We Are All In This Together 2 ▪ The financial impact of COVID-19 requires us to make sacrifices , while maintaining the critical services our residents expect and protecting our most vulnerable neighbors. ▪ We have already taken steps to reduce spending in the current (2020) fiscal year by implementing a hiring and spending freeze across government. ▪ In our FY 2021 budget proposal, we are finding ways to save resources so that we don’t lose ground on our shared progress in the District and maintain our DC Values. Everybody will need to give something
Our Priorities for Making Budget Decisions 3
District’s Financial Strength Before COVID -19 4 Financial Successes Foundations of Economic Growth Before COVID-19: ▪ 24 consecutive years of balanced • Fast recovery from the longest federal budgets government shutdown in history ▪ AAA Bond Rating • Continued population growth ▪ Fully funded pensions & retiree • A strong real estate market healthcare • Increasing wages ▪ Ended FY 2019 with 60 days of cash reserves • Continued diversification of DC’s job market and job growth We are still the envy of many cities and states because of our strong financial foundation and prudent fiscal management. We will continue to balance our budget as every household must do.
5 Our Challenge: To maintain our most important programs and services even though we have more residents, more businesses, more students, more seniors and fewer resources. ▪ We must continue to protect the health of our residents ▪ We must pay for new students entering our schools ▪ We must cover the rising costs of healthcare for our most vulnerable ▪ We must ensure the safety of our communities ▪ We must maintain our commitment to affordable housing ; and ▪ We must support our residents and businesses that have been impacted by COVID-19
Our Unique Budget 6 Annual 4-Year 6-Year + Operating Financial + Capital Budget Plan Plan FY 2021 FY 2021-2024 FY 2021-2026 While the District is similar to other localities and states in that its budget must be balanced — expenditures cannot exceed revenues —the District’s budget is unique in that it must be balanced over four years. This means revenue declines today have a multi-year impact on the budget.
Our Reserve Funds 7 The District has four reserve funds designed to provide flexibility during difficult financial times. Three are already in use. IN USE: The Cash Flow Reserve is providing daily Cash Flow Reserve - $775M operating cash to pay employees, meet contract Provides daily operating cash to pay employees, meet payments, and cover daily supplies. The cash flow contract payments, and cover daily supplies. reserve is expected to be at its lowest point in August as several significant obligations are due. Contingency Cash - $299M Available for unanticipated, non-recurring needs that The District has used $236.4M of its Contingency arise. Funds must be replenished within 1-2 years. Cash Reserve , mostly for COVID-19 response. Fiscal Stabilization - $213M The full $213M Fiscal Stabilization Reserve was May be used to cover revenue shortfalls used to balance the 4-year financial plan, and is experienced by the District government. budgeted to be replenished over the life of the plan. We preserve the Emergency Reserve in Emergency Reserve - $149M case we have a second wave of COVID19 Available for extraordinary unanticipated, non-recurring or another unforeseen emergency. needs, such as a natural disaster or calamity. Typically used only after Contingency Cash has been exhausted.
What Makes Up Our $3.3B in Fund Balance? 8 Our Fund Balance is essentially what we have in our bank account. Only some is available for use in solving budget challenges. Reserved for PAYGO Capital Projects Reserved for Housing Emergency & $161.8M Production Trust Fund Contingency Reserves $161.8M $447.8M 5% Dedicated Tax Funds 14% 5% $488.7M Includes Healthy Schools, 13% Fiscal Hospital Fund, WMATA Operating and Capital, and more Stabilization $3.3B & Cash Flow Other Funds Not Shown Reserves FY 2019 General Prior Year 30% Additional reserve funds not Fund Balance 15% $986.3M included in the District’s General Surpluses Fund reserves include the $488.7M following, totaling over $2B: • Unemployment Insurance Trust Fund ($680M) 17% • Paid Family Leave (PFL) Reserved for 1% Fund ($271M) Soccer Stadium • DC Water ($643M) $10.4M 0% Reserved for • Washington Convention & Chartwell Debt Service Reserves Sports Authority ($164M) Settlements $563.2M $8.5M • DC Retirement Fund ($44M) for capital projects
9 Budget Process + March 11: COVID-19 Public Health Emergency Declared + April 24: New Revenue Estimates from CFO + August: New Revenue Estimates from CFO
10 Total Budget: Sources Sources of Gross Fund $- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 Local $8,542.5 Federal Grants & Medicaid $3,637.5 Enterprise Funds $3,010.0 Special Purpose Revenue $754.8 Dedicated Taxes $518.5 $16.7 Federal Payments $182.3 BILLION Private $4.8 *Dollars in millions NOTE: Growth in Enterprise Funds since FY 2020 is due to growth in Unemployment Insurance (UI) and Paid Family Leave (PFL) funds.
11 Total Budget: Uses Gross Funds Expenditure Budget $- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 Human Support Services $5,113.7 Public Education System $3,139.7 Enterprise Funds and Other Funds $3,010.0 Financing and Other $1,415.4 Public Safety and Justice $1,546.0 $16.7 Operations and Infrastructure $1,113.3 Government Direction and Support $951.4 BILLION Economic Development and Regulation $415.5 *Dollars in millions
12 Local Funds Budget by Cluster Local Fund Expenditures by Appropriation Title $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 Public Education System $2,612.9 Human Support Services $1,968.3 Public Safety and Justice $1,286.0 Debt Service, Financing, and Other $897.6 Government Direction and Support $835.8 $8.5 Operations and Infrastructure $698.2 BILLION Economic Development and Regulation $243.1 *Dollars in millions
13 Budget Growth (Local Funds) Year-Over-Year Percent Change 7.1% 3.4% 3.7% 5.2% 4.4% 1.8% 4.6% FY18 FY20 FY15 FY16 FY17 FY19 FY21 $8,387,876 $8,542,041 $6,800,989 $7,034,673 $7,294,683 $7,632,782 $8,031,379 REVISED PROPOSED NOTE: FY19 includes $178.5M in Dedicated Tax revenue that was previously and in subsequent years part of the Local Funds Budget. To ensure comparability, this amount was added into the FY19 total.
14 Capital Budget: Sources Sources for FY 2021-FY 2026 $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 GO/IT Bonds (Tax Exempt) $3,579.8 Pay-As-You-Go (PAYGO) $1,685.1 Federal & Private Grants $1,177.8 Short Term Bonds $566.5 GO/IT Bonds (Taxable) $465.7 $7.9 Local Transportation Fund Revenue $221.5 BILLION Local Highway Trust Fund $213.0 *Dollars in millions
15 Capital Budget: Uses Uses for FY 2021-FY 2026 $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 Department of Transportation $2,740.5 Washington Metropolitan Area Transit Authority $1,735.0 District of Columbia Public Schools $1,411.9 Department of Health Care Finance $370.5 Office of the Deputy Mayor for Planning and Economic Development $327.4 Department of Parks and Recreation $245.6 Fire and Emergency Medical Services Department $163.1 $7.9 Department of Public Works $122.5 BILLION University of the District of Columbia $108.5 All Other Agencies $684.4 *Dollars in millions
Revenue Losses Are Significant 16 What does it mean to cut $700M+ FY 2020 & FY 2021 from the operating budget? Projected Revenue Loss $9,000 ▪ Hypothetically speaking… cutting the combined local budgets of the Departments of Human Services, $8,690 $8,500 Disability Services and Parks and $774M $8,452 Millions LOST Recreation — and then some $722M LOST $8,000 What does it mean to cut $1.2B from $7,916 $7,730 the capital budget? $7,500 Hypothetically speaking… cutting all local ▪ capital for both DDOT and DCPS and $7,000 FY 2020 FY 2021 cutting 3 years of fleet Pre-COVID Estimate Current Estimate Hypothetically speaking… cutting all ▪ DMPED capital projects plus the new St. Elizabeths Hospital plus all fleet for 3 years
How Did We Close the Gaps? 17 Overall Utilized Reversal of the Assumed no Evans estimated pay growth Full use of amendment in bond Full use of in the out- Fiscal order to capture FY 2019 refinancing Stabilization years of the additional surplus savings in Reserve revenue from financial FY 2021 and Ballpark Stadium plan FY 2022 Bon Defeasance $322M $213M $105M $80M $250M
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