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At-Large Councilmember Kenyan McDuffie probably thought he’d earned a favor or two from Mayor Muriel Bowser after knocking one of her most persistent critics off the Council. Instead, the mayor turned around and raided money from one of McDuffie’s pet programs.
The former Ward 5 lawmaker has spent the past few years pushing the District to adopt a “baby bonds” program, an idea that’s gained some traction nationally as a way to address the racial wealth gap by essentially creating government-backed trust funds for poor children. It took a bit of work, but McDuffie was able to get a pilot version of this effort funded two years ago (an achievement he mentioned frequently as part of his at-large bid last year). Or so he thought.
Buried within Bowser’s austere new budget proposal is a note that these baby bonds will get bupkis when Fiscal Year 2024 begins this October. The mayor’s budget minders were able to grab $20.9 million that was already appropriated to seed the program over the next two years (and save another projected $33.2 million through 2027) as they sought to close gaps elsewhere amid a worsening economic picture. Naturally, this has McDuffie a bit miffed.
“Can you take a moment to explain the rationale in zeroing out a program that is transformational for people trapped in cycles of poverty in the District of Columbia?” McDuffie asked Bowser and the rest of her budget team as they presented the spending plan to the Council on March 24. “It really is a program designed to provide a level of hope, given the sorts of disinvestments that have happened over generations to people in the city who are trapped in poverty.”
Jenny Reed, Bowser’s budget director, clarified that the program hasn’t been defunded entirely; the city devoted about $3.3 million to it in startup costs in fiscal year 2022 and another $6.2 million in 2023. But since the program “had not yet gotten off the ground,” Reed says, she decided to divert the remaining money the Council allocated to it elsewhere.
“The program had not selected a vendor, they had not yet communicated to parents who had to give the parental consent [to start the trust fund accounts],” Reed told the Council. “The cost of the program was going to go up significantly because it wasn’t fully funded in last year’s budget. So we left the funding deposited in ’22 and ’23, then we made the decision to stop the program. We did that for other programs as well.”
McDuffie felt that answer strained credulity, considering that “frankly, the District of Columbia is farther along than anybody else in the country in implementing this program.” Only California and Connecticut have passed similar baby bond measures thus far, but Loose Lips has to imagine McDuffie has a point here, considering the city’s already spent $9.5 million on the program over the past two years.
The Office of the Chief Financial Officer, which is managing these trust fund accounts, certainly made it sound as if work was already well underway on baby bonds in its answers to oversight questions from McDuffie’s economic development committee, which it delivered in mid-February. Reed is correct that the city hasn’t picked a contractor to manage the program’s IT systems, but OCFO told McDuffie’s committee that it had already put out a request for information to find one.
Additionally, the CFO’s office said it had identified “future participating families” (anyone on Medicaid and those under a certain income threshold with kids born after Oct. 1, 2021, can qualify) and notices about the program “will be sent out shortly.” LL imagines it took quite a bit of effort to track down the roughly 4,300 children McDuffie estimates would be eligible for this program. The city isn’t in the baby bond business just yet, but it’s not as if the program is still a pipe dream either.
CFO Glen Lee was evasive in answering McDuffie’s questions about his office’s progress, only saying that “we’re moving forward with the resources that have been appropriated.” OCFO spokespeople didn’t respond to LL’s requests for additional comment.
At its core, this whole kerfuffle looks like a bit of budget gamesmanship on Bowser’s part. When McDuffie pressed the CFO in the hearing on whether baby bonds were fully funded, Lee and his deputies seemed to agree. But Reed and Bowser were quick to step in and add that, in their view, it wasn’t seeded with money “across the financial plan,” a key distinction.
So, what does that mean if you’re not a Wilson Building wonk? D.C. budgets for more than just one year at a time, with four fiscal years included in each “financial plan.” When McDuffie found money for baby bonds in fiscal year 2022, he had to come up with cash through 2025: about $32 million in all.
It’s on the CFO to find money for the program in the budget after that, or raise the alarm that he couldn’t do so: but he did neither. And in this new budget, Bowser is calculating out spending through fiscal year 2027. The CFO estimates baby bonds will cost a combined $33.2 million in 2026 and 2027, and since there wasn’t already a source of funding identified for that cash, Bowser felt justified in moving it elsewhere.
Technically, Bowser could have fixed all this and funded the program if it hoped to meet the Council’s intent. The mayor’s team was using every accounting trick they could to balance this year’s budget, however. High-minded principles weren’t exactly part of the equation.
“We were operating with the thought that we had to add about $40 million across the plan,” Bowser told the Council.
This approach seemed to peeve not only McDuffie but also Council Chairman Phil Mendelson, who is busy waging a similar battle with both the mayor and the CFO over his efforts to make Metrobus rides that originate in the District free. But the ultimate resolution to that dispute will probably be the same as it is on baby bonds: If the Council wants to fund it, they’ll need to come up with the money without Bowser’s help. McDuffie seems game to try—a spokesperson tells LL his staff has already met with the CFO’s office about the matter.
However, there’s an old saying around the Wilson Building that making any program happen without the mayor’s full support is an uphill slog, simply because she has so many levers available to slow things down if she wants to use them. It turns out that doesn’t get any less true if you’ve sent Elissa Silverman packing.
This story has been updated.