District of Columbia:

Deteriorating Financial Condition

T-AIMD-95-89: Published: Feb 24, 1995. Publicly Released: Feb 24, 1995.

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GAO discussed the District of Columbia's deteriorating financial condition. GAO noted that: (1) the District's financial condition has continued to deteriorate to the point where the District is insolvent; (2) the District provides a variety of services utilizing a general fund that has a total budget of $4.4 billion; (3) the District receives approximately $1.1 billion in federal grants, as well as reimbursements for services that are not included in annual appropriations; (4) after 3 years of positive general fund balances, the District recorded a $335 million deficiency in fiscal year (FY) 1994; (5) Medicaid cost adjustments totalled $103.5 million in FY 1994; (6) a significant portion of this adjustment involved money the District owed to a district-owned facility; (7) since FY 1990, the District has transferred $85 million from the general fund directly to D.C. General Hospital to cover hospital operating losses; (8) these transfers are not included in the District budget and therefore are not subject to congressional review and approval; (9) the District does not have reliable information on its total liabilities or the exact number of District personnel; and (10) the Mayor and the District City Council have taken various actions to address overspending by eliminating vacant positions and transferring costs to other funds or agencies within the District, but little spending reduction has occurred.

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