along the streetcar corridors as more businesses and residents want to locate near the new amenities.  This means that whatever affordable housing is currently there is at risk of disappearing.

DC has several housing policy options to help preserve and build affordable housing along the corridors; such as funds for affordable housing development and preservation, inclusionary zoning (IZ) and public land.  And that is true.  But standing the way of that reality?  The resources to make many of those tools available for preservation and construction.  While the IZ program is up and running, support for DC’s other main affordable housing programs (like the Housing Production Trust Fund) has been significantly reduced through budget cuts and the impact of the recession on DC’s finances.  To make matters worse, federal support for the construction and preservation of affordable housing has been cut way back in recent years. 

 These efforts must start soon, before it becomes too late or too expensive to preserve and build housing that is affordable to a wide array of residents. Indeed, in the case of H Street, it would have been better to start as soon as the streetcar plans were laid. Going in now to build or preserve affordable housing is much more expensive than it would have been several years ago when the streetcar development was first coming to H Street.

A sad sign that the housing impact of streetcars is not being taken seriously is a recent DC Council hearing on the land use study that included three committees but not the Committee on Housing and Workforce Development (as we talked about yesterday, jobs are another important issues missing from the discussion).  Going forward, it’s important to bring the Committee on Housing and Workforce Development to the table when discussing the streetcar project. 

Stay tuned to the District’s Dime tomorrow when we discuss the streetcar’s impact on DC finances and small businesses.  

The District’s ambitious streetcar plan will take 30 years and roughly $1.5 billion to build. Thirty-seven miles of tracks need to be installed, large streets need to be re-engineered and repaved, raised stops with pedestrian shelters need to be constructed, and many, many other projects need to be done to make the system work.

So how many jobs will that mean for DC residents?

It’s unclear.

Usually when the city undertakes a large economic development project using public dollars, hiring targets for DC residents are negotiated upfront. This was true in both the construction of the Washington Convention Center as well as Nationals Park. The streetcar project is different, of course, in that it is not one discreet building or complex but a system that will be constructed over a long period of time with the lead agency being the city, through the District Department of Transportation.

In public documents, the only mention of how many jobs this $1.5 billion project will create is when the system is operational. Even then, there’s conflicting numbers and little detail. In the executive summary, the DC Streetcar System Plan estimates that the system will create “200 First-Source eligible jobs at the onset of service” and that number will boost to 700 at the completion of the system. Yet elsewhere in the document it is stated that the first two lines—H Street and Anacostia—will generate “approximately 30 full‐time, permanent jobs.” The total number of operational jobs is lowered to “450 to 500 full‐time, permanent jobs.” These will likely be system operators and perhaps mechanics.

Yet what about using the construction of the streetcar system as a jobs program as well? In its “City Build” program, San Francisco created a public works job placement and training program that serves as a pipeline to city contractors. Administration of the program was placed within the Mayor’s Office for Workforce and Economic Development, creating a stronger link between employers and job seekers. Right now, the District is embarking on a pilot “workforce intermediary” that would act as a matchmaker between job seekers and employers. One likely focus of the intermediary is construction-based jobs, and it might be beneficial to see if the streetcar could be a training pipeline. The skills could be used regionally, as Arlington and Fairfax Counties in Virginia are also embarking on a plan to build a streetcar line along Columbia Pike.

Maximizing our resources is critically important, especially in these difficult economic times. The streetcar is an important project that will expand our city’s transportation options and offer great opportunities for economic development. We need to make sure that jobs are part of the planning.

Stay tuned to the District Dime tomorrow as we discuss the streetcar impacts affordable housing.

Have you heard about the District’s latest multi-billion dollar economic development project?

Nope, we’re not talking about City Center, the remaking of the Old Convention Center site downtown.

And sorry, Tom Sherwood, we’re not talking about a new Redskins stadium.

We’re talking about streetcars.

The District’s 37-mile plan to build a streetcar system is often talked about in terms of transportation, yet it is also a roadmap to see where the District plans to concentrate its economic development resources over the next 30 years. Certainly streetcars will enhance DC’s public transportation options—offering a modern and attractive way to get from Point A to B as well as increasing walkability—but the fact is, many of the eight proposed lines are already served by subway, bus and bikeshare. So why add a streetcar system? As noted in the recently released Streetcar Land Use Study, it is conventional wisdom among urban planners that buses do not drive development. Streetcars do, because the fixed tracks show a commitment by government to invest in a specific area and this type of “premium” transportation is more likely to be used by more affluent riders whom developers and businesses want to attract.

That’s certainly been the case for H Street NE. This historic DC retail corridor, which was ravaged during the 1968 riots, has been a magnet for investment from big developers, small business owners and house hunters in recent years—and that’s before the first red vehicles will even glide down the street’s tracks. (The city’s latest estimate is for the H Street line to be operational by Summer 2013.)

So it’s important for us to ask the same questions about streetcars that we might ask about any other major economic development project:

• What impact will streetcars have on land prices, affordable housing, existing businesses, renters, and homeowners?
• What jobs might be created out of the project and how can city residents benefit?
• What is the best way to pay for such a project, given that the streetcar is estimated to cost $40 million per mile?
• In what neighborhoods should streetcars be built and how should we prioritize who gets it first?

The recently released Land Use Study touched on several of these questions. Over the next few days, DCFPI will explore these topics more in depth: how streetcars will impact affordable housing, how streetcars can be integrated into the city’s job training and workforce development efforts, and how to approach balancing the new investment streetcars will attract with the needs of existing businesses.

Stay tuned to the District Dime for our special streetcar week!

How would you survive if you developed a permanent disability that made it impossible to work?  Most likely, you would apply for federal benefits designed to provide an income for people who cannot work due to disabilities, like Social Security.  For lower-income residents, the appropriate program is often Supplemental Security Income (SSI). 

The problem is that the application process for SSI can take a year or two, if not longer.  In the meantime, how would you make ends meet?

District residents used to be able to depend on Interim Disability Assistance (IDA), temporary aid provided by the city during the long SSI application process.

However, in the last several years, local funding for IDA has been reduced drastically, leaving many vulnerable residents languishing on a waitlist without a means of survival.

IDA provides an income of $270 a month – or about $9 a day – to individuals who are waiting for their SSI application to be approved and have no other means of support.  Although $270 may not seem like a lot, recipients depend on this money for rent (often rent shared with others), prescriptions, and necessities like toothpaste.  Without IDA, many people with disabilities– who cannot work and have no other income – are forced to rely on more costly emergency services, such as emergency rooms and shelters, thus costing the District more. 

Furthermore, if the SSI application is approved, the federal government reimburses the District for IDA assistance paid during the application period, thus helping to fund the program. DC’s recovery rate is in line with similar state programs across the U.S. 

This small monthly payment has a real impact on the residents who receive it.  As an example, Ms. C was the head of a painting crew and then worked at a restaurant.  Her mental illnesses have worsened in recent years and she developed a seizure disorder and arthritis, so she cannot continue working.  Ms. C takes 10 different prescriptions and was hospitalized for a week when her medications were stolen.  With IDA, she could afford the $1 co-pays for each replacement prescription could get her refills each month.  Having a steady income from IDA has kept Ms. C on her medications and out of the hospital during the more than two years she has waited for a decision on her SSI application. (For more stories about IDA, please see here). 

Despite the benefits of IDA for recipients and the federal SSI reimbursement, local funding for IDA has been reduced from $5.6 million in FY 2008 to just $1.5 million in the current fiscal year. 

Only 1,200 residents are able to receive assistance each month compared to 2,900 in previous years.  Without further investment by the Mayor, it is expected that fewer residents will be able to receive assistance even though the need will remain unchanged. 

Restoring IDA is one of the recommendations of the Fair Budget Coalition this year.  To get more information on the Fair Budget Coalition and their campaign to truly Make One City Possible please visit their website at http://makeonecitypossible.com/.

For the first time since the No Child Left Behind (NCLB) Act was adopted over ten years ago, the U.S. Department of Education is offering DC and states a chance to be relieved of some onerous provisions related to school improvement under the 2001 law. In particular, DC and the states can request flexibility from the NCLB requirement that 100 percent of students achieve math and reading proficiency by 2014, as long as they develop a new plan to improve student outcomes and close achievement gaps. 

The District is taking advantage of this invitation. The Office of the State Superintendent of Education has drafted an “ESEA flexibility waiver,” including a new plan to track student achievement and to direct federal funds to struggling schools.  Without the waiver, OSSE predicts that over 200 of the 218 schools in the District — including DCPS and public charter schools —  will not  meet their “adequate yearly progress” (AYP) targets next year. 

Instead of the one-size-fits-all accountability measures associated with NCLB, DC’s new plan would establish measures to recognize when schools are showing academic growth, even if this is not reflected in overall proficiency rates. For example, a ninth grade teacher who brings a student from a fourth grade level to a seventh grade level would get no credit under the current NCLB system of measuring AYP.  But the teacher and school would get credit for this progress under OSSE’s waiver plan. 

The District is also proposing more efficient ways to identify schools in need of assistance and target federal resources to those schools. Under the proposal, all DCPS and public charter schools would be put into one of five categories: Reward (schools with highest proficiency and growth), Good Standing, Continuous Improvement, Focus, and Priority (schools with greatest need for intervention. Additionally, federal resources would be more narrowly targeted, to the lowest-performing 15 percent of schools, with a particular emphasis on the lowest 5 percent (Priority Schools). If three years of intensive intervention does not move a school out of the “Priority” level, OSSE could suggest that the school be closed.  The specifics of the support system and school improvement process are still being determined. 

OSSE has held a series of focus groups with local education stakeholders to engage the public in developing this new plan, and District residents still have an opportunity to offer feedback on the Flexibility Waiver Request until February 14^th. DCFPI hopes you will take the time to review the application and contribute to the conversation on how student outcomes are measured and tied to federal resources in District schools.

First there was the CAFR, DC’s annual financial audit that takes a detailed look at how DC spent and collected local revenues last fiscal year.  Now, we have the Current Services Funding Level — CSFL — which provides a first look at DC’s projected expenditures and revenues in the next fiscal year.  The bottom line?  The costs of services are rising modestly, but continued weakness in the economy means that revenues will be $150 million less than the amount needed to maintain programs and services next year.  That means that although the city ended 2011 with a sizable surplus, Mayor Gray will need to make cuts, raise revenue, or both, in order to present a balanced budget to the DC Council on March 23rd.  

The current services budget shows three important things: 1) how much it would cost to maintain existing programs and services, 2) the areas where costs are rising, and 3) whether expected revenues will be enough to cover those costs.  

The CFO estimates that it will cost $5.9 billion to maintain services in Fiscal Year 2013, an increase of  5 percent over what it currently costs.  This estimate removes any one-time funding for programs that are not expected to continue next year, and it adjusts for expected changes in expenses such as utilities, rent and personnel costs, such as salaries and health care.  The current services funding level also takes into account projected changes in program caseloads and legally mandated changes, such as the inflation increase in the Uniform Per Student Funding Formula used to fund DC Public Schools and Public Charter Schools.  

Why are the costs of services rising? The final page of the CSFL provides a good breakdown of key changes. It shows that he largest drivers are an expected increase in Medicaid enrollment and a new requirement to allocate 25 percent of new revenues into a pay-as-you-go account to fund capital projects. Each of these changes represent 19 percent of total growth.  DCFPI raised objections to the pay-go proposal, noting that tying up funds this way could force DC to make cuts to basic programs and services.  

Lastly, the CSFL shows that expected revenues in FY 2013 are $150 million lower than the costs of maintaining services, a budget gap that the Mayor and Council will need to close through program cuts, increased revenues, or a mix of both.  (Note that without the pay-go requirement, the gap would be $100 million.) 

The CFO will issue another revenue forecast later this month, which may change the story on the size of the expected budget gap in FY 2013.  Stay tuned to the District’s Dime for updates on the revenue forecast and how it will impact the FY 2013 budget. 

One of Mayor Vincent Gray’s stated priorities is to increase the supply of workforce housing, one component of affordable housing needed along the continuum of affordable housing needs. This is a laudable goal — seeking to make DC a place where residents can afford to live close to their jobs. However, if D.C. officials use regional incomes to define “workforce housing,” they will fail to reach most of DC’s low and moderate-income working households. Focusing assistance on households earning below 80 percent of Area Median Income (AMI), or $84,900 for a family of four, better meets the need of the typical DC working family than pegging programs to our wealthy region’s high area median family income. 

A Regional Standard Wouldn’t Serve DC’s Local Workforce  

While there is no one definition for workforce housing, the Urban Land Institute’s (ULI) Terwilliger Center for Workforce Housing describes it as “housing that is affordable to households earning 60 to 120 percent of the area median income.” In the DC area, this would mean housing that is affordable for a family of four with annual earnings between $63,600 and $127,300. Such a definition appears to not recognize that people earning DC’s minimum wage ($17,160 a year for full time work) are also part of the workforce because the term workforce housing is often used (incorrectly) to refer to households earning above a low-income threshold. 

DC has yet to set a clear standard for what workforce housing is, but in the past, the District has used 120 percent of AMI, or $127,300 for a family of four, as the upper limit.  More often, developers will use the upper limit of any affordability range to price rents.  In 2006, the District created a workforce housing land trust that helps build affordable homes for households earning up to 120 percent AMI.  In another instance, the District approved changes to the affordability requirements for the Southwest Waterfront development public land deal.  Previously, the affordable housing to be built on site was intended to be affordable to low to moderate-income households, or those earning between $31,830 (30 percent of AMI) and $63,600 (60 percent AMI).   The approved changes limited the affordable housing to those households earning between 30-60 percent of AMI to the first 500 units built out of a total of 1,200-1,500 units (or 8-15 percent of all units).  The developer was then allowed to fulfill the remainder of the affordable housing requirements by providing units affordable to those earning 100 percent to 120 percent AMI, which the developer termed workforce housing. 

Based on regional income definitions, which includes surrounding counties in Maryland and Virginia, most working households in DC would not earn enough to qualify for a program to assist families earning 100 percent of the AMI, let alone the $127,300 a year, or 120 percent of AMI. This is because the District’s median income for a family of four is much lower, $70,400 – or equivalent to just 66 percent of AMI. 

Who is the Typical DC Working Household?  

Occupations with modest annual wages make up most of the District’s workforce. The income disparities between DC and the larger metro region are evident in Table 1 which compares the area median income (AMI) with median income numbers for District households. 

Working families who wouldn’t be helped by an income standard set at 100 percent AMI include the elementary school teacher and her two children living on an annual income of $62,138 a year, or two working parents such as a security guard and a retail sales clerk earning a combined income of just over $60,000 a year. When we look at the earnings of common occupations in DC (Table 2) – teachers, janitors, security guards, and even police officers – we see that a three-person household with one wage earner for these occupations falls well below 80 percent of AMI. After high-earning lawyers and managers, six of the remaining eight top jobs for DC residents fall below 80 percent AMI, with many falling far below.

DC Workforce Housing Need vs. Availability  

An analysis done by the National Low-Income Housing Coalition shows that the District had a surplus of affordable and available housing units, citywide, for those households earning above 80 percent of AMI (Figure 1).  This indicates that 80 percent of AMI should be a logical upper limit for targeting affordable housing assistance.  The greatest shortages, and greatest housing needs, are found at the lower-income levels, at half of AMI and below. For households earning between 53 and 80 percent AMI, a small surplus exists of units that are both affordable (rent is no more than 30 percent of income) and available (not occupied by a higher income group).   

The Fix: Set DC’s Workforce Housing Standard Upper Limit at 80 Percent AMI 

The greatest housing challenges by any measure – cost burden, shortage, availability – are faced by DC residents earning well below 60 percent AMI. Thus, programs for the lowest income households should be strengthened. Beyond that, as the District seeks to keep more working households in the city, DC should focus assistance below 80 percent AMI ($76,400 for a family of three), so typical working DC families can be helped. With limited housing aid available, it needs to be used more wisely to help struggling DC working families find a home they can afford.

In a city still reeling from a series of school closures under the Fenty administration, education leaders in the District are abuzz over a controversial report on the school system released last week. Commissioned by the Deputy Mayor for Education, “Quality Schools: Every Child, Every School, Every Neighborhood,” also known as the IFF study, recommends that the city close or turnaround 38 traditional public schools and three public charter schools and encourages the replication of high-performing charter schools in  neighborhoods with  the greatest need. DC officials have issued reassurances that there will not be any dramatic transfer of the city school system to public charter schools, but the study has sparked tensions between advocates of traditional public school and public charter schools.

The study analyzes supply and demand for “performing schools” in DC and provides data on the ten neighborhoods that have the largest gap in education service. This is defined as the difference between the number of students living in the neighborhood and enrolled in K-12 public schools (the demand) and the number of seats available in high-performing schools as defined by IFF (the supply). The study relied on DC-CAS test results to measure the number of “performing seats” at each school. IFF developed a four-tier system to rank schools from highest performing (Tier 1) to lowest performing (Tier 4) across 39 neighborhood clusters in the city. Not surprisingly, the need for performing seats was highest in DC’s poorest neighborhoods and for elementary school grades. Over half of the Tier 4 schools are located in Wards 7 and 8 and out of the additional 39,758 Tier 1 seats needed to meet demand across neighborhoods, 21,164 are for kindergarten to fifth grade.

One of the report’s main recommendations is to close or turn around Tier 4 DCPS schools and replace them with high-performing public charter schools. The researchers go as far as to suggest an incentive to maximize existing building capacity – “With cooperation and coordination between DCPS and PCSB [Public Charter School Board], PCSB can use the buildings as incentives to recruit the highest performing charter school operators into the Top Ten priority neighborhood clusters.”

DCFPI’s take? Policymakers should take the analysis with a grain of salt. There have been numerous criticisms of the study, from the rigor of the supply and demand analysis technique to IFF’s ties to charter school funders. For example, the researchers base their definition of quality on a school’s test scores rather than on student achievement growth from year to year, a better predictor of how well equipped schools are at teaching at-risk student populations over time. IFF also did not make the link between performing seats and schools serving large numbers of special education or English language learner students or poverty rates across neighborhoods. Ignoring these critical factors when making policy decisions regarding school closure, turnaround, or expansion would be short-sighted.

The Fair Budget Coalition has kicked off its advocacy efforts on the fiscal year 2013 budget.  A new report from Fair Budget challenges Mayor Gray to “Make One City Possible” for all DC residents by targeting resources on DC’s two most pressing challenges: reducing unemployment and helping residents remain in the city amidst sharply rising housing costs.

Although DC is beginning to rebound from the recession, economic growth is uneven, as in the nation as a whole.  The District’s downtown commercial market is strong, yet record numbers of residents are looking for work.

The Fair Budget Coalition’s recommendations center on these two themes: Creating opportunities to live in the District and to find meaningful work. The coalition urges Mayor Gray to restore deep cuts that have been made in the recession, and in some cases, to make new investments in these areas.

Creating Opportunities to Live in the District: The Fair Budget Coalition’s recommendations to help residents afford to live in DC focus on creating opportunities for better housing and health outcomes. They include re-investing in core housing programs, like the Housing Production Trust Fund and the Local Rent Supplement Program, and maintaining the Home Purchase Assistance Programs. The recommendations also branch out to include health concerns, such as ensuring that DC residents maintain health insurance and protecting victims of domestic violence.

Creating Opportunities to Work in the District: With hopes that the District will tackle its high unemployment rate, the Fair Budget Coalition recommends investments and policy changes that will help resident build skills and create prime environments for employment.  The coalition recommends restoring cuts to adult literacy and child care, and creating a new pilot program to provide housing to homeless families in job training — making it more likely that the training can be completed.  Fair Budget also suggests that DC focus job training efforts on growth industries that offer higher wages.

The Fair Budget Coalition notes that making these investments is critical to DC’s future, and that policy makers should be open to raising revenues, if needed, to support these goals. They offer several revenue-generating ideas, such as requiring two-earner families to report their income together on their tax return, and raising penalties for violating worker protection laws.

The Fair Budget Coalition’s report can be found here.

District Dime readers should have received their W-2 by now. The W-2 form summarizes both your wages earned and your federal, state and local taxes withheld in 2011.  While the thought of tax season officially being upon us may raise some people’s blood pressure, it is also a very important time for low-income families.  

Why? Tax season is the time when families can access one of the most effective anti-poverty programs around, the Earned Income Tax Credit (EITC).  And it is also the time that the DC Earned Income Tax Credit campaign ramps up, helping low-income families learn if they are eligible for this program and help them file their taxes for free. 

The EITC is a refundable tax credit designed to encourage work while also offsetting the payroll and federal taxes that take a huge bite out of low-income working families’ paychecks.  In 2010, the EITC lifted 6 million people out of poverty nationwide, half of them children.  Without the EITC, the national poverty rate would have been one-third higher.  

The EITC was started as a federal program in 1975. Since then, 25 states, including DC, have adopted their own state level EITCs.  The DC EITC is equal to 40 percent of the federal credit and is one of the largest refundable state-level EITC’s in the US.  In 2008, approximately one in six DC tax filers received the EITC. 

The EITC can provide a significant boost to low-income families’ earnings.  For example, a single parent with two children who had $10,000 in taxable income would be eligible for a $4,000 federal EITC and a $1,600 DC EITC, boosting their earnings by 56 percent.  

The DC EITC Campaign not only provides free tax preparation services to low-income families in the DC metro region but also works to provide outreach and awareness of the tax benefits that low-income families are eligible to claim. This is important because DCFPI estimates that as many as 11,000 DC residents who are eligible for the federal and DC EITC did not claim it. 

I volunteer as a tax preparer with the DC EITC campaign, and I see the difference the EITC can make for low-income families.  If you’re interested in joining the effort to help low-income families access the EITC and other low-income tax benefits, visit the DC EITC’s campaign website and sign up today.

DC’s Certified Annual Financial Report, or CAFR, for Fiscal Year 2011 (FY 2011) was released today and came with some good news: The District ended FY 2011 with a $240 million surplus.  The surplus reflects a combination of higher revenues (some of which had been anticipated in previous revenue forecasts) and below-budget spending in some agencies.

While clearly this is good news, several questions about the surplus have been raised, including whether this means DC didn’t have to increase revenues for FY 2012, what will happen with the surplus, and how this news impacts the FY 2013 budget.

Here’s a quick Q&A. We’ll have more to say about the CAFR soon.

Does this mean the District should roll back the tax changes made last spring and fall? DCFPI agrees with Mayor Gray, who said at the CAFR press conference this morning that the District’s finances remain fragile. It’s important to keep in mind that the CAFR is for FY 2011, and that revenue changes such as the increase on high income earners were made to balance the budget for the current fiscal year, FY 2012, and beyond. District leaders construct the budget based on quarterly revenue projections from the Chief Financial Officer. Again, the surplus announced today only covers FY 2011. Dr. Gandhi’s next projection will arrive sometime in February, but the projections last December showed a loss of revenue in FY 2013 and beyond due to potentially significant cutbacks in the federal government.

In other words, right now it appears that the surplus in Fiscal Year 2011 was a one-time gain. As Mayor Gray said, it would not be prudent to make policy changes now based on funds that cannot be projected for FY 2013 and the four years beyond that DC is required to budget.

What will happen with the $240 million? Under current law, the funds will be sent to DC’s savings account, often referred to as the fund balance. Right now, any end-of-year surplus funds are devoted to two separate accounts in the city’s fund balance: Half goes to a “Working Capital” fund, helping ensure that DC has enough cash-on-hand to pay its bills without extensive short-term borrowing. The other half of any surplus goes to a budget reserve that is available to meet unanticipated needs, but—as credit card commercials often say—certain restrictions apply.

What could be done with the surplus? Mayor Gray and the DC Council have made clear that building up DC’s savings is a high priority, and Mayor Gray seemed to indicate that he favors keeping it in the fund balance. The mayor could propose to use some of the surplus funds, but this may not be prudent at this time for these reasons:

• Surplus funds are one-time and impact only FY 2011. If program funds are increased or taxes are lowered, it would impact FY 2012 and beyond.
• DC is facing spending pressures this year. Just four months into FY 2012, a number of agencies have spending needs that exceed their budget. Other spending pressures may arise as the year continues.
• We won’t have a clear sense of the city’s finances until the February revenue forecast.

For these reasons, it makes sense, for now at least, to let all of the surplus stay in the fund balance.

What does this mean for FY 2013? This may be a sign that agency spending is on a trend that is lower than expected and that revenues are on a higher than expected trend.  This could be good news for FY 2013, but we won’t know for sure until the revenue forecast is released and the CFO issues a “current services” baseline budget for 2013.

Stay tuned to the District Dime!

Should DC try to recruit talented teachers to low-performing schools though financial incentives? A teacher incentive bill introduced in November by Chairman Kwame Brown, The Highly Effective Teacher Incentive Act of 2011, would do just that on a pilot basis. It was discussed this week in a public hearing, drawing valuable feedback on the structure and rollout of the program.

Too often, urban school districts like DC face the challenge of attracting and retaining high quality teachers to public schools plagued by high poverty rates and limited resources. Brown’s bill proposes a three-year pilot program to place a maximum of 20 teachers in four high-need schools with the following incentives:

• A bonus of $10,000 per year each year that the teacher remains in the high-need high school (in addition to any IMPACT bonuses);
• Homebuyer and other housing assistance;
• Tuition assistance;
• Loan repayment assistance; and
• Income tax credits.

Both DCPS and public charter schools would be eligible for the program, if passed.

The Office of the State Superintendent for Education reported that 38 of the 218 DC schools are currently identified as high-need, which is defined as schools of 200 or more students that have been in existence five or more years, where less than 40% of their students meet reading and math proficiency and more than 75% of students qualify for Free and Reduced Price Lunch. Earlier this week, Bill Turque noted the uneven distribution of effective teachers – of the 663 teachers deemed highly effective on the latest IMPACT evaluations, only 71 work in the 41 schools in Wards 7 and 8, while 135 teach in the 10 schools in Ward 3.

IMPACT, DC’s existing teacher evaluation system does reward highly effective teachers with bonuses up to $25,000 and base salary increases up to $20,000, but does not directly address the distribution of high quality teachers. DCPS Chancellor Kaya Henderson expressed support for the pilot program, after a provision to exempt participating highly effective teachers from IMPACT evaluations was removed. She and other witnesses pointed out that incentives alone do not cut it — that teachers also need a supportive environment with good principal leadership and parent engagement. Henderson also noted DCPS’ recent efforts to lure effective principals back from Montgomery County by adjusting their pay scale.

Some witnesses expressed concern that the IMPACT system is being used as the basis to identify highly effective teachers for the program, given its controversial nature in DC; others thought the timeline for the pilot program may be too short to see results in student performance.

It is becoming increasingly clear that effective teachers play a critical role in bridging achievement gaps and that the lack of a high quality teacher can adversely affect student success when stacked against poverty and other socio-economic factors. Whether or not financial incentives alone are the answer remains unclear, but it is good that DC’s leaders are thinking about how to address this important issue.

Today, the DC Council held a roundtable on Mayor Gray’s proposed supplemental budget for this year. Why are we looking again at this year’s budget? Two reasons: Chief Financial Officer Natwar Gandhi reported $42 million in additional revenue for this year, and certain programs need more money to operate, in what some like to call a “spending pressure.”

DCFPI’s take? Let’s not make rash spending decisions. We’re only four months into our fiscal year. Let’s put the additional money aside until we get a clearer picture of what our spending pressures will be for the entire fiscal year.

Our complete testimony is below:

Chairman Brown and members of the committee, thank you for the opportunity to testify 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 how policies impact low-and-moderate income families.

I am here today to testify on the Mayor’s FY 2012 Supplemental Budget request, more specifically to ask several questions that the mayor’s supplemental budget proposal raises and suggest an alternative to the Council.

Budgeting is not an exact science. Unexpected expenses occur over a fiscal year that cannot be anticipated, which makes it necessary to add and subtract funds to make the budget balanced.  From the information provided in the Mayor’s supplemental budget, the majority of these appear to be true spending pressures and amount to less than 1 percent of the District’s $6.4 billion local budget.

However, we are concerned that only four months into Fiscal Year 2012, the Mayor’s proposed supplemental budget would use the entire $42.2 million of additional FY 2012 revenue projected by Chief Financial Officer Natwar Gandhi.  This raises several important questions that the Council should consider:

1. Is this the full picture of the District’s spending pressures? Are there other spending pressures that are not being addressed in the Mayor’s proposed supplemental budget?
2. How would using all of the additional FY 2012 revenue now, impact the District’s ability to address future spending pressures?
3. How will this additional spending impact the budget gap already identified for FY 2013 and the remainder of the four-year financial plan?

First, is this the entirety of spending pressures for Fiscal Year 2012? I raise this question because when making decisions about scarce public resources it is important to make sure that we have as much information as possible.  It would be helpful to know if there are other spending pressures that are not covered in this supplemental budget, why they were not chosen to be funded with additional revenues, and how agencies plan to address them.  This would help the public and the Council assess whether these are the highest priority pressures to address.

Second, it is very likely that other spending pressures will arise since we are only one-third of the way through the current fiscal year.  If all of the additional revenue is devoted to the eight programs identified in this supplemental budget, it is unclear how the District would address other equally urgent spending pressures that arise later in the year.  Moreover, the CFO is expected to release another revenue forecast in late February, and if that reflects a downward revision of projected revenues, the District may no longer have the $42.2 million in additional funds for FY 2012 announced in December.

Third, how will the added spending on ongoing programs impact the budget in fiscal year 2013 and beyond?  In the most recent revenue estimate, Dr. Gandhi projected a revenue decline for FY 2013 when compared with the projections made at the time the current budget was adopted.  Any additional ongoing services funded this year would add to the anticipated budget gap in FY 2013.

Mr. Chairman, the DC Fiscal Policy Institute would like to propose an alternative approach to the current supplemental budget.  We recommend that the Mayor and Council set the $42 million in additional revenue for FY 2012 aside and wait until later in the fiscal year, perhaps three months from now, when the District can have a better sense of what spending pressures remain and what our revenue picture looks like.  In the meantime, the Mayor could work with agencies to address urgent needs through re-programming, and the Mayor and CFO could work with agencies to address some of the spending pressure internally.  DCFPI suggests that at that time, the Mayor provide an update of the spending pressures to the Council and public, as well as a plan for how to use any additional revenues to cover those urgent spending pressures that cannot be covered internally.

Lastly, the Mayor and Council should work to restore the operating reserve in each year’s annual budget.  Until a few years ago, the DC budget had a $50 million operating budget reserve to help cover these kinds of spending pressures that arise after the budget is adopted.  In order to make the use of the reserve more transparent, the Council could require that the proposed uses of the fund come before the Council for approval.

Thank you for the opportunity to testify, and I’m happy to answer any questions.

Happy Monday District Dime Readers.  Here’s a look at a handful of events going on in upcoming weeks.

Monday January 23^rd

• 10:00am, Committee of the Whole, hearing on B19-0576 Highly Effective Teacher Incentive Act of 2011, Room 500. Click here for the witness list.

Tuesday January 24^th

• 10:00am, Committee of the Whole, public roundtable on B19-0654 Fiscal Year Revised Budget Request Emergency Adjustment Act of 2012, Room 500. The vote on the bill will be held on Tuesday, February 7^th.

Wednesday January 25^th

• 5:30pm, Next meeting of the Public Education Finance Reform Commission (PEFRC). Petworth Public Library, 4200 Kansas Ave, NW. For more information, visit www.pefrc.org.

Saturday February 11^th

• 9:30am, Mark your calendars to attend Mayor Gray’s “One City Summit”, a citywide town hall meeting, that will bring together 1,000 residents to discuss how to improve quality of life in the District for residents across neighborhoods, income levels, and backgrounds. Register here.

Good morning, District Dime readers.  We hope you had a nice MLK, Jr. weekend. 

As you know, one of DCFPI’s wishes for 2012 is that the District fully implement its re-designed TANF program to help more families with children prepare for work and find jobs with good wages and benefits.  Today’s column highlights the indicators of progress we hope the District will measure and share on this new endeavor.  Given Dr. King’s focus on economic rights — the need to give poor families the tools to succeed — in addition to civil rights, this topic is especially relevant today. 

The District’s re-designed TANF program aims to do a better job identifying the barriers to work faced by DC’s families, and then provide a set of services tailored to the each family’s needs.  In return, all families will be expected to make progress on their “Individual Responsibility Plan.” 

So, how will we know how things are going?  The District’s Department of Human Services can let us know by sharing information in a timely way on different aspects of the new effort.  Some of the indicators are outputs — such as the number of families assessed and referred to new services.  Later on, it will be good to get information on outcomes — such as the number of parents completing training and getting jobs. 

 Here are some key indicators: 

• Number of families assessed and referred to services:  The starting point for the new program is a thorough assessment of every family’s strengths and employment barriers.  No one will be referred to new services before going through an assessment.  So it will be critical to know how many TANF families are being assessed and referred, on at least a quarterly basis. 
• Major types of needs identified:  How many TANF families are ready to look for work, how many need education or training, and how many have other barriers, such as mental illness?  Knowing the needs of DC’s TANF families is critical to designing an effective welfare-to-work program. 
• What kinds of services are families getting?  The District should provide information on the number of families referred to specific service providers, to get a sense of how the re-design is playing out on the ground level. 
• Are families getting jobs?  What kind?  Ultimately, the success of welfare reform will be measured by the number of parents who successfully move to work and keep their jobs.  Knowing how many parents find work — and the wages, hours, and fringe benefits of those jobs — is critical. 

This would be a great start. We look forward to learning more from the District on the success of its TANF re-design.

This week, the District Dime is focusing on DCFPI’s new “resource map” of services and funding for workforce development in the District of Columbia. On Tuesday we went over some basics of the map and how it was put together. Yesterday we reviewed some of the main sources of federal funding that help DC residents enter and re-enter the workforce. Today we’ll examine sources of local funding. 

As the resource map shows, the District makes both large and small investments in workforce development through local dollars. By local dollars, we are referring to monies allocated from the General Fund, which come from sales, income, and property taxes and fees, among other sources. 

What is the largest single allocation of local tax dollars in workforce development?  The District’s Summer Youth Employment Program, which is run by the Department of Employment Services (DOES). Though the program has been significantly downsized over the last few years, it still receives the largest appropriation of local dollars for workforce development. The program provides a six-week subsidized job for District youth ages 14 to 21. 

Another DOES program that receives a large investment is the Transitional Employment Program. It is designed to help some of the hardest-to-employ District residents such as ex-offenders successfully enter or re-enter the workforce through job readiness, training and subsidized employment. 

As we mentioned in previous blogs, DOES isn’t the only game in town. The District also deploys significant dollars through the employment training program in TANF, Temporary Assistance for Needy Families. The Department of Disability Services also has a substantial employment readiness and placement program to help residents with disabilities. 

How successful are these programs in helping residents get and retain jobs? Unfortunately we don’t know as much about that as we should. We hope the collection of this kind of data and a focus on outcomes in determining how to use our precious local dollars will be a focus of our elected and appointed leaders. 

Want paper copies of the resource map? Contact Elissa Silverman at silverman@dcfpi.org or 202.325.8816.

Yesterday, DCFPI released a “resource map” of workforce development in the District of Columbia. The map is a visual snapshot of services and funding to help DC residents get and retain jobs. 

In its efforts, the District uses both federal and local funds. So what are the main sources of federal funding? 

The Workforce Investment Act (WIA) is responsible for much of the federal workforce funding to the District. WIA, as it is known, was put in place to consolidate many of the services the federal government funds. Title I of the act funds training for adult workers, dislocated workers, seniors and youth. You can see where the funds land in DC by looking at the “Federal Grants” line in the map. For example, WIA adult funding goes toward DC Works! Career Centers— One-Stops, in the government lingo— as well as toward Employer Services and Program Performance Monitoring in within the Department of Employment Services. What is program performance monitoring? It is a catchall category in the local Department of Employment Services budget which includes federal as well as local monies for adult job training. 

WIA youth money funds the city’s year-round program for youth, and the Senior Community Service Employment grants helps low-income residents 55 and older find work. Once again, you can see this by looking in the “Federal Grants” line. 

Yet the Workforce Investment Act goes beyond adult and youth job training. Title II of the act authorizes funding for adult and family and literacy programs. The funding for this is found within the Office of the State Superintendent and comes through the U.S. Department of Education.                                                                                                                  

Title IV addresses training for adults with disabilities. The federal funds come through the Rehabilitation Act and fund work readiness and job training services within the District’s Department of Disability Services. 

Another source of federal funding is in the human services cluster. The employment program within the Temporary Assistance for Needy Families (TANF) uses some federal monies, though a majority is done with local dollars.  There is also a federal match for the employment program within the Supplemental Nutrition Assistance Program, formerly known as food stamps. 

Tomorrow we’ll go more in depth on how we spend local dollars on workforce development here in DC.

Today, DCFPI is releasing a “resource map” of workforce development services in the District of Columbia. This project, a culmination of nearly two years of effort, offers a visual way to see how our city spends its resources on services to help residents get and retain jobs. We hope it’s a policy brief that would make the character Rod Tidwell—“Show Me The Money”—in the 1996 film Jerry Maguire proud.

Many states assemble similar resource guides every few years to help elected and appointed officials set strategic workforce policy. The map shows what the District spends on workforce development, what services are offered and who is served. Accompanying the map is additional information—where it was made available by agencies — on grantees including non-profit organizations, colleges and for-profit training providers.

A copy of the map is here. Over the next few days, we will go into some detail to explain it.

Today, we’ll share a few general notes on the map and how it was put together. The map reflects spending in Fiscal Year 2010, the most recent year in which we could obtain accurate information, though we include Fiscal Year 2011 dollars for the University of the District of Columbia Community College to reflect its evolving size and mission. We contacted every DC agency we thought is likely to have workforce development services, in our effort to obtain the most accurate picture of services offered and money spent. We also worked with the Office of the Chief Financial Officer, the mayor’s budget office, and various advocates involved in workforce development.

The map is intended to be a snapshot of funding and services not a precise audit of dollars.

What are a few big takeaways from the map? First, the Department of Employment Services isn’t the only agency involved in workforce development in DC. The map shows that there are a dozen agencies involved in helping residents enter and re-enter the workforce. The Department of Employment Services plays a big role, but agencies including the Department of Human Services and the Office of the State Superintendent also have significant funding.

What doesn’t the map speak a lot about? Very simply, outcomes. How many residents get employment after engaging in these programs and services? There is very little information available on that. Given our limited resources, it is valuable to know what services are most effective. We hope our elected and appointed officials will improve the data on outcomes and build in accountability measures in upcoming years.

Tomorrow we’ll talk about the major federal funding sources in workforce development and how they are deployed to help DC residents.

Legislation now before the DC Council would update a property tax deduction for seniors that has not been adjusted for inflation for 20 years. It sounds like the kind of proposal the DC Fiscal Policy Institute normally would support – and indeed we support the concept behind it. But DCFPI testified this morning that the bill should not be the top priority for tax relief.

Currently, DC law gives homeowners age 65 and older, with incomes of up to $100,000, a 50 percent property tax break on their principal residence. Today, the Council’s Finance and Revenue Committee held a hearing on legislation that would increase the income eligibility for this deduction to $125,000 per year.  

DCFPI believes that it makes sense to adjust tax benefits regularly to account for inflation. Without periodic adjustments to income eligibility and the size of tax benefits, the value of those benefits decrease over time as the cost of food, utilities, and everything else we buy increases. Failing to adjust income thresholds also means that the number of residents eligible for them will decrease. 

We thus support the intent of updating the senior property tax deduction, but it is not so clear why this particular tax benefit is a top priority for a makeover. There are several prominent parts of the tax code that are not adjusted for inflation, and many of these affect low and moderate income District residents. The legislation to update the senior property tax deduction on the other hand, would benefit residents with incomes between $100,000 and $125,000. Yet half of all DC households headed by an elderly resident have incomes below $40,000, and 80 percent have incomes under $100,000. 

If the DC Council wants to focus on addressing tax benefits that have diminished due to inflation, we recommend focusing on “Schedule  H”, which offers a tax credit to households with incomes below $20,000 when property taxes are high relative to income. The Schedule H income eligibility limit has not been adjusted for 35 years, and neither has the maximum credit amount. DCFPI testified last fall at a hearing on legislation to update Schedule H. 

Tax benefits such as the personal exemption and standard deduction in the income tax also are not indexed for inflation. These tax benefits affect a broad range of District residents, but have remained stagnant for several years. 

The issue of how and when to index tax benefits for inflation may be best addressed by the forthcoming Tax Review Commission, which has been tasked with making comprehensive changes to the District’s tax system. While the problems with Schedule H clearly warrant immediate change, the issue of indexing a broader range of tax benefits for inflation merits further study, in order to set priorities and determine their costs, which could be substantial.

So we read in the Washington Post Style Section that wonks are out, and tradesmen are in. We have a few other beefs with this year’s “The List,” so if DCFPI’s wonk-dom is headed out of fashion, we plan on taking a few others out with us. So here’s our version…. 

OUT: SCHOOLS BUDGETS NO ONE EXCEPT MAYBE MARY LEVY CAN UNDERSTAND
IN: SCHOOLS BUDGETS EVERYONE CAN UNDERSTAND

Will 2012 be the year that parents, teachers and anyone else interested in school reform can finally read and understand the District of Columbia Public Schools (DCPS) budget? We hope so, and we’ll be working collaboratively to help bring about needed transparency in this large and important area of our budget. The good news is that DCPS is aware of the public’s desire for more clarity and is working on changing how information is presented in the upcoming FY2013 budget. We’re also eagerly anticipating the recommendations of the Public Education Finance Reform Commission, which is chaired by our own Ed Lazere. The commission is taking on a range of critical issues facing DC’s public education system, including the rules and rationale behind the Uniform Per-Student Funding Formula and its impact on both DCPS and DC public charter schools. 

OUT: SEEING THOUSANDS OF REASONABLY-PRICED HOUSING UNITS VANISH
IN: AN UPDATED COMPREHENSIVE HOUSING STRATEGY TO KEEP DC AFFORDABLE TO ALL 

It’s been six years since DC last outlined a housing blueprint to tackle how to preserve affordable housing for low-income and longtime residents while still welcoming newcomers to our city. This year would be a good time to update our plans. Time is of the essence, given that the District is expected to add over 150,000 new jobs over the next two decades and could need nearly as many new housing units for workers that will fill them. At the same time housing costs continue to soar making it harder for low- and moderate income residents to stay or move into the District. 

OUT: NOT KNOWING HOW WE SPEND OUR TAX DOLLARS
IN: USING TECHNOLOGY TO IMPROVE DC BUDGET TRANSPARENCY

It’s always good to know the who, what and why’s of spending our public dollars, right? CFO Info is the CFO’s newest resource for online budget information. And while it is off to a promising start, it could be improved by providing additional spending details that cannot be found in published budget documents—namely, the ability to look at local and federal spending at the ‘activity level’ over time. This is where most of the programs and services that DC residents use are found.   

OUT: SUBSIDIES ANYWHERE AND EVERYWHERE
IN:  INCENTIVES TO JUMPSTART DEVELOPMENT IN AREAS WHERE IT IS MOST NEEDED 

Our New Year’s wish for economic development is that the Tax Review Commission will take a comprehensive look at the effectiveness of DC’s “tax expenditures” — including exemptions, deductions, abatements, credits, and rebates —  and develop frameworks for determining which should continue, which should be altered, and how and when new ones should be instituted. According to the most recent tax expenditure report by DC CFO Natwar Gandhi, DC currently has more than 100 tax expenditures that cost the city roughly $2 billion in foregone revenue each year. 

OUT: TALKING ABOUT THE NEED FOR JOBS
IN: EFFECTIVELY USING RESOURCES TO TRAIN OUR RESIDENTS FOR JOBS NOW AND IN THE FUTURE 

Mayor Gray’s One City One Hire is a good start, but this year we need to start tackling how we can best use our resources to help prepare our residents for the jobs that will be available in the future. We plan on working with the executive and legislative branches to review programs like our DC Works! Career Centers to effectively deploy local and federal monies to help our neighbors get and keep jobs.

Our second 2012 wish is for the successful rollout of the Temporary Assistance for Needy Families (TANF) redesign. 

The District is in the midst of implementing a new approach to education and training in TANF, the welfare-to-work program that assists one in three families with children in DC.  The reforms result from a recognition that prior TANF services were not adequately helping parents move towards employment.   Early results are very promising; a pilot of the new program resulted in a ten-fold increase in the share of TANF recipients participating in work activities.  

The new approach — referred to as “universal engagement” — is built on the expectation that all parents on TANF should either prepare for work or address problems that may interfere with employment.  Universal engagement recognizes that these expectations need to be tailored to the parent’s education level, work experience, and challenges.  Some parents have the skills to immediately seek employment.  Others need job training or education first.  Some need to address other employment barriers such as mental illness, low literacy, or a substance abuse problem before they can enter training.  

Some key components of the new program include: 

• Assessment of Client Skills/Barriers: The starting point is an in-depth individual assessment of skills, barriers, education, and goals to best match clients with needed services. 
• Program Orientation: Parents receive a comprehensive orientation to help them understand options available to them for education, training, and supportive services, as well as their rights and responsibilities.    
• Development of Individual Responsibility Plan:  Each parent works with the Department of Human Services to develop a customized “Individual Responsibility Plan” (IRP) to specify what the parent is expected to do to make progress toward employment.   
• Parents who have reasonable levels of job skills and work experience and limited personal barriers to work will receive job placement services to help connect quickly with employment.  Parents who have limited job skills or work experience, but who otherwise face little or no personal barriers to work; will be offered “work readiness” services to help them prepare for employment, including education or training.  Finally, parents with barriers, such as low literacy or domestic violence — will be expected to address those barriers before preparing for work.

These reforms hold much promise but there are major implementation challenges.  DHS will need to assess more than 11,000 TANF families currently required to participate in work preparation activities before these families will be allowed to access these new services.  There is an added time pressure as thousands of families are slated for a reduction in benefits to just $257 a month in October 2012.  In many cases, the parents will not have had the opportunity to take advantage of the new, improved services prior to this reduction. 

Our wish for 2012 is that every family will have adequate time to benefit from these improved services and make progress towards stability and self-sufficiency.  

Check back in with the District Dime tomorrow to see our comprehensive 2012 wish list and perhaps a few fun predictions for the coming year.

Happy New Year District Dime readers!

Like many of you, we here at the District Dime also have some resolutions for the New Year — which we plan to keep, of course — and some wishes as well. This week we will discuss a variety of budget-related developments that we would like to see transpire in 2012 to ensure that the District remains an attractive place to live and work.

Our first wish for the New Year is for the success of the Tax Review Commission.

What is the Tax Revision Commission?

The Tax Revision Commission was authorized by the DC Council last year and given 9 months to study and make recommendations for changes to DC’s tax system.  It will be made up of 11 members, including five appointed by the mayor, five appointed by the DC Council, and one from the Office of the Chief Financial Officer.

What is the status of the Tax Revision Commission?

Although money was set aside in the FY2012 budget to fund the commission, it has yet to get up and running, as both the Mayor and the DC Council continue to deliberate on their choices for commissioners. We agree that it is important to get the selection of commissioners right, which is why it is good that he commission legislation calls for 6 of the 11 members to be tax experts.

However, we also believe that it is important for the commission to get rolling sooner, rather than later.  DC’s economy has changed substantially since the last commission in 1998, while many of DC’s taxes have not kept up with these changes. For example DC’s property tax credit for low-income residents has problems that result in very few residents claiming it, the standard deduction in the income tax has not kept pace with inflation, and the sales tax has not been modernized to reflect the changing spending patterns of consumers, who spend much more money now on services than in the past.

Our wish today is that the next time we write about the Tax Revision Commission, we will be able to comment on its progress and its ultimate success.

Check back in with the District Dime the rest of this week to see what else is on our wish list for this 2012.

The District’s Dime is going on vacation and will resume posting in the new year.  We wish everyone Happy Holidays.

Happy Holidays District Dime readers!

Let’s start with the good news. On Thursday afternoon, DC Chief Financial Officer Natwar Gandhi gave DC residents some holiday cheer, announcing a $42 million revenue surplus in the current fiscal year (FY 2012). But it turns out that that good news ill be short-lived, because Gandhi also said that expects large revenue shortfalls over the next three years.

The increase in revenue collections in the current fiscal year is driven primarily by higher than expected income and sales tax revenues. But that uptick is expected to slow down significantly in future years because of the impact to the District’s economy from significant across-the-board cuts to federal programs, slated to take effect in early 2013. Gandhi notes that the significant cuts in federal funds will likely result in reduced wages and cautious spending in the District, leading to lower income, sales, and deed tax collections.

In FY 2010, 60 percent of the District’s economic activity came from federal spending. Gandhi projects the reduced federal spending will contribute to a deficit of $46 million in FY 2013, which is expected to increase to $130 million by FY 2015. Gandhi noted that the outlook could change, depending on how and in which program areas Congress decides to make the cuts.

As for the $42 million surplus in the current fiscal year, it is not clear at this point how those funds will be used. Prior revenue surpluses were required to be spent on a contingent list of priorities passed by the DC Council in the spring, including funding for mental health services, health care, and police officers. That contingency list no longer applies to current or subsequent revenue forecasts.

The $42 million surplus will likely be one of the first topics the Council and Mayor take up when they return from the Holidays. Tune in to the District’s Dime after the New Year for more details on what the most recent revenue report will mean for the District’s budget.

The District has a great opportunity to access federal job training funds to help DC residents who are eager to go to work or get a better job.  It comes, of all places, from the federal food stamp program, now known as SNAP. 

The SNAP Employment and Training program provides federal funds to cover half of the costs of a wide array of employment-related services for people who get food stamp benefits.  It can support programs operated directly by the DC government, but it even can bring federal funds to non-profit training providers to enhance their services.  SNAP E&T can support education and training for a large share of DC’s low-income population, because most low-income residents receive SNAP food benefits. 

Until recently, the District has barely made use of this resource.  This year, the city started to take greater advantage of SNAP E&T, but it could be doing even more.  For example, the Fiscal Year 2102 budget includes $4.6 million in local funds for adult job training. If that were made part of SNAP E&T, it could be expanded to as much as $9.2 million with federal funds.

A new policy brief from the DC Fiscal Policy Institute highlights ways the District can use the SNAP Employment and Training Program to expand workforce development.  With DC’s unemployment still higher than in the peak of the official recession, accessing more federal funds for job training should be at the top of the city’s New Year’s resolutions list.

SNAP E&T doesn’t require the city to re-invent the wheel by creating new programs.  The city can incorporate or coordinate existing workforce development programs into SNAP E&T — by identifying participants who receive SNAP benefits and making sure the education or training program is part of an employment plan for that person — and then accessing federal funds to support program costs.  To be sure, doing this creates new administrative requirements, but it seems worth it. 

DC already is taking some steps in the right direction.  Last spring, the District provided SNAP employment and training funds to a number of non-profit training providers for the first time.  The city also has raised the possibility of partnering with groups getting workforce development funds from Wal-Mart, bringing SNAP E&T funds to enhance the private funds.  And the DC Department of Human Services has initiated efforts to coordinate some programs operated by the Department of Employment Services through SNAP E&T. 

These efforts are promising and should be pursued fully.  At a time when it is hard to look to the federal government to expand important services, the SNAP Employment and Training program is a precious gift. 

DCFPI’s policy brief can be found here.

If improving the transparency and equity of DC school financing are on your wish list this holiday season, you will be pleased to know the District of Columbia Public Education Finance Reform Commission is on the case. The Commission, an independent body established as a result of legislation adopted in 2010, is charged with examining and making data-driven recommendations for revising the methods used to fund DC Public Schools and public charter schools: the “Uniform Per Student Funding Formula.”  The Commission is specifically required to explore issues of “equity, adequacy, affordability, and transparency” faced by both traditional public schools and public charter schools. The legislation text can be found here: DC Code § 38-2914- Public Education Finance Reform Commission. 

The Commission will hold four meetings between now and January 31^st – an aggressive timeline that will allow them to deliver recommendations to Mayor Gray as he develops his Fiscal Year 2013 budget. The next meeting will take place this Wednesday, December 21^st from 6:00 to 9:00 pm at the Friendship Chamberlain Charter School (1345 Potomac Ave SE 20003).  Background documents, including agendas, notes, and audio recordings of the past three public meetings can be found on the Commission website at http://www.pefrc.org/. 

In addition to attending meetings to offer public input, you can offer feedback to the Commission in the following ways:

• E-mail: info@pefrc.org.
• Call: 1-202-688-5438. Note: you must dial 1+202 in order to place the call successfully.
• Engage with social media: Like the Commission on Facebook and follow or mention @dcpefrc on Twitter.

Background documents for each meeting are posted in advance, so that the public can comment, and materials from the proceedings of each meeting are posted afterwards. 

In full disclosure, DCFPI’s executive director, Ed Lazere, serves as the Commission Chair, but DCFPI would be following the proceedings carefully in any case. We hope you look forward to the work of the Commission as we do.

In 2010, the District spent $15 million on business property tax breaks, despite a recession that had reduced tax collections and led to sharp cuts in a number of programs. Also in 2010, the DC Council approved new abatements which will, over time, reduce city revenues by $166 million. Yet despite the large dollar amount and tight fiscal times, very little analysis was done by the District to determine how much bang DC was getting for its tax abatement buck.

Today, DCFPI issued a new report with guidelines for how to weigh the costs and benefits of business tax subsidies. The report, “Making Sense of the District’s Tax Abatement Dollars: Nine Questions to Consider”, raises critical questions that DC’s leaders and the public ought to ask when considering any tax abatement proposal:

1. How much subsidy is required, at this point in time, to enable a project to move forward?
2. Have the developers sought private financing before seeking a public subsidy?
3. How much will the abatement cost in terms of lost revenue?
4. What are the community benefits of the abatement?
5. Does this project address an economic development priority for the city?
6. Are any costs of the abatement hidden?
7. Does this abatement have a clawback provision?
8. Is the cost of the abatement capped?
9. Does an abatement have a sunset and subsequent review process?

This report builds off of two efforts from last year that will improve tax abatement accountability: the CFO’s Unified Economic Development Budget Report, which catalogues economic development spending, and the Exemptions and Abatements Information Requirements Act, which requires businesses seeking tax subsidies to provide cost and benefit information. The new law will help ensure that questions 1-4 are answered before any abatement can be voted on. There is no standard process in place for answering the remaining questions, however.

DCFPI’s new report goes a step further in addressing additional issues that a critical to ensuring that resources allocated to economic development are used more wisely and efficiently.

To view the full report, click here

Ever wonder how the District stacks up to other states when it comes to economic development subsidies (we at the District Dime certainly do)? Well, a new report released today sheds some light on this question. The report by Good Jobs First, entitled “Money for Something: Job Creation and Job Quality Standards in State Economic Development Subsidy Programs,” rates all 50 states and the District on the question of what each state requires of developers in exchange for the subsidies they are awarded.

Unfortunately, the District earned the dubious distinction of ranking dead last in the report. Our score: 4 out of 100.

The GJF report measures three main criteria of state economic development subsidy programs:

1)      Job Creation Requirements: Do programs require subsidy recipients to meet job-creation or performance standards?

2)      Wage Standards: Do programs require businesses getting subsidies to pay workers above a certain wage level?

3)      Health Benefits: Do programs require subsidy recipients to provide workers health coverage or other employee benefits?

According to the report, the only District subsidy program that requires developers to meet any performance benchmarks is the New E-Conomy Transformation Act of 2000 (NET 2000). The report finds that in most states, economic development programs at least have job creation requirements to ensure that subsidies will create more jobs. DC’s main economic development programs, like TIF and tax abatements, by contrast, do not make such demands.

It should be noted that this study was initiated prior to the passage this year of the Exemptions and Abatements Information Act. This law will for the first time require developers seeking property tax abatements to spell out the community benefits their projects will provide, including the number of affordable housing units and jobs created by the project. While this act still does not mandate that developers meet specific job creation targets or other community benefits, before receiving an abatement, it is certainly a step in the right direction.

The bottom line is that, particularly in an era of tight budgets, when District residents are being asked to do more with less, the District should do a better job of getting more bang for its economic development bucks. We should follow the lead of other states that use subsidies to get tangible benefits for DC residents and neighborhoods.

The DC Fiscal Policy Institute staff is expanding! This week, we’d like to introduce District Dime readers to our three newest staff members. 

Soumya Bhat is DCFPI’s new Education Finance and Policy Analyst. A DC resident for the past six years, her work will focus on fiscal transparency and equity issues facing public education in the District. She joins us from The Finance Project, where she conducted state fiscal mapping studies and provided research and technical assistance to state leaders on the strategic financing of early education and out-of-school time systems.  Soumya likes to bake, travel, and practice yoga. She can be reached at bhat@dcfpi.org.

Kate Coventry joins us as a Policy Analyst working across a range of issues affecting low-income residents of DC, particularly TANF policy.  Her professional background is rooted in working with community organizations in the Washington area. Kate is an avid knitter in her spare time.  She can be reached at coventry@dcfpi.org.

Jessica Fulton is DCFPI’s new Outreach Coordinator, where her work will focus on maintaining and building connections with the community and gaining support for policy campaigns. She is joining DCFPI following an internship with the Office of Congressman Tim Ryan (D-OH).  She previously worked as a Policy and Research Associate with the Chicago Urban League, focusing on issues of inequality in education, income, and juvenile justice. Jessica enjoys cooking, going to concerts, reading and doing yoga. She can be reached at fulton@dcfpi.org.

Please help us welcome them to the DCFPI team!

Last month, Walmart announced that it was increasing its DC expansion from 4 to 6 planned stores. Walmart now plans to construct stores in Skyland and Fort Totten to go along with the four that were previously planned for Wards 4, 5, 6, and 7.

Reactions from elected officials and residents have varied widely. The debate over Walmart thus far has focused on the increased access to retail, particularly groceries, for many DC residents. But there has been less attention to another important question: if Walmart brings its low prices to the District, what will be the cost to District residents?

Walmart says the average salary at its District stores will be around $11 per hour. What would this mean for a DC resident trying to make ends meet? Most retail jobs are part-time, so assuming a DC resident worked 32 hours per week, he or she would earn about $17,000 per year, less than the federal poverty line for a family of three. A 2010 report from DCFPI shows that the city’s working poor earn about $9 per hour. Walmart’s wages won’t be much above that.

Walmart further claims that each store will employ 300 people. But this figure does not take into account the number of jobs that will be lost at other DC retail businesses, which studies from across the country suggest will happen. So if, for example, a new Walmart brought 300 jobs led to a drop of 100 jobs in other businesses, the real jobs gain would be a lot less. This is not a hypothetical issue. Some of the proposed new stores, such as the Skyland and Ward 6 stores, will be very close to one or more grocery stores. The real jobs figure is what should be weighed against the potential costs of Wal-Mart’s arrival.

Finally, Walmart’s has touted a “community partnership initiative” that may sound like more than it really is because it is non-binding. Walmart has offered some notable benefits, such as support for job training programs and giving preference to District contractors and job-seekers, even though they are not asking DC for any subsidies. But this agreement is merely a promise; none of the commitments are binding. The District has no way of holding Walmart accountable to its promises.

There is no doubt that Walmart would bring inexpensive retail to DC, particularly in some neighborhoods that could use expanded retail options. However, the current debate is overlooking the fact that these low prices may come at a real cost to DC residents.

Today, the DC Council will consider legislation that would alter a program that helps businesses affected by streetscape construction. The changes would make the program more expensive and limit the number of businesses that can get help. That’s not a good business plan.

The Streetscape Relief Fund, which was funded last year to help affected businesses weather a temporary decline in revenue, offers no-interest loans to businesses for the duration of streetscape construction. That’s potentially big help to businesses in Adams Morgan, H Street Northeast, and other parts of town where major street projects have made it hard for customers to get to their favorite restaurant, bar, or music shop for now.

Today’s emergency legislation would change the program from one that provides loans to include grants, tax abatements, and other forms of assistance. There are a number of reasons why the DC Council should resist this change.

This legislation should not be approved as emergency legislation. Given the unprecedented nature of this change, and potential long-term cost, it should be done with the normal hearing and voting processes.

The current program, a 5-year no interest loan, already offers business generous help. Access to low-interest credit is a real premium to any business. The structure of DC’s loan program allows businesses to finance all sorts of things with no money out of their pocket for years.

Streetscape work in the long-run is a benefit to businesses. Just like a home remodeling project, it may be hard to endure in the short-term, but is very positive in the long-term. Why should these be the areas getting small business help, as opposed to areas NOT getting streetscape work?

The current loan program is sustainable for the long term and helps more businesses. When a loan gets repaid, the funds are available to lend to businesses in the next areas getting streetscape work. If funds are given away as grants or tax abatements, on the other hand, new funds would have to be found every year. With 18 streetscape projects in the works now, and more planned for the future, the District should make the most efficient use of limited resources in the Streetscape Fund.

Regardless of loan or grant, DC needs a process to make sure funds go to businesses that are struggling only due to construction. There is no such process in the law now to distinguish between businesses that are simply failing and those that are suffering due to construction right now, the funds are awarded based solely on the discretion of the Mayor.

Affected businesses rightly point out that the Streetscape program has not yet delivered any relief. While this is a valid concern, it merely highlights the fact that the problem with the Streetscape Relief Fund as it stands is one of implementation. The DC Council and the Mayor ought to focus on improving the program already in place, rather than dramatically altering it in ways that could impose even more costs on the District.

Hello District Dime readers and welcome back from Thanksgiving!

The District Dime is taking a break from blogging this week. Did all the tryptophan in our turkey dinners get to us? Perhaps. But we are also attending the annual State Fiscal Analysis Initiative conference this week, meeting our fellow state budget analysts from across the United States.

So we’re taking a bye week, and we’ll be back in full effect next week.

Here at the District’s Dime, we’ve been reporting for the last few years on how the number of DC residents in need of help to put food on the table has jumped sharply in the recession. So we were a little surprised to see an article last week in the Examiner that said the number of DC households receiving food stamps dropped from 2009 to 2010.  

Why the difference? 

Well, it turns out the different accounts all come down to the source of the data, and unfortunately the Examiner did not rely on the best available data on use of food stamps (now known as SNAP, or the Supplemental Nutrition Assistance Program) .  The best figures, from the program itself, confirm that food stamp participation is up sharply in DC. 

The Examiner relied on a Census Bureau brief based on data from the American Community Survey (ACS).  While the ACS is a great source for data on incomes, poverty status, health insurance coverage and demographic data, it is not the most authoritative source on the number of people receiving public benefits, like food stamps.    

Instead, researchers typically go straight to the US Department of Agriculture, the agency that runs the program, for direct administrative data on food stamp usage.  The USDA aggregates reports from state and local food stamp offices across the country for a more authoritative look at how food stamp use varied from state to state and year to year.  

USDA figures show a 17 percent increase in the number of DC households receiving food stamps from 2009 to 2010, not a decrease.  It shouldn’t be much of a surprise that the number of families in DC seeking help from the food stamp program has risen in the last few years.  Both unemployment and poverty have worsened in DC over the last few years, making it harder for families to make ends meet and take care of their basic needs. 

With Thanksgiving just around the corner, it is important to remember how many residents are at risk of going hungry — and what an important role the food stamp program plays in fighting hunger.

As we learned over the weekend, the much-talked about congressional “Supercommittee” will likely end with less than super results, and its failure could trigger staggering cuts that will be felt right down to state and local budgets including DC’s. 

Meanwhile, there is also a local effort shave DC’s budget dramatically that – led by a supercommittee of one rather than 12 – that has been much less talked about even thought it could have an equally big impact. 

What’s that?

The District of Columbia “One City Performance Review” was announced by Mayor Vincent Gray with much fanfare earlier this summer as a top-to-bottom review of DC government finances. The effort is being spearheaded by former District Chief Technology Officer Suzanne Peck, who said she would do the work pro-bono and has done similar studies for the governors of Pennsylvania and Delaware. 

According to sources, Peck has asked each city agency to identify how they can reduce their budget, reportedly by 10 percent, as well as identify untapped sources of revenue.  The suggested cuts and revenue will all be combined into a binder for Mayor Gray to review. The submissions are expected to be sent to Peck soon. 

What impact will this have on the Fiscal Year 2013 budget? It is unclear right now.  Given that DC agency budgets have been scrubbed for inefficiencies and cut over multiple rounds during the recession, it is not clear how they will fins substantial additional savings without significantly affecting services.  A 10 percent cut would mean more than $40 million to the Metropolitan Police Department and $65 million to the Department of Health Care Finance. 

In fact, there are many other unanswered questions about the “One City Performance Review.” The effort has received little attention, save a few media reports that revealed city employees involved in the project were asked to sign confidentiality agreements. 

We hope that the final product of the “One City Performance Review” will be available to the public for review and comment.   A one-person effort to cut from every corner of the DC budget is something the public deserves to be brought into, particularly with a mayor who expresses such strong support for transparency.  We hope to hear more from Peck and Mayor Gray about the effort and how its findings will impact the FY 2013 budget.

Tomorrow, the Committee on Housing and Workforce Development will hold a hearing on a bill that aims to increase affordable housing opportunities for certain groups of DC residents.  The bill identifies an important problem, because the targeted groups — such as residents with severe mental illness — have some of toughest affordable housing challenges in the District. But the bill would rely on an affordable housing program, Inclusionary Zoning, that is not best suited to solve it. 

DC’s Inclusionary Zoning program was passed in 2006, but has only recently gotten underway. The program works by giving residential housing developers a “density bonus” that allows them to build 20 percent more residential units than zoning regulations would typically allow.  In exchange, the developers are required to set aside between 8-10 percent of the total housing units as affordable to people who make between 50 percent and 80 percent of area median income, or between $36,000 and $58,000 for a single individual.  

The Inclusionary Zoning (IZ) Amendment Act of 2011 would restrict all housing built under the IZ program to  the chronically homeless, people who have severe mental illness, people with HIV/AIDS, people with developmental disabilities, and people who are victims of domestic violence. 

While the goal of helping these groups get housing is important, IZ is not the most effective solution: 

• Many residents with these special needs have incomes too low to qualify for IZ. For example, about four-fifths of clients of DC’s Department of Mental Health receive Medicaid, meaning that they have income under $22,000.  Homeless residents have incomes on average of less than $8,000 per year.   
• Many of the groups targeted in the bill have better outcomes when their housing is combined with supportive services.   A number studies have found that the chronically homeless spend less time in shelters, hospitals, and utilizing emergency services when placed in housing that connects them with case management and supportive services. IZ housing does not include any supportive services.   

But there are programs the District could look to that would be more effective at providing affordable housing opportunities for the groups identified in this legislation: 

• Expand Permanent Supportive Housing (PSH) and the Local Rent Supplement program (LRSP).  PSH is specifically geared towards the chronically homeless while LRSP is used to create affordable housing for very low-income residents.  Non-profits who utilize LRSP often also provide the crucial link to supportive services.   
• DC can leverage the value of its public land to create affordable housing opportunities.  The District could pass legislation to require that public land used to develop housing should have a certain percentage set aside as affordable.  The value of the public land would provide the subsidy needed to support the affordable housing. This approach was used was by the District in the past, on parcels of land belonging to the Anacostia Waterfront Corporation. Legislation could require that nonprofits providing case management and additional services for populations such as chronically homeless would get preference for any affordable units created.   

There are many residents who need help to afford DC’s extremely high housing costs, and residents with special needs often need more aid to navigate DC’s housing market.  DCFPI supports the intent of the proposed legislation and looks forward to working to support efforts that will meet these goals most effectively.

DCFPI will be testifying this Wednesday in support of legislation that would ease housing burdens for thousands of DC residents affected by gentrification and its impact on their property taxes or rent. 

The hearing is on legislation to modernize a tax credit — known as “Schedule H” —  that is intended to help lower- income residents facing high property tax bills.  Schedule H has been around for 35 years, but while times have changed, the credit has not.  The rules are now so restrictive and complex that very few DC households actually get help from Schedule H.  That would change if the legislation introduced by councilmembers Jack Evans, Michael Brown and Phil Mendelson is adopted.  

The property tax is tied to what your home is worth —  not what you earn — which means there can be times when someone’s property taxes are high relative to their income.  Think about a retiree whose home is in the middle of a gentrifying neighborhood, or a homeowner who lost her job and is having trouble paying bills.  

Property taxes affect renters, too, since landlords pass on their expenses to tenants through the rents they charge.  Given DC’s incredibly high and rising rents, property taxes add to the challenges low-income residents face paying rent each month. 

Schedule H is supposed to help both homeowners and renters by offering a tax credit of up to $750 when property taxes are high relative to income.  (Under Schedule H rules, 15 percent of rent is considered a property tax equivalent.)   But the credit’s design has been neglected for decades and simply doesn’t work well now.  The income eligibility limit was set at $20,000 almost 35 years ago and has not been adjusted once since then.  There’s a requirement that two people sharing housing must combine their income when applying, which means that a young parent who moves in with her mother cannot get Schedule H if she and mom earn as little as $10,000 each. 

The legislation would address these and other problems with Schedule H.  It would raise the income eligibility level to $50,000 —  and adjust for inflation annually after that —  and it would allow adults living together to apply for Schedule H based just on their income.  It would increase the maximum credit —  which also has not been adjusted since the 1970s —  to $1,000. 

The price tag for these changes is significant.  But as the District climbs out of the recession — and as gentrification and rising rents continue — taking steps to help residents struggling with property tax bills should be a priority.

Two weeks ago, DC Mayor Vince Gray took a quick trip down to Tampa, Florida, accompanied by DC Council members Jack Evans and Michael Brown. It wasn’t to escape the chilly temperatures here in Washington. The three were there to look at the training facility for the Tampa Bay Buccaneers of the National Football League. 

According to press reports, Gray is thinking about trying to build a similar facility for the Washington Redskins near the team’s old home at RFK Stadium. The Redskins currently have a practice facility in Ashburn, Va., and play homes games in Landover, Md. 

Building this type of facility would likely involve some use of public dollars, ranging from infrastructure needs like roads, lights, and storm water runoff to direct subsidies for the facility.  

The decision to use city resources to convince the Redskins to move their training camp to the District should be considered through the lens of economic development. And like any other economic development project, there are important questions to ask before deciding whether this is a worthwhile project: 

• Is the project an economic development priority for the District?
• Is some type of public subsidy needed for the project to move forward?
• What are the costs?
• What are the benefits?

1. Is the project an economic development priority for the District?   Right now, that remains unclear. Many neighborhoods across the District are in need of economic development, yet with limited public dollars, the District has yet to set priorities.  One big question is: How would putting in a Redskins training facility impact the planned economic developments underway or in the pipeline in other neighborhoods?  Another question is whether  putting an NFL training facility at the location known as Reservation 13 is a higher economic development priority than what the District has so far envisioned for the land, a mixed use development which would be an extension of the Capitol Hill East community.   
2. Is some type of public subsidy needed for the project to move forward?  Again, this is unclear right now. Professional sports teams often request financial assistance from cities and states to defray costs, but it is not always clear that they need them. 
3. What are the costs?  Again, unclear. Nationals Park was built with taxpayer dollars. The former Wizards and Capitals team owner Abe Pollin did not ask for public dollars to build the Verizon Center, though the city did pay a substantial amount to upgrade infrastructure around the facility.
4. What are the benefits?  Many DC residents and Redskins fans would like to see the team return to playing within its namesake. There is a hometown pride to attending games inside the District line.  But it also is important to know what other community benefits there might be, such as jobs for DC residents, if this proposal becomes more serious. 

DCFPI hopes that if such a proposal does move forward, city officials will take a transparent approach to informing residents about plans and addressing these important questions. Unfortunately, city officials got off to a bad start by not making the trip a part of the mayor’s public schedule. We look forward to move information on this project.

DC’s elected leaders are showing signs that they understand the critical importance of helping DC residents find jobs and that DC government can also take steps to make work pay. Just last week Councilmember David Catania introduced two pieces of legislation that recognize that there is still plenty of work to be done in ensuring that the opportunity to earn a decent living is available in all parts of the city. 

There is no doubt the need is great. While some District residents are doing quite well, many more in the District struggle to get by. As we noted last week, the District has one of the widest income gaps in the nation.  DC’s current unemployment rate – over 11 percent – is higher than during the official recession in 2009 and the highest in 30 years. In some areas of the city, the unemployment rate is estimated at upwards of 30 percent, due to lack of adequate education and training as well as other barriers to the workforce. And among employed District residents, many struggle to make ends meet in one of the highest cost-of-living areas in the country. 

The first bill, the Worker Assistance and Gainful Employment Support (WAGES) Act of 2011, expands eligibility for the District’s earned income tax credit (EITC). The EITC, a tax credit targeted on low-income workers, plays a critical role in reducing poverty among residents in low-wage jobs. Councilmember Catania’s bill would expand eligibility to all working residents aged 18 and older. Currently, working residents between the ages of 18 and 24 without children are not eligible for the EITC. The WAGES Act would also provide a tax credit to employers that provide training to certain DC residents, including those who qualify for the EITC, recently incarcerated residents, TANF recipients, and those who have been unemployed for more than 6 months. 

The second bill, the District Workforce and Business Fairness Act of 2011, cosponsored by Councilmember Mary Cheh, gives preference in the District’s procurement process to businesses that maintain a workforce that is composed of at least 50% District residents. Currently, a business located in DC can be certified as a Local Business Enterprise simply by being based in the District, regardless of how many District residents they actually employ. 

These pieces of legislation, like all legislation, deserve scrutiny. For example, previous efforts to provide tax credits to employers who hire low-income residents have had mixed success, and the EITC changes should be examined to assess whether they would add a lot of complexity to the current credit. But the bills deserve credit for raising new ideas and offering tangible ways to help unemployed DC residents get back to work and afford to live in the city where they work.

Many people are surprised to find out how many DC households are struggling to get by.  As we reported on the District Dime just a few weeks ago, DC’s combination of low-wage jobs, highly competitive job market, and high cost of living means that many families have a hard time finding year round, full-time work with wages that can support a family.  And in the wake of the Great Recession, it has become even harder.  

But sometimes even these dire statistics can be overblown or misinterpreted, including a recent presentation from DC’s Department of Human Services that nearly 40 percent of DC residents receive Medicaid, food stamps, or TANF — or some combination of the three.  While this figure was shocking to some, it is really important to understand the factors behind it and the impact of the recession on program participation.  

The biggest contributor to this figure is the 32 percent of DC residents who receive Medicaid, which covers adults up to 200 percent of poverty ($37,000 for a family of three) and children up to 300 percent of poverty ($56,000 for a family of three).  Many of these are working households who cannot get adequate coverage through their job.  DC’s Medicaid eligibility is the key reason that our uninsured rate is one of the lowest in the nation.  That’s something to embrace, not run away from. 

About 21 percent of DC residents get food stamp benefits, now known as SNAP.  SNAP is a food assistance program for low-income residents, from the elderly to the unemployed to the working poor.  Since SNAP is available to people with incomes below 130 percent of poverty, it is not surprising that our SNAP participation rate is about the same as the city’s poverty rate – which is now 19 percent.  

Finally, just 8 percent of DC residents are in our basic welfare program — TANF — and two-thirds of those enrolled are children.  TANF provides cash assistance and job training to very low-income families with children.  

And it is no surprise that enrollment in these programs rose significantly in the recession.  In fact, many of these programs continue to see participation rise as unemployment is now higher in DC than at any time during the recession.   Participation in SNAP has grown the most since the recession began – by nearly half over the past three years – while TANF participation has risen 38 percent, and Medicaid enrollment has grown by 17 percent.  

When the private market doesn’t provide access to health care and a weak economy leaves thousands of residents unemployed, it is reasonable for the District to have programs to help families meet their basic needs like medical care, food, and job training.  Ensuring residents can find jobs with pay and benefits that can support a family is rightly Mayor Gray’s number one goal.  But DC shouldn’t limit access to these vital programs before that is done.

Hello District Dime readers, and welcome to a new week!

This morning, we want to call your attention to the newly redesigned DC Council website, www.dccouncil.us. The site has several new features we are excited about:

*An on-line form to sign up to be a public witness at DC Council hearings. Now, a few clicks of the keyboard can put your name on the list to testify. We hope it will make it easier for residents to have their voices heard!

*An easy to use and navigable calendar of official legislative events at the DC Council. You can even sign up for alerts that let you know when the time or location of meetings or hearings of interest have changed.

*Quick access to the legislative history for bills introduced after September 15, 2011. As the website notes, the Council’s main legislative archive, LIMS or the Legislative Information Management System, remains a bit, well, archaic. Hopefully it can be updated soon.

*A more comprehensive public hearing or roundtable record.  The new site allows for hearing notices, witness lists, committee prints and other important hearing information to be located all in one place.     

DCFPI thanks the Council for making local government more accessible and high tech. We also thank the Council for listening to us! Along with other interested people and organizations, DCFPI submitted a list of suggestions to the Council on how to improve the site earlier this year. Here’s what we had to say. 

Let us—and the Council—know what you think of the changes!

If you stopped anyone with a stroller to tell them that child care in the DC area is among the most expensive in the country, they’d look at you as if you had told them the sky is blue: “Tell me something I don’t know,” their eyes would say.

Last month, Forbes magazine found that the DC metro area is the 9^th best region for working mothers. Contributing to the District’s high ranking are its level of women’s earnings (1^st) and its unemployment level (2^nd).

But the DC area also was rated as having the 4^th highest cost-of-living and the most expensive child care. Forbes is not alone in coming to this conclusion. The Economic Policy Institute finds that a “basic family budget” for a family of three in the DC area is over $63,000, including $18,000 for child care for two children (which many parents would tell you is too low). Yet fewer than half of DC households earn this much.

As the District strategizes on how to reduce record levels of unemployment by better educating and training residents, policymakers should also pay attention to supports that enable parents to go to work, knowing that their children are being cared for.

The District supports early childhood education, including a child care subsidy program that provides vouchers to low-income working families. Many DC Public Schools and public charter schools offer classes starting at age three.

While eligibility is generous, covering families up to 250 percent of poverty, funding for the child care subsidy program has fallen by a quarter over the past four years. While this was partly offset by expansion of pre-K programs in DCPS and DCPCS as part of the “Pre-K for All” program, begun in 2009, the child care subsidy program is facing strain. Reimbursement rates paid to service providers have not been adjusted since 2004, resulting in fewer and fewer qualified child care providers, and advocates have identified unmet demand for services for infants, children with special needs, and care during non-traditional work hours. In 2009, 10,000 children under age three were on a waiting list for a child care provider.

Soon, the mayor will begin to turn his attention to the FY2013 budget. It is critical that policymakers recognize that modest economic gains that have occurred over the past year are not being shared by all. Unemployment in DC, for example, is now higher than in the midst of the official recession in 2009. As discussions begin on next year’s budget, the mayor and Council ought to ensure support for early childhood education, child care subsidies, and programs like these that help low-income families work towards self-sufficiency.

The District of Columbia is sometimes described as a tale of two cities: One city is thriving and affluent, another is struggling and poor. Last week, the U.S. Census offered confirmation of this split: A new report shows that income inequality in our city is one of the highest in the nation.

What is income inequality? Income inequality measures how income is distributed in a society, i.e. whether it is concentrated in a small percentage of households or it is spread evenly among a large portion of the population.

When comparing DC to cities with population greater than 100,000, the District came in third in overall income inequality. Using this measure, known as the Gini index, Atlanta had the highest inequality followed by New Orleans.

Income inequality is an important measure because it shows how a society—whether that be a neighborhood, city or nation—is economically structured. It also helps explain, for example, why the District has one of the most vibrant economies in the country yet still has a very high unemployment rate. There are some District residents who are doing very well, but there are some who are doing very poorly.

This can be seen in other economic indicators as well. As noted in the DCFPI report, Packing a Punch, the employment gap between black and white residents of DC is the largest it has been in 30 years.  Hourly earnings for high-wage earners increased nearly 30 percent while those at the bottom grew by just 11 percent.
For those with a high school diploma, median wage for someone with a high school degree increased just one percent over last 30 years. Contrast that with the median wage for a college graduate, which has risen nearly 30 percent in last 30 years.

DC’s high cost of living, and little growth in wages for low-wage earners means they have an even harder time getting by in DC.  Earnings for low-wage workers cover just half of a ‘basic family budget.’ This gap is higher than in every other large US city except Honolulu and NYC.

Happy Monday District Dime Readers.  Here’s a look at what’s going on this week at the Wilson Building.

Tuesday November 1^st

• 10:00am, Committee of the Whole, 23^rd Legislative Meeting, Room 500. Click here for the agenda.

Saturday November 5^th

• 10:00am, Committee of the Whole, hearing on Youth Perspectives on Middle Grades Education in the District, Room 500.

You may have read last week that the DC metro region — which includes DC as well as neighboring counties in Maryland and Virginia — has the lowest poverty rate in the nation at just over 8 percent. But DC itself has a poverty rate of 19 percent. Why the big difference? 

It may seem like a simple question, but it is worth exploring.  

In metropolitan areas, typically the pattern has been that greater concentrations of wealthier households live in the suburbs. That’s certainly true in DC’s metro region, where the District is surrounded by some of the wealthiest counties in the nation. But more recently, there has been an urban renaissance with more and more people, including higher-income individuals, moving back into cities across the US.  That’s certainly true in DC where our population has grown over the last decade, and the city has been adding more high income households. But despite this, DC’s median income for a family of four, meaning half of the families have incomes above and half below, is $68,600.  

Meanwhile the DC metro area median income for a family of four is still much higher, roughly $103,500.     

But DC’s high poverty rates also have a lot to do with DC’s very competitive job market and the mismatch between the skills DC residents have and the skills the jobs being created here in DC require. Most jobs in the District that pay a living wage require, at a bare minimum, a college degree.  In Wards 7 and 8, a significant number of residents lack even a high school diploma. Last year, DCFPI reported that residents without a high school diploma are more than seven times as likely to be low-income as those with a college-degree. And an even greater proportion of jobs created in the past few years are requiring advanced degrees or specialized training of some sort, further widening the gap between the haves and the have-nots.  

While the record unemployment levels in the city are also contributing to higher poverty rates, even many residents with jobs are falling behind. A single-parent with two children working a full-time, minimum wage job, still does not earn enough to lift his or her family above the poverty line of $17,570.  Furthermore, the federal poverty line does not give the full picture of the depth of poverty in the District because $17,570 can go much further in places like Omaha, Nebraska than it can in the District.  DC is one of the most expensive places to live in the country.  For a working parent in DC, the cost of housing, food, transportation, and child care, can quickly eat up an entire paycheck. 

Lastly, while the DC metro region has some of the lowest levels of income inequality compared to other metro regions, the District has some of the highest levels of income inequality.  In fact, new Census data show that DC has the third highest level of income inequality when compared with other cities. A DCFPI report last year showed that wage gains for high-wage earners far outpaced the gains for middle- and low-wage earners in DC over the last 30 years.  In fact, the report showed that in 2009, the gap between high-wage and low-wage earners in DC was one of the highest on record.

Happy Monday District Dime Readers.  Here’s a look at what’s going on this week at the Wilson Building.

Monday October 24^th

• 11:00am, Committee on Aging and Community Affairs, hearing on B19-0017 Human Rights for Ex-Offenders Amendment Act of 2011, Room 500.

Tuesday October 25^th

• 1:00pm, Committee of the Whole, hearing on PR19-0250 DC Auditor Yolanda Branche Appointment Approval Resolution of 2011, Room 500.

Wednesday October 26^th

• 10:00am, Committee on Finance and Revenue, hearings on PR19-368 FY12 Income Tax Secured Bond and General Obligation Bond Issuance, B19-164 Schedule H Property Tax Relief, B19-188 Combined Condo Real Property Tax, B19-257 Real Estate Broker Licensure, B19-279 National Capital Revitalization, and B19-0280 Streetscape Corridor Taxation Relief Act of 2011, Room 412.

Thursday October 27^th

• 3:30pm, Committee on Health, oversight roundtable on Youth Perspectives of District Health Programs, Room 500.

Yesterday, Amber Harding of the Washington Legal Clinic for the Homeless (WLCH) offered testimony at the Committee on Human Services’ roundtable on DC’s “Winter Plan” for protecting the lives of homeless residents this upcoming winter. 

Amber was kind enough to share her testimony with the District Dime.  Her testimony highlights how the District’s Winter Plan places far more barriers to homeless families seeking shelter than on homeless individuals.   You can find the full text of Amber’s testimony on WLCH’s blog.  The remainder of this blog post is excerpted from Amber’s testimony. 

For individuals, the Winter Plan presumes that there will be nights that all beds will be filled and that overflow single adult shelters will be on standby.  There is no overflow commitment in the Plan for families, despite the fact that DC General fills up every year. While DHS has verbally committed to place families in hotels or motels if DC General fills up, it has not communicated any details to the community regarding how quickly the hotels will be brought online or how food, case management and transportation will be provided to these families. 

For singles, the intake process for severe weather shelter is simple, operates 24 hours a day, 7 days a week and presumes eligibility. The person states that he is homeless and needs shelter. No verification or documentation is required. For families, the intake process is onerous, operates 6-7 hours a day 5 days a week, and presumes ineligibility.  Families…are often told there is no space in shelter and to try back another day—despite their desperation and despite their legal right to shelter that night. 

Severe weather shelters for individuals are low barrier and easy to access for a very good reason—as a community we have decided that we should not erect bureaucratic barriers to shelter when the risks of even discouraging shelter are so significant. Our community would not possibly support taking that risk when small children are in danger of freezing—yet that is how our system runs and how it has run for years. 

The Washington Legal Clinic for the Homeless believes that DC is running a shelter program that is outside of the law. In order to come into compliance with the law and reduce the risks to the lives of DC families, DHS must do the following: 

1. Be ready to implement a back-up plan for families the moment DC General fills up.   
2. Beginning today, reach out to all families experiencing housing crises to make sure they are encouraged to enter shelter this winter if they have no safe place to go.   
3. Prepare written directives to hotline workers and DC General staff instructing them to facilitate transportation and entry to DC General or hotels/motels immediately if a family applies for shelter after FRC is closed. Families should be placed into shelter immediately and then referred to receive a full assessment, including eligibility, on the next business day. 
4. Prepare written protocol/script for intake specialists at the Family Resource Center to reduce the number of unlawful denials of shelter to families and to clarify that families should be placed even if they do not present with documents to verify eligibility factors.  
5. Provide written notice of eligibility to all families.  The Homeless Services Reform Act and its regulations require that written notice of eligibility or placement denials are provided to every applicant.  DHS has agreed to do this, but families are not receiving such notice.
6. Exempt families from the residency requirements of the Homeless Services Reform Act during Hypothermia Season. 
7. Use Office of Shelter Monitoring to test the compliance of the Family Resource Center and the hotline throughout the season.  DHS should regularly test compliance and enforce its directives and the law through additional focused training, personnel disciplinary recommendations and contract penalties or termination, if necessary.

The Week Ahead

Happy Monday District Dime Readers.  Here’s a look at the week ahead.

Monday October 17^th

• 2:00pm, Committee on Aging and Community Affairs, hearing on Long-Term Care Ombudsman Program & Human Rights Service of Process, Room 412. 
• 3:00pm, Committee on Aging and Community Affairs, oversight roundtable on J.B. Johnson Nursing Center and Washington Center for Aging Services, Room 412. 

Tuesday October 18^th

• 10:00am, Committee of the Whole, meeting, Room 500.
• 11:00am, Committee of the Whole, legislative meeting, Room 500. View the legislative meeting agenda here. 

Thursday October 20^th

• 10:30am, Committee on the Judiciary, hearing on B19-371 Recordation Tax on Refinances of Security Interest Instruments Clarification Act of 2011, Room 500.
• 2:00pm, Committee on Human Services, oversight roundtable on Winter Plan: Protecting the Lives of Homeless People in the Winter of 2011-2012, Room 500.

The neighborhood now known as NoMa has a lot going for it, but there’s one big thing missing: public parks. In recent years, this area has been booming with new development spurred by the addition of the New York Avenue Metro Station and several federal and DC agencies, but green space is in short supply. Of course great public spaces help shape great communities, but the supporters of a DC Council bill to advance this goal in NoMa are going about it in the wrong way. 

What could be wrong with parks in NoMA? The devil is in the details. 

While the idea of bring more parks to NoMA is fine, the way that the NoMa Reinvestment Act of 2011 would go about it has three colossal flaws. The legislation would dedicate over $50 million in DC tax collections and turn it over to a private organization to spend. Strike One. There would be little public accountability for the spending decisions. Strike Two. And the bill deceptively hides the costs of the bills so that $50 million of spending on parks would officially have no impact on DC’s finances. Strike Three. 

The legislation creates a private fund, where a portion of the money that would otherwise go to the District’s general fund would be deposited. This would be used towards the development of parks and other infrastructure projects in NoMa. The amount deposited in the fund would be based off projections made by the Office of the CFO on the amount of revenue expected to be generated within NoMa from three sources: 1) deed and recordation taxes; 2) property taxes; and 3) sales taxes.   Revenue in excess of these projections would be deposited into the fund. 

Hiding the Costs  

If someone gave you a free lunch, you would eat it, of course. But what if it turns out that they bought that lunch with money that they already owed you? Doesn’t sound so appetizing now, does it? 

That is what is happening with financing in the NoMA parks bill. When the legislation was introduced earlier this year, the funding was fairly straightforward, and the CFO confirmed that the sponsors would need to find tens of millions in revenue or budget savings to meet the expected costs. 

Rather than rolling up their sleeves to do this, the proponents took the easier route and found two ways to make the official costs of the bill disappear. One is a bit hard to explain but the other is not. All legislation passed in DC must show that it will not put DC’s budget out of balance, but only for a 4-year window that the CFO must use to assess the fiscal impact of legislation. To get around this, much of the costs of the NoMA park bill would occur starting five years from now. This allows supporters to claim that the bill has no fiscal impact, but like any magician’s trick, this is just an illusion. Spending $51.5 million on parks will of course have an impact on DC’s finances. 

Public money to a private organization

The NoMa Reinvestment Act would establish a troubling precedent where taxpayer money would be turned over for the use by a private organization. 

The legislation would give the NoMA Business Improvement District, a private nonprofit, control of the funds. The legislation would create an advisory board to review the NoMA BID’s proposals, but three of the seven members of this board would be appointed by the NoMa Improvement Association BID, giving a private organization significant power in deciding how significant sums of taxpayer dollars ought to be spent. The city already has a Department of Parks and Recreation, which looks at the city holistically, on a yearly basis, and comes up with a budget which determines how much should be spent on parks throughout the city. The rationale for having a private organization do the same thing in a specific area of the city with public money is unclear.  

Very little accountability 

It is a significant step for public funds to be directed to a private organization which then takes on the same functions that the District government is already responsible for, in deciding how those funds ought to be spent. If this is to occur, there should be a lot of Dc government oversight. Yet the board created by the legislation would need to give only three business days notice in advance of a meeting to determine how to allocate the funds. Furthermore, once the board has made a decision and submitted it to the Council for approval, the Council only would have only ten days (not 10 business days even) to review the decision. If the Council fails to act within those ten days, the decision of the board will be deemed approved. 

The NoMa Reinvestment Act is the epitome of poor fiscal policy because it directs public money to a private organization, requires very little accountability, and deceptively hides the fiscal impact of the bill. For these reasons, bill 19-23 should be voted down by the City Council.