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Executive SummaryThe practice of earmarking, as an appropriation mechanism, is not new. However, within the past year, this practice has been subject to an increased level of scrutiny at the national level by scholars, watchdog groups, and special interest advocates. The new Democratic Congress came into office vowing to reform this method of appropriation.1 However, groups that have followed the proposed reforms closely have posited that major reforms, still yet, have not been achieved. State and local levels of government, nationally, are also confronting the same issue, including the District of Columbia. At a time when the District is enjoying record surpluses, there is greater flexibility relative to spending. This flexibility has contributed inherently to a shift in the number of earmarks that have been introduced and approved by the Council of the District of Columbia (“Council”). The Council’s advanced recognition of an apparent increase in the number of earmarks resulted in a formal request to review this practice and to assess possible options for reform. A review of earmarks has revealed that two of the most significant issues associated with this practice are a lack of transparency and competition. This revelation is not exclusively applicable to the District, but is relevant to this mechanism, in general. In May of 2007, when the full Council was considering the Fiscal Year 2008 Budget Support Act of 2007 on first reading, a proposed amendment to the Budget Support Act (“BSA”) resulted in a specified funding allocation being struck and the identified funding being shifted to another organization. This amendment raised the overarching question surrounding this practice: Why should organization X receive funding and not organization Y? This action resulted in increased local scrutiny of this practice, although the Council was already reviewing this method of appropriation comprehensively. Scope of ReviewThis review examines earmarks approved by the Council of the District of Columbia (“Council”) from Fiscal Years 1999 through 2008 in an effort to clearly assess the Council’s utilization of this method of appropriation. The introduced and approved versions of the BSA were analyzed to demarcate those earmarks that were initiated by the executive branch of government and those that were introduced by members of the legislative branch of government (see Appendix, Table 2). The BSA was selected as the instrument for analysis because of its degree of reliability in identifying these actions. The Congressional Research Service (“CRS”) has maintained that one of the central challenges to measuring earmarks in appropriation bills is defining the term and applying it consistently to the analysis. This review defines “earmarks” as an approved measure by the Council, which results in the appropriation of funds for a specific purpose. This appropriation applies only to direct funding for organizations, institutions, and private sector entities. Although earmarking can be defined more broadly to include earmarking funds for specific projects and programs internally within the government, the select definition for this review does not take such appropriations into account. However, Chart 1. delineates all earmarks approved by the Council from Fiscal Years 1999 through 2008, to include internal allocations and tax exemptions. By the select definition for this review and analysis, the Council approved 99 earmarks, totaling $49,766,576 in Fiscal Year 2008.
State and Local Governments To provide a more detailed assessment of earmarking from a national perspective and to examine possible reform measures that may be adopted by the Council, select cities, counties and states were contacted to obtain jurisdiction-specific information on earmarking. Twenty-three (23) local jurisdictions responded and twenty-eight (28) states (see Charts 2 and 3). Of the 23 cities and counties that responded, 8 responded definitively that their legislative bodies do earmark funds for specific purposes; 6 local jurisdictions responded yes, but noted that the use is limited; 4 respondents stated that their members do not earmark funds; and 5 responded yes, without providing clear information as to whether or not the earmarks involve external organizations/institutions. Of the 28 states that responded, 20 provided a definitive yes to earmarking funds for specific purposes; 7 responded yes, but provided that the use is limited, with certain restrictions; and one state, Colorado provided that members of the legislature do not earmark funds for specific purposes. Earmarking Trends in the District of Columbia
Source of Data: Budget Support Acts, 1999 through 2008 Notes: The earmarks identified are restricted to those earmarks that name specific organizations, institutions and for profit entities. i Earmarking Trends FY05 - FY08 0 10,000,000 20,000,000 30,000,000 40,000,000 50,000,000 60,000,000 2005 2006 2007 2008 Fiscal Year Dollars
Overall, the findings are:
This finding is strikingly applicable to the District of Columbia, where the number of earmarks approved for external organizations have risen from 3 in 2004 to 99 in 2008 and the dollar value has increased from $1.2 million in 2004 to $49+ million (in the aggregate) in 2008. The Council is at a turning point, like many other jurisdictions in the United States, including the United States Congress, relative to identifying the most appropriate method for reforming this practice. The Council must determine whether or not it should abolish its use altogether or reform the existing process. A review of other jurisdictions reveals a trend of reform as opposed to absolute abolishment. The method of reform adopted can only be determined by the very body that engages in this practice. The Council is in a position where it must analyze its options and amend its rules to reflect the preferred course of action. Overview A review of the literature on earmarks reveals that a universal definition for the term “earmark” does not exist. The Office of Management and Budget (“OMB”) defines earmarks as specified funding for projects, activities or institutions not requested by the executive, or as add-ons to requested funds which Congress directs for specific activities. Scholars and practitioners still continue to debate whether or not spending instructions constitute earmarks. The difficulty in defining an earmark contributes to the difficulty in definitively identifying earmarks. Nevertheless, the term earmark has come to have a negative connotation in both political and non-political environments, alike. In many instances, the literature that addresses this subject will also reference the negative and derogatory phrase “pork barrel politics” which is directly related to earmarking, but is markedly different. All too often, the expression “earmark” and “pork” are used interchangeably although such utilization distorts their actual meaning. This occurs because many earmarked appropriations may include projects that are actually considered “pork”. For clarification purposes, pork is defined as an appropriation or favor granted by governments for political reasons, rather than because of public necessity, and to earmark, alternatively, means simply to set aside something (in this case funding) for a particular purpose. This review will focus on actions by members of the Council of the District of Columbia (“Council”) that can be equated to earmarking. Although some individuals may review the identified earmarks and may assume that they should be classified as “pork”, it is difficult to conclusively determine that the designated funding allocations were granted for political reasons rather than because of public necessity. The term, earmark, is generally used to describe an action by a legislator that results in the appropriation of funds for select projects, programs, and/or organizations and institutions, without any established form of competition. This applies to both governmental and non-governmental entities. The member simply requests that funding is set aside for the purpose identified and, if approved, the set aside becomes an additional earmark in the appropriation bill. Research indicates that many Congressional earmarks are actually captured in reports and are inserted during the conference phase. Citizens Against Government Waste (“CAGW”) provides that to qualify as a pork barrel project, the project must meet several criteria. These projects are generally inserted into complex spending bills without competition, debate, or input from relevant executive agencies. Further, the provisions are often not subject to a separate vote in either chamber of Congress and are not subject to performance standards.
Earmarking is often scrutinized and criticized because:
It is important to note; however, that this appropriation mechanism is not exclusively within the province of the legislative branch of government, but is also utilized by the executive branch of government. Unfortunately, many people relate this practice exclusively to the legislative branch of government. Consequently, this body almost always bears total responsibility and is subject to ongoing scrutiny for using this longstanding method to secure funding for select programs and projects. Although the practice of earmarking is not new to the federal, state, or local levels of government, greater attention is being focused on this method of appropriation for the following reasons:
As the federal, state and local levels of government explore reforms, they are acutely aware that offered proposals will be subject to scrutiny because of the level of review that has already occurred. As expressly stated in the executive summary, groups that have followed the proposed reforms closely have posited that major reforms have yet to be achieved. A major difficulty in discerning whether or not reforms have truly been made and whether or not they have been effective is the ongoing debate concerning what truly defines an earmark and the argument that earmarks, regardless of how they are largely perceived, have significant benefits. Primarily, the argument is made that members of legislative bodies are more familiar with the direct and immediate needs of their constituency and the areas they represent; therefore, they are in a better position to decide which programs are necessary and which groups are capable of providing the required services. Scope of Review This analysis includes the following sections: a review of existing literature on earmarks, to include difficulties in determining definitively the actual number and dollar value of earmarks in the aggregate (this involves the difficulty in defining the term earmark); a historical overview of earmarks (Congressional); a review of earmark reforms at the national level; a review of state and local governments use of earmarks and reforms implemented, to date; a review of the District’s use of earmarks from 1999 through 2008; and proposed recommendations for legislative reform. For purposes of this review, the focus will be exclusively on legislative earmarks; however, Table 1 which highlights earmarking trends of the Council of the District of Columbia includes executive earmarks in an effort to distinguish between those that emanated from the legislative branch versus those that were included in the transmitted budget request to the Council. The tables also include earmarks that can be classified as internal (designated funding allocations with specific spending instructions given to agencies).
I. What is an Earmark? (Review of Existing Literature) A review of the literature regarding earmarks reveals that the definition of an earmark varies. According to a Harvard Law School Briefing Paper, in the context of federal budgeting, the term “earmark” is used in the following two distinct ways: (1) it may refer to an expenditure paid from the general fund that has been specified to apply to a particular local project, usually within the congressional district of the provision’s author; and (2) An earmark may refer to the dedication of a discrete revenue stream to a particular program within the federal budget, regardless of whether that program is local or national in scope. To further complicate the task of defining an earmark, according to the Congressional Quarterly’s American Congressional Dictionary, because all appropriations set aside funds for some “purpose, use, or recipient, under the most extreme definition, virtually every appropriation is earmarked.” It is significant to recognize that scholars, watchdog groups, and other entities that have a special interest in this process also vary in terms of where special emphasis is placed when reviewing this practice. More specific definitions of the term tend to differ in the extent to which they emphasize the following four factors commonly attributed to earmarks:
A review of recent reform measures in the U.S. Senate shows that an earmark has been more restrictively defined as “a provision that specifies the identity of an entity to receive assistance and the amount of the assistance” (S.1, Legislative Transparency and Accountability Act of 2007). Further, for many, however, a line-item expenditure should not be classified as an earmark simply because it includes specific spending instructions. According to the Congressional Research Service (“CRS”), many defense spending bills include a very detailed accounting of how each dollar will be spent, for example, directives specifying the purchase of a particular kind of fighter jet is a matter of standard procedure. The CRS, therefore, narrows its definition, depending on the context, considering a defense-spending item to be an earmark only if Congress adds money to the department’s request “at a level of specificity below the normal line item level.” The Office of Management and Budget (“OMB”) defines earmarks as funds provided by the Congress for projects and programs where the Congressional direction (in bill or report language) circumvents the merit-based or competitive allocation process, or specifies the location or recipient, or otherwise curtails the ability of the Administration to control critical aspects of the funds allocation process. When legislators earmark funds for specific purposes, certain scholars challenge that executive agencies are compromised because they have little room to accommodate all of the programs they may view as essential to accomplishing its assigned mission, based upon its subject matter expertise. This challenge is consistent with the ongoing debate concerning what is the true role of the executive branch of government and what is the true role of the legislative branch of government. Many would say that the legislative branch of government is charged with making the laws and engaging in appropriate oversight of the executive branch of government. However, when the legislative branch of government begins the exercise of determining, explicitly, how executive agency appropriations should be expended, or making determinations as to what particular programs and/or projects should be funded to carry out the intent of approved legislative measures, the legislature is, in fact, encroaching upon the powers expressly granted to the executive branch of government. Others argue that the executive branch of government is required to execute the instructions given to it by the legislature, including specific spending instructions. Alternatively, it has been presented that a definition of earmarks should not restrict itself to simply actions of the legislative branch of government because the executive branch of government “frequently directs that funds be expended on identified projects for many of the same reasons as legislators.” According to information obtained by Rob Porter, and contained in his Briefing Paper, some defenders of Congress seek to apply the term to agency justifications for specific program-funding levels sent to the pertinent appropriations subcommittees in the weeks following the president’s public budget outline. Legislative supporters further suggest that an “executive earmark” occurs after the congressional appropriations process, when officials divert money from an agency’s discretionary fund toward projects “in some key district or state” for political gain. A draft report released on November 28, 1997 by the Financial Economist for the District of Columbia Office of Tax and Revenue referenced a report by the National Conference of State Legislatures (“NCSL”) that defines earmarking as a designation of all or part of a revenue stream to a specific program or expenditure categories. The report provided that, “In the earmarking process, a specific part of a revenue source is set aside to fund a designated project or expenditure category.” The example cited was a state directing that a percentage of its sales tax on lodging be only used to promote tourism. Such revenue will not be available to fund any other program or expenditure categories and is also subject to shifts in funding that may be available. The report evaluates the percentage of various states’ budgets that are earmarked for specific purposes and its impact on future decision-making and new policy issues/direction. II. Central Issue(s) Associated with Earmarks (1) Lack of Competition A critical aspect of earmarking involves legislators funding specific programs, activities, institutions, organizations, etc., without any form of competition, as would normally be required during the contracting and/or grant award process. It has been argued that this practice has become so commonplace and extensively used that funding for some federal grant programs has been completely depleted. An example cited in the Chronicle of Philanthropy was Congress’ earmarking of the entire $124M that was provided for the Job Access and Reverse Commute program. The author of the article stated, “The United States Department of Transportation had no role in deciding which groups would benefit from the program, which is designed to provide transportation support for individuals who are moving off the welfare rolls.” Rich Stolz, an organizer at the Center for Community change, an anti-poverty group in Washington says that while the recipients of the job-program earmarks are doing good work, the shift away from competitive grants raises concerns. Stolz stated, “The process is not accountable to a strict set of standards or guidelines. That sets up a competition that may be unfair, where the primary basis for where funds go is the political power of a particular appropriator.” “In addition, all of the $163.9 million in the Department of Education’s Fund for the Improvement of Postsecondary Education and $248 million available in the agency’s Fund for the Improvement of Education was earmarked by Congress. Previously, those programs awarded money through a competitive process. Although the District of Columbia government is not at risk for depleting local grant funding, by earmarking, the fact that guidelines have not been adopted for selecting organizations places decision makers in a position where they are selecting certain organizations to the exclusion of others without any clearly defined and transparent rationale. Individuals and organizations that observe this process will continue to raise the following question until appropriate reforms are made: Why should one organization receive governmental assistance to the exclusion of others? Unfortunately, this question cannot be easily answered because the rationale for selecting the entity is not always clear. This same question was raised when the Supreme Court of Arkansas addressed special and local funding initiatives in 2005 and determined that it was unconstitutional. (2) Restricts the Advancement of Policy Concerns by the Sponsor and the Recipient It has been argued that once the legislator and the organization receive approval for an earmark, they are largely restricted from voicing policy concerns with other measures that are being considered. “Once members insert their earmarks into a bill, they’ve given away their ability to vote against the bill or even criticize it,” says Matthew Specht, a spokesman for Rep. Jeff Flake, Republican of Arizona, who opposes earmarks. “The leadership will say you have to shut your mouth or lose the earmark.” This very fact and, all too often, occurrence, unfortunately, silences the legislator that has received an earmark approval. This inherent outcome is not in the interest of the electorate, because the elected member has a duty and an obligation to represent their interests on multiple and diverse policy fronts. The approval of the earmark can directly affect the member’s ability to object to other aspects of the bill that may not be in the interest of their constituents. A review of responses provided by states regarding earmarks reveal that a significant number of legislators obtain approval of earmarks from the leadership of finance committees after receiving support from ranking members of the relevant subject matter committees and subcommittees. Observers of this process stress the fact that the earmark system relies too heavily on who a member or an organization knows and not on the merit of one’s work or the actual public benefit to be derived.
(3) Selectivity: Who Gets What? Research has proven that federal earmarks are overwhelmingly concentrated in a few states and in a few Congressional districts. Scott Lilly, a chief Democratic staff member on the House Appropriations Committee in the 1980s and 1990s stated, “If lawmakers didn’t agree to a system that earmarked money, most districts would be getting more money.” According to an article that appeared in the Chronicle of Philanthropy that looked at earmarks awarded to charities, the author provided that organizations are much more likely to receive an earmark if they operate in states represented by a senator who serves on the Appropriations Committee, which is the panel that allots money to specific government programs. To support this finding, data reveal that since 1997, Alaska consistently received more per capita in earmarks than any other state when the Senator from Alaska was the Chairman of the Appropriations Committee. This individual remained Chairman until 2004. The infamous “Bridge to Nowhere” project, in Alaska, actually resulted in increased attention being focused on the earmarking process in recent years, due to the level of funding that was appropriated and the numerous problems associated with this project. The Chronicle’s analysis found that of the eighteen states that received the most in charitable earmarks in the 2005 fiscal year, seventeen had a senator on the panel. And fourteen of the eighteen states at the bottom of the list did not. Determining where the power truly resides, also applies to the United States House of Representatives, where members of the House Appropriations Committee can also play a central role in appropriating funds for projects, programs, organizations, and institutions in their home states. Leadership on the House side recognizes that the process is cyclical because different areas of the country benefit at different times. Certain groups will automatically be at a disadvantage as the political leadership pendulum swings back and forth. III. Congressional Earmarks and Proposed Reforms According to historical records, earmarking is not a new practice. The idea of directing federal money to local projects originally dates back to the Bonus Bill of 1817, which was introduced by Representative John Calhoun of South Carolina. The purpose of this bill was to construct highways linking the East and South of the United States to its Western frontier. Representative Calhoun proposed utilizing the earnings bonus from the Second Bank of the United States, specifically for this program (would be classified as “pork”). The President, at that time, James Madison vetoed the bill because he found it to be unconstitutional. However, Taxpayers for Common Sense, an independent watchdog organization, believes that widespread earmarking is relatively new in American politics. To support its position, the group cites earmarks since 1970, specifically utilizing the defense bill as an example. The organization provides that the 1970 Defense Appropriations Bill had a dozen earmarks; the 1980 bill had 62; and by 2005, the defense bill included 2,761. “Among the earmarks in the 2005 bill was money to eradicate brown tree snakes in Guam. Similar increases are seen in the history of the Transportation Appropriations Bill. When President Dwight Eisenhower proposed the first national highway bill in the 1950s, there were two projects singled out for specific funding. In August 2005, when Congress passed a six year, $286.4 billion Transportation Bill, there were 6,371 earmarks, ranging from $200,000 for a deer avoidance system in Weedsport, New York to $3 million for dust control mitigation on Arkansas’ rural roads.” Taxpayers for Common Sense (“TCS”) reports that there were roughly 15,000 congressional earmarks at a total cost of $47 billion in 2005. This number is greater than information reported for the same year by the Congressional Budget Office. According to its database of FY 2008 Congressional earmarks, Congress inserted 12,881 earmarks worth $18.3 billion in this year’s spending bills, with $14.8 billion being disclosed by lawmakers. “This represents a 23 percent cut in total earmarks from the high water mark of 2005, but a smaller cut than the 50 percent reduction House leadership initially set as its goal. The Congressional Earmarking Process Members of Congress are required to submit formal requests to the appropriate subcommittee(s) asking for the body’s support for the requested earmark. Unfortunately, many individuals view this submission, as simply a matter of formality and that decisions are not made based upon merit, but rather for purely political reasons, i.e., favors in exchange for votes on key pieces of legislation by party leaders and appropriations chairmen. Earmarks were, largely, not considered by the entire legislative Chamber, but during the conference stage—when the conference committees for each chamber meet to address differences in their approved legislation. Pursuant to established procedures, upon the appropriate modifications being made, both houses must approve the legislation again. However, if a member wishes to oppose a particular earmark, he or she must vote against the entire bill. Because of the very fact that most earmarks are “inserted into massive pieces of legislation, which fund the federal government, members of Congress are often reluctant to oppose them. In addition, through the process of logrolling, which is the trading of votes by legislative members to obtain passage of actions of interest to each legislative member, members often agree to support a bill with another’s earmark in exchange for the same treatment.” (Sourcewatch, 2000) Thomas A. Schatz, President of Citizens against Government Waste provides that 98% of earmarks, to appropriation bills, are added in the conference phase. “When passed legislation reaches the president’s desk, a similar problem arises. Not wishing to stall the budgetary process or risk a public relations backlash for rejecting a bill for transportation or defense appropriations, presidents are often forced to sign bills loaded with earmarks.” To address this issue, several presidents have been proponents of the line-item veto, which would allow them to veto specific appropriations, without vetoing the entire bill. This power was granted in 1996 and was used 11 times to strike 82 items from the federal budget by former President Bill Clinton. However, the United States Supreme Court in the case of Clinton v. City of New York upheld a federal district judge’s opinion that the law was in violation of the United States Constitution, in June of 1998. It is clear that there is both support and opposition for earmarking, with researchers, scholars, and elected officials citing advantages as well as disadvantages with earmarking. In 2001, Representative Alan Mollohan expressed his belief that “politicians know better than federal agencies how to properly spend money for higher education.” He stated, “Nobody knows their constituents or their academic institutions or their programs better than the members of the House or the Senate who represent these organizations….We are in a better position to evaluate the merits of these programs than any executive agency.” In 2006, Representative Mike Simpson issued a joint report in support of earmarks. The two Congressmen, representing the state of Idaho cited the benefits of the earmarks that were approved for Idaho and offered that these things would not have been possible without earmarking. Generally, fiscal-conservatives are cited as opposing earmarking. However, data reveal that individuals that have been labeled as such utilize this mechanism as well. Many fiscal conservatives, however, have begun to stress the importance of limiting earmarks. In an article published in the Bureau of National Affairs Daily Tax Report, dated June 15, 2007, Jonathan Nicholson reported that Republicans were advocating more earmark transparency. Mr. Nicholson wrote, “House Republicans said June 14 they would expand their efforts for greater earmark transparency to include tax provisions as well as spending and authorizing earmarks, even though there may not be consensus yet on what would constitute a tax earmark.” Minority Whip Roy Blunt (R-Mo.) said, “If there’s an earmark in a tax bill where someone puts something in a tax bill, that may not be a bad thing, but it shouldn’t be a secret thing. Pursuant to H. Res.6, Section 404, the term “limited tax benefit” means – any revenue losing provision that provides a Federal tax deduction, credit, exclusion, or preference to 10 or fewer beneficiaries under the Internal Revenue Code of 1986, and contains eligibility criteria that are not uniform in application with respect to potential beneficiaries of such provision; or any Federal tax provision which provides one beneficiary temporary or permanent transition relief from a change to the Internal Revenue Code of 1986. Pursuant to S.1, entitled, the “Legislative Transparency and Accountability Act of 2007”, a “limited tax benefit” is defined as “any revenue provision that has the practical effect of providing more favorable tax treatment to a particular taxpayer or limited group of taxpayers when compared with other similarly situated taxpayers, or one that provides one beneficiary temporary or permanent tax transition relief.” Recent Congressional Reforms The majority of opponents to earmarking cite the lack of transparency as being one of the major reasons that they oppose this process. The following examples demonstrate actions that result in lessened transparency: inserting earmarks during the conference stage, after the public debate has transpired; and the ability of members to introduce earmarks anonymously. The aforementioned, clearly presents obstacles for those that are attempting to monitor this process. 1. On March 29, 2006, the Senate passed the “Legislative Transparency and Accountability Act of 2007” by an extraordinary majority. The bill requires the following:
Watchdog organizations criticized this measure because of a proviso in the bill that provided that “no disclosure was necessary for money to be spent by federal agencies. This was viewed as a significant loophole because of the large number of earmarks that are transmitted through designated agencies. 2. On April 6, 2006, Senators Tom Coburn, Barack Obama, Tom Carper, and John McCain introduced the “Federal Funding Accountability and Transparency Act of 2006”, which would require the Office of Management and Budget to create a searchable database of all government-appropriated funds and its recipients. The database would include:
The bill was approved by the Senate Committee on Homeland Security and Governmental Affairs and passed by voice vote in the full Senate on September 7, 2006. Approximately six days later, the House passed it as well. President Bush signed S.2590, the Coburn-Obama Transparency Act into law on September 26, 2006. Many view this law as an incremental step in bringing greater transparency to the process. The United States Senate and House could not agree on broad ethics reform legislation, therefore both chambers moved to amend their own rules to require better transparency. The House passed a rules change on September 14th; however, the Senate took longer. On the House side, a rule change was sponsored and introduced by Representative David Drier of California, Chairman of the House Committee on Rules, which would require that all earmarks and their sponsors be disclosed in every House bill. Prior to a vote on the proposed measure, Representatives Emanuel and Hollen amended the measure to include a prohibition on earmarks to an organization employing a spouse, family member, or former employee of the sponsor. 3. On September 13, 2006, Representative Dennis Moore introduced an alternative rules change measure, which would require that:
The measure was not considered before the chamber voted on the rules change proposed by Dreier. On September 14th, the Dreier-sponsored rules change was approved by a vote of 245-171. The changes were effective until the end of 2006. Many Democrats and watchdog groups cited the reforms as extremely weak. Several Republican members of the House Appropriations Committee argued that the change would have a disproportionately negative impact on them.
4. On Tuesday, April 17, 2007, the Chairman of the Senate Appropriations Committee
A procedural step to change Senate rules, failed. Current Provisions that are Adhered To By the House and Senate (See Attachment G) 5. House Resolution 6. Congressional Earmark Reform “It shall not be in order to consider:
6. Senate 1, “Legislative Transparency and Accountability Act of 2007” (See Attachment G) The approved Act provides that the term “earmark” means a provision that specifies the identity of a non-Federal entity to receive assistance and the amount of the assistance; and the term “assistance” means budget authority, contract authority, loan authority, and other expenditures, and tax expenditures or other revenue items. Pursuant to S.1, “It shall not be in order to consider any Senate bill or Senate amendment or conference report on any bill, including an appropriations bill, a revenue bill, and an authorizing bill, unless a list of-
is available along with any joint statement of managers associated with the measure to all Members and made available on the Internet to the general public for at least 48 hours before its consideration.” The approved act strengthens internal Senate rules.
Jr., signed the Honest Leadership and Open Government Act of 2007 into law on September 14, 2007. Select Requirements (To review the entire bill, access S.1. Honest Leadership and Open Govt. Act of 2007)
Ongoing Difficulties with Reporting on Congressional Earmarks The Congressional Research Service has consistently maintained that one of the central challenges to measuring earmarks in appropriation bills is defining the term and applying it consistently to the analysis. CRS also cited additional factors that complicate the process:
IV. Review of State and Local Earmarking Procedures To provide a more detailed and comprehensive assessment of legislative earmarking and to examine possible reform measures that may be adopted by the Council of the District of Columbia, select cities, counties and states were contacted to obtain jurisdiction specific information on earmark utilization. It is important to note that due to the political nature of this practice and the timing of inquiries, over 90% of the information provided by these entities was obtained through telephonic inquiries of Council budget offices, member offices, and legislative committees and subcommittees. The remaining 10% provided electronic responses describing adopted or generally followed procedures (See Table 2 for All Responses). Each respondent answered two basic questions which elicited information relative to whether or not their respective legislative body earmarks funds for specific purposes, as defined by this review; and if so, a description of the appropriations process, to include guidelines that encompass earmarking. Table 2 delineates the two categories of responses, which includes the established procedures that have been adopted or adhered to by members of the legislative body. The following 24 cities and counties provided responses: Phoenix, Arizona; Tucson Arizona; Los Angeles, California; Oakland, California; San Francisco, California; San Jose, California; Denver, Colorado; Orlando, Florida; Cook County, Illinois; Anne Arundel County, Maryland; Montgomery County, Maryland; Prince George’s County Maryland; Detroit, Michigan; New York City, New York; Syracuse, New York; Wake County, North Carolina; Portland, Oregon; Alexandria, Virginia; Arlington, Virginia; Fairfax, Virginia; Milwaukee, Wisconsin; San Antonio, Texas; and Seattle, Washington. Of the 24 cities and counties that responded, 10 responded definitively that their legislative bodies do earmark funds for specific purposes; 7 local jurisdictions responded yes, but noted that the use is limited; 6 respondents provided that their members do not earmark funds; and 1 did not provide a clear response. Four of the respondents did not provide clear information as to whether or not the earmarks involve external organizations/institutions. The following local jurisdictions provided detailed information concerning established procedures for earmarking funds: Montgomery County, Maryland; Prince George’s County, Maryland; New York City, New York; Arlington, Virginia and Seattle, Washington with Montgomery County, Maryland having the most comprehensive approach to awarding funds to specific organizations (see Chart 3). In addition, the following 32 states responded: Alabama; Arkansas; Connecticut; Colorado; Delaware; Florida; Georgia; Illinois; Indiana; Kentucky; Louisiana; Maine; Maryland; Massachusetts; Michigan; Minnesota; Mississippi; Missouri; Montana; Nevada; New Hampshire; New Jersey; New York; North Carolina; Ohio; Pennsylvania; Rhode Island; South Carolina; Tennessee; Texas; Vermont; and Virginia. Of the 32 states that responded, 19 provided a definitive yes to earmarking funds for specific purposes; 7 responded yes, but provided that the use is limited, with certain restrictions. The respondent for the following states provided that members of the legislature do not earmark funds for specific purposes: Colorado; Indiana; Maryland; Michigan; Missouri; and Montana. The following states provided detailed information concerning their established procedures: Florida; Kentucky; Louisiana; New Jersey; Rhode Island; and Tennessee.
V. Earmarking Trends in the District of Columbia Background On May 15, 2007, the Council of the District of Columbia’s use of this appropriation method came under public scrutiny because of an approved amendment that struck one designated appropriation and alternatively shifted funding for other purposes (enhanced earmarks). This decision led to heightened interest in this process and raised the question of which groups, if any, were more deserving of such appropriations. As noted in the introductory paragraph of this section, this practice is, still yet, very new to the Council. However, the total number and dollar values of earmarks, in many instances, exceed earmarks approved by select jurisdictions reviewed. Further, the Council has not established a uniform mechanism and/or process for ensuring that organizations which receive public funds through this process, are in good financial standing; have the capacity to deliver required services; and, at the end of the period for which funding is provided, that these entities have delivered all services they were required to provide to the District and its residents. Methodology In an effort to review the utilization of earmarks by the Council of the District of Columbia, a review of earmarks was conducted utilizing the introduced and approved versions of the Budget Support Act covering fiscal years 1999 through 2008. This review revealed that the approved FY 2006 Budget Support Act marked the true beginning of the earmarking process by the legislative branch of government. This finding does not mean that the legislative branch of government did not specify that local funds be utilized for a specific purpose within the District of Columbia government previously. A review of the Budget Support Acts for earlier years, 1999, 2000 and 2001, respectively, revealed that the Council of the District of Columbia directed funds for specific purposes; however, these directives did not involve external organizations. It is important to note that executive decisions may be made after budget approval that may, still yet, qualify as an earmark, based on the operational definition used for this research project. This can also apply to the legislative branch of government. By utilizing the Budget Support Acts for the identified periods, one can more easily and definitively identify legislative earmarks. By reviewing the introduced versions of the Budget Support Acts and the approved Acts, one can ascertain whether or not the earmarks emanated from the executive or legislative branch of government. However, there is one major caveat: the Budget Support Acts, as a chosen instrument to review earmarks, also have limitations. This document does not disclose whether or not earmarks that were contained in the Budget, prior to its submission to Council, were the result of individual member requests to the Mayor. This will never be known, unless a member elects to share this information. In addition, members of the Legislature, as in other jurisdictions reviewed, can work with the Mayor and agencies to ensure that certain organizations receive grants through the agency award process. Such agreements and interactions are extremely difficult to identify. Nevertheless, the Budget Support Act remains the most reliable method to delineate specified funding allocations. This document identifies the receiving entity and the award amount. Unfortunately, information is not contained within the report that clearly provides information to the public and members concerning how those funds will be explicitly utilized by the receiving entity. Operationalizing the Term As stated in the overview section, scholars and policymakers continue to struggle over the definition of an earmark and - in the extreme - almost any appropriation can be characterized as an actual earmark. For purposes of this research project, an earmark will be defined as, “an approved measure by the Council, which results in the appropriation of funds for a specific purpose. This includes direct funding for organizations, programs, projects and institutions.” The Council should determine whether or not internal governmental appropriations, for specific purposes, should be included in this definition. The attached tables include such appropriations. However, the actual awards, in the aggregate, to outside entities, have been extrapolated from internal directives. Council Budget Process The District of Columbia Home Rule Act (Public Law 93-198; 87 Stat. 777) [D.C. Official Code 1-201.01 et. seq.] Approved December 24, 1973 prescribes a procedure for the approval of the annual budget for the District of Columbia Government. Using the estimates of the Chief Financial Officer, the Mayor submits a budget to the Council for approval by the Council. Once approved, it is transmitted to Congress, which appropriates the funds. Under Section 424(a)(5) [D.C. Official Code 1-204.24(a)(5)], the Chief Financial Officer for the District of Columbia prepares and submits to the Mayor and the Council annual estimates of all revenues of the District of Columbia (without regard to the source of such revenues), including proposed revenues. These revenue estimates are binding on the Mayor and the Council for purposes of the annual budget to be submitted to Congress, except that the Mayor and the Council may base the budget on estimates of revenues that are lower than those prepared by the Chief Financial Officer. Under Section 442(a) [D.C. Official Code 1-204.42(a)], the Mayor prepares and submits a proposed annual budget to the Council. In preparing the annual budget, the Mayor may utilize a budget prepared by the Chief Financial Officer for this purpose under section 424(a)(2) [D.C. Official Code 1-204.24(a)(2)]. Under Section 603(c) [D.C. Official Code 1-206.03(c)], the Mayor is required to submit a balanced budget and identify any tax increases that shall be required in order to do so. The Council is required to adopt such tax increases to the extent the budget is approved. The annual budget submitted shall include, among other items, a multiyear plan for all agencies of the District government (as required under section 443 [D.C. Official Code 1-204.43]) and multiyear capital improvements plan for all agencies of the District government (as required under section 444 [D.C. Official Code 1-204.44]). Under section 446 [D.C. Official Code 1-204.46], the Council must hold a public hearing on the budget submission and, within 50 calendar days after receipt of the budget proposal from the Mayor, adopt a budget by act. The act is styled as the Budget Request Act (of the year of adoption) and requires only one reading. If the Mayor approves the budget act, he or she submits the act to the President of the United States for transmission to Congress. However, unlike other acts submitted to the Mayor for signature, the Mayor may exercise a line-item veto under Section 404(f) [D.C. Official Code 1-204.04]. If the Mayor disapproves an item or provision, he or she must attach to the act a statement of the item or provision which is disapproved and, within the 10-day period for approval or disapproval, return a copy of the act and statement with his or her objections to the Council. The Council has 30 calendar days to reenact a disapproved item or provision by a two-thirds vote of the members of the Council present and voting. If an item or provision is reenacted, the Chairman submits it to the President for transmission to Congress. If the Mayor fails to (return timely) a disapproved item or provision to the Council, he or she shall be deemed to have approved the item or provision and the Chairman submits it to the President for transmission to Congress. Unlike other legislation, the Budget Request Act does not become effective after a period of Congressional review - - it never becomes District of Columbia local law. Instead, the President transmits the Budget Request Act to the House and Senate Appropriations subcommittees on the District of Columbia. Ultimately, Congress appropriates all funds for the District by a congressional act. This congressional act may, but is not required to, include some or all of the provisions of the Budget Request Act as transmitted by the District. Data Review and Analysis This section of the review examines earmarks approved by the Council of the District of Columbia (“Council”) for Fiscal Years 1999 through 2008. The examination takes into account those earmarks that were submitted by the Executive Office of the Mayor as well as those earmarks that were inserted by the Council, during its review and approval of the Mayor’s budget submission. The Budget Support Act (“BSA”) is the selected instrument for reviewing the Council’s introduction and approval of earmarks. To distinguish between Mayoral submissions and Council insertions/amendments, it was necessary to examine the introduced and approved versions of the BSA. As stated earlier, all references to earmarks approved by the Council, to include total number approved per fiscal year and total dollar values of earmarks, applies exclusively to those earmarks that explicitly name external entities (e.g., nonprofit organizations, institutions, private entities, etc.) as recipients. The detailed table that delineates all earmarks for the fiscal years reviewed captures earmark designations for agencies and other instrumentalities of the District of Columbia government. For example, on page 1, of Chart 1, the designated recipients are all District departments, offices, and/or instrumentalities. The Executive Office of the Mayor proposed internal earmarks, should the Chief Financial Officer certify additional revenue; however, the Council did not approve this section. Although they are earmarks in the broader sense of defining an earmark, for purposes of this review, earmark designations will be restricted to those earmarks that expressly name external organizations.
Source of Data: Budget Support Acts, 1999 through 2008 Notes: The earmarks identified are restricted to those earmarks that name specific organizations, institutions and for profit entities. ___________________________ Earmark Comparison 0 20 40 60 80 100 2008 2007 2006 2005
Summary In FY 2008, the Executive Office of the Mayor (“EOM”) proposed specified funding allocations totaling $13,790,000 for 28 external entities. In addition, the EOM submitted a proposed allocation of $57,000,000 of DCPS funds for Strategic Partnerships (not approved). Pursuant to the BSA, the proposed allocation was for purposes of modernizing schools including, but not limited to MacFarland Middle School, Rudolph Elementary School, and Backus Middle School. The EOM also proposed the reservation of $30,577,000 in a sub-account identified as the State Educational Activities Fund. The reserve funding was to be used for costs associated with the reorganization of state education initiatives, including costs associated with a higher than projected student enrollment. In FY 2008, the Council approved specified funding allocations totaling $20,655,000, which is a difference of $6,865,000 from the proposed allocations submitted by the EOM. In addition, the Council amended the BSA to include a new Subtitle entitled, Other Specified Funding Allocations (all District government related). The approved allocations total $5,460,000. In addition, the Council reserved $11.073 million in unallocated fiscal year 2008 local funds for commercial property tax relief for small businesses. A new Subtitle O, Section 2152 was also inserted that provides that by October 15, 2007, the Deputy Mayor for Planning and Economic Development shall make an intra-District transfer of $400,000 from the Neighborhood Investment Fund to the Main Streets program for the purposes of subsidizing the executive director’s salary. A new Title V, Subtitle B, Section 5012 was inserted entitled, “Transitional Housing, Rapid Housing for Homeless Youth, Emergency Rental Assistance, and Supportive Services Expenditure of Revenue.” All expenditures approved under this Subtitle total $17,370,449 and of that total, five were earmarked for external entities and total $1,613,576 in the aggregate. The Council also inserted and approved the distribution of $3 million as a net increase in TANF benefits. A new Title V, Subtitle K was inserted and approved by the Council entitled, “Designated Appropriation Allocations.” Allocations in this section of the BSA total $57,188,000; however, those allocations that specifically identify external entities total $25,898,000, and the total number of designated earmarks for external entities is 28. In FY 2007, the EOM submitted a request to appropriate a minimum of $74,859,000 of additional revenue; provided, that the Chief Financial Officer of the District of Columbia certify, through a revised quarterly revenue estimate for fiscal year 2007, that local funds exceed the annual revenue estimates incorporated in the approved Fiscal Year 2007 budget and financial plan. Although the Council did not approve this subtitle, all proposed earmarks were internal to the District of Columbia government. In Fiscal Year 2007, the EOM proposed an increase in the Deed Recordation Tax and requested that revenues generated from the proposed increases supplement the Mayor’s Comprehensive Housing Task Force Trust Fund and activities of the Task Force. The Mayor also submitted a request for Medical Homes Grant Making. This subtitle provided that the Office of the City Administrator may award, through a grant to the District of Columbia Primary Care Association, if the grant meets the criteria for a sole source award, from capital funds available to the Department of Health outside of the funding for any contract authorized by the Act, an amount not to exceed $8.2 million during Fiscal Year 2007, and $2.8 million in Fiscal Year 2009 to support Medical Homes DC. Of the Fiscal Year 2007 funding, $6 million was earmarked for the Northwest One Community Health Center project, as part of the Mayor’s New Communities Initiative. Any portion of the $6 million that was not used for the health center project was to be used for any other Medical Homes capital project. The remainder of the grant, $2.2 million in Fiscal Year 2007 and $2.8 million in Fiscal Year 2009 was to be used to develop an electronic health record system for community health centers to promote higher quality of care, improved coordination of services among providers, and more accurate reporting of health statistics to the Department of Health. In FY 2007, the Council of the District of Columbia amended the Budget Support Act to include only three specified allocations should the Chief Financial Officer certify additional revenue. The three allocations totaled $11,500,000. The largest designation was an internal allocation to the Metropolitan Police Department. The act provided that the first $10.5 million in fiscal year 2007, and the first $21 million in fiscal years thereafter be used for purposes of hiring approximately 350 new police officers. The other two identified allocations can be defined as earmarks and totaled $1,000,000. Each identified organization received $500,000 each. The Council also inserted a specified funding allocation of $1,000,000 to the Office of the City Administrator for the Youth Development Plan Implementation Strategy. A new subtitle O was included and approved by the Council that resulted in $25,000 being appropriated from the June Reserve Fund and Fund Balance Allocation of 2006 for a nonrecurring distribution to provide support for the development of an East of the River Business and Community Guide. This allocation was accompanied by language that required a competitive process subject to the terms and conditions approved by the Deputy Mayor for Planning and Economic Development. The Council modified the Deed Transfer and Recordation Tax Increase Subtitle to include identified allocations (all internal), which totaled $40,330,000. This subtitle provides that the fund is to be administered by the Office of the Deputy Mayor for Economic Development. In addition, the Council approved language that provided that an amount equal to 39.3% of the funds collected under Section 303(a-3) of the Deed Recordation Tax Act and all interest earned on those funds be deposited in the Mayor’s Comprehensive Housing Task Force Fund without regard to fiscal year limitation pursuant to an act of Congress (All funds that are deposited into the Fund shall not revert to the General Fund of the District of Columbia at the end of any fiscal year or at any other time).
The Council amended the BSA to include additional specified funding allocations for 10 external entities, totaling $1,129,400. The source of funding was the General Fund. The Council also amended the BSA to include a New Great Streets Capital Expenditures Subtitle, with allocations totaling $16,550,000 of which four allocations were for external entities, totaling $3,050,000. This section provided that the funds described in the fiscal year 2006 capital budget as the Neighborhood Revitalization Commercial Corridor Redevelopment Project (EB3-04) in the amount of $16.6 million ($4.5 million is in accordance with the Great Streets Plan; and the remaining $12.1 million is to be expended on Great Streets Supporting Projects). The Council amended Title II of the BSA to require the Department of Employment Services to develop a Comprehensive Workforce Development Strategic Plan for the District of Columbia. An amendment to Title III of the BSA was included that authorized the Office of the Attorney General to award a grant, with funds appropriated through the fiscal year 2007 budget, of no less than $3.2 million to the District of Columbia Bar Foundation, which, in turn, awarded grants to nonprofit organizations that deliver civil legal services to low-income people; provided, that no more than $250,000 from the funds granted to the Bar Foundation shall be used to provide funding for a District of Columbia Poverty Lawyer Loan Assistance Repayment Program. The Bar Foundation was provided administrative expenses, up to 5% of the funds granted under the authorizing section of the BSA. The Council amended the Subtitle of the BSA entitled, Medical Homes Grant-Making. The Council provided that of the $2.2 million allocated for Fiscal Year 2007 for developing an electronic health record system for community health centers to promote higher quality of care, improved coordination of services among providers, and more accurate reporting of health statistics to the Department of Health, $200,000 shall be used to support information technology needs for District of Columbia public and charter school nurse suites. The modification also provided that from operating funds available to the Department of Health, not including funding for any contract authorized by the Act, an amount not to exceed $1.9 million during Fiscal Year 2007 to support and stimulate the Medical Homes DC’s public purpose of health improvement by ensuring that all residents of the District of Columbia, especially low-income and indigent residents, have a medical home where a primary care provider knows each patient’s health history, where each patient can be seen regardless of ability to pay, and where each patient can routinely seek non-emergency medical care in the community where the patient resides. The Council amended the BSA to include a new Title V, Subtitle K entitled, “Designated Appropriation Allocations.” This section included 25 designated allocations for external entities. The total universe of designations, in this section, totaled $43,282,000; however designated allocations for external entities totaled, $10,615,000. Subtitle G. of the same Title provided that by the 1st day of Fiscal Year 2007, the District shall issue a Notice of Grant Award, containing a signed agreement and scope of work, to each entity designated in this title to be awarded a grant by the District of Columbia. The Mayor was required to disburse funds, by February 1, 2007, to each entity designated in the title to be awarded a grant by the District of Columbia at least 25% of the total grant award, unless otherwise agreed upon in the signed grant agreement. If the District fails to make the 25% disbursement by February 1, 2007, the District shall disburse 50% of the total grant amount to the designated entity by February 15, 2007. The Mayor was required to disburse by March 1, 2007, to each entity designated in the title all outstanding grant funding, unless otherwise agreed upon in the signed grant agreement. By December 1, 2007, the Mayor was required to conduct an audit and reconciliation of all funding disbursed to entities designated in the title to be awarded a grant by the District of Columbia. In FY 2006, the Executive Office of the Mayor included a Subtitle in the BSA entitled, Medical Homes Grant-Making. The funding source for the introduced subtitle was the operating funds available to the Department of Health. This subtitle authorized the Office of the City Administrator to award, through a grant to the DCPCA an amount not to exceed $510,900 during Fiscal Year 2006 to support and stimulate the Medical Homes D.C.’s public purpose of improving health outcomes by ensuring that all residents of the District of Columbia, especially low-income residents and indigent residents, have a medical home where a primary care provider knows each patient’s health history, where each patient can be seen regardless of ability to pay and where each patient routinely seeks non-emergency medical care in the community where the patient resides. The EOM included a subtitle entitled, “Support for Voting Rights Education and Informational Activities” ($1 million was appropriated, solely from local funds, for purposes of promoting education and informational activities to apprise the general public of the lack of voting rights in the United States Congress for District of Columbia residents. The EOM was provided the authority to expend the funds directly or award them as one or more subgrants to non-governmental organizations for the designated purposes. The Council inserted a new Subtitle entitled, “Criteria for Spending Contingency Funding,” however; all appropriations were District government-related, with the exception of one allocation. The Council provided in this subtitle that should additional revenue become available in FY 2006 that those additional revenues are allocated to human services needs. The express language provided that a minimum of $21 million in additional revenue be allocated for human services needs and that an amount of $780,000 be awarded to the Healthy Families B Healthy Communities Collaborative. In Subtitle J of the Act, the Council provided that should local funds exceed annual revenue estimates, allocation of additional revenues or of tax relief should be in the following order of priority: Residential Property Tax Rate and Cap Reduction Act of 2005; Limited-Equity Cooperative Tax Fairness Act of 2005; Affordable Housing Preservation Tax Assessment Act of 2005; Appropriation of Additional Revenue Act of 2005; Triennial Group Taxable Assessment Disparity Correction Act of 2005; Disabled Persons Tax Reduction Act of 2005; and Disabled Property Owners Tax Reduction Act of 2005. In FY 2006, the Council amended the BSA to include a new subtitle entitled, the “Access Rx Amendment Act of 2005.” This subtitle proposed the establishment of the Access Rx Pharmaceutical Research Center. The language of the new subtitled directed the Department of Health to conduct a program to provide life saving prescription and nonprescription medications and medical supplies. This would have been accomplished by enrolling eligible individuals into pharmaceutical assistance programs. Of the funds appropriated for the Department of Health for Fiscal Year 2006, the Director was required to enter into a contract with the Archdiocesan Health Care Network, Catholic Charities in the amount of $1.956 million to operate and administer the program and provide sufficient personnel to ensure appropriate oversight of the program. The Council also amended the BSA to establish the HIV/AIDS Crisis Area Capacity Building Fund, which is a revolving fund. The Council provided that the fund is administered by the Mayor for the purposes of providing loans and grants of up to $500,000 to develop, support, expand, repair, or improve service delivery to persons with HIV/AIDS within those Wards that did not receive grants from the HIV/AIDS Administration during fiscal year 2005. The Council required the Mayor to submit, by December 1, 2005, through the HIV/AIDS Administration, within the Department of Health, a report that includes a comprehensive plan for distributing funds from the Capacity Building Fund to those Wards that lack the infrastructure to provide preventative and maintenance services within the Ward to persons living with HIV/AIDS. The Mayor was required to submit to the Council, no later than 180 days after the end of the fiscal year a report on the financial condition of the Capacity Building Fund, including the results of the operation of the fund for the preceding fiscal year and an analysis of the number of persons living with HIV/AIDS, by Ward. In Fiscal Year 2006, the Council amended Title V., to include a new Subtitle N. entitled, “Designated Appropriations.” This subtitle included 19 designated appropriation allocations for external entities and 13 for District agency purposes. The total was $33,352,250 with external designations totaling $13,524,000. In Fiscal Year 2006, the Committee on Finance and Revenue amended the BSA to include the following: DC Cancer Consortium ($30,000) to promote and coordinate activities to educate the general public on cancer prevention and to promote healthy lifestyles; DC Cancer Consortium ($60,000) to develop and maintain a cancer website listing cancer-related services and programs within the District of Columbia; Capital Breast Care Center ($250,000) to develop and test a model program to improve outreach, quality and timeliness of breast care for low-income DC residents; Capital Breast Care Center ($150,000) to be granted for breast, cervical, and ovarian cancer outreach and treatment services to low-income women; and School-Based Health Programs ($210,000), of which, $100,000 was to granted to the DC Assembly on School Based Health Care. In Fiscal Year 2005, the Council of the District of Columbia amended the Budget Support Act to include a new Subtitle entitled, “Allocation of Additional Revenue in 2005.”Under this new subtitle, the Council approved four designations. The approved allocations were all District-related, and totaled $3,582,600. $2,000,000 was allocated to the Office of Property Management for the costs of transitional office space; $1,200,000 was allocated to the District of Columbia Public Library for general operations; $256,000 was allocated to the DC Police and Firefighters Retirement & Relief Board for the increased cost of processing retirement hearings and rulings; and $132,600 was allocated to the Police and Fire Clinic for costs associated with processing disability retirement cases. A new subtitle H. was included in the approved BSA entitled, the “Medical Homes Grant Making Act of 2005.” The subtitle provided that the Office of the City Administration may award, through a grant to the District of Columbia Primary Care Association, if the grant meets the criteria for a sole source award, from capital funds available to the Department of Health outside of the funding from any contract authorized by the Act, an amount not to exceed $1 million during fiscal year 2005, an amount not to exceed $7 million during fiscal year 2006, and an amount not to exceed $7 million during fiscal year 2007, to support and stimulate the Medical Homes DC. The Council also approved the direction of $250,000 from the Department of Mental Health’s Strategic Manage Service to the Department of Human Services’ Family Services Administration for the Southeast Veteran’s Access Housing, Inc., for the renovation of the men’s shelter. In Fiscal Year 2004, the Council amended the BSA to require that the Convention Center Marketing contracts awards include the following groups: The Washington, DC Convention and Tourism Corporation; the D.C. Chamber of Commerce; and the Greater Washington Ibero American Chamber of Commerce. In FY 2004, the Council required that of the Pay-As-You-Go Capital Funding for Fiscal Year 2004, a total of $11.257 million be made available for Pay-As-You-Go once the Chief Financial Officer has determined and certified that those funds are not necessary for any of the following purposes: Metropolitan Police Department (up to $1,097,000 to cover the costs of an additional 100 officers); the Child and Family Services Agency to cover court mandated hiring of social workers (up to $2,500,000); the Youth Services Administration to cover the court mandated expenses for foster care homes for committed youth, intensive substance abuse services, or community based therapeutic group homes (up to $3,000,000); the Department of Mental Health to cover court mandated staff hiring expenses (up to $2,000,000); the Department of Health to cover inflationary increases for institutional Medicaid providers (up to $2,000,000); and Court mandated costs (up to $660,000). The Council also amended the BSA to require that the Mayor create not less than $10 million in savings in the total estimated costs of all District government contracts during Fiscal Year 2004. The Council provided that the savings would be allocated in not less than the following amounts and in the following titles of the FY 2004 budget as appropriated by Congress: Government Direction and Support: $621,000; Economic Development and Regulation: $160,000; Public Safety and Justice: $2,152,000; Public Education System: $2,879,000; Human Support Services: $3,280,000; and Public Works: $928,000. In Fiscal Year 2003, the Executive Office of the Mayor proposed that beginning October 1, 2002 through September 30, 2004, 100% of the tobacco settlement residual be spent for purposes specified in local law and 100% of the annual savings from debt defeasance or prepayment be allocated to the Department of Human Services, the Child and Family Services Agency, and the District of Columbia Public Schools for spending pressures generated by the Medicaid and Special Education programs. The Executive Office of the Mayor also proposed amending the Children and Youth Investment Trust Fund Amendment Act of 2002. It was amended to authorize the Mayor to make grants to a single non-service provider, non-profit organization of which at least 95% would be used to make sub-grants for the purpose of providing services to District children, youth and their families, including, but not limited to early development opportunities, safe and enriching centers of learning in and out of school, and other training, recreational and educational services. In Fiscal Year 2003, the Council amended the BSA to provide specified allocations for Pay-As-You-Go Capital Funding for Fiscal Year 2003. The Council provided that a total of $5 million shall be made available for Pay-As-You-Go once the Chief Financial Officer has determined and certified that those funds are not necessary for the purposes outlined in Title XXXIII. Pursuant to the approved BSA, no less than $2 million of Pay-As-You-Go funding was to be deposited into the Addiction Recovery Fund. The $2 million was in addition to the $7.5 million that the Council directed be reallocated from object class 41 (Contracts) to object class 50 (Subsidies and Transfers) for the express purpose of full implementation of the voucher system to support the Drug Treatment Choice Program. The Council also provided that of the Pay-As-You-Go Capital funding for Fiscal Year 2003, $3,000,000 shall be available to the University of the District of Columbia for one-time expenditures related to the accreditation of the Law School. In Fiscal Year 2002, the Executive Office of the Mayor did not submit earmarks. The Council amended the BSA to require the reallocation of $500,000 from the Department of Employment Services for Reverse Commute Transportation Services to the Apprenticeship Council. The Council required that the additional $500,000 be used for transportation and other costs associated with expanding apprenticeship programs for District residents. The Council also provided specific expenditure requirements for established District Funds, to include the Adoption Support Fund; the Alcoholic Beverage Regulation Administration Fund; the Health Occupations Regulation Fund; and the Public Health Laboratory Fund. Pursuant to Title XXXIX, entitled, the “Requirements for CFO Certification of Funds Freed Up from the Reserve Rollover and Priority for Spending such Funds,” $11,000,000 was to be made available to the Local Roads Construction and Maintenance Funds from the freed-up appropriated funds in FY 2002 from the reserve rollover as set forth in the FY 2002 Budget Request Act if the Chief Financial Officer certifies that the $11,000,000 is not required to replace funds expended in Fiscal Year 2001 from the Reserve established by the District of Columbia Financial Responsibility and Management Assistance Act of 1995, or from additional local revenue where the Chief Financial Officer certifies that additional local revenues are available. The Council amended the BSA to require the Mayor to establish, by contract, a 2-year pilot substance abuse program for youth 16 through 21 years of age. The Addiction Prevention and Recovery Administration was required to administer the program from its operating budget. The FY 2002 budget provided $2 million to implement the pilot substance abuse program. In Fiscal Year 2001, the Council of the District of Columbia amended the BSA to require that in Fiscal Year 2001, the first $200,000 of the unobligated balance of the Victims of Violent Crime Compensation be transferred to the Executive Office of the Mayor to fund staff support for the District of Columbia Commission on Violence Against Women. In addition, the amendment provided that the remaining funds are made available for victims assistance in accordance with a plan developed by the Executive Office of the Mayor and submitted to the Council. The Council also amended the BSA to prioritize spending should the CFO certify that Funds were freed up from Reserve Rollover. All specified uses were District agency/instrumentality-related. The proposed priorities totaled $37,189,000. The Council provided that the next $10,000,000 is used for Operational Improvement if the Chief Financial Officer determines the Operational Improvement is not achieving the required savings, and the balance, if any, shall be provided in the outlined priority order in Title XLVII of the BSA. Finally, the Council required that the first $30 million of annual revenue derived from the collection of public rights-of-way occupancy fees be dedicated to the Department of Public Works for expenditures related to street and alley repairs and maintenance that would otherwise be paid from the General Fund. Any revenue in excess of the $30 million was to be dedicated to the District of Columbia Highway Trust Fund. In Fiscal Year 2000, pursuant to Section 1550 of the District of Columbia Appropriations Act, the District was required to have a reserve in the amount of $150 million. The criteria for spending from the Reserve were to ensure budget balance in case of a shortfall in revenue, or to provide flexibility to fund such expenditures as nonrecurring initiatives that support sustainable and measurable increase in revenues through enhanced service delivery, that reduce costs, that are unforeseen demands on District spending, or that constitute an investment in fostering the District’s economic well-being. The District was required to spend the funds from the Reserve in such a way that an appropriate balance is available in the 1st 2nd and 3rd quarters to ensure balance between revenues and expenditures at the end of the year. The act provided that under no circumstances should the budgeted Reserve serve to provide resources to agencies to allow them to overspend their budget. In accordance with the criteria set forth in this Title, the approved Act provided that funds from the reserve shall be applied in a specific order, with the first being to ensure budget balance in case of a shortfall in revenue. This Title also provided for specified expenditures from the reserve in Fiscal Year 2000, all of which were District-government-related. Title XXV of the Act provided for Fiscal Year 1999 allocations. It was directed that certain Fiscal Year 1999 funds appropriated by Congress for infrastructure and economic development be allocated by the Mayor to identified District agencies. The total allocation was $27,194,000. In Fiscal Year 1999, 2000, 2001, 2002 and 2003 there were no earmarks.
District of Columbia Earmarks, FY 2005-FY 2008, BSA VI. Conclusion The increase in the number of earmarks and the total dollars that are being awarded to non-governmental entities both nationally and locally has led to greater scrutiny of this practice. Most jurisdictions that are exploring reform have focused greater attention on the issue of transparency because it is often cited as one of the major issues associated with this activity. The general proposals for addressing transparency include, primarily: disclosing the sponsor of the earmark; disclosing the proposed recipient; disclosing the proposed dollar award; and a self-certified conflict of interest statement by the sponsor. Such reforms will address only one aspect of the cited disadvantages of earmarking, leaving the other areas not addressed at all, most notably, the lack of competition that is enshrouded in this practice. A review of the federal government’s reform proposals reveals that reaching a consensus on the most appropriate reform measure(s) is not simple. In fact, there are many options, including disallowing earmarks that result in non-governmental entities receiving awards for purposes that are not always clearly disclosed by the identified sponsor. Many legislators would argue that this is not the solution because earmarks have advantages:
Findings Pursuant to the results of the defined research, the Council’s utilization of earmarks is highlighted in FY 2006, when the Council approved over 20 earmarks for specific organizations and institutions. The data reveal that the number of earmarks increased markedly in subsequent years. Of particular significance are the data for Fiscal Years 2007 and 2008. In fiscal year 2008, earmark awards totaled $49,766,576, representing an increase of $20,458,294 above FY 07 funding levels. In addition, comparing Fiscal Year 2005 to Fiscal Year 2008, we would see an increase in total dollar awards of $48,516,576. This revelation is critical and highlights the increased use of earmarks to achieve select public purposes. Earmark Comparison 05' and 08' 0 10,000,000 20,000,000 30,000,000 40,000,000 50,000,000 60,000,000 2005 2008
_____________ It is important to note that 100% of the non-governmental earmarks in 2006 (inception year) were for health-related purposes. The Council should recognize that its use of earmarks is very new; however, the number and dollar value of earmarks in the aggregate has increased exponentially. In fact, according to information provided by New York City, their FY 2007 earmarks total around $40,000,000. The District has surpassed that level. This fact is significant because New York City’s approved Fiscal Year 2008 budget is $59 billion and its current population is recorded at 8.2 million. The District, in contrast, has an approved FY08 budget of $9.7 billion and its population is 582,000 (U.S. Census, Revised Estimates, 2006). However, the District is confronted with the ever increasing demand and need for human services while simultaneously being confronted with its structural imbalance. The shift in requests for assistance was recently documented in a Washington Post article that highlighted the nature of constituent requests in the District of Columbia. The Council has in many senses prioritized issues and its prioritization is being translated in the Budget Support Act. The Council, moving forward, should determine whether or not it will continue to utilize earmarks to achieve its diverse policy goals and objectives. Should the Council elect to continue earmarking funds for nongovernmental entities, it must determine the most appropriate method for ensuring that this process is transparent, fair, and results in desired outcomes. This certification is extremely important because it helps to ensure that the receiving entity is truly serving District residents in the manner that was intended. The Council should be aware that external entities that may review this process, in the future, will not challenge the well-intended purposes of the appropriations. However, the possibility of such entities uncovering the failure of recipients to achieve positive outcomes could cast a very negative shadow on the entire process. Therefore, uniform guidelines and reporting requirements should be established. Should the Council elect to continue to engage in earmarking, it should be aware that the issue of non-competition will continue to be raised; additional groups will lobby for funds, as well; and the Council will eventually be placed in a position of justifying why certain organizations that provide similar services, with the same capacity level as the receiving entity, do not benefit from this process. The Council should also consider the following disadvantages that have been cited in existing literature:
VII. Recommendations for Reform After reviewing federal, state and local reform actions and proposed actions, the Office of Policy Analysis (“OPA”) recommends ten reform proposals for consideration. OPA also took the “Established Requirements for Doing Business with the Office of Contracting and Procurement” and relevant sections of the District of Columbia Official Code into consideration as well. The Council of the District of Columbia (“Council”) has various options to consider should it elect to reform the earmarking process. Pursuant to Section 2-303.02 of the District of Columbia Official Code, the Chief Procurement Officer is required to establish a pre-qualification process to certify the financial and professional responsibility of prospective bidders for District government contracts. It is important for the Council to obtain uniform information from prospective grant awardees for purposes of establishing the financial and professional standing of these entities. Therefore, many of the cited characteristics should be considered for grant awards as well. The Code requires that the pre-qualification process address the following characteristics of a prospective bidder, at a minimum:
Aspects of the aforementioned characteristics would be extremely relevant to establishing the standing of organizations that are considered for earmarks. This section of the code provides that the contracting officer shall only make purchases from and award contracts only to responsible contractors. Existing law requires that a contractor meet all of the following requirements to be determined a responsible contractor:
OPA also reviewed the Children Youth Investment and Trust Corporation grant application, award, and monitoring procedures. In Fiscal Year 2008, the Council of the District of Columbia approved seventeen awards to external entities, through CYIT. A formal request was made to CYIT to require that all awardees, approved by the Council, be held to its established grant monitoring procedures. Although this requirement is significant, CYIT could not impact the actual grant award. Organizations view approved awards as a matter of law and some public officials believe that they are mandated to make the award regardless of the capacity of the receiving entity to provide the service. In some instances, the scope of work has to be modified to accommodate this issue. With the majority of entities that award grants, both governmental and nongovernmental, funding opportunities are made available, pursuant to the established goals and priorities of the awarding entity. It has been asserted that the established priorities of these entities are not often consistent with the identified priorities of members of legislative bodies. CYIT utilizes external reviewers that are experts in their field to review grant proposals (submitted proposals are in response to an advertised funding opportunity). The awards granted and approved by the Council are not subject to a uniform and competitive process. Members sometimes vote to authorize numerous appropriations without knowledge concerning the receiving entity; the actual purpose for the award; whether or not grant monitoring guidelines and procedures have been established; and information concerning the expected outcome(s). CYIT, upon awarding grants, assigns a program associate to the organization that will assist them in modifying their work plan and budget based on the actual award. It is not clear that all Council approved and selected awardees have developed work plans. Once the work plan and the budget have been approved, a contract is executed that outlines the responsibilities of both parties and the terms and conditions of the grant including the termination process. Ensuing payments are dependent on the successful submission of quarterly reports and maintaining an average daily attendance rate within 75% of their funded number of participants. A final 10% of the grant is withheld from the last quarterly payment until all final reports are submitted. CYIT describes their process as performance-based granting, which means that payment and continuation of payment depends on an organization’s progress towards their formal work plan. Recommendations for Reform 1. Amend the Rules of Organization and Procedure for Council Period 17 to prohibit specified funding allocations to select organizations, institutions, and private sector entities in the annual Budget. 2. The Council of the District of Columbia should amend its Rules of Organization and Procedure, for Council Period 17, to require members that propose specified funding allocations for organizations, to certify that the receiving entity is/has (1) in good financial standing (a member’s ability to certify that an organization is in good financial standing will be exclusively dependent upon a certification by the organization that it is in good financial standing (this will be supported by a current financial statement that delineates it existing assets, liabilities, pending lawsuits, judgments); (2) current on District and federal taxes (if not current, certification that an approved payment plan has been entered into), a copy of the organization’s most recent 990 Form or other required tax filing statement will be required; (3) the capacity to provide the requested services; and (4) that the allocation is consistent with the established priorities and goals of the Council of the District of Columbia. Procedure Each member that has an interest in proposing a specified funding allocation is required to provide the following information to the relevant (Subject Matter/Policy Jurisdiction) standing Committee, the Office of the Budget, and the Office of the Secretary. The Office of the Secretary will be required to disseminate the required information to members of the Council of the District of Columbia, within 24 hours of receipt:
The required information shall be submitted to the relevant Committee, the Council Budget Office and the Office of the Secretary at a minimum, one week, prior to Committee Mark-Up and Vote. The Committee shall be required to certify, in its report, that the required information has been submitted within the established time period. (It is important that the information is submitted to the relevant Committee for recording purposes). This information shall be posted on the Council’s website and a notice of proposed appropriation(s) shall be filed with the Office of the Secretary. The purpose, of which, is to inform the public. Audits The District of Columbia Auditor will be required to randomly audit sub-grant recipients. These audits shall be conducted annually and a formal report issued to the Council and Mayor by November 15th of each fiscal year. Standing Committees Requirements The Committee will be required to certify in its report that all required information has been submitted by the proposing Councilmember. Should a member not meet the one-week submission requirement, the member can submit the request to the Committee of the Whole 5 days (excluding weekends) prior to the scheduled Committee of the Whole session. The member is required to submit the information to the Office of the Secretary and the Office of the Budget, also. Prohibition on Amendments from the Dais 3. The Rules of Organization and Procedure for Council Period 17 should be amended to prohibit amendments that would result in a specified funding allocation for a specific organization from the dais. Rationale: An amendment from the dais does not provide members with adequate time to make an informed decision on the proposed award. The Council should explore the option of amending the Budget Support Act between 1st and 2nd reading should the informational requirements be met. 4. Include in the annual budget of the Council, reserved funding for the purpose of awarding sub-grants to identified organizations. Each Councilmember will be allocated _____, annually for this purpose. Each member will have complete discretion, relative to the entity that will receive the funding, after certifying that the organization is in good financial standing and that they have the capacity to provide the required services. Each member will also be required to submit a Conflict of Interest Form, attesting that there is no conflict of interest involved. 5. Consistent with the Council’s Legislative Priorities and Goals, identify one to two issues that are of priority (e.g. HIV/AIDS; Domestic Violence; Job Training) and all specified funding allocations should be directed to organizations that devote their time and resources to the identified areas. This will require reserved funding for the Council to direct funding for the identified purposes. 6. Amend the Rules of Organization and Procedure to prohibit an organization from receiving specified funding allocations consecutively. 7. The Council may set aside funds for community-related purposes and establish a formal and uniform competitive grant award process, as some jurisdictions have established (see Montgomery County, Maryland; Detroit, Michigan; and Tennessee). 8. Members of the legislature can work with the executive branch of government to ensure that agencies are made aware of the critical needs of their respective communities and constituents (most importantly, ensuring that funding is available to address those needs through organizations that serve those communities).The agency would be responsible for overseeing the process and all awards would be subject to a competitive process. 9. Amend the Rules of Organization and Procedure to limit the award level for each earmark ($255,000 non-capital, and $1,000,000 for capital projects). 10. Amend the Rules of Organization and Procedure to prohibit more than one designated appropriation for earmarked capital projects for external entities. Outstanding Issues
FY 2006 Earmarks
1. The United States House of Representatives amended its Rules through H.R. 6 and the Senate's reules were amended through the Legislative Transparency Act of 2007. A joint measure was passed and signed into law by President George W. Bush, Jr., the "Honest leadership and Open Government Act of 2007." |
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