Statement of Brian L. Schwalb Attorney General for the District of Columbia

Before the Committee on the Judiciary and Public Safety Honorable Brooke Pinto, Chairwoman

Office of the Attorney General Hearing on Fiscal Year 2024 Budget

April 12, 2023

Introduction

Good morning, Chairwoman Pinto, Councilmembers, and District residents. I am Attorney General Brian Schwalb. I appreciate the opportunity to appear today for this FY2024 budget oversight hearing.

As the District of Columbia’s independent, elected Attorney General, I am responsible for stewarding what I believe to be the finest public interest law firm in the country. OAG is powered by an extremely talented and hardworking group of professionals who are dedicated to using the law to protect the interests of the District of Columbia and improving the lives of District residents.

Since this is a budget hearing, let’s start with the numbers. OAG generates a return far in excess of our costs. In FY22, OAG’s defensive litigation practice groups—our Civil Litigation, Commercial, and Personnel, Labor, and Employment Divisions—confronted financial exposure to the District realistically estimated at nearly $443 million. With the support of our Office of Solicitor General, OAG’s litigators—through motions practice, trials, appeals and settlements— were able to resolve this exposure for less than $7 million. OAG’s Commercial Division preserved another $93 million by successfully defending collected tax revenue on appeal. Additionally, our Civil Litigation Division collected $3 million in administrative penalties for violations of District regulations, our Child Support Services Division secured nearly $50 million in monetary support for District children, and our Public Advocacy Division netted $12 million in penalties and restitution in consumer protection, housing, workers’ rights, and civil rights cases brought in the public interest. I lead with this point, Madam Chairwoman, to emphasize the fact that the Council’s budgetary support for OAG creates a multiplier effect. All told, OAG generated nearly $600 million in value to the District, a roughly four-times return on investment based on our FY22 budget.

Of course, the benefits OAG provides for the District are not just monetary in nature. By enforcing and defending the laws the Council has enacted, OAG’s work makes the District safer, fairer, and more equitable for all who live, work, and visit here. Our recent accomplishments are too numerous to recount, but allow me to offer some highlights.

Since I last appeared before this Committee less than two months ago for our performance oversight hearing, OAG has successfully resolved four separate housing cases, holding different landlords in Wards 1, 5, and 8 accountable for substandard property conditions that exposed tenants and community members to health and safety risks, including illegal firearms and drugs, rodent infestation, and environmental hazards. As a result of OAG’s enforcement of the District’s nuisance, consumer protection, and lead hazard statutes, these landlords will be required to remedy identified threats to the safety and security of tenants and visitors.

Last month, OAG filed a housing discrimination lawsuit enforcing the new Eviction Record Sealing Authority and Fairness in Renting Amendment Act of 2022. That law, which the Council passed last year, is intended to ameliorate the adverse impacts of the District’s dwindling supply of affordable housing by, among other things, fortifying the legal prohibition against source of income discrimination. Our recently filed suit alleges that two companies and their owners violated the Human Rights Act by falsely telling housing voucher holders that units were not available for rent while simultaneously telling non-voucher holders that they were, by stating a preference for certain types of vouchers over others and, in violation of the new protections, by discriminating against voucher holders based on their prior payment history and sealed eviction records.

OAG also continues to stand up for consumers. We pursue investigations and enforcement actions and also engage in public education about the District's consumer protection laws. Last month, we issued an alert notifying restaurant owners and patrons that the District’s Consumer Protection Procedures Act (CPPA) prohibits charging fees that are not transparently disclosed and clearly explained before a diner places an order. We put out the alert in response to numerous complaints we have been receiving about ambiguous fees appearing on restaurant bills, like generically labeled “service fees.” Sometimes these fees aren’t disclosed until diners receive the check, and they can lead diners to think a tip for the servers is already included in the check when it isn’t. With the alert, we sought to create greater public awareness about CPPA requirements and to make clear that restaurant patrons, just like consumers of any other goods or services in DC, are entitled to honesty, fairness, and transparency. Since issuing the alert, many restaurant owners have thanked us, emphasizing the importance of competing on a level playing field and protecting the trust their customers place in them.

Just this morning, OAG announced the largest-ever settlement in a litigated case under the CPPA. Cartridge-based e-cigarette manufacturer JUUL Labs, Inc. (JUUL) will pay the District $15.2 million to resolve OAG’s allegations that the company unlawfully marketed its vaping products to District youth and misrepresented its highly addictive qualities. Under my leadership, OAG will prioritize the health and safety of District children and aggressively pursue unlawful business conduct that preys upon, and seeks to profit from, exploiting our youth.

OAG is widely recognized not only for our affirmative civil enforcement of laws that protect District residents, but also for innovations in criminal and juvenile justice that enhance public safety. These innovations are especially important now. Even if still low by historical measures, violent crime has increased since the pandemic. There are too many guns and too much gun violence in our city. Everywhere I go, people tell me they are afraid. They are concerned about their quality of life. We must recognize and respond to these concerns. We must continue holding people who break the law accountable. But we cannot return to failed policies of the past, which produced mass incarceration, destroyed Black and brown communities, punished children as adults—but that failed to make us any safer. Instead, we must lead, and continue to innovate, with evidence-based, data driven policies and practices that will make DC safer now and in the long run. In short, we need to be smart on crime.

Exercising our responsibility to prosecute juvenile offenses, we are employing strategies designed to hold children accountable for violations of the law while facilitating the services they need to get on the right track and to keep from re-offending. Our attorneys are consulting with police in real time to ensure the legality and appropriateness of youth arrests. We built the first-ever restorative justice program in a prosecutor’s office. We have created new ways to prevent rather than prosecute truancy through our ATTEND program. And we have brought a proactive, public- health approach to interrupting gun violence through our Cure the Streets program. These smart- on-crime initiatives support our communities, help our children grow to their full potential, and make us safer.

On the subject of gun violence, OAG has been pursuing a multi-faceted strategy to keep illegal guns—a driving force behind violent crime—off our streets and out of the hands of our kids. OAG prosecutes gun-related cases where there is sufficient, constitutionally acquired evidence to carry our burden of proving guilt beyond a reasonable doubt. We successfully sued ghost gun manufacturer Polymer80 to keep its unlawful, untraceable firearms off our streets, winning a permanent injunction and $4 million in penalties. We are defending our common sense gun control laws, which are under attack following the Supreme Court’s decision last term in the Bruen case. We have driven policy change by successfully pushing the Bureau of Alcohol, Tobacco, Firearms, and Explosives to use its authority to clamp down on the spread of ghost guns. And through Cure the Streets, we are making grants to community-based organizations that employ violence interrupters to break cycles of retaliatory gun violence.

Priorities

While only a snapshot of the work OAG does every day, these highlights reflect my own priorities, which are informed by what I heard from community members during the campaign and transition, and reinforced by what I have learned in my first 100 days in office. They include:

• Enhancing public safety by promoting the health, education, and success of our children;
• Using laws that protect workers, tenants, children, consumers, seniors, and the environment to close the widening gaps in income, equity, and opportunity that threaten the collective welfare of our city;
• Safeguarding our civil rights and democratic freedoms, which includes fighting for reproductive freedom and against incursions on our prerogative of self-government; and
• Building on the legacy of institutional excellence at OAG by recruiting, investing in, and retaining top talent and by holding ourselves to the highest professional standards.

These priorities animate the work of OAG. And thus they animate the budget OAG is proposing for FY24. The Mayor’s budget proposal for OAG, our modest enhancement requests, and our proposed Budget Support Act provisions will enable OAG to continue delivering for District residents.

The Mayor’s FY24 Budget Proposal for OAG

This year, with a renewed spirit of cooperation, my colleagues and I worked closely with Mayor Bowser and her team, including City Administrator Kevin Donahue and Budget Director Jenny Reed, to craft OAG’s part of the Mayor’s proposed budget. Our interactions were candid, collegial, and productive. I thank the Mayor for respecting my priorities and my assessment of OAG’s most pressing needs. For the record, it is important to note that, because OAG is an independent agency led by an elected Attorney General accountable to the voters and not the Mayor, OAG’s annual budget should not be subsumed within the Mayor’s annual budget as a structural matter. But that is for another day. For purposes of this year’s budget, we recognized the Council faces difficult budget choices, and we thought it was important for OAG to partner with the Mayor, to the greatest extent possible, to develop OAG’s budget.

Following the CFO’s February revenue forecast, the Mayor asked OAG to find $10 million in savings in our budget. My team and I worked hard to accommodate her request while ensuring our most critical needs are met. I am pleased to report that, through our discussions, we reached almost full agreement. As a result, the enhancement requests we have of the Council are modest, both in number and amount.

The vast majority of the line items in the Mayor’s FY24 budget for OAG look familiar. That is because they match the line items from OAG’s FY23 budget, which include: (1) items for personal and nonpersonal services from local funds; (2) federal grant funds to support our Child Support Services Division; (3) capital funds to modernize our Child Support Services Enforcement System; and (4) several special purpose revenue funds, including our Litigation Support Fund, which is self-funded with recoveries OAG brings in through affirmative enforcement litigation.

There are, however, several minor but important differences between the Mayor’s FY24 budget for OAG and OAG’s FY23 budget. These minor differences are what enable OAG to satisfy the Mayor’s request for reductions without pulling back on our priorities or compromising our mission. Let me briefly discuss the most noteworthy changes from FY23.

Cure the Streets Violence Interruption Program. OAG has agreed to self-fund, from the Litigation Support Fund, the four new Cure the Streets sites that the Council supported in FY23 with funds from the American Rescue Plan Act, or “ARPA.” OAG currently makes grants to support 10 different Cure the Streets sites around the city. Each site provides intensive, targeted services to interrupt, treat, and prevent retaliatory gun violence. By agreeing to give up ARPA funds to operate the four new sites in FY24, and to fund them instead from the Litigation Support Fund, OAG is accepting responsibility for carrying the costs of all 10 sites on our own. I am fully committed to assuming this responsibility this year. To make it happen, a Budget Support Act subtitle that increases the spending cap within the Litigation Support Fund will be required. I will discuss that shortly.

Paid Leave Enforcement. Last year, the Council appropriated ARPA funds to support two OAG attorneys who ensure the availability of sick leave to District workers under the Sick and Safe Leave Act, often by suing employers that deny their employees sick leave by improperly classifying them as independent contractors. For FY24, OAG has agreed to relinquish these ARPA funds and instead to self-fund these two positions, again out of the Litigation Support Fund.

Two settlements from just last month highlight the importance of our enforcement litigation. In one case, OAG secured $835,000 from Maryland Applicators, a drywall contractor that failed to provide sick leave to misclassified workers. In another case, we recovered $657,000 from B&B Solutions and Ana’s Cleaning, cleaning contractors that failed to provide sick leave to janitors who performed COVID cleaning under a District government contract. In each case, the employers provided restitution to the workers and paid civil penalties to the District for breaking the law. OAG expects to file additional enforcement matters in the coming months.

Workforce stabilization. The Mayor’s budget includes $1 million to promote the retention and prevent the attrition of OAG’s talented lawyers and professional staff. This budget item is born out of recent, hard experience. OAG lawyers, especially early career lawyers, frequently get “stuck in grade” for much longer than their peers in the federal government and elsewhere. They often leave OAG to join agencies or firms where they can earn promotions more quickly. And they often do so at precisely the point when they have developed the skills, professional independence, and substantive knowledge to provide maximum value to OAG and the District. Because OAG’s success largely depends on human talent, we need to retain these capable, dedicated employees— to offer them not only the sense of fulfillment and professional growth that public service provides, but also opportunities for advancement that match the competition.

Finally, although funds for the indispensable upgrade of our badly outdated Child Support Enforcement System (DCSSES) have been included in prior budgets, I want to add a brief note about their inclusion in the Mayor’s proposed budget. DCCSES is the engine of our Child Support Services Division; every child support case is managed through it. The current system is old and very few people still know how to maintain it. There is a growing risk of failure. Roughly $24 million has been spent on the upgrade so far. The good news is that we are nearing the finish line. We cannot abandon modernization now. The Mayor’s budget for OAG includes approximately $2 million in capital funds to complete and implement the modernization project. Under its two-to- one matching formula, the federal government will contribute an additional $4 million. This means the Council’s investment of $2 million will translate into an overall investment of $6 million.

Requested Enhancements

I will now turn to our budget enhancement requests. As I mentioned earlier, they are modest. They total just under $500,000. With these requests, we are asking the Council to make long-term, structural commitments to the strength and utility of the Office of Attorney General. These enhancements will have a multiplier effect. They will pay for themselves, and then some.

Family Services Division Manager
We are requesting $196,620 to hire a new section chief in our Family Services Division (FSD). The work this manager will do is critical to protecting some of the District’s most vulnerable children. Among their responsibilities, FSD attorneys provide legal advice and counsel to the District’s Child and Family Services Agency (CFSA) regarding both court-involved children who are in foster care and non-court-involved children who remain in homes where abuse and neglect have been reported but who have not been placed in foster care. For every child in the first category of cases—that is, every court-involved child in foster care—an FSD manager engages in regular, intensive case reviews with the responsible FSD attorney and FSD’s counterparts from CFSA. These case reviews, which can last two to three hours per household, examine the behavior of the parents that brought the child to the attention of CFSA, as well as the measures currently being undertaken to ensure a safe home environment.

From its experience with these consultations, FSD has concluded that it can provide greater support to CFSA if it furnishes guidance earlier in the process, instead of after persistent problematic behavior has necessitated court involvement and foster care. In other words, FSD’s participation in case consultations prior to court involvement could reduce the need for court involvement and foster care and, in so doing, advance CFSA’s twin objectives of ensuring the health and safety of children and promoting family cohesion.

The section chief position established with this first requested enhancement would enable FSD’s early, front-end participation in case consultations. For every child in-home under CFSA supervision, the section chief would manage and engage in the same intensive case reviews that FSD, together with CFSA, currently conducts for every child in foster care. Because the in-home population is currently almost double, and sometimes approaches triple, the foster care population, FSD’s need for this additional resource is acute. Funding to fulfill this need aligns with my own priority to keep kids healthy and safe, and also with CFSA’s impending organizational restructuring, which will combine the administration of in-home and foster care cases.

Data Analysts
We are also requesting funding to hire two new data analysts at the cost of approximately $150,000 each. Currently, OAG has only one full-time, dedicated data analyst. This is for a 700-person agency that, consistent with best practices, seeks to collect, maintain, and rely on credible, clean data to inform the exercise of our wide-ranging civil and criminal enforcement authority. One analyst simply cannot do everything an evidence-based, data-driven OAG needs to advance the District’s interests.

OAG hired our current data analyst in 2019. Since then, we have greatly expanded our data management, quality assurance, and analytics capacities. Most of the infrastructure we have established supports the work of our Public Safety Division (PSD). It also supports our Cure the Streets program. Among other vital tasks, our data analyst implements business processes for PSD and ensures timely entry of criminal and juvenile case data; creates and maintains internal dashboards to assist PSD attorneys with caseload management and court dates; created, published, and now regularly updates OAG’s first installment of its public Prosecution Data Portal regarding OAG’s adult prosecutions; compiles descriptive statistics and analysis for periodic internal reports and ad-hoc data requests, as well as external and often highly time-sensitive requests from public officials and media; provides regular support for our ongoing Restorative Justice randomized- controlled trial study; and assists with other program evaluations, including a Cure the Streets survey and an analysis of truancy rates and our ATTEND program.

In addition to the support our data analyst provides to PSD, she furnishes statistical and methodological expertise for affirmative civil enforcement litigation initiated by our Public Advocacy Division. Our data analyst works with large datasets to calculate unpaid wages in workers’ rights cases and rental overages and deceptively charged fees in consumer protection cases; builds statistical models to predict differential lending outcomes by race/ethnicity in civil rights cases; and reviews expert reports to identify potential weaknesses.

All this work is overwhelming for one person. The addition of two more analysts will not only make the work more manageable and spread institutional knowledge regarding OAG’s data analytics across multiple employees, but also substantially increase our data analytics capabilities. Rather than simply furnishing and monitoring descriptive statistics, OAG could begin to use inferential statistics to discern what the data tells us about the functioning and effectiveness of OAG policies and programs across OAG divisions—not just PSD and PAD—so that clear metrics are established for determining whether a program is successful. Further, OAG could deploy in-house data analysts for litigation involving large datasets where it is not practical or cost-effective to hire outside experts.

Budget Support Act Subtitles

Along with these modest spending enhancements, we are proposing two Budget Support Act subtitles.

First, we ask the Council to increase the Litigation Support Fund cap from $19 million to $23.5 million, the personal services cap within the LSF from $6 million to $7 million, and the public safety expenditures cap within the LSF from $7 million to $9 million. These increases are necessary to permit OAG to self-fund the four new Cure the Streets sites and the two paid leave enforcement attorney positions within our Public Advocacy Division. As I mentioned earlier, we worked collaboratively with the Mayor to help her achieve her budget priorities by agreeing to re- allocate ARPA funds and absorb in our LSF the costs of the four Cure sites and the two enforcement attorneys. These proposed BSA subtitles are necessary for us to be able to honor those commitments.

Second, we ask the Council to make a clarifying amendment to the Restitution Fund statute to allow OAG to direct unclaimed restitution awards to pay uncompensated claimants in other cases where the defendant is insolvent. OAG’s Restitution Fund, established in DC Code § 1-301.86c, prescribes a claims process for distributing restitution obtained through wage theft and consumer fraud settlements and judgments. Under the Restitution Fund statute as written, funds leftover after the exhaustion of the settlement claims process in a case are treated as unclaimed property. Treating excess funds as unclaimed property makes sense where a settlement itemizes specific restitution amounts to named individuals. It does not make sense where, as is often the case, a settlement establishes a common fund to provide restitution to individuals who are unknown at the time of settlement but who are entitled to receive compensation from the fund upon submission of a verifiable claim. OAG’s proposed amendment to the Restitution Fund statute will allow OAG to use any leftover monies in a common settlement fund to compensate real victims in a different case, one in which the payment of restitution OAG has obtained is impossible because of the defendant’s insolvency.

In addition to proposing two BSA subtitles, I want to offer a comment on one of the BSA subtitles in the Mayor’s proposed budget. Proposed Subtitle B of Title I mandates specific return-to-office and telework policies for District agencies and provides the Mayor exclusive authority to make limited exceptions. By its terms, the proposal would cover OAG and its employees. Again, however, OAG is no longer subordinate to the Mayor; it is independent, led by an independently elected AG who, like the Mayor, is accountable to District residents. The Attorney General thus has the exclusive authority to establish employment and personnel policies for OAG. And on the specific issue of whether to adopt a mandatory return-to-office/limited telework policy, we are currently engaged in a detailed process of reviewing options. We are gathering information and closely examining whether such a policy is right for our workforce and the work we do, given some of the unique competitive challenges we face. We anticipate announcing our policy in the coming months based on what is most conducive to employee retention, productivity, and effectiveness. For these reasons, OAG opposes Subtitle B of Title I in the Mayor’s proposed BSA.