[Sequestration of District of Columbia Funds Under P.L. 99-177]

GAO reviewed issues concerning whether the federal retirement fund contribution to the District of Columbia (D.C.) was subject to reduction under the Balanced Budget and Emergency Deficit Act of 1985. The account for the federal payment includes: (1) the payment to the D.C. General Fund; (2) the federal contribution to the D.C.-administered retirement funds; and (3) the payment for water and sewer services furnished to the federal government. GAO found that most of the account's sequesterable base had been obligated. Since the act precludes sequestering obligated balances, the required sequesterable amount was calculated on the remaining unobligated balance. However, D.C. planned to apportion the sequesterable amount among each of the activities in the account, including those whose balances were obligated and exempt from reduction. GAO believes that the D.C. proposal is inconsistent with the method used to calculate required reductions, and with the act's requirement that obligated balances not be reduced. GAO recommended that D.C. reexamine its implementation of the reductions required under the act to ensure that obligated balances are not reduced.