City agencies are on track to overspend their current budgets by $42 million or more, Chief Financial Office Natwar M. Gandhi informed top city leaders this morning.

At a John A. Wilson Building breakfast meeting, Gandhi told Mayor Vincent C. Gray(D) and D.C. Council members that agencies are on track to overspend by at least $42 million, and as much as $58.4 million in a current worst-case scenario.

Officials in both Gray’s and Gandhi’s offices are playing down the significance of the gap. Mayoral budget wonks believe they can find offsetting savings in other parts of the budget. David Umansky, a spokesman for Gandhi, said the overspending is, in essence, a drop in the bucket: “In a $5.5 billion local budget, this is somethig that is very doable.”

The big ticket items include $11 million for recent settlements in long-running cases surrounding the 2002 mass arrests at Pershing Park and mass arrests made at the 2000 World Bank/International Monetary Fund protests. That figure includes fees for not only the plaintiffs’ attorneys, but also outside lawyers representing city officials.

The Department of Health Care Finance is projected to overspend its budget from between $25.7 and $29.7 million by $17 million — largely due to an inability to shift enrollees in the D.C. HealthCare Alliance program, paid for fully by the District, to the Medicaid program, 70 percent of which is paid for by the federal government. The shift is allowed for the first time under the new federal health care law.

Also, the city could be on the hook for an additional $7.4 million in subsidies to the Metro system should the transit agency’s board approve a budget in the coming months that requires additional funding from regional jurisdictions.

The Department of Youth Rehabilitation Services is set to spend $8.4 million more than planned on residential treatment center placements for troubled youth. A January Washington City Paper story examined the trend of increased residential placements and whether that’s good public policy.

The University of the District of Columbia needs an additional $3.5 million to cover operating costs for two former D.C. Public Schools buildings it now runs. That somewhat less than the $8 million UDC said it needed in January.

Still to be determined is how much the city will have to pay to D.C. Public Schools teachers reinstated under a recent arbitrator’s ruling; the city is appealing the decision.

Here is a itemized list prepared by Gandhi’s office:

FY2011 D.C. Government Spending Pressures