District officials are ready to begin a full-scale procurement to replace the existing financial management system, which is widely regarded as insufficient to manage the district's finances. A $28 million appropriation approved in the 1996 fiscal year federal budget would provide initial funding for the new system, according to the 1996 District of Columbia Appropriations Act.
District officials say there's an urgent need to replace the system to get an accurate picture of city finances. "We must do something because we're in a situation where, if we continue to wait, we'll only fall further behind," said Robert L. McInnis, chief information officer in the district's office of the chief financial officer.
In a strategic plan published by the financial control board in December 1996, the district's financial management systems are cited for being among the worst in the city government.
"For years, the district has not known the current status of expenditures against budgeted amounts and allowed millions of dollars of obligations to be incurred outside of the accounting system .... Also, feeder systems are not integrated with the central system," according to the plan.
McInnis said his department, under the direction of Chief Financial Officer Anthony Williams, prepared a capabilities assessment report of the financial management system last fall that was presented to the control board in December. The control board endorsed an option in the report to replace the existing financial management system, and the five-member panel forwarded the report to congressional committees that oversee the district's government.
The control board had endorsed replacing the system because "it met the objective of improving financial management in the district," according to Mark Goldstein, deputy executive director of the financial control board.
Jack Cox, press secretary to Rep. Charles Taylor, R-N.C., chairman of the House subcommittee on D.C. Appropriations, said it was unlikely the subcommittee would take action on any recommendation before subcommittee meetings and hearings are convened by the chairman in late March. Taylor became chairman of the D.C. appropriations subcommittee in January, according to Cox.
Meanwhile, McInnis said his department is doing everything it can to gather information that will help it launch procurement efforts. "We're laying the foundation to move ahead," he said.
The capabilities assessment report concluded that the district government could pursue any one of three options. The first option would require the district government to remain with the existing system, which would cost $44.1 million over the next seven years.
The second option calls for enhancement of the existing system largely by software and system design upgrades. The second option would cost $50.3 million over seven years.
McInnis said the third option, which seeks to bring in new software and some new hardware, is cheaper in part because it would not require the costly support to avoid year 2000 software conversion problems. The new software will correct the problem.
According to the capabilities assessment report, the district's financial management system is designed to support the following:
The report also says integrated feeder systems from the district's agencies "were to be developed and interfaced with the central accounting system." The integration of systems never happened, the report says.
- Organization reporting - reports expenditures and revenues by cost center/agency according to the organizational structure of the district and its agencies.
- Program reporting - reports expenditures associated with a program (e.g., drug rehabilitation) undertaken by the district or one of its agencies.
- Project/grant reporting - reports receipts and expenditures data for one-time activities such as capital improvement projects, system development projects and federal grants.
- Appropriation reporting - reflects the amount of appropriations authorized by the district and Congress.
- General ledger/fund reporting - reports the status of assets, liabilities, revenues, expenses, obligations and fund balances for each fund.
- Budget development reporting - provides automated support to the annual budgeting process before and after the appropriation process.
"Of the 19 major feeder systems, 13 require manual journal entries to be posted into FMS [a financial management system], while five use an off-line periodic exchange of information on magnetic tapes or diskettes, and one does not interface with FMS at all," according to the report.