D.C. Council Chairman Vincent C. Gray released the following statement about the Comprehensive Annual Financial Report, or the CAFR, in which the District received a "clean audit" yesterday. Nikita Stewart and David Nakamura write about the report in today's Washington Post. As the story notes, the District is counting on the federal stimulus package to help the city balance its budget---even before the package makes it through the U.S. Senate.
Gray's statement about the CAFR and the road ahead was released after he and other council members met with Chief Financial Officer Natwar M. Gandhi yesterday.
Washington , DC - Council Chairman Vincent C. Gray said he was guardedly pleased to hear good news today, as the Office of the Chief Financial Officer (OCFO) released the Comprehensive Annual Financial Report (CAFR) for the 2008 fiscal year. The audit, prepared by BDO Seidman, LLP, represents the District's 12th consecutive balanced budget and unqualified or "clean" audit opinion. The audit reported that the general fund now has an $87 million balance of unreserved funds, which together with the $46 million the Council set aide in an operating cash reserve in November, will be sufficient to balance the District's 2009 fiscal year budget.
At a briefing this afternoon, the CFO also informed the Council that the District saw significant improvement in problematic budgetary issues appearing in the accompanying independent auditor's report, which is often referred to as the Yellow Book. In fiscal year 2007 the District had three material weaknesses (most serious) and six significant deficiencies of lesser concern. For 2008, the District had only two material weaknesses (treasury operations and Medicaid) and four reportable conditions (payroll/human resources, D.C. Public Schools , Office of Tax and Revenue, and post employment benefits). Two areas that were material weaknesses last year, D.C. Public Schools and Office of Tax and Revenue, were downgraded in severity by the auditors this year due to the focused attention the Council, the Executive, and the offices of the CFO and the Inspector General gave to these areas.
"The District is clearly moving in the right direction, however, we must address our remaining issues through rigorous management and oversight. Issues involving treasury and human resources easily can be addressed by management implementing better control systems," Chairman Gray said. Other issues like Medicaid reimbursement require systemic changes to provider agencies, particularly the Child and Family Services Agency and D.C. Public Schools transportation. These agencies must make real changes to properly document services and fill out the appropriate paperwork, because the District cannot afford to spend 100 percent local funds on services that are eligible for Medicaid reimbursement, and should not tolerate poor performance. With regard to Medicaid, we are hopeful that the new Department of Health Care Finance, created by Council legislation, will exert a positive impact on management of the Medicaid program. So while the news is very good today, we must be more determined than ever to resolve any remaining internal control issues."