Potential FY15 Budget Pressures Office of the Budget Director Jennifer Budoff, Director Council of the District of Columbia Monday, January 26, 2015 1

FY 2015 Budget Pressures: Overview 2

Increase in FY15 Expenditures: Potential $47M+ FEMS Settlement Per GASB rules, the entire amount must be booked the year the judgment is finalized U nclear if judgment will be final in FY15 FY15 Options: 1. Expected $21M settlement 2. Settlements and Judgments ( S &J) $21.7M budgeted for FY15, $18M unspent 3. Section 103/801 of the FY15 Appropriations Act allows for payment from unallocated local funds C ould also be used to fund smaller settlements after S&J is depleted 4. Other one - time sources of funds (see later slides) 3

Reduction in FY15 Revenues: $83.3M December revenue estimate revised downward by $83.3M FY15 revenue still projected to be 4.3% greater than FY14 FY16 revenue is still projected to grow 3.8% over FY15 in millions FY14 FY15 FY16 Projected local revenue 6,309 6,578 6,829 $ increase over prior FY 107 269 251 % increase over prior FY 1.7% 4.3% 3.8% 4

Options to address potential FY15 revenue shortfall Options: 1. One - time sources of funds 2. NPS, travel and hiring freeze 3. Targeted program reductions $16M of enhancements frozen by Mayor Bowser Council alternatives, if any may be smaller due to: Year - to - date underspending Higher revenue estimates later in the FY 5

FY15 Option #1 Up to $63M from one - time sources of funds: Subject to verification and certification by the OCFO Source Amount Operating margin $5.2M Repayment of Loans and Interest $9.8M Certificates of Participation $22.7M Commodity Cash Reserve $25M (unaudited pre - CAFR) 6

FY15 Option #2 NPS, Travel and Hiring Freeze: Frequently used to address potential gaps Key method used by the last administration to control spending additional verification in the EOM CFO is unable to quantify the savings that accrued in previous freezes Expect higher than usual underspending in the first half of FY15 because of Mayoral transition As savings accrue through FY, they would be recognized later in the year 7

FY15 Option #3 Targeted program reductions: $16M : Freezes on LRSP, SNAP and youth homeless beds lifted Note that the under enrollment in DCPCS is projected under spending, not a freeze $ 9.9 has already been reprogrammed out Determining amount available, if any 8

FY15 Option #3 Targeted program reductions: Councilmember recommendations List of all enhancements in FY15 (see handout) 9