Case Study

District of Columbia
Financial Advisory and Strategic Consulting Services

PFM served as the District of Columbia's Financial Advisor during the years when it was under the supervision of a financial control board. PFM analyzed the District's base revenues, operating expenditures and personnel policies to develop a multi-year strategic financial plan to balance the District's budget. The situation was uniquely complicated. In addition to a substantial deficit and problems faced by many local governments - a deteriorating tax base, an increasingly destitute population, an employment base made up largely of tax-exempt commuters - Washington's operating budget and ability to levy taxes are subject to Congressional approval.

PFM worked closely with the Mayor, his senior staff, and the District of Columbia Financial Responsibility and Management Assistance Authority to develop two annual budgets and multi-year financial plans. PFM's analysis of the city's largest departments resulted in a plan for fiscal year 1997 proposing operational and financial initiatives designed to eliminate the District's operating deficit by generating $463 million in savings. This analysis included program reviews of the District of Columbia public schools and major City operations, as well as government-wide personnel actions and work force reductions. The resulting budget and multi-year plan were adopted as an operating blueprint for repairing the District government; when implemented, the plan helped to balance the City's revenues and expenditures much earlier than planned. Today, recurring surpluses have eliminated the District's structural deficit and allowed the annual budgeting of a legally required reserve fund.

PFM also provided the expertise to implement critical parts of the financial strategy. In 1996 PFM managed a securitization of the District's property tax receivables that yielded over $25.84 million. PFM also developed and implemented a comprehensive credit strategy consistent with the financial plan, assisting the City's reentry to the markets by supporting the sale of more than $500 million in notes and bonds.

In subsequent years, PFM continues to advise the District on issues ranging from overall cost containment to performance-based-budgeting to personnel system redesign.