Pamela D. Graham, Chief Financial Officer, DC Public Schools 
FY 2008 Projected Deficit: memorandum to Chancellor Michelle Rhee
November 21, 2007

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District of Columbia Public Schools
Pamela D. Graham, Chief Financial Officer

TO: Chancellor Michelle Rhee 
DC Public Schools

FROM: Pamela D. Graham
CFO DC Public Schools

DATE: November 21, 2007

RE: FY 2008 Projected Deficit

The DCPS OCFO has recently discussed with DCPS officials the budget issues addressed in this memorandum. We believe it is in everyone's best interest to clearly spell out those issues to avoid any misunderstanding on the scope and urgency off these matters. Further, it is understood that during this time of transition to new leadership within DCPS, this is probably a most unwelcome development.

Previously identified budget pressures have accelerated to the point where DCPS has a projected budget deficit in the current fiscal year 2008. Early numbers indicate that without an adequate budget reduction plan, the deficit could be as high as $100 million (see Attachment 1). Immediate measures are required to stop the deficit from being realized.

Effective immediately, we will work together to implement the following:

1. Freeze all new hiring in DCPS central administration and schools including all selected candidates who have not been notified.
2. Identify all individuals who have been notified of their selection for hiring but have not yet begun work.
3. Identify all employees who are working in schools who have not yet been processed and process them immediately so they can be paid for the work they have done.
4. Produce a deficit reduction plan by December 7, 2007 that includes the unknown costs that are associated with number three above. In this plan, we should consider the elimination of all funded vacancies, freezing all supply and equipment spending, an overhaul of all existing MOAs, MOUs and contracts, and realigning the original supplemental request to deficit needs.

The practice of overriding process and procedure in hiring new employees must not continue. No one should be made an offer of employment until the budget certification process is completed. In Attachment 2, there is a list of recently-added employees who can not be processed into our payroll system because adequate budget authority does not exist to legally complete the process.

Of foremost concern to all of us should be the payment of employees who have been on the job, in most cases unaware that their hiring is not funded. Our payroll customer service employees have been overwhelmed with complaints from those new hires who are not receiving pay checks. As part of our deficit reduction plan, we need to ensure that anyone who has put time into a job gets paid for the work they have done.

Attachments

cc: Natwar M. Gandhi, Chief Financial Officer Lucille Dickinson, CFO Chief of Staff Kaya Henderson, Deputy Chancellor Lisa Ruda. DCPS Chief of Staff Allison Allis, Budget Director, DCPS

Attachment 1
PROJECTED FY08 DEFICIT

Attachment 2
Pendinq Request for Personnel SF- 52 Status Report as of 11/21/2007