What’s Up With All These Unspent DC Dollars?

This morning via Twitter, it seemed like Christmas came early to the Wilson Building: The Gray administration informed DC Council members at a pre-legislative session breakfast that the District had millions in unspent funds from fiscal year 2012 that needed to be spent’pronto. In fact, the Mayor had asked Chairman Mendelson to move an emergency bill at today’s legislative session that would allocate $6.9 million to charter schools, $6.9 million to DC public schools, $6.5 million to Metro, $1.5 million to parks and recreation and $1.2 million to the Oak Hill youth detention facility.

You might be asking: Where did this money come from? Why did we learn about it now? Do we need to spend it right now? Can it be spent for other things?

You ask, the District’s Dime answers”¦

Where did this money come from?
It is very hard as a government to spend the budget right down to the penny, so as the end of the fiscal year approaches in September, some agencies have unspent dollars. If the money is not spent at all, it ends up in the city’s savings account, known in wonk-speak as the “fund balance.” But there’s a bit of a grace period after the fiscal year ends September 30 to do what’s called a “reprogramming,” which is shifting funds from one agency to another. The deadline to reprogram monies is today, November 1. The funds discussed today are unspent dollars that the mayor proposes to reprogram.

Why did we learn about it now?
The executive has the ability to reprogram dollars throughout the fiscal year, and due process is that the mayor gives notice to the Council, the notice is published in the D.C. Register, and the money is passively approved unless there is an objection. In the last 45 days or so, the Gray administration has reprogrammed about $30 million in unspent funds in this way. Those funds went to parks and recreation ($13 million), Temporary Assistance for Needy Families ($11 million), Department of Health Care Finance ($2.5 million), the Metropolitan Police Department ($1.6 million) and a few other places in smaller designations.  There also has been a number of reprogramming of funds within agencies, from one line to another.

 Today’s reprogramming did not have the proper time for a passive approval, so Mayor Gray and his administration are seeking an active approval from the Council so it can be done today, via emergency legislation.

Do we need to spend it right now?
There are options, depending on circumstances. One situation where the city would need to reprogram immediately is if money needs to be moved to agencies that have obligated more than their budget, so the District is not found to be anti-deficient. There also maybe other obligations under the law in which we need to spend the money. Right now, it is unclear whether all of the five designations’DC Public Charter Schools, DCPS, Metro, DPR and Oak Hill’meet either of these criteria, although it appears that some may.

A case can also be made to wait in those instances where the funds do not have to be reprogrammed now. The money could be placed in our reserves for designation at a later time. That way the Council could have a discussion of how best to spend these funds.

Can it be spent on other things?
An important thing to keep in mind is that these unspent funds cannot be budgeted in a way that using them in fiscal year 2013 would create funding holes in fiscal year 2014 and beyond. These are what is known as “one-time” funds and can be used for programs or activities that are finite.

That said, there were items included in the “wish list” for fiscal year 2013 that have not yet been funded but could be funded on a one-time basis, including using reprogrammed funds from FY 2012.  An example is the Housing Production Trust Fund.