WASHINGTON — District of Columbia Mayor Adrian Fenty outlined his plan to close the city’s budget gap yesterday after officials delayed a $103 million payment to charter schools, underscoring its financial troubles.
Even as the plan was announced, school board officials said the delayed payment would not affect any of the $137 million of school bonds that are outstanding.
The mayor submitted a revised budget for fiscal 2010 to the District Council that combines federal stimulus aid with spending cuts, including layoffs, to navigate the budget through the economic recession now in its 18th month. The revised budget is designed to eliminate the district’s $453 million budget gap for fiscal 2009.
“My administration has taken action to address the district’s deficit, exploring all possible options,” Fenty said in a statement. “Our proposed plan not only balances the budget but also protects critical services for district residents.”
The $453 million budget deficit was announced in June after chief financial officer Natwar M. Gandhi determined the district’s revenue estimate for fiscal 2009 would be 3.8% lower than the estimate released in February. Gandhi projected that revenues will decline by $150 million, or 2.0%, in fiscal 2010.
Fenty proposed to apply $152 million of stimulus funds to the fiscal 2009 budget and $36 million to the 2010 budget. The district will tap its rainy-day fund for $125 million in 2009 and reallocate funds that were not spent in previous years. The mayor proposed to eliminate 1,631 position across the government, including 458 vacant and 1,176 filled positions. He has asked agency officials to “scrub their budgets” to find an additional $110 million in savings.
The district was forced to delay a payment to charter schools because of a calendar quirk this year compounded by budget stress, officials said. The charter schools operate on a fiscal year that starts July 1, three months before the district’s fiscal year, which begins Oct. 1. This leaves the schools’ July payment dependent on revenues the district receives during the fourth quarter.
Historically, the district’s revenue estimates have increased as the fiscal year progresses and funds have become available for the schools. But this fiscal year, the revenues dropped and the funds were not available.
The city cannot legally appropriate funds to the schools from the fiscal 2010 budget until it is passed by Congress.
District officials said yesterday that, within the next few days, the schools will receive $57 million from the rainy-day fund. The rest of the $103 million will become available when the 2010 budget is approved.
Charter schools have about $137 million of bonds outstanding and are planning to issue another $103 million of bonds, according to staff in the deputy mayor’s office for planning and economic development. The schools are budgeted to receive $413 million in fiscal 2009. The missed payment from the district will not affect the schools’ creditworthiness, said Jeremy Williams, finance manager for the D.C. Public Charter School Board.
Using money from the rainy-day fund can exacerbate future budget shortfalls, Fenty said. Unlike states, the district is required to repay 50% of any funds withdrawn from the rainy-day fund within the next fiscal year. The remaining funds must be repaid the following year. In fiscal 2010, the city will have to repay at least $62.5 million to the rainy-day fund despite the expected continuing weak economy and budget problems.