Management Problems in
the District are Systemic
by Deroy Murdock and Christian Robey


As the D.C. Council’s new members take their seats, now’s the time to seize the momentum and reform DC Government.

This city’s program management aches for improvement.  Both bleeding-heart liberals, and tight-fisted conservatives should find waste and incompetence outrageous.

Media reports abound about specific instances of local mismanagement, but amazingly few  journalists identify this as a system-wide problem.  While each city faces unique challenges, these examples of District ineptitude cannot be explained away by special, local circumstances:

• According to last December 16’s Washington Post “A report commissioned by the D.C. Council says systemic failures, a lack of oversight and a dysfunctional work environment all led to the theft of nearly $50 million from city coffers by a D.C. tax office employee.”  In other words, thoroughgoing mismanagement at the DC tax office created an environment where criminal activity and even a monumental tax scam could flourish.
  
  
• District officials have failed to account for or even spend federal bioterrorism funds for a full decade.  Between September 1999 and August 2004, the Centers for Disease Control and Prevention awarded the D.C. Department of Health $24.5 million to improve bioterrorism preparedness and response capabilities, according to an audit by the U.S. Department of Health and Human Services’ Inspector General. The District failed to track specific line-item funds or provide accurate financial reports between October 2001 and September 2003.
  
  Some may be relieved to hear that DC did not spend taxpayer money, notwithstanding the fact that preventing a bioterrorist attack is a perfectly legitimate government activity. Never mind the gravity of this mission, DC mismanaged this money and is utterly clueless about where much of it went.

• According to documents obtained under the Freedom of Information Act, DC agencies exceeded their budgets by at least $1 million nearly 100 times in FY 2006 and FY 2007.What could $100 million have bought? DC cops earn starting salaries of $48,715.   Thus, $100 million could have paid 2,052 rookie cops for one year.  Or consider teachers: with starting salaries of some $43,000, DC could have dedicated that $100 million to hiring 2,325 new teachers with bachelor’s degrees.

• Lottery Technology Enterprises (LTE) has held the $120 million contract to operate the District's lottery since August 25, 1982. LTE was fined $1.4 million for security breaches involving fraudulent winners and stolen tickets.  “D.C. officials learned [in 2006] that lax enforcement of security procedures made it possible for a handful of contract employees to steal tens of thousands of dollars in lottery tickets and prize money,” LotteryPost.com reported after inspecting records from December 2007. “In roughly 5,600 separate transactions over a seven-month period, the perpetrators tricked the system into thinking the purchases had been made by one of more than three dozen lottery terminals at authorized lottery retail locations throughout the District.   All told, the LTE technicians created $86,000 in phantom D.C. Lucky Numbers, D.C. 4, Keno and Powerball tickets, earning prize money totaling more than $70,000.”
  
  
• City Council auditor Deborah Nichols reviewed five years of deals at Eastern Market and found that local authorities joined Eastern Market managers in routinely breaking rules and laws on contracting and financial management. Nichols found that conditions may have worsened since an August, 2007 fire damaged the market.

• The Summer Youth Employment Program ran $10 million beyond its $21 million 2008 budget. Among the reasons for this 48 percent overage, the Washington Times reported August 12, Mayor Adrian Fenty “instructed his managers to place anyone who sought a job with a job — even if applicants missed the deadline… Subsequently, some youths who failed to show up for work got paid, and when the money ran out, many who had actually worked received no pay. And as for Mr. Fenty's more open and transparent government: Summer Spencer, director of the Department of Employment Services, has not been allowed to speak with the press.”
  
  
• The DC Auditor reported last September 30 that the chairman of the Board of Real Property Assessments and Appeals (BRPAA) “ignored regulations, conducted himself in a manner that created the appearance of impropriety or lack of integrity, accepted campaign donations from organizations that represented clients before BRPAA, and failed to effectively manage and improve BRPAA’s operations, performance, and stature.” The DC Auditor added: “The Chairman did not provide BRPAA with the competent leadership that the important work of BRPAA requires, thus jeopardizing the integrity of BRPAA and diminishing public trust and confidence in BRPAA’s decisions.”

DC’s taxpayers have underwritten dozens more examples of government waste, mismanagement, and malfeasance.

So, where do we go from here?  One idea is to use another city’s best practices to repair a specific program.

Other cities have proved how to correct mismanagement.  Former Indianapolis Mayor Stephen Goldsmith literally wrote the book on reforming municipal services. 
 
Under Goldsmith, local agencies invited private entities to perform specific public services. Faced with competition, these government bodies often outdid their private-sector counterparts.
 
For example, Goldsmith achieved dramatic results in charging for sanitation services.

“We approached sewer billing in a different way, contracting every utility in central Indiana and asking them to compete for the sewer bill job,” he explains in his book, The 21st Century. “Forced by competition to further effort, the water company returned with a new proposal to collect sewer bills for $2 million annually, for a savings of 30% -- six times the amount it had offered originally.  More impressive from our perspective, the Indianapolis Water Company  went a step further by offering to find unbilled or under-billed sewer users, collect the missing revenue, and share the earnings with the city.  The company offered the first $500,000 in collections to the city, and proposed to split additional collections evenly.  So without hiring any more employees, conducting any studies, or installing any more auditors, the city has earned savings and revenues from this small example of more than $10.6 million to date.”

So what would happen if DC implemented, say, a competitive process for running its Summer Youth Employment Program?  Right now private parties are contracted to assist the city with this project, but it is managed completely by the city.  If the District learned from cities such as Indianapolis, it could save taxpayers money, attract businesses, and do so “without hiring anymore employees, conducting any studies, or installing any more auditors.”

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Deroy Murdock is a nationally syndicated columnist and is on the board of scholars for DC Progress.  Christian Robey is the President of DC Progress.

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