oversight

D.C. Courts: Planning and Budgeting Difficulties During Fiscal Year 1998

Published by the Government Accountability Office on 1999-09-16.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                      United States General Accounting Office

GAO                   Report to Congressional Requesters




September 1999
                      D.C. COURTS

                      Planning and
                      Budgeting Difficulties
                      During Fiscal Year
                      1998




GAO/AIMD/OGC-99-226
United States General Accounting Office                                                          Accounting and Information
Washington, D.C. 20548                                                                                Management Division



                                    B-283119                                                                                     Letter

                                    September 16, 1999

                                    The Honorable Ernest J. Istook
                                    Chairman
                                    The Honorable James P. Moran
                                    Ranking Minority Member
                                    Subcommittee on the District of Columbia
                                    Committee on Appropriations
                                    House of Representatives

                                    The Honorable Thomas M. Davis, III
                                    Chairman
                                    Subcommittee on the District of Columbia
                                    Committee on Government Reform
                                    House of Representatives

                                    On May 18, 1999, we testified before the Subcommittee on the District of
                                    Columbia, House Committee on Appropriations, regarding the District of
                                    Columbia Courts’ (DC Courts) financial operations in fiscal year 1998, its
                                    first year of operations with direct federal funding.1

                                    In our testimony, we reported that DC Courts had experienced difficulties
                                    in planning and budgeting during this transition year. Our review of DC
                                    Courts records showed that it had potentially overobligated its resources,
                                    which could violate the Anti-Deficiency Act. Following our testimony, we
                                    provided to the Subcommittee on the District of Columbia, House
                                    Committee on Appropriations, a chronology of pertinent events related to
                                    the DC Courts appropriation and obligations for fiscal year 1998.2 We also
                                    reviewed proposed deobligations submitted by DC Courts. This report
                                    (1) supplements our testimony, providing additional detail on our findings,
                                    and (2) transmits our recommendations to the Congress and DC Courts.
                                    Our objectives were to address the following questions, which were also
                                    discussed at the testimony:

                                    1. What were DC Courts obligations for fiscal years 1996, 1997, and 1998?


                                    1
                                     District of Columbia Courts: Financial Related Issues for Fiscal Year 1998 (GAO/T-AIMD/OGC-99-176).
                                    2
                                    District of Columbia Courts: Chronology of Events Related to DC Courts’ Appropriation and
                                    Obligations for Fiscal Year 1998 (GAO/AIMD-99-204R, June 7, 1999).




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                      2. Did DC Courts have a spending plan for fiscal year 1998 and obligate
                      funds in accordance with available resources?

                      3. Why did DC Courts defer payments to court-appointed attorneys from
                      late July 1998 through September 1998, and were those payments made in
                      fiscal year 1998 processed in accordance with policies and procedures?

                      During the course of our review, we also identified an issue regarding DC
                      Courts’ authority to spend money from the Crime Victims Fund for the
                      Crime Victims Compensation Program.



Results in Brief      DC Courts incurred obligations of $115.4 million, $119 million, and $125.6
                      million in fiscal years 1996, 1997, and 1998, respectively. Fiscal year 1998
                      obligations reflect a different scope of activities than prior year obligations,
                      primarily because of changes necessitated by the Revitalization Act of
                      1997. These changes included the transfer of a DC Courts function to
                      another entity and increased costs of employee benefits during fiscal year
                      1998. DC Courts also gave its nonjudicial employees a 7-percent pay raise
                      and assumed responsibility for judges’ pension costs as part of its fiscal
                      year 1998 appropriation for court operations.

                      DC Courts did not prepare and execute a budget based on amounts
                      appropriated for fiscal year 1998. Records showed that throughout the
                      year, DC Courts was aware that its spending was on pace to exceed
                      available resources. However, rather than managing within its available
                      funds, DC Courts incurred obligations in anticipation of receiving
                      additional resources from the Congress and others to cover the difference.

                      Faced with an impending shortfall in operating funds, DC Courts officials
                      deferred payments totaling $5.8 million owed to court-appointed attorneys
                      and expert service providers during the last 3 months of fiscal year 1998.
                      The Congress transferred $1.7 million in fiscal year 1998 funds to DC
                      Courts that was used for deferred court-appointed attorney payments and
                      authorized DC Courts to use the fiscal year 1999 appropriation to fund the
                      remaining deferred amount of $4.1 million.

                      As of May 25, 1999, we found that DC Courts fiscal year 1998 obligations
                      exceeded available resources by $4.6 million, in violation of the
                      Anti-Deficiency Act. This funding shortfall reflected the $4.1 million in
                      deferred payments to court-appointed attorneys that should have been
                      recorded as fiscal year 1998 obligations and our assessment of



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             deobligations for fiscal year 1998 submitted by DC Courts. In addition, DC
             Courts treated $773,000 in interest—earned primarily on the bank balances
             from quarterly apportionments of its fiscal year 1998 appropriation—as an
             available budgetary resource for court operations without having
             legislative authority to do so. According to our overall evaluation,
             obligations and available funding for fiscal year 1998 were $125.6 million
             and $121 million, respectively.

             In general, DC Courts processed vouchers for court-appointed attorneys
             and expert-service providers in accordance with established policies and
             procedures. However, its policies did not (1) include time frames for
             processing the vouchers and making payments or (2) require that judges
             document decisions to reduce claimed voucher amounts. Further, DC
             Courts did not have procedures for retaining data on vouchers reported as
             lost or missing. These deficiencies are of particular concern given that DC
             Courts became subject to the federal Prompt Payment Act in fiscal year
             1999. Under this act, DC Courts could be required to pay interest on any
             voucher payment made more than 30 days after submission of a proper
             invoice.

             In addition, DC Courts did not have the requisite authority to spend funds
             in the Crime Victims Fund account. DC Courts’ records indicated that it
             spent about $1.8 million during fiscal year 1998.

             This report includes recommendations to the Congress and DC Courts. In
             response to a draft of this report, DC Courts disagreed with our
             conclusions and the need for implementing three of our recommendations.
             They agreed to seek clarifying legislation to address two of our other
             recommendations. They did not directly address the other
             recommendations. Subsequent to DC Courts’ response, the Conference
             Committee on the District of Columbia Appropriations Act, 2000 adopted
             provisions that, if enacted, would address four of the recommendations.



Background   The District of Columbia Court Reform and Criminal Procedure Act of 1970
             (Court Reform Act) transferred jurisdiction over all local judicial matters to
             a unified court system for the District. This entity, known as DC Courts,
             includes

             • the Superior Court, which is the trial court with general jurisdiction over
               virtually all local legal matters, including criminal, civil, juvenile,
               domestic relations, probate, and small claims cases, and



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                           • the Court of Appeals, the highest court of the District of Columbia,
                             which reviews all appeals from the Superior Court, as well as decisions
                             and orders of D.C. government administrative agencies.

                           The Court Reform Act provided for the creation of a policy-making body
                           for DC Courts, the Joint Committee on Judicial Administration. The Joint
                           Committee, comprised of the two chief judges and three associate judges
                           elected annually by the judges of the Superior Court and Court of Appeals,
                           submits DC Courts’ annual budget requests and is responsible for DC
                           Courts’ general personnel policies, accounting and auditing, procurement
                           and disbursement, development and coordination of statistical and
                           management information systems and reports, and other related
                           administrative matters. The Joint Committee appoints the executive
                           officer, who manages the day-to-day administrative and financial
                           management of the Court System on the Committee’s behalf. The fiscal
                           officer, subject to the supervision of the executive officer, is responsible for
                           maintaining accounting records and processing payments from the general
                           appropriation.



Impact of the 1997         The Revitalization Act3 changed DC Courts’ funding process, nonjudicial
Revitalization Act on DC   employee compensation, and functional responsibilities. Under the
                           Revitalization Act, the federal government took over certain financial
Courts                     responsibilities and roles previously held by DC Courts under the Court
                           Reform Act. Some activities became federal government responsibilities,
                           while others remained local government activities funded with federal
                           dollars.

                           The Revitalization Act provides for direct federal funding of DC Courts.
                           The Joint Committee submits the Courts’ budget request to the Congress
                           through the Director of the Office of Management and Budget (OMB). The
                           District’s fiscal years 1998 and 1999 appropriation acts contain a federal
                           payment to the Joint Committee for operating DC Courts. The
                           appropriation acts also require OMB to approve the apportionment of the
                           federal payment to the Joint Committee on a quarterly basis for
                           expenditures necessary to efficiently execute the functions vested in the
                           courts.



                           3
                            National Capital Revitalization and Self-Government Improvement Act of 1997, Public Law No. 105-33,
                           Title XI, 111 Stat. 712 (1997).




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                            Judges and nonjudicial employees of DC Courts are treated as federal
                            employees solely for the purposes of eligibility in the federal health and life
                            insurance and workers’ compensation plans. For nonjudicial employees,
                            this eligibility extends to federal retirement plans as well. In fiscal year
                            1998, the federal government also assumed responsibility for administering
                            the judges’ retirement funds, and the DC Courts assumed responsibility for
                            the judges’ pension costs as part of its fiscal year 1998 appropriation.

                            The Revitalization Act also transferred the adult probation function from
                            DC Courts to a new entity, the District of Columbia Court Services and
                            Offender Supervision Agency (COSA), 4 with a requirement that COSA be
                            certified as a federal agency by August 5, 2000. In the short term, the COSA
                            Trustee, an independent officer of the D.C. government, manages all funds
                            and personnel associated with the entity.


Court-Appointed Attorneys   DC Courts appoints and compensates attorneys to represent persons who
                            are financially unable to obtain such representation on their own under
                            three programs: (1) the Criminal Justice Act program (CJA),5 (2) the
                            Counsel for Child Abuse and Neglect (CCAN) program,6 and (3) the
                            Guardianship program.7 Indigent persons who are charged with criminal
                            offenses can obtain the assistance of court-appointed attorneys through
                            CJA. In family proceedings where child neglect is alleged or where the
                            termination of the parent and child relationship is under consideration and
                            the parent, guardian, or custodian of the child is indigent, the child and/or
                            parent, guardian, or custodian of the child can obtain the assistance of a
                            court-appointed attorney through CCAN. The Guardianship program pays
                            for the representation and protection of mentally incapacitated individuals
                            and minors whose parents are deceased. In addition to legal
                            representation, these programs offer indigent persons access to experts to
                            provide services such as transcription of court proceedings, expert witness


                            4
                             The Revitalization Act named the new federal agency the Offender Supervision, Defender and Court
                            Services Agency, but it was renamed by the District of Columbia Courts and Justice Technical
                            Corrections Act of 1998, Public Law No. 105-274, Section 7(c), 112 Stat. 2419, 2426, October 21, 1998.
                            5
                             D.C. Criminal Justice Act of 1974, as amended, D.C. Code Ann. Secs. 11-2601 through 11-2608 (1981)
                            (1995 Replacement Volume, 1999 Supp.).
                            6
                             Neglect Representation Equity Act of 1984, as amended, D.C. Code Ann. Secs. 16-2304, 16-2326.1 (1981)
                            (1997 Replacement Volume).
                            7
                            D.C. Guardianship Protective Proceedings, and Durable Power of Attorney Act of 1986, as amended,
                            D.C. Code Ann. Secs. 21-2001 through 21-2085 (1981) (1997 Replacement Volume).




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                         testimony, foreign and sign language interpretation, and investigations and
                         genetic testing.

                         Attorneys and expert-service providers who work on CJA, CCAN and
                         Guardianship cases submit vouchers to DC Courts detailing time and
                         expenses involved in working on a case. Following an administrative
                         review and approval by the presiding judge or hearing commissioner, the
                         voucher is forwarded to DC Courts, which prepares a list of payments to be
                         made. The list is electronically submitted to the General Services
                         Administration (GSA), which prepares and issues checks 8 paid from DC
                         Courts’ annual appropriation. During fiscal year 1998, DC Courts paid
                         court-appointed attorneys at a rate of $50 per hour and reimbursed them
                         for authorized expenses.


Crime Victims            A District law established the Crime Victims Compensation Program under
Compensation Program     DC Courts’ jurisdiction before the Congress passed the Revitalization Act.
                         The District law (1) identifies fines, fees, and other moneys for DC Courts
                         to deposit into a Crime Victims Fund and (2) provides that compensation
                         totaling up to $25,000 can be made from the fund to crime victims for
                         economic loss. Payments can also be made for shelter, burial costs, or
                         medical expenses.



Objectives, Scope, and   Our objectives were to (1) compare DC Courts’ obligations for fiscal years
                         1996, 1997, and 1998, (2) determine whether DC Courts had a spending plan
Methodology              and obligated funds consistent with available resources in fiscal year 1998,
                         and (3) determine why DC Courts deferred payments to court-appointed
                         attorneys in fiscal year 1998 and whether payments that were made were
                         processed in accordance with policies and procedures. To accomplish our
                         objectives, we

                         • obtained and reviewed DC Courts’ general ledger account balances and
                           other financial information for fiscal years 1996, 1997, and 1998;
                         • obtained and analyzed DC Courts’ budget requests, spending plans, and
                           details supporting budget documentation for fiscal year 1998;
                         • obtained and reviewed financial information and correspondence
                           between DC Courts, OMB, the Department of Justice, and the Congress;

                         8
                          Prior to March 1998, this processing was done through the District’s Financial Management System
                         (FMS).




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                        • obtained and compared court-appointed attorney payment information
                          under CJA and CCAN for fiscal year 1998 and prior fiscal years;9
                        • reviewed policies and procedures for voucher payment and analyzed
                          about 30,000 records in DC Courts’ tracking and payment databases that
                          represent fiscal year 1998 payments through July; and
                        • interviewed the Joint Committee on Judicial Administration; DC Courts’
                          Executive Officer, Fiscal Officer, and Legal Counsel; CJA and CCAN
                          program officials; officials in the Financial Operations Division who
                          process voucher payments; officials from the Department of Justice,
                          OMB, GSA and the COSA Trustee; officials from the District of
                          Columbia’s Department of Administrative Services; and court-appointed
                          attorneys.

                        In order to compare budgeted and obligated amounts, we gathered
                        financial information and analyzed obligations and funding resources
                        reported by DC Courts. We used DC Courts’ unaudited financial
                        information,10 which was compiled from various manual records and
                        accounting and financial management systems, and held discussions with
                        DC Courts officials to obtain additional clarification.

                        We did our work in accordance with generally accepted government
                        auditing standards between October 1998 and May 1999. We requested
                        comments on a draft of this report from the Joint Committee on Judicial
                        Administration in the District of Columbia. The Joint Committee provided
                        us with written comments that are discussed in the “DC Courts Comments
                        and Our Evaluation” section and are reprinted in appendix I.



Reported Obligations    DC Courts’ records indicated that total obligations in fiscal years 1996,
                        1997, and 1998 were $115.4 million, $119 million, and $125.6 million,
for Fiscal Years 1996   respectively. Fiscal year 1998 obligations reflect our adjustments, as
Through 1998            discussed later, and a different scope of activity than the prior years’
                        obligations. This is primarily due to changes resulting from the
                        Revitalization Act of 1997.

                        9
                         Our work on court-appointed attorneys focused on those appointed under the CJA and CCAN
                        programs. The total payments of approximately $300,000 under the Guardianship program were not
                        included since the amount was about 1 percent of the total payments to court-appointed attorneys and
                        not deemed material to our review.
                        10
                          On May 19, 1999, DC Courts awarded a contract to KPMG Peat Marwick, LLP, to perform the first
                        financial statement audit of its operations. The audit was for the year ended September 30, 1998, as
                        required under the Revitalization Act.




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                         For example, the adult probation function was transferred from DC Courts
                         to the District of Columbia Court Services and Offender Supervision
                         Agency (COSA) in fiscal year 1998. While DC Courts no longer had
                         operational responsibility for the adult probation function, it continued for
                         several months to pay salaries and related costs on behalf of the COSA
                         Trustee. In March 1998, the Trustee took over the payments for adult
                         probation and subsequently reimbursed DC Courts $7.8 million for the
                         costs DC Courts paid on the Trustee’s behalf. These costs and the related
                         reimbursements were included in DC Courts’ fiscal year 1998 obligations
                         and available funds.

                         Also as a result of the Revitalization Act, nonjudicial employees received
                         federal benefits that increased DC Courts obligations for fiscal year 1998.
                         DC Courts also assumed responsibility for the judges’ pension costs as part
                         of its fiscal year 1998 appropriation for court operations and gave its
                         nonjudicial employees a 7-percent pay raise.



DC Courts’ Spending      Prior to the decision to transfer the adult probation function to a new
                         entity, DC Courts had requested $123.5 million to fund its fiscal year 1998
Plan and Obligation of   operations. When DC Courts received $108 million in its fiscal year 1998
Funds                    appropriation, it was responsible for developing a spending plan to ensure
                         that its obligations did not exceed available resources. However, DC
                         Courts did not develop such a plan. It obligated funds throughout the year
                         based on its expectation of receiving additional funds. While DC Courts
                         received an additional $1.7 million in appropriated funds for the fiscal year,
                         it did not receive all of the funding it anticipated. It also received $12.1
                         million in grants, interest, and reimbursements, including the $7.8 million
                         reimbursement from the COSA Trustee, during the fiscal year.

                         Letters between DC Courts and OMB during fiscal year 1998 reflect DC
                         Courts officials’ expectations of receiving additional resources and OMB’s
                         concern that if DC Courts did not lower its rate of spending, its obligations
                         would exceed available funds. For example, in an April 1998 letter, OMB
                         advised DC Courts that it was incurring obligations at a rate that would
                         necessitate a deficiency or supplemental appropriation. For their part, DC
                         Courts officials continued to seek additional funds during their discussions
                         with the COSA Trustee, the Department of Justice, and OMB.

                         By the end of the fiscal year, DC Courts’ records showed that obligations
                         exceeded available resources by about $350,000 for fiscal year 1998.
                         Specifically, its records showed obligations of almost $122.2 million and



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                             funds received of about $121.8 million. However, we found that
                             adjustments needed to be made to those amounts:

                             • DC Courts deferred more than $4.1 million of court-appointed attorney
                               payments that were eventually made with fiscal year 1999 funds but did
                               not record these amounts as fiscal year 1998 obligations. Accordingly,
                               we added this amount to DC Courts’ reported fiscal year 1998
                               obligations.
                             • DC Courts treated interest earned primarily from quarterly
                               apportionments of its appropriation as available budgetary resources
                               for court operations. However, DC Courts did not have authority to
                               spend this interest. For this reason, we reduced the amount that DC
                               Courts reported as available resources for fiscal year 1998 by $773,000.

                             At our May 18 testimony, we reported that DC Courts’ recorded obligations
                             and available funding for fiscal year 1998 as adjusted were about $126.3 and
                             $121 million, respectively, resulting in a potential overobligation of more
                             than $5.2 million, in violation of the Anti-Deficiency Act.

                             Recently, DC Courts officials advised us that some obligations in their fiscal
                             year 1998 records needed to be deobligated. DC Courts officials stated that
                             these included amounts that the District should not have recorded as
                             obligations, as well as amounts for services that were no longer
                             anticipated. In May 1999, we evaluated more than $500,000 of the proposed
                             $1 million in deobligations and determined that almost $200,000
                             represented obligations for fiscal year 1998 that were still valid. For
                             example, in three cases, these amounts represented contracted services
                             that had been rendered during fiscal year 1998 for which the contractor had
                             not yet billed DC Courts. In addition, we identified almost $200,000 of
                             unrecorded fiscal year 1998 obligations. These changes reduced DC
                             Courts’ overobligation for fiscal year 1998 by approximately $600,000, to
                             about $4.6 million.


Adjustments to Fiscal Year   We found that DC Courts needed to increase its reported fiscal year 1998
1998 Obligations and         obligations by more than $4.1 million to account for court-appointed
                             attorney payments that had been deferred during fiscal year 1998 and not
Resources                    recorded as fiscal year 1998 obligations. DC Courts eventually made these
                             payments with fiscal year 1999 funds as authorized by the District of
                             Columbia Appropriations Act of 1999. However, this did not convert the
                             deferred payments from fiscal year 1998 obligations to fiscal year 1999
                             obligations.



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                      We also found that DC Courts needed to decrease its fiscal year 1998
                      budgetary resources because it had treated $773,000 of fiscal year 1998
                      interest income as an available budgetary resource for court operations
                      without having explicit legislative authority to do so. DC Courts earned the
                      interest primarily as a result of depositing quarterly apportionments of its
                      appropriation for court operations in interest bearing accounts. 11 The
                      District of Columbia Home Rule Act provides that no amount may be
                      obligated or expended by a District government officer or employee unless
                      the amount has been approved by an act of Congress and then only
                      according to that act. Also, the Revitalization Act amended the Home Rule
                      Act to expressly provide that moneys12 received by DC Courts be deposited
                      in the U.S. Treasury or the Crime Victims Fund. 13 These statutory
                      provisions support the general proposition that when the Congress
                      appropriates funds for DC Courts, it establishes an authorized program
                      level beyond which DC Courts may not operate. Accordingly, DC Courts
                      may not augment its appropriation without specific statutory authority to
                      do so.

                      The Home Rule Act provisions are clear and comprehensive. The
                      provisions apply to all amounts and moneys received by DC Courts, and
                      they are overcome only by the Congress granting the specific authority
                      needed. We are unaware of any statute that authorizes DC Courts to retain
                      and spend interest earned on appropriations for court operations. Further,
                      it undermines the Home Rule Act provisions and the general proposition
                      they support to infer that when Congress required the Treasury to quarterly
                      pay apportioned amounts to DC Courts, the Congress also authorized DC
                      Courts to retain and spend the interest it earns. Accordingly, DC Courts
                      was not authorized to retain or use this interest income and should have
                      remitted it to the U.S. Treasury.


Anti-Deficiency Act   By combining the adjustments described above with DC Courts’ reported
                      obligation balances, we determined that DC Courts had overobligated its
                      budgetary resources by $4.6 million. The Anti-Deficiency Act prohibits
                      District government officers and federal officials from making

                      11
                        For fiscal years 1998 and 1999, the District of Columbia Appropriations Acts required the Treasury of
                      the United States to pay appropriations quarterly to the DC Courts based on quarterly apportionments
                      approved by OMB.
                      12
                       These generally refer to funds received from nonfederal sources, such as fines and fees.
                      13
                       Section 450 of the Home Rule Act, as amended.




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(1) obligations or expenditures in excess of amounts available in an
appropriation or fund unless they are otherwise authorized to do so by law
and (2) an obligation or expenditure in excess of an apportionment.
Apportionments at increments throughout a fiscal year are intended to
prevent obligations and expenditures at a rate indicating a necessity for a
deficiency or supplemental appropriation. To the extent DC Courts
overobligated its budgetary resources for fiscal year 1998, the
overobligations violated the Anti-Deficiency Act.

Anti-Deficiency Act provisions constitute some of the fundamental
financial management requirements for federal and District government
activities subject to the congressional budget process.14 The act’s purpose
is to ensure that agencies or activities funded by annual appropriations
manage their affairs so as not to exhaust their appropriations before the
end of the fiscal year and require additional funding for their annual
operations. OMB and we have stated that officers or employees of the
federal government subject to the Anti-Deficiency Act may not incur
obligations against anticipated receipts, including supplemental
appropriations requested but not yet enacted, 15 because such receipts may
not be realized. For example, the Congress may not enact a supplemental
appropriation in the amount requested by an agency. 16 The official having
administrative control of the appropriation is required to establish
regulations to ensure compliance with the Anti-Deficiency Act and to
identify the reasons for any obligation or expenditure exceeding an
apportionment.

The Anti-Deficiency Act requires the head of an agency to report
immediately to the President and the Congress any violation of the act
including all relevant facts and a statement of actions taken. OMB Circular
A-34, Instructions on Budget Execution, provides additional guidance on
information that the agency is to include in its report to the President.
OMB instructs agencies to include the primary reason or cause for the
overobligation, any extenuating circumstances, the adequacy of the system


14
 31 U.S.C. secs. 1341, 1342, 1349-1351, 1511-1519 (1994).
15
 B-230117-O.M., February 8, 1989, and OMB Circular No. A-34, sec. 21.4 (Rev., Nov. 7, 1997).
16
  OMB has made it clear that even in situations where OMB approves an apportionment request that
would indicate the necessity for a supplemental or deficiency appropriation, it does not authorize the
agency to exceed available resources. While an agency is required to submit a fully justified request for
supplemental funding accompanying the deficiency apportionment request, OMB’s approval of such an
apportionment request does not commit OMB to recommend that amount to the President or transmit
that amount to Congress. OMB Cir. No. A-34, sec. 33.2 (Rev., Nov. 7, 1997).




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providing administrative control of funds, any changes necessary to ensure
compliance with the Anti-Deficiency Act, and steps taken to prevent a
recurrence of the same type of violation.

Violations of the Anti-Deficiency Act are generally the result of agencies
incurring obligations of a discretionary nature in excess of available
funding. An overobligation does not violate the Anti-Deficiency Act if it is,
in the language of the act, otherwise authorized by law. However, no law
explicitly authorized DC Courts to incur fiscal year 1998 obligations in
excess of available resources. The argument that obligations for attorneys’
fees in excess of available resources are “otherwise authorized by law”
finds support on the grounds that these obligations are mandatory in
nature. When a law establishes an appropriation or fund for the sole
purpose of paying obligations of a mandatory nature, obligations in excess
of available funding are not generally viewed as being in violation of the
requirements of the Anti-Deficiency Act.17

While the obligations for court-appointed attorneys might reasonably be
viewed to be of a mandatory nature, the critical issue for applying the
Anti-Deficiency Act in this case is whether the overobligations were
entirely attributable to the mandatory obligations for court-appointed
attorneys and consequently authorized by law. This task is complicated by
the fact that court-appointed attorney programs are financed as part of the
general appropriation for court operations. Under these circumstances,
DC Courts should have considered the impact that the mandatory aspect of
the program would have on the appropriation and managed the residual
amounts prudently so that total obligations did not exceed the total amount
appropriated. In other words, having funds for mandatory activities
included in a lump sum appropriation available for discretionary activities
did not relieve DC Courts of its responsibility to manage discretionary
spending to avoid exceeding available resources and violating the
Anti-Deficiency Act.18

While DC Courts’ overobligation of an appropriation that funds both
mandatory and discretionary programs may not necessarily constitute an


17
 See 65 Comp. Gen. 4 (1985).
18
 “District officials must supervise and manage the District’s financial transactions to insure that
appropriations are not exceeded and the requirements of the Anti-Deficiency Act are met.” B-262069,
August 1, 1995 (the District would violate the Anti-Deficiency Act if its discretionary decisions on the
Medicaid and Aid to Families with Dependent Children programs led to overobligating its lump sum
appropriation for Human Support Services).




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Anti-Deficiency Act violation, it at least creates a presumption of such a
violation. To avoid violating the Anti-Deficiency Act, DC Courts would
have to show that it took all reasonable steps to manage the account within
the amounts appropriated and that any obligations in excess of available
resources resulted from constitutional or statutory requirements.19 To
support this argument, the burden is on DC Courts to provide evidence of
unanticipated mandatory spending and efforts undertaken to cut
discretionary spending.

The actions of DC Courts during fiscal year 1998 do not demonstrate that
the overobligation of the fiscal year 1998 account resulted from obligations
that were beyond its control. For example, the $4.1 million in payments for
court-appointed attorneys clearly was not deferred because it was
unexpected—the fiscal year 1998 obligations for court-appointed attorneys
were similar to those in fiscal year 1997 and the estimates for fiscal year
1998. Also, DC Courts granted a discretionary pay raise20 that took effect
after the fiscal year 1998 appropriation was enacted into law even though
the appropriation was more than $15 million less than the amount DC
Courts initially requested. Finally, DC Courts did not base its spending
during most of fiscal year 1998 on the appropriation it received.

DC Courts officials have stated that they did not violate the Anti-Deficiency
Act because a provision in the fiscal year 1999 appropriation act authorized
DC Courts to make court-appointed attorney payments that had been
deferred from fiscal year 1998. The DC Courts’ view is that this provision
authorized the deferral of these payments in fiscal year 1998 and allowed
DC Courts to use fiscal year 1999 funds to liquidate these obligations, all
without violating the Anti-Deficiency Act as long as DC Courts paid all
fiscal year 1998 overobligations in accordance with the fiscal year 1999
appropriation act. We disagree with this view. The provision in the fiscal
year 1999 appropriation act merely authorizes DC Courts to use fiscal year
1999 funds to pay obligations incurred in fiscal year 1998 and prior years
for court-appointed attorneys. The fiscal year 1999 appropriation act had
not been enacted when DC Courts deferred payments to court-appointed



19
 B-262069, August 1, 1995.
20
 On November 13, 1997, the Joint Committee on Judicial Administration approved comparability of the
DC Courts compensation schedule with the federal court’s schedule for nonjudicial employees, to be
achieved over a 2 fiscal-year period, provided adequate funding was appropriated. The first salary
adjustment of 7 percent became effective December 7, 1997, at a reported cost of almost $2.8 million
for fiscal year 1998.




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                  attorneys and, according to its records, overobligated fiscal year 1998
                  appropriations.

                  The Congress has long recognized that the timing of payments for
                  court-appointed attorneys is not predictable and that claims attributable to
                  a fiscal year may be submitted or approved after the end of the fiscal year
                  when funds are no longer available. The provision in the fiscal year 1999
                  appropriation act addresses this problem by making fiscal year 1999 funds
                  available for such payments without regard to when the obligations were
                  incurred. It does not, as DC Courts suggested to us, authorize DC Courts to
                  defer paying obligations already identified and ready for payment.

                  Further, if such a position were to prevail, it would undermine
                  congressional control of DC Courts’ appropriation. DC Courts has
                  identified no limitations as a matter of law to its position that the provision
                  is available whenever DC Courts’ costs exceed resources, as long as only
                  costs for court-appointed attorneys are deferred. This position, if accepted,
                  would allow DC Courts to respond to dissatisfaction with its appropriation
                  by deferring court-appointed attorney payments at any time or in any
                  amount throughout a fiscal year. This could lead to spending for court
                  operations in excess of what the Congress intended and shift significant
                  costs for court-appointed attorneys to the next fiscal year, all without
                  violating the Anti-Deficiency Act. The language and purpose of the
                  provision in the fiscal year 1999 appropriation act and the Anti-Deficiency
                  Act support no such interpretation.

                  To ensure that in the future appropriated funds intended for
                  court-appointed attorneys are not used for other purposes, the Congress
                  could make a separate appropriation to DC Courts for payments to
                  court-appointed attorneys. This appropriation could be similar to that
                  provided to federal courts each year to fund payments to court-appointed
                  attorneys, in which funds remain available until expended.



Payments to       Throughout fiscal year 1998, it was clear that unless DC Courts modified its
                  spending or received additional funds, it was facing a shortfall. By the third
Court-Appointed   quarter, when DC Courts had not received the additional funds it
Attorneys         anticipated, there were limited options available for addressing the
                  projected shortfall. DC Courts officials considered furloughing employees
                  and closing the courts for a period of time during the summer, as well as
                  deferring court-appointed attorney and expert service provider payments.
                  In May 1998, OMB officials advised DC Courts to reduce nonpersonnel



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                          costs instead of furloughing employees or closing the courts to avoid an
                          Anti-Deficiency Act violation. On July 24, 1998, DC Courts began deferring
                          payments for court-appointed attorneys for the remainder of the fiscal year,
                          and it eventually used fiscal year 1999 appropriations to pay most of those
                          amounts. As part of its budget request, DC Courts had estimated $31.6
                          million for payments to court-appointed attorneys in fiscal year 1998, an
                          amount that was similar to that in the previous year. As of July 1998, DC
                          Courts had expended $25.8 million on court-appointed attorney payments.



Voucher Processing        We found that DC Courts processed voucher payments for court-appointed
                          attorneys in accordance with its policies and procedures. However, these
Procedures                procedures did not address certain matters that were important to proper
                          disposition of voucher claims, including

                          • time frames for making such payments,
                          • procedures for maintaining data on vouchers reported as missing, and
                          • procedures for notifying attorneys and expert-service providers when
                            voucher amounts claimed were reduced.


Time Frames for Voucher   For fiscal year 1998, DC Courts was not subject to the federal Prompt
Payments                  Payment Act or the District Quick Payment Act. However, the District’s
                          fiscal year 1999 appropriation21 subjected DC Courts to the requirements of
                          the federal Prompt Payment Act. Under the act, an entity that fails to pay
                          promptly for goods and services accepted as satisfactory may be required
                          to pay interest on amounts owed.

                          For fiscal year 1998, we analyzed payment timing from two different
                          perspectives. First, we looked at the number of days from the vouchers
                          first being submitted by the attorney or expert provider to the payment
                          being made. Second, we looked at the number of days from the presiding
                          judge or hearing commissioner approving the voucher for payment to the
                          payment being made. Our analysis of DC Superior Courts’ fiscal year 1998




                          21
                           Public Law No. 105-277, sec. 162, 112 Stat. 2681-148 (Oct. 21, 1998).




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paid voucher data22 through July 1998 showed that 48 percent of these
vouchers were paid within 30 days of being submitted. Ninety-four percent
of the vouchers for court-appointed attorneys and expert service providers
were paid within 30 days of the presiding judge’s or hearing commissioner’s
approval.

We also reviewed DC Courts’ implementation of the Prompt Payment Act in
fiscal year 1999 as it applies to paying court-appointed attorneys. The
purpose of the act is to encourage agencies to pay bills in a timely manner.
If an agency fails to pay a bill by the “required payment date,” interest
begins to accrue. Except for situations not relevant here, the required
payment date under the act is 30 days after receipt of a “proper invoice.”23
The Prompt Payment Act defines a proper invoice as one that contains or is
accompanied by substantiating documentation required by regulation or
contract that is necessary to permit the agency to approve the bill. 24

On December 10, 1998, the Chief Judge of the Superior Court issued a
memorandum to all judges and hearing commissioners stating that with
regard to vouchers for CJA and CCAN payments, it had been determined
that the date DC Courts receives a proper invoice is the date the
authorizing judge or hearing commissioner approves the voucher. The
Superior Court Trial Lawyers Association has raised concerns over this
determination. We share their concern because if a proper invoice is
“received” only when it is approved, DC Courts could avoid incurring
interest on vouchers simply because the judge or hearing commissioner
has not reviewed them. We understand that this matter is currently under
discussion between DC Courts and the Superior Court Trial Lawyers
Association.

As of June 1999, DC Courts did not have a mechanism for tracking
vouchers from acceptance to due date to ensure that they were processed
and paid in time and to avoid interest penalties. Further, the absence of
policies or procedures for retaining data on the number of vouchers


22
  To perform our analysis on the timeliness of voucher processing, we used data DC Courts merged
from databases in its voucher tracking and voucher payment systems. Court of Appeal cases and
vouchers for court transcribers are not tracked in the voucher tracking system. Therefore, they are not
a part of this analysis. We excluded some records because of missing or erroneous data in data fields.
DC Courts was unable to explain completely the reasons for the missing or erroneous data.
23
 31 U.S.C. 3902 (b), 3903 (a) (1) (B) (1994).
24
 31 U.S.C. 3901 (a) (3) (1994).




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                           reported as missing or the disposition of such vouchers created additional
                           concern that a significant number of vouchers would not be paid until after
                           the due date.


Lost or Missing Vouchers   Prior to and during our review, court-appointed attorneys claimed that filed
                           vouchers were sometimes lost and had to be refiled. The DC Courts
                           accounting manager responsible for voucher processing and payment
                           estimated that out of over 4,000 vouchers processed each month, about
                           50 vouchers were reported as missing. However, the accounting manager
                           did not have any specific information. The underlying causes of this
                           problem could not be explained.

                           We noted that procedures in effect presented opportunities for vouchers to
                           be misplaced or lost at two different stages during voucher processing. DC
                           Courts date-stamps each voucher when it is received but does not maintain
                           a log of these submissions. Further, DC Courts does not input voucher data
                           into its tracking system until the voucher is audited for accuracy, a process
                           that, according to the accounting manager, takes about 8 working days.
                           Without logging in all vouchers upon receipt or immediately entering
                           voucher data into the tracking system, DC Courts cannot ensure complete
                           accountability for all vouchers. This increases the risk that vouchers lost
                           or misplaced at this stage will not be recovered.

                           After a voucher is audited for accuracy, it is forwarded to the presiding
                           judge or hearing commissioner for approval. Although DC Courts’ voucher
                           tracking system identifies the date of specific events, vouchers are
                           hand-delivered to and from the judges’ chambers, presenting additional
                           opportunities for vouchers to be misplaced or lost.


Reduction of Voucher       During the final review of vouchers, the judge or hearing commissioner has
Amounts                    the authority to reduce the amount of the voucher if he or she determines
                           that some of the attorney’s or provider’s hours or expenses should be
                           disallowed. DC Courts did not have procedures covering how judges or
                           hearing commissioners were to document such decisions to the attorney or
                           provider. However, DC Courts officials stated that this information was
                           available to attorneys who requested it.

                           Our analysis of fiscal year 1998 paid voucher data showed that judges or
                           hearing commissioners reduced voucher amounts in 9 percent of the cases,
                           more than half of which involved reductions of $100 or less.



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Crime Victims   During our review, we identified a matter that, while not affecting DC
                Courts’ use of its fiscal year 1998 appropriation for court operations, needs
Compensation    to be addressed to provide DC Courts the requisite authority to make
Program         payments out of its Crime Victims Fund. A District law established the
                Crime Victims Compensation Program under DC Courts jurisdiction prior
                to the enactment of the Revitalization Act.25 The District law provides that
                the fund may be credited with (1) appropriations made to it, (2) fines
                assessed on persons convicted of serious traffic or misdemeanor offenses,
                or persons convicted or pleading guilty or no contest to felony offenses,
                (3) amounts recovered by the District from offenders or third parties by
                subrogation to the victim’s rights as a result of payments of claims to
                victims, (4) repayments of overpayments or false claims payments from
                claimants, and (5) amounts received from any source, including grants
                from the federal government, for the purpose of the fund. The District law
                provides that compensation totaling up to $25,000 from the fund can be
                made to crime victims for economic loss. Payments can also be made for
                shelter, burial costs, or medical expenses. DC Courts’ records indicated
                that about $1.5 million in such payments plus almost $300,000 of
                administrative cost payments were made during fiscal year 1998 and that
                the balance of the fund at September 30, 1998, was about $6.8 million.

                While the Revitalization Act amendment to the Home Rule Act supports the
                authority of DC Courts to deposit the fines, fees, and other money
                identified in the District law to the Crime Victims Fund, the Revitalization
                Act makes no mention of spending amounts deposited to the fund. Further,
                nothing in the language of the District’s fiscal years 1998 or 1999
                appropriation acts appropriates amounts from the Crime Victims Fund.
                Finally, we have not identified any other federal law authorizing payments
                from the fund. The District of Columbia Home Rule Act26 states that no
                officer or employee of the District of Columbia government may obligate or
                spend an amount unless it is approved by an act of the Congress and then
                only according to that act. Accordingly, we conclude that DC Courts did
                not have the requisite legislative authority to make payments from the
                fund.




                25
                 The Victims of Violent Crime Compensation Act of 1996, D.C. Law 11-243, 44 DCR 1142, 2601 (April 9,
                1997), D.C. Code Ann. Secs. 3-421 through 3-438 (1998 Supp.).
                26
                 Section 446 of the Home Rule Act, as amended.




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Conclusions          DC Courts experienced difficulties in planning and budgeting in fiscal year
                     1998, its first year of operations with direct federal funding. In a transition
                     year in which DC Courts underwent changes to its functions and
                     responsibilities, DC Courts’ management did not properly execute its
                     responsibility to operate within available resources. Appropriate
                     recognition of obligations incurred and resources available and compliance
                     with federal laws and guidelines addressing its financial management are
                     crucial to improving DC Courts’ performance in this area. In addition, DC
                     Courts did not have complete information in its voucher tracking system to
                     ensure that all submitted vouchers were promptly tracked, processed, and
                     paid. Revised procedures in this area and improvements to its voucher
                     tracking system could improve DC Courts’ timeliness in making voucher
                     payments and reduce the incidence of missing vouchers. Improvement in
                     these areas has become critical in fiscal year 1999, now that DC Courts is
                     subject to the federal Prompt Payment Act and may be required to pay
                     interest on payments made more than 30 days after receipt of a proper
                     invoice.



Recommendations to   If the Congress continues to require the U.S. Treasury to pay quarterly
                     apportionments to DC Courts, we recommend that the Congress consider
the Congress         authorizing DC Courts to retain the interest earned and requiring DC
                     Courts to include estimated interest in its annual budget request. This
                     would alleviate the need for DC Courts and U.S. Treasury to process
                     interest repayments to U.S. Treasury.

                     If the Congress wishes to ensure that appropriated funds intended for
                     payment of court-appointed attorneys are not used for other purposes, we
                     recommend that the Congress consider making a separate appropriation to
                     DC Courts for payments to court-appointed attorneys.



Recommendations to   We recommend that the Joint Committee on Judicial Administration

DC Courts            • perform all necessary investigation and reporting under the
                       Anti-Deficiency Act related to DC Courts’ overobligation of its fiscal
                       year 1998 appropriation,
                     • transfer to the U.S. Treasury all interest earned on appropriated funds or
                       seek legislative relief from repaying the interest that was improperly
                       retained,




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                      • issue guidance providing that interest is to be paid when vouchers
                        containing or accompanied by all required substantiating
                        documentation are not paid by the required payment date,
                      • establish procedures that require all vouchers to be logged and tracked
                        immediately upon receipt, and
                      • seek legislation authorizing DC Courts to use the Crime Victims Fund to
                        pay eligible claims under the Crime Victims Compensation Program.



DC Courts’ Comments   In commenting on a draft of the report, DC Courts disagreed with our
                      findings concerning
and Our Evaluation
                      • its violation of the Anti-Deficiency Act in fiscal year 1998 and
                      • its use of interest earned on its appropriation as a resource to fund court
                        operations.

                      In addition, DC Courts disagreed with our conclusions and the need for
                      implementing three of our recommendations. They agreed to seek
                      clarifying legislation to address two of our other recommendations. DC
                      Courts did provide technical comments which we have incorporated as
                      appropriate but have not reproduced in our report.

                      In several meetings with us and in a written statement submitted to us in
                      May 1999, DC Courts stated that it disagreed with the legal basis for our
                      conclusion that DC Courts violated the Anti-Deficiency Act by
                      overobligating its budgetary resources by approximately $4.6 million in
                      fiscal year 1998.27 We considered DC Courts’ position in preparing the draft
                      of this report. In summarizing its position in its comments on our draft, DC
                      Courts stated two principal reasons why its actions were in conformity
                      with the Anti-Deficiency Act.

                      First, DC Courts asserted that because it has the authority to defer attorney
                      payments under its appropriation act, its actions constitute an exception to
                      the Anti-Deficiency Act. As discussed in detail in this report, we disagreed
                      with DC Courts’ position. We stated that the appropriation act provides
                      authority to use current funds to pay prior year obligations and not the


                      27
                        In our testimony on May 18, 1999, we reported that the amount of the potential overobligation was
                      $5.2 million. Subsequent to our testimony, DC Courts provided us with proposed deobligations for
                      fiscal year 1998. We reviewed the proposed deobligations in May 1999 and, as a result, revised the
                      amount of DC Courts’ overobligation for fiscal year 1998 to about $4.6 million.




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authority to decide to defer paying obligations already identified and ready
for payment. The Congress’ granting of this authority in the fiscal year 1999
appropriation act (and prior years’ acts) addressed the difficulty of
attorney claims being submitted and approved in one fiscal year for
services rendered in prior fiscal years and, therefore, being obligations
chargeable to the prior fiscal years. This authority in the appropriation act
is significant because without it, the fiscal year 1999 funds would not have
been available to pay prior year obligations. DC Courts’ comments do not
address this basic tenet of appropriations law but rather commingle the
separate issues of whether DC Courts may (1) overobligate its fiscal year
1998 appropriation to the extent of its attorney payments and (2) use its
fiscal year 1999 appropriation to pay claims attributable to prior years.

Furthermore, we observed that DC Courts’ position establishes no limits as
a matter of law and would undermine congressional control. DC Courts
characterizes the appropriation as providing authority to defer attorney
payments from one year to the next only when confronted with
extraordinary circumstances. However, it offers no statutory basis for
limiting the asserted authority only to extraordinary circumstances. As
discussed in our report, DC Courts is authorized to obligate funds for
court-appointed attorneys in excess of available resources without
violating the Anti-Deficiency Act if overobligations are solely attributable
to mandatory spending as evidenced by (1) unanticipated spending for
attorneys and (2) reductions in discretionary spending designed to keep
total obligations within total resources. This authority is very different
than the authority to defer attorney payments from one year to the next and
spend the “saved” attorney payments on court operations that DC Courts
attempts to read into the appropriation act.

Second, DC Courts asserts that the Anti-Deficiency Act allows for a
deficiency or supplemental request for appropriations where (1) the
enactment of new laws after budget requests are submitted to the Congress
results in increased costs or (2) the government’s continuation of essential
functions for the safety of human life or the protection of property is
required. DC Courts refers to 31 U.S.C. 1515 (b)(1)(A) and (B), a provision
of the Anti-Deficiency Act. However, DC Courts’ reliance on this provision
is misplaced. Section 1515 is not an exception to the Anti-Deficiency Act’s
basic prohibition of obligating or spending in excess of or in advance of an
appropriation. Rather, section 1515 is a statutory exception only to the
general apportionment rule in 31 U.S.C. 1512, which prohibits apportioning
funds at a rate indicating a deficiency or a need for a supplemental
appropriation. This distinction is discussed in II GAO, Principles of Federal



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Appropriations Law (GAO/OGC 92-13, December 1992, pp. 6-80 through
6-83). Further, OMB Circular A-34, sec. 33.2 (Rev. Nov. 7, 1997) makes clear
that an apportionment indicating a deficiency or a need for supplemental
appropriation does not guarantee the agency that OMB, the President, or
the Congress will support the agency’s request for supplemental funding.
Even if DC Courts had met the conditions in section 1515(b) and received
an apportionment indicating a need for supplemental funding, section 1515
provides no legal basis for DC Courts to obligate funds in excess of the
amount appropriated.28

One of the themes running through DC Courts’ comments is that DC Courts
received inadequate funding and had limited options available for spending
reductions. DC Courts asserts that our report needs more information on
this matter because such information would make the report more
complete and accurate and lead to different legal conclusions. In general,
DC Courts’ comments about the Revitalization Act, as well as its dealings
with the Congress, OMB, and other executive branch entities over the
funding it believes it should have received for fiscal year 1998, may be
among the factors DC Courts could offer as extenuating circumstances that
resulted in its violation of the Anti-Deficiency Act. However, none of the
additional information DC Courts has offered affects our legal analysis of
DC Courts’ Anti-Deficiency Act violation. In this regard, DC Courts
commented that our report “overstates the very limited relevance of a
modest pay increase.” However, we found that the discretionary pay raise
was almost $3 million, or about 65 percent of DC Courts’ $4.6 million
overobligation of its resources in violation of the Anti-Deficiency Act. 29

DC Courts also disagreed with our conclusion that it lacked the authority to
retain and spend interest earned on the federal funds appropriated for


28
  DC Courts’ reference to 31 U.S.C. 1515 is also misplaced for factual reasons. After passage of the
Revitalization Act and before enactment of the District’s fiscal year 1998 appropriation act, the
President submitted a revised budget request to the Congress that reflected the Revitalization Act’s
changes. Accordingly, a request for supplemental funding under section 1515(b)(1)(A) could not be
based on the Congress having passed a law affecting DC Courts after having received a budget request
for DC Courts. Further, while DC Courts may have had funding difficulties in fiscal year 1998, those
difficulties did not result, as section 1515(b)(1)(B) requires, from an “emergency.” Finally, when OMB’s
last apportionment for the year to DC Courts was made in April 1998, OMB warned DC Courts that it
needed to reduce its rate of spending to avoid violating the Anti-Deficiency Act.
29
  Our central point regarding the pay raise is that it represents discretionary spending that could have
been postponed or eliminated. This is supported by the effective date of the pay raise, which was
“subject to sufficient funds being available,” and which was awarded after DC Courts knew that the
Congress had authorized an appropriation for fiscal year 1998 that was over $15 million less than the
amount requested.




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court operations. As discussed in the report, our conclusion is based on
the language of the Home Rule Act and the Revitalization Act consistent
with basic principles of federal appropriations law. In contrast, DC Courts
asserts that it may infer the authority to retain and spend the interest
because the Congress “remained silent on the matter of interest” even
though the Congress required the Department of the Treasury to make
quarterly payments to DC Courts, and it was inevitable that DC Courts
would deposit the payments in an interest-bearing account. DC Courts’
view is contrary to the fundamental principle of appropriation law that
prohibits an agency from augmenting its appropriation from other sources
unless specifically authorized by law. Because nothing in the language of
any act, or even legislative history, indicates that the Congress wanted DC
Courts to retain and spend interest earned on fiscal year 1998
appropriations, we find no basis to impute to the Congress a grant of
authority that overrides limitations found in law and grounded in principles
of appropriations law. Accordingly, as discussed in this report, the interest
should have been deposited to Treasury, as required by section 450 of the
Home Rule Act as amended by the Revitalization Act.

During our review, we requested documentation from DC Courts regarding
its preparation and execution of a spending plan tied to its fiscal year 1998
appropriation. We found that when DC Courts received an appropriation
that was over $15 million less than it requested, it did not take immediate
steps to cut planned spending to reflect the actual level of funding but
rather proceeded with a discretionary pay raise and continued to spend at a
rate that would necessitate a deficiency or a supplemental appropriation.
Other than not filling vacant positions (which, according to DC Courts, cut
almost $3 million in operational costs), DC Courts did not propose the
necessary spending cuts until the third quarter of the fiscal year and only
after requests for supplemental funding did not materialize. At that point,
as DC Courts officials pointed out, their options to make spending cuts
were limited.

DC Courts took exception to our discussion of the Prompt Payment Act in
relation to its processing of payment vouchers because, as we noted in our
report, DC Courts was not subject to the Prompt Payment Act until fiscal
year 1999. We found it useful to refer to the Prompt Payment Act because
in the absence of any legal requirements to make timely payments, it
provided a recognized standard and DC Courts payments were made
subject to the Prompt Payment Act beginning in fiscal year 1999.




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                        DC Courts also stated that our report did not accurately characterize the
                        nature of communications between DC Courts and both OMB and
                        Members of Congress. However, this report and our previously issued
                        testimony and chronology of events30 fairly reflect all the relevant and
                        critical documentation DC Courts provided to us. DC Courts did not
                        include new or additional information in its comments that affects our legal
                        positions and conclusions.



Subsequent              Following the receipt of comments from DC Courts on a draft of this report
                        and discussion of our recommendations with the House and Senate staff of
Congressional Actions   the oversight and appropriations committees, the Conference Committee
                        reported H.R. 2587, the District of Columbia appropriations bill for fiscal
                        year 2000, on August 5, 1999.31 If enacted as reported by the Conference
                        Committee, H.R. 2587 would address four of our recommendations as
                        follows:

                        • It addresses the recommendation that the Congress consider
                          authorizing DC Courts to retain interest earnings and reflect estimated
                          interest in its budget requests if the Congress continues to require the
                          U.S. Treasury to pay quarterly apportionments to DC Courts. The
                          proposed language eliminates the requirement that the U.S. Treasury
                          pay the apportionments quarterly to DC Courts and requires all amounts
                          to be quarterly apportioned by OMB, obligated, and expended in the
                          same manner as funds appropriated to other federal agencies.32 Thus,
                          federal funds will remain with the Treasury until needed for authorized
                          DC Courts activities, and disbursements for these authorized activities
                          will be made directly from the Treasury. This change would eliminate
                          the need for an interest-bearing bank account to handle the federal
                          payment to DC Courts.
                        • It addresses the recommendation that the Congress consider making a
                          separate appropriation to DC Courts for payments to court-appointed
                          attorneys. The proposed language establishes a separate federal
                          payment for “Defender Services in the District of Columbia Courts,”
                          specifically for making payments to court-appointed attorneys under the


                        30
                          District of Columbia Courts: Chronology of Events Associated with DC Courts’ Financial-Related
                        Issues for Fiscal Year 1998 (GAO/AIMD-99-204R, June 7, 1999).
                        31
                         H.R. Rep. 106-299.
                        32
                         H.R. Rep. 106-299, at 3.




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  CJA, CCAN, and Guardianship programs, and requires that payroll and
  financial services be provided by GSA, which must submit monthly
  reports to the President and specific committees.33
• It addresses the recommendation that DC Courts pay the Treasury the
  interest already earned on prior federal payments. H.R. 2587 would
  authorize DC Courts to use up to $1.2 million of interest earned on the
  fiscal year 1999 federal payment to make certain payments to court-
  appointed attorneys for indigents.34 Our recommendation that DC
  Courts pay the Treasury interest earned on the fiscal year 1998 federal
  payment remains unaffected.
• It addresses the recommendation that DC Courts request legislative
  authority to spend money in the Crime Victims Fund. Section 160(b)(1)
  of H.R. 2587 would authorize DC Courts to spend moneys properly
  deposited in the Crime Victims Fund for purposes authorized by the
  Crime Victims Act, as amended. In addition, section 160(e) of H.R. 2587
  would ratify any payments made from the Crime Victims Fund on or
  after April 9, 1997, to the extent the amounts are authorized under the
  Crime Victims Compensation Act of 1996, as amended.


We are sending copies of this letter to Senator Kay Bailey Hutchinson,
Chairwoman, Subcommittee on the District of Columbia, Senate
Committee on Appropriations; Senator Richard Durbin, Ranking Minority
Member, Subcommittee on the District of Columbia, Senate Committee on
Appropriations, and Subcommittee on Oversight of Government
Management, Restructuring and the District of Columbia, Senate
Committee on Governmental Affairs; Senator George Voinovich,
Chairman, Subcommittee on Oversight of Government Management,
Restructuring and the District of Columbia, Senate Committee on
Governmental Affairs; and Representative Eleanor Holmes Norton,
Ranking Minority Member, Subcommittee on the District of Columbia,
House Committee on Government Reform. We are also sending copies to
the Joint Committee on Judicial Administration, DC Courts, through the
Honorable Annice Wagner, Chair; the Honorable Jacob J. Lew, Director,
Office of Management and Budget; and Grace Mastelli, Deputy Assistant
Attorney General, Department of Justice. Copies will be made available to
others upon request.


33
 H.R. Rep. 106-299 at 3-4.
34
 H.R. Rep. 106-299 at 3-4.




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If you have any questions, please contact me or Steven Haughton at (202)
512-4476. Key contributors to this assignment were Marcia Washington,
Lou Fernheimer, Jeffrey Jacobson, and Richard Cambosos.




Gloria L. Jarmon
Director, Health, Education, & Human Services
 Accounting and Financial Management Issues




Page 26                                      GAO/AIMD/OGC-99-226 DC Courts
Page 27   GAO/AIMD/OGC-99-226 DC Courts
Appendix I

Comments From the District of Columbia
Courts                                                     Appenx
                                                                Idi




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