District of Columbia: Information on the District's Financial Crisis

Pursuant to a congressional request, GAO discussed the District of Columbia's overall financial situation with regard to its need for an increased federal share of transportation project costs. GAO noted that: (1) the District estimates that its fiscal year (FY) 1995 spending will exceed its congressional appropriation limit by about $132 million; (2) the District has increasingly relied on the federal payment to cover bills from the previous fiscal year; (3) the District has not reduced its FY 1995 spending to the congressionally mandated level or implemented many of its own planned expenditure cuts; (4) the District's financial management systems and internal controls do not provide the necessary information to control spending and costs and estimate budget and cash needs; (5) the District's program systems are not integrated with its central system and data entry into the central system is often delayed by months; (6) five cities have taken steps to improve their financial management systems which include hiring new financial managers and giving them authority and responsibility to strengthen the cities' financial operations, installing new or upgrading their financial management systems, and improving their financial reporting; and (7) these cities have emphasized the need for credible financial information for decisionmaking and improving accountability and performance of government operations.