[Ed. Note: The following is by Mary Levy, DC school budget expert, on the lack of accounting of federal grants in DC’s public schools in the wake of a new financial management system.]

By Mary Levy

In a startling blow to fiscal accountability, the office of DC’s chief financial officer (CFO) has eliminated budget information on major federal grants in agencies across DC. On April 12, 2023, I testified against this practice before the DC council committee on business and economic development, at a budget oversight hearing for the office of the CFO, who is the recently appointed Glen Lee.

My example: District of Columbia Public Schools (DCPS). Each year, the office of the state superintendent of education (OSSE) passes on to DCPS tens of millions in federal funds.

Now, with DC’s new financial management system, neither publicly available documents nor public submissions to the DC council have any information on the total amounts of federal grants–let alone what they are spent on.

OSSE data dumps show totals of some federal grants to receiving agencies in DC–but by no means has that been true for all federal grants. In any event, this is not public information but what I have been given access to. Moreover, there is no information whatsoever on how the federal funds will be or have been spent, and the DC council does not know any more than the public about this.

After being asked about this at the April budget oversight hearing by the chair of the committee (at large council member Kenyan McDuffie), Mr. Lee explained that when one DC agency “purchases” services from another, the amounts are shown in the new financial management system only for the “purchasing” agency, to prevent double-counting in two agencies.

Lee gave as an example DCPS’s purchase of utilities from the DC department of general services (DGS). That example makes sense for utilities, because that service is passed through to DCPS school buildings and accounted for by DCPS.

But that example makes no sense with regard to Title I, IDEA, food service, and other multimillion dollar federal grants that other DC agencies pass through! What are these state-level agencies “purchasing” for their operations?

If anything, the federal grant situation in DCPS is reversed, as DCPS provides services to students and schools with those federal dollars, as intended by the federal government and as overseen by OSSE.

OSSE does not account for the spending of these federal millions at any time. And while DCPS knows what it does with these funds, it provides no public information about them, even to the DC council. 

(This opacity is bad enough with DCPS—but accounting for federal funds in DC charters is also publicly opaque. The only place on the charter board website that shows a total of federal funds going to DC charter schools appears to be the charter board’s annual financial analysis reports (FAR). But the most recent FAR is for FY21, years behind the present, and does not outline what those federal funds are used for either in individual schools or overall. For that FY21 period, DC charters received $116 million in federal funds, a large portion of which was apparently related to covid relief. While one can find the actual use of federal money in DC charters in annual fiscal audits of individual charter schools, each is more recent that the latest posted FAR. Individual school budgets posted on the charter board website do not go into what that federal money is used for, and annual reports of individual charters do not all outline what their federal money goes toward, either.)

All of this means that the public is essentially in the dark with regard to a timely accounting of specific uses of tens of millions in federal funds given to all our publicly funded schools each year—a situation made much worse in DCPS by a forced obstacle in DC’s new financial management system.

Because the CFO’s new financial system started only in FY23 (which ended on September 30), we don’t yet know about actual expenditures anywhere. That said, we know the amounts of federal grants in individual, DCPS local school budgets because those are reported by DCPS in January or February when the federal monies are given to individual DCPS schools.

But we know nothing about the rest of federal grants in DCPS because neither DCPS nor the CFO report them. An obscure table in the FY24 budget with nothing but codes shows DCPS’s total for each code–but nothing on how the money is to be spent. (To see this table, go to the FY24 budget executive summary document at this link, which constitutes volume 1; then starting at page 279, which is part of Appendix H, look for entries for agency GA0.) And nothing will be forthcoming as to actual expenditures when that time arrives.

Since we know the amount of federal funds going to individual DCPS schools, we know that the rest of DCPS’s portion of federal funds goes to DCPS central accounts, where some of it is spent on direct services to students (for example, most of food services, some early childhood services to families, and Medicaid reimbursement spent on dedicated aides). But much is also spent on DCPS’s central offices, even as DCPS has complained bitterly about not having enough money for its central offices. What does it even have—and why don’t we know it? 

That is hardly acceptable accounting for what amounts to $160 million this year going to DCPS alone.

To be sure, both OSSE and DCPS have to report all expenditures to the federal government, but only for all revenue sources combined. As it is, we won’t know how this will be handled until sometime after Labor Day next year, when the FY23 reports are due. As far as I know, accounting for individual grants is not reported publicly.

Because the amounts and uses of federal money should not be a secret, and the amounts of federal funds given to DCPS and DC charter schools are huge each year, I testified in April for an immediate reversal of not accounting clearly for such funds in DCPS.

The simplest solution would be to treat DCPS as the purchasing agency, with both OSSE and DC’s department of health care finance as sellers to DCPS. These agencies do not account for DCPS’s spending any more than DGS does when it passes on utility bills to DCPS. But DCPS does account for utilities both in budget and in actual expenditures.

A more complicated, but acceptable, solution would be to require DCPS to provide a full accounting of its planned and actual expenditures of all federal grants in a timely and accessible manner. Ditto for DC charter schools (a few of which are currently in danger of not spending covid relief funds by the federally mandated deadline).

Nearly half a year after my testimony, with nothing changed, I wrote on September 20 to the CFO and council member Kenyan McDuffie, copying council chair Phil Mendelson (who as chair oversees DCPS), to remind them that the DC council and DC taxpayers deserve no less than a full accounting of these annual millions of federal grant dollars and urging them to adopt one of those two solutions above.

So far, no response. 

All of this indicates how disempowered DC residents are with respect to their publicly funded schools. Consider that it took hundreds of people testifying, writing, and otherwise advocating to ensure the passage of legislation that forces a certain funding minimum for DCPS schools.

That was for local funds, for which the urgency was immediate and direct.

Such advocacy is unlikely with far less tangible, and fungible, federal grants. Nonetheless, could pushback by DCPS on that local school funding law cause the DC council to demand a similar accounting of federal grants to DCPS?

Stay tuned.