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GOOD MORNING, CHAIRMAN EVANS AND OTHER MEMBERS OF THE COMMITTEE ON FINANCE
AND REVENUE, I AM PLEASED TO APPEAR BEFORE YOU TODAY TO DISCUSS THE ACCOMPLISHMENTS OF THE
OFFICE OF THE CHIEF FINANCIAL OFFICER (OCFO) FOR FY 1999 AND 2000 TO DATE AND OUR GOALS
FOR FY 2001. APPEARING WITH ME TODAY ARE MY DEPUTIES: DR. WILLIAM HALL, DEPUTY CFO FOR
FINANCE AND TREASURY; MR. TONY POMPA, DEPUTY CFO FOR FINANCIAL OPERATIONS AND SYSTEMS; MR.
HENRY DEBNAM, CHIEF INFORMATION OFFICER; AND DR. NATWAR GANDHI, DEPUTY CFO FOR TAX AND
REVENUE. THEY ARE AVAILABLE TO ASSIST IN ANSWERING YOUR QUESTIONS. WE NOT ONLY WANT TO
TELL YOU ABOUT SOME OF OUR CONSIDERABLE ACCOMPLISHMENTS, BUT WE WILL ALSO TELL YOU ABOUT
SOME OF THE AREAS THAT WE KNOW NEED IMPROVEMENT. AS YOU KNOW IN THE LAST FIVE (5) YEARS,
THIS CITY HAS COME A LONG WAY IN STABILIZING ITS FINANCIAL STATUS. YET, WE STILL HAVE A
CONSIDERABLE WAY TO GO BEFORE WE ARE COMPLETELY OUT OF THE WOODS.
IN FY 1999, THE OCFO HAD A BUDGET OF $89.4 MILLION AND 1,063 AUTHORIZED FTEs. IN THE
CURRENT FISCAL YEAR, OUR BUDGET IS $86.8 MILLION AND THE NUMBER OF AUTHORIZED FTEs IS
1,081. OUR CONSIDERABLE ACCOMPLISHMENTS INCLUDE:
- ACHIEVING INVESTMENT-GRADE RATINGS ON THE DISTRICT'S OUTSTANDING GENERAL OBLIGATION
BONDS, WHICH WILL ALLOW THE DISTRICT TO BORROW AT LOWER INTEREST RATES, FREEING UP MORE
MONEY FOR CAPITAL PROJECTS AND OTHER SERVICES;
WE ALSO RESTRUCTURED THE DISTRICT'S DEBT TO REDUCE THE COST OF DEBT SERVICE IN FY2000 BY
$59 MILLION AND TO ACHIEVE A PRESENT VALUE SAVINGS OF ABOUT $5.0 MILLION. COMPLETED IN
JULY 1999, THIS IS THE LARGEST SINGLE FINANCIAL TRANSACTION IN THE DISTRICT'S HISTORY ON
WALL STREET.
IMPLEMENTING THE TAX INCREMENT FINANCING PROGRAM AND ISSUING CLOSE TO $1 BILLION IN
INDUSTRIAL REVENUE BONDS;
CONDUCTED OR INITIATED THIRTY-FIVE (35) AUDITS/REVIEWS OF VARIOUS GOVERNMENT AGENCIES.
THESE REVIEWS, PERFORMED BY OUR INTERNAL CONTROL UNIT, UNVEILED 108 DEFICIENCIES IN
INTERNAL CONTROL WEAKNESSES. THEY ALSO SAVED THE DISTRICT OVER $1.5 MILLION DOLLARS IN
DISALLOWED AND QUESTIONABLE COSTS AND INCORRECT BILLINGS TO THE DISTRICT;
BEGAN REQUIRING AGENCY CFOs TO PREPARE FINANCIAL PLANS AT THE BEGINNING OF THE FISCAL
YEAR. THIS IS A GOOD MANAGEMENT TOOL THAT ALLOWS OUR CFOs TO ASSESS THEIR BUDGETS,
ORGANIZATIONS AND FINANCIAL PRESSURES EARLY IN THE YEAR SO THAT CORRECTIVE ACTIONS ARE
DEVELOPED IN A TIMELY FASHION, RATHER THAN IN THE LAST QUARTER. WITH THESE PLANS, WE HOPE
TO NOT HAVE ANY AGENCIES FINISH THE YEAR WITH A DEFICIT;
SUCCESSFULLY ADDRESSED THE Y2K ISSUE
FOR $7 MILLION BY EVALUATING AND REMEDIATING 77 COMPUTER APPLICATIONS. THESE INCLUDED 8
MAJOR APPLICATIONS THAT COMPRISED MORE THAN 7 MILLION LINES OF CODE, ONE OF THE LARGEST
QUANTITIES OF DATA OF ANY DISTRICT GOVERNMENT AGENCY AND 4 (FOUR) TIMES LARGER THAN THE
NEXT MISSION CRITICAL AGENCY;
CONVERTED NEARLY HALF OF THE CITY'S
AGENCIES TO THE NEW POSITION CONTROLLED CAPPS COMPUTER HUMAN RESOURCES SYSTEM AND BEGAN
THE FIRST YEAR OF OPERATION OF THE CITY'S NEW FINANCIAL MANAGEMENT SYSTEM, SOAR.
IN THE AREA OF TAX AND REVENUE, WE
CONTINUED TO HAVE SOME OF OUR MOST SIGNIFICANT ACHIEVEMENTS. IN ADDITION TO PHYSICALLY
RELOCATING OUR OTR OFFICES, WE:
- INSTITUTED A NUMBER OF NEW INITIATIVES
TO IMPROVE TAX COLLECTIONS. WE CONTINUED OUR EFFORTS TO MAKE IT EASIER TO PAY TAXES BY
USING TELEPHONES AND CREDIT CARDS. THE EFFECTS OF THESE EFFORTS CAN BE SEEN IN THE CITY'S
NEW REVENUE ESTIMATE OF $55 MILLION IN ADDITIONAL REVENUE EXPECTED FOR THIS FISCAL YEAR.
WE WOULD LIKE TO ALSO POINT OUT THAT OVER THE LAST 3 YEARS, 16,000 NEW TAX FILERS HAVE
BEEN ADDED TO OUR TAX ROLLS, ADDING $250 MILLION TO OUR TAX BASE.
- IMPROVED OUR ENFORCEMENT EFFORTS BY
INSTITUTING A TAX FRAUD HOTLINE TO REPORT POTENTIAL TAX FRAUD AND ABUSE AND ESTABLISHED A
NEW CRIMINAL, INVESTIGATIONS TAX UNIT.
- NEARED COMPLETION OF A MAJOR REAL PROPERTY AUTOMATION PROJECT.
APPROVED IN FY 1997, THE GEOGRAPHICAL INFORMATION SYSTEM (GEIS) WILL SOON MAKE ACCESSING
REAL PROPERTY INFORMATION OF THE RECORDER OF DEEDS AVAILABLE BY COMPUTER.
- CONTINUED INSTALLATION OF THE INTEGRATED TAX SYSTEM. OUR NEW
STATE OF THE ART MULTI-YEAR TAX SYSTEM WILL MAKE IT POSSIBLE TO CROSS-REFERENCE ALL CITY
TAXES BY COMPUTER. BUSINESS TAXES WILL BE AVAILABLE THIS FALL WITH REAL PROPERTY AND
INCOME TAXES AVAILABLE IN 2001 AND 2002, RESPECTIVELY. ONCE
COMPLETED THE DISTRICT WILL HAVE ONE OF, IF NOT THE, MOST SOPHISTICATED TAX SYSTEMS IN THE
COUNTRY.
WHILE WE ARE PROUD OF OUR
ACCOMPLISHMENTS, THERE ARE STILL A NUMBER OF AREAS THAT NEED IMPROVEMENT. THE FOLLOWING
ARE SOME OF THE MOST SIGNIFICANT. WE NEED TO:
- IMPROVE THE RECORDING OF DEBT RELATED
TRANSACTIONS. ISSUES ARISING FROM THE NEW SOAR SYSTEM AND THE ANTIQUATED BOND SYSTEM NEED
TO BE WORKED OUT TO FACILITATE THIS PROCESS.
- IMPROVE THE BANK RECONCILIATION PROCESS.
- START USING STATISTICAL TECHNIQUES TO ENHANCE THE RELIABILITY OF CASH FORECASTING, TO
INCREASE INVESTMENT RETURNS, AND TO REVISE PROCEDURES TO IMPROVE THE TIMELINESS OF OUR
CASH FLOW REPORTING.
- IMPROVE THE OPERATION OF SOAR SO THAT IT PROVIDES FINANCIAL DATA IN THE FORMAT USERS
NEED. AS PART OF THIS PROCESS, POLICIES AND PROCEDURES WILL BE UPDATED TO REFLECT CHANGES
BROUGHT ON BY SOARS IMPLEMENTATION. WE WILL BE DEVELOPING STANDARDIZED REPORTS FOR USERS'
USE OF SOAR.
- COMPLETE CONVERSION OF THE REST OF THE GOVERNMENT TO THE NEW CAPPS SYSTEM AND IMPROVE
THE MANAGEMENT OF THE PROCESSING OF PERSONNEL AND BENEFITS INFORMATION. BECAUSE OF THE
COMPLEXITY OF THE CITY'S PAYROLL STRUCTURE, WE HAVE ALREADY STARTED TO IMPROVE THE PROCESS
OF WORKING WITH AGENCIES TO INCORPORATE THEIR SPECIFIC NEEDS INTO CAPPS.
- IMPROVE MONTHLY/QUARTERLY FINANCIAL REPORTING PROCESSES AND PROCEDURES, AS WELL AS TO
PERIODICALLY CLOSE ACCOUNTS THROUGHOUT THE YEAR, NOT JUST AT YEAR-END. IN THIS WAY WE CAN
RESOLVE THOSE ISSUES IN A MORE TIMELY FASHION, AS THEY OCCUR.
- DEVELOP STANDARDIZED ACQUISITION
POLICIES AND STANDARDS TO ENSURE THAT COMPUTER SYSTEMS CAN BE INTEGRATED AND FUNCTION FROM
A COMMON PLATFORM.
- IMPLEMENT A DATA WAREHOUSE SOLUTION TO
SUPPORT USER ACCESS TO FINANCIAL AND PERFORMANCE INFORMATION. THE EXECUTIVE INFORMATION
SYSTEM (EIS) IS THE FIRST STEP IN THIS PROCESS.
- MODIFY EXISTING PROCEDURES FOR THE
COLLECTION OF DISHONORED TAX PAYMENT CHECKS SO THAT WE CAN PURSUE THOSE RELATED TO THIS
TAX DEBT. BY IMPROVING THIS PROCESS, WE COULD COLLECT AN ADDITIONAL $10 MILLION IN TAX
REVENUES.
A "GOING
FORWARD" APPROACH FOR THE SOAR SYSTEM THAT WILL BE AN INTERNALLY DRIVEN APPROACH AND
INCLUDE:
- DEVELOPMENT OF NEW CLOSING PROCESS
USING AVAILABLE INTRANET TOOLS TO SUPPORT THE TRANSFER, TRACKING AND RECONCILIATION OF
AGENCY LEVEL PACKAGES.
- CHANGE AUDIT SCOPE AND PROCESS TO
MANAGE NEW SYSTEM CAPABILITIES.
- LIMITED CHANGES TO ACCOUNTING
STRUCTURE (INTERNAL TRANSACTION FILE, TO SUPPORT BETTER ANALYSIS OF AGENCY LEVEL DATA AND
TO SUPPORT MORE EFFICIENT DATA ROLL-UP.
- SOME RESTRUCTURING OF OFOS TO SUPPORT
BETTER COORDINATION AND SUPPORT BETWEEN CENTRAL OFFICE AND AGENCY ACCOUNTING OPERATIONS.
IN ADDITION TO MAKING
THE IMPROVEMENTS NOTED DURING THE REST OF THIS FISCAL YEAR, THERE ARE SOME MANAGEMENT
IMPROVEMENTS THAT WE WILL DO THIS FISCAL YEAR.
- WE WILL DEVELOP PERFORMANCE AGREEMENTS
FOR ALL OF OUR SENIOR MANAGERS, INCLUDING MYSELF. WITH THESE AGREEMENTS WE WILL BE ABLE TO
MEASURE PERFORMANCE OF OUR EXECUTIVE LEVEL MANAGERS, WITH THE INTENT OF FILTERING THE
PROCESS DOWN THROUGHOUT THE AGENCY.
- WE WILL CONTINUE TO HAVE AGENCY CFOs
WORK CLOSELY WITH THEIR AGENCY DIRECTORS. WE WANT THE AGENCIES TO SEE THEIR CFOs AS
BUSINESS MANAGERS, HELPING THEM TO SOLVE PROBLEMS AND ISSUES IN A TIMELY AND FISCALLY
RESPONSIBLE MANNER. PREPARATION OF THE FINANCIAL STATEMENTS WAS THE FIRST STEP IN THIS IN
THIS OBJECTIVE AND TO FURTHER IT, I WILL WORK WITH AGENCY DIRECTORS TO DEVELOP THE
PERFORMANCE EVALUATION PLANS FOR THE AGENCY CFOs.
- WE ARE CHANGING AND REVISING THE
MONTHLY FINANCIAL STATUS REPORT, COMMONLY KNOWN AS THE FRP, AND THE FLASH REPORTS.
GOVERNMENT OFFICIALS WHO RECEIVE THEM MUST GET THE FINANCIAL INFORMATION THEY NEED IN A
ROUTINE, TIMELY MANNER.
LASTLY, WE ARE VERY PROUD-OF THE EXECUTIVE MANAGEMENT TEAM THAT WE HAVE PUT TOGETHER
WITH THE EXCELLENT TALENT AND SKILLS THAT WE ALREADY HAVE IN THE OCFO, WE HAVE DONE AN
EXTENSIVE, LOCAL AS WELL AS NATIONAL, COMPETITIVE RECRUITMENT. WE HAVE ATTRACTED SOME
EXTREMELY WELL QUALIFIED AND EXPERIENCED PROFESSIONALS, MANY OF WHOM HAVE ADVANCED DEGREES
OR PROFESSIONAL CERTIFICATIONS. IN FACT, THE QUALITY OF OUR TALENTED PROFESSIONALS WAS
RECOGNIZED IN A RECENT ISSUE OF THE BOND BUYER, THE DAILY NEWSPAPER OF PUBLIC FINANCE
OFFICIALS, WHICH STATED THAT, "THE GOVERNMENT OF THE DISTRICT OF COLUMBIA... HAS A
RELATIVELY NEW BUT VASTLY EXPERIENCED FINANCIAL MANAGEMENT TEAM UNDER THE LEADERSHIP OF
CHIEF FINANCIAL OFFICER (CFO) VALERIE HOLT ...." OUR NEWCOMER STRONGLY COMPLEMENT OUR
TALENTED "OLDTIMERS."
IN ADDITION TO RECRUITING LOCALLY AND
NATIONALLY, WE HAVE CANDIDATES INTERVIEW WITH PANELS OF OTHER FINANCIAL PROFESSIONALS FROM
INSIDE AND OUTSIDE THE GOVERNMENT. IN FACT, AS PART OF OUR SELECTIONS OF THE DEPUTY CFO
FOR FINANCE AND TREASURY, DR. HALL AND OUR NEW BUDGET DIRECTOR, MR. OTIS WILLIAMS, WE HAD
A PANEL EXTENSIVELY INTERVIEW THEM. THE PANEL WAS COMPOSED OF DISTINGUISHED CITIZENS WHO
VOLUNTEERED THEIR TIME TO HELP IN THIS PROCESS. THEY INCLUDE AN OFFICIAL OF THE
SMITHSONIAN, TWO MEMBERS OF THE BANKING COMMUNITY, THE PARTNER OF A MAJOR LAW FIRM, AND AN
OFFICIAL OF A MAJOR PUBLIC INTEREST ORGANIZATION. WITHIN THE OCFO WE ARE USING THE SAME PROCESS TO FILL AGENCY CFO AND OTHER
FINANCIAL POSITIONS.
WHILE WE HAVE ACCOMPLISHED MUCH, WE KNOW THAT
WE STILL HAVE CONSIDERABLE CHALLENGES AHEAD OF US. HOWEVER, WITH THE TALENTED AND VERY
EXPERIENCED TEAM THAT WE HAVE PUT TOGETHER, WE BELIEVE THAT WE ARE WELL ON OUR WAY TO
HAVING, AS ONE TOP INVESTMENT FIRM OFFICIAL STATED LATE LAST FALL, A FINANCIAL OPERATION
WITH A WORLD CLASS REPUTATION.
I WOULD NOW LIKE TO HAVE THE MEMBERS OF MY
STAFF SEATED AT THE TABLE SAY A FEW WORDS ABOUT THEIR OPERATIONS. |