A change made this spring in the city's purchasing procedures will knock a $7.2 million hole in the D.C. Board of Education's budget for this fiscal year, board officials said yesterday.
The policy limiting the ability of city agencies to carry obligations from one fiscal year to the next, which board members said they were not informed of until last week, would throw the school system into "a tailspin," they said, by requiring it to pay an unexpected $7.2 million for goods ordered during the last fiscal year but delivered this year.
"You can't suddenly change the way an entire school system runs," said board member R. David Hall (Ward 2), the board's finance director.
"This is not a situation we can accept. We only found out about this last week," said board vice president Nate Bush (Ward 7). City officials reacted with skepticism yesterday when told that board members had claimed that they were unaware of the new policy. A "Mayor's Memorandum," dated March 3, 1983, and sent to "heads of all agencies, departments, boards and commissions," explicitly laid out the new policy and its effects.
"I don't understand how the rest of the city government can receive something the memorandum the schools didn't," said Alphonse G. Hill, deputy mayor for finance. "We've had comptrollers' meetings" of all the city's agencies and departments, Hill said, adding that his own office had to absorb $1 million in a situation similar to that of the school system.
School official insist, nonetheless, that they had no record of receiving the memo then and add that if they had, they would have had much more time to consider methods of reallocating funds to absorb the $7.2 million payment.
The policy change says that any goods ordered by a city agency in fiscal year 1982 but not received until the current fiscal year, which began last Oct. 1, will be paid for by that agency's current budget. For fiscal 1983 and beyond, the policy says, all orders "outstanding" at the end of fiscal 1983--Sept. 30, 1983--and thereafter "shall lapse at fiscal year end."
In the past, all agencies routinely carried over obligations from one fiscal year to the next. Money set aside to pay for goods not delivered would return to the city's general fund, which would then pay for the goods when they arrived. Under the new policy, obligations will no longer carry over.
"We are trying to reduce prior year obligations to a minimum to avoid the 'hidden hit' of those funds when the next fiscal year starts," said city budget director Betsy Reveal.
Also worrying school board members is the fact that they have not received between $7 million and $13 million worth of orders made this fiscal year. Under the city's new policy, those orders--for items ranging from school vehicles to computer software--would be considered void and that money would revert back to the city. The board has scheduled a special meeting this Wednesday to discuss the matter.
Reveal said there was no disparate treatment of the school system, and "All agencies that had expenditures in fiscal 1983 for obligations in fiscal 1982 were treated the same."