The upgrade on the District of Columbia's bonds was based on improved financial and administrative factors resulting largely from federal legislation affecting the district. A critical component to the improvement in the district's creditworthiness was the implementation of the National Capital Revitalization and Self-Government Improvement Act of 1997. With this act, effective Oct. 1, 1997, the federal government assumed the majority of the district's unfunded pension liability, which totaled $3.7 billion at the end of fiscal 1997. The costs of certain district operations also are being transferred to the federal government, and the Medicaid reimbursement rate was increased to 70% from 50%. The net positive effect from the revitalization act on the district's finances is projected to range from about
