REPORT OF THE CHIEF LEGISLATIVE ANALYST

Transcription

1 REPORT OF THE CHIEF LEGISLATIVE ANALYST April27, 2011 To: From: Honorable Members ofthe Budget and Finance Co, mittee Gerry F, Mille Chief Legis ati e Overview of the Proposed Budget As requested by your Committee, we have prepared the attached overview of the Proposed Budget, as submitted by the Mayor on April20, 201 L In addition to the issues summarized in the attached, we have identified a budget timing concern. The Proposed Budget provides for a reduction in working days spread across General Fund departments totaling approximately $80 million. That funding has been removed from the departments' budgets. However, a tentative agreement with the Coalition of City Unions was recently sent to bargaining unit members which would, among other things, increase their contribution to the pensions system for retiree healthcare. In exchange for the increased contribution, members would not see a reduction in their working days. Similar discussions are occurring with other non-coalition units. The timing issue involves the up-front payment of the City's contributions to the pension systems through the issuance of Tax Revenue Anticipation Notes (TRANS). For civilians (LACERS), our contribution is based on the covered or base salary and does not reflect the reduction in working days. If the reduction in working days does not occur because of increased contributions to LACERS, the increased employee contributions will go to LACERS rather than departments' budgets. In essence, LACERS will receive both the City's contribution and the increased employee contributions and, since working days are not reduced but the salary funding has been removed, the departments will have insufficient funding in their salary accounts. We suggest that your Committee explore options to address this issue with LACERS, the City Administrative Officer (CAO) and the Mayor's office. If we can be of further assistance, please let us know. GFM: djclgfm wpd Attachment Overview of the Budget As Submitted by the Mayor.

2 OVERVIEW OF THE BUDGET AS SUBMITTED BY THE MAYOR Presented To Budget and Finance Committee Prepared By Gerry F. Miller Chief Legislative Analyst

3 Mayor's Budget Shortfall $ M General Fund Base Revenue Change ($-25.06M) Budgeted Revenue ($4,375.21M) Revenue Estimate from Mid-Year FSR ($4,373.40M) Revenue Change from Budget to Mid-Year ($-1.81M) Revenue Changes Subsequent to Mid-Year FSR ($-23.25M) Obligatory Expenditure Change ($204.19M) Employee Compensation Adjustment ($!!.39M) Full Funding for Partially Financed Positions ($84.02M) Salary Step Plan and Turnover Effect ($1 0.04M) Deletion of2010-ll Equipment ($-0.05M) Deletion of Funding for Resolution Authorities ($-39.49M) Deletion of One-Time Expense Funding (including Municipal Election Funding) ($-24.58M) Deletion of One-Time Unappropriated Balance ($-63.96M) 2011 Tax & Revenue Anticipation Notes ($152.80M) Capital Finance Administration Fund ($-2.39M) Capital Improvement Expenditure Program ($37.78M) Human Resources Benefits ($24.21M) Judgment Obligation Bonds Debt Service Fund ($-1.73M) Water and Electricity ($1.46M) Unappropriated Balance- Water and Electricity ($LOOM) Unappropriated Balance - Petroleum Products ($4.00M) Library- Charter Required Change from to ($13.45M) Recreation & Parks- Charter Required Change from to ($-3.75M) Continuation of Existing Services and Savings ($78.03M) Early Retirement Incentive Program- Payout ($2l.OOM) General City Purposes - Annual City Audit/Single Audit ($0.02M) General City Purposes- Medicare Contributions ($1.60M) General City Purposes- Retirement Contributions ($-3.38M) General City Purposes- Financial Management System Replacement ($9.75M) Unappropriated Balance- Outside Counsel incl. Workers' Compensation ($2.25M) Animal Services - Shelter Operations Staffing ($0.88M) City Attorney- Tobacco Enforcement Program ($0.94M) City Attorney- Community Law Enforcement and Recovery (CLEAR) ($0.13M) City Attorney- Neighborhood Prosecutor Program ($1.67M) City Attorney- Gang Prosecution Program ($0.43M) City Attorney- Pitchess Motions ($1.18M) City Attorney- Police-Related Litigation ($1.99M) -2-

4 Mayor's Budget Shortfall $ M City Attorney- Workers' Compensation Outside Counsel Support ($1.13M) City Attorney- Legal Support to Proprietary Departments ($2.60M) Controller- Payroll System Replacement ($0.82M) Finance - Audit Penetration Rate ($0.98M) Finance - Bank Service Fees ($4.28M) Fire - Homeland Security Enhancements ($0.96M) Fire- Professional Standards Division ($1.04M) General Services & New Facilities ($!.29M) Information Technology Agency- Public Safety Systems Project ($0.50M) Information Technology Agency- Payroll System Replacement Support ($1.44M) Infonnation Technology Agency- Supply Management System Support ($2.10M) Information Technology Agency- Los Angeles Business Tax Support ($0.54M) Personnel- Metropolitan Detention Center ($0.65M) Personnel - Public Safety Bureau Staffing ($1.44M) Police- Digital In-Car Video System ($0.39M) Police- Handheld Radio Maintenance ($0.23M) Police - Jail Division ($0.46M) Police - Groupwise Software Licenses ($0.26M) Police- Sworn Hiring Plan/Attrition ($-7.13M)) Police- Sworn Overtime ($7.70M) Police Management Systems Re-Engineering ($1.68M) Police- Consent Decree Systems Support ($0.75M) Police- Constitutional Policing ($0. 70M) Police- Internal Audit and Inspection Division ($1.11M) PW/Contract Administration- Public Right of Way Program ($0.58M) PW /Contract Administration - Port of LA Inspection and Compliance Program ($1.25M) PW/ContractAdministration- Compliance Services to Other Departments ($0.67M) PW/Street Services- Public Right of Way Construction Enforcement ($0.35M) Transportation- Enforcement and Traffic Control ($1.16M) Transportation- Water Trunk Line Construction Program Support ($0.53M) Other ($9.12M) Other Changes and Adjustments ($28.98M) Police- Uniform Allowance and Excess Sick Time Payout ($14.61M) Salary Savings Rate Adjustments ($8.97M) Other ($5.40M) TOTAL BUDGET DEFICIT $ M - 3 -

5 Mayor's Budget Balancing Solutions $336.26M BUDGET BALANCING ACTIONS 11 New/Expanded Revenue Proposed for ($10.65M) Fire - Industrial Building Inspection ($LOOM) Fire- Above Ground Inspection Fee ($0.15M) Planning- Increase for Full Overhead Costs ($0.50M) Transportation- Parking Citations ($9.00M) 11 Special Fund Revenue that Offsets General Fund Expenditures for ($18.20M) Special Parking Revenue Fund Transfer ($18.20M) 11 Efficiencies/Reductions Included in the Proposed Budget ($-62.07M) Aging- Administrative Budget Reduction ($-0.20M) Animal Services- Expense Reduction and Deletion of Vacant Positions ($-1.41M) Animal Services - Management Realignment ($-0.22M) Animal Services -Northeast Care Center Closure ($-0.06M) Building and Safety- Code Enforcement Reductions ($-0.36M) City Administrative Officer- Reductions and Deletion ofvacant Positions ($-0.93M) City Attorney- Deletion of Vacant Positions ($-0.16M) City Clerk- Account Reductions and Deletion of Vacant Positions ($-0.47M) Controller- Deletion of Vacant Positions ($-L62M) Council - Budget Reduction ($-2.09M) Disability- Salary and Contract Account Reductions ($-0.12M) Finance- Overtime, Expenses and Administrative Support Reductions ($-0.74M) Fire- LAFD Deployment Plan ($-5.81M) Fire - Staffing Adjustments ($-6.66M) General Services - Fleet Services Reduction ($-1.50M) General Services- Supply Services Reduction ($-0.21M) General Services- Various Reductions and Deletion of Position ($-L61M) Information Technology Agency- Deletion of Vacant Position ($-0.67M) Infom1ation Technology Agency- Expense Account Reductions ($-0.90M) Information Technology Agency Swing Shift Elimination ($-0.47M) Mayor- Budget Reduction ($-0.94M) Persom1el- Deletion of Vacant Positions ($-L52M) Personnel- One-Time and Other Expense Account Reductions ($-0.82M) Personnel- Public Safety Bureau Staffing ($-0.60M) Planning - Deletion of Vacant Positions ($-L63M) Police - Accumulated Overtime ($-LOOM) PW/Board of Public Works- Deletion of Vacant Positions ($-0.48M) PW /Board of Public Works - Graffiti Abatement Services ($-0.50M) PW/Board of Public Works- Project Restore ($-0.12M) -4-

6 Mayor's Budget Balancing Solutions $336.26M PW/Contract Administration- Deletion of Vacant Positions ($-0.18M) PW /Engineering - Deletion of Vacant Position ($-!.22M) PW/Engineering- Overtime and Expense Accounts Reductions ($-0.21M) PW/Street Services- Operational Reductions ($-2.75M) PW /Street Services - Transfer of Services to Bureau of Sanitation ($-!.28M) Transportation- Change in Crossing Guards Services ($-1.95M) Transportation- Deletion of Vacant Positions ($-1.13M) Transportation- Special Events Permit Office ($0.31M) Treasurer- Consolidation of Treasury and Finance Functions ($-0.75M) Capital Finance Administration Fund- Police Administration Building ($-15.01M) Other ($-4.08M) Other Changes and Adjustments ($ M) Change in Number of Working Days ($-79.67M) Commercial Paper for Early Retirement Incentive Program Payout ($-21.00M) Commercial Paper for Working Capital ($-21.62M) Animal Services- Cost Recovery for Spay and Neuter Program ($-0.16M) City Attorney- Consumer Protection Funding ($-1.87M) General Services- Street Resurfacing Program Support ($-9.05M) Information Technology - Government Access Funding ($-1.43M) Police - Increase in Special Fund Revenue ($-6.16M) Police - Sworn Salary Savings ($-20.00M) Transportation- Funding Source Adjustment ($-7.88M) Transportation- Implementation of MeasureR Projects ($-0.92M) Capital Improvement Expenditure Program ($-37.78M) General City Purposes- Council District Community Services ($-0.12M) General City Purposes - Homeless Shelter Program ($-1.02M) General City Purposes- L.A.'s BEST ($-0.21M) General City Purposes - Learn and Earn Program ($-0.03M) General City Purposes - Pensions Savings Plans ($-0.23M) General City Purposes- Solid Waste Fee Lifeline Rate Program ($-8.61M) General City Purposes- Solid Waste Fee Reimbursement ($-3.70M) General City Purposes - Special Events Fee Subsidy- Citywide ($-0.23M) General City Purposes- Youth Employment Program ($-0.03M) General City Purposes - Other ($-!.24M) Human Resources Benefits- Unemployment Insurance ($-14.00M) Other Special Purpose Funds - Arts and Cultural Fac. and Services Trust Fund ($1.04M) Other Special Purpose Funds- Attorney Conflicts Panel Fund ($-0.23M) Other Special Purpose Funds - Los Angeles Zoo Enterprise Trust Fund ($-!.17M) Other Special Purpose Funds- Neighborhood Empowerment Fund ($0.16M) - 5-

7 Mayor's Budget Balancing Solutions $336.26M Other Special Purpose Funds - Matching Campaign Funds ($0.07M) Other Special Purpose Funds- Other ($0.31M) Water & Electricity- Direct Payment by Recreation and Parks ($-15.91M) Other- ($-4. 76M)., Increased Services in the Proposed Budget ($7.42M) Finance - Financial Management System Centralization ($0.16M) Fire- Brush Clearance Expense Account ($LOOM) Fire - Paramedic Medical Equipment ($0.40M) Planning- Northeast LA New Community Plan ($0.26M) Police - Technology Related Contracts ($2.55M) PW/Contract Administration- Los Angeles Airport Inspection Program ($3.05M)., New Services/New Facility Expenses in the Proposed Budget ($4.67M) City Administrative Officer- Asset Management Study ($0.30M) Fire - Urban Search and Rescue Team ($l.oom) Unappropriated Balance- City Disaster Planning Group ($0.50M) Unappropriated Balance - Deferred Entry of Judgment Program ($0.52M) Unappropriated Balance -IT Infrastructure Outsourcing ($0.25M Unappropriated Balance - Merchant Card Convenience Fee Program ($0.50M) Unappropriated Balance -Neighborhood Council Funding ($0.08M) Unappropriated Balance - Redistricting Costs for Council and LAUSD ($1.50M) Other ($0.02M) TOTAL BUDGET BALANCING ACTIONS $336.26M April27,

8 SIGNIFICANT ISSUES AND FUTURE YEARS Major components of the Mayor's solutions to close the structural budget gap of $336M include the following: Listed as "Change in the Number of Working Days," civilian employee furloughs are applied in two categories, with some exceptions: 36 days furlough for positions which receive cost of living adjustments on or after July 1, 2011, or 26 days furlough for all other positions. General Fund savings are estimated to be $79.67M. Labor negotiations are continuing and efforts are being made to find solutions which will eliminate the need for civilian furloughs in A tentative agreement has been reached with the Coalition of LA City Unions which is pending ratification. In the absence of ratified agreements with the Coalition and other labor unions, furloughs must be implemented in order to balance the budget. Departmental Efficiencies and Reductions in Public Services are applied in nearly all departmental budgets and result in $62.07M in General Fund savings. Deletions in these categories include the elimination of vacant position authorities; management realignment; expense reductions; savings in the capital improvement program; and, functional transfers or departmental consolidations. The Mayor's Proposed Budget includes the issuance of $42.62M in Commercial Paper for two main components: to finance the second installment of vacation and sick leave payments for the Early Retirement Incentive Program (ERIP) ($21M) and unspecified Working Capital ($21.62M). Commercial paper is a debt instrument typically used for capital expenditures. Annual payments for the commercial paper issuance are approximately $8.8M for five years, with annual interest estimated to be just under $1.0M. This is the first time the City has issued Commercial Paper for working capital. Police Salary Savings ($20.0M) are included in the Proposed Budget and are anticipated to be realized through a combination of reduced sworn salary costs and management of personnel. One-time savings of $18.2M are transferred frorn the Special Parking Revenue Fund to balance the Proposed Budget. Use of these funds will impact parking projects intended to be funded in the Department of Transportation Five-Year Plan. New or expanded revenue ($10.65M) is proposed for The main component of this is a plan to increase the revenue from parking citations ($9.0M) through implementation of a part-time traffic officer program. Additionally, modest increases in revenue are projected over the revised estimates. Overall, however, revenues are lower than those projected one year ago. It is important to note that a significant portion of the proposed budget balancing solutions are not permanent reductions to the City's payroll, which includes not only salaries and overtime, but also bonuses, benefits and pension costs. Labor costs comprise nearly 90 percent of the City's budget. Assuming some permanent reductions to ongoing labor costs in , the GAO's Four-Year Budget Outlook projects that there will be a $281.0M shortfall in based on current factors. Projected shortfalls continue through All estimates are subject to change. While these projections are better than they were a year ago, they still indicate that the structural deficit lingers - 7 -

9 SIGNIFICANT ISSUES and has not yet been fully addressed. Projected shortfalls in future years are driven not only by increased salary costs but from combined increased payments for sworn and civilian pensions and health care costs. The shortfalls projected for and highlight the urgent and critical need for permanent, ongoing labor cost reductions. POLICY CONSIDERATIONS Compliance with Financial Policies: In the GAO's Supporting Information for the Budget and Finance Committee, the CAO reports on the Proposed Budget in comparison with the following areas of the City's Financial Policies: City Financial Policies Mayor's Proposed Budget Reserve Fund The Reserve Fund shalt be 5% of the Reserve Fund rate is 4.075% of General Fund revenues, as General Fund Budget. The policy compared to 2.91% for Adopted Budget. (See provides for a phasing-in period and discussion on the Reserve Fund.) requires increasing the percentage deposited into the Reserve Fund beginning in Capital & To the extent possible, the City shalt Provides 0.15% of General Fund revenue for capital and Infrastructure annually budget 1% of General Fund infrastructure projects {$6.51 M). A 1% investment would revenue to fund capital or infrastructure require an additional $3727M to be appropriated to capital improvements. or infrastructure improvements. One~Time Revenue To the extent possible, current A total of $190.28M in one-time revenue or other funds and operations will be funded by current cash from deferred expenditures is programmed in revenues. The use of unencumbered 12, including an $18.2M transfer of surplus SPRF revenue prior year balances in all funds shall be and the issuance of $42.62M in commercial paper. Of the scrutinized and carefully limited to be total amount, $129.46M is made available through one-time used primarily for one-time expenditure deferrals by reducing the number of working expenditures. One-time revenues will days (i.e., furlough days) ($76.67M), deferring projects in only be used for one-time expenditures. the Capital Improvement Expenditure Program ($37. 78M), and by reprogramming MIClA interest income from the Police Administration Building project ($15.01 M). One-time expenditures of $35.41M are included in the proposed budget Once one-time expenditures are deducted from one-time revenues, there is an excess of $154.87M in onetime financial resources budgeted in for ongoing expenditures. Pension and When the required contribution rate A credit has not been earned; therefore funding is not set Retirement Funding falls significantly below the normal cost aside in accordance with this policy. rate, the City will set aside the incremental rate amount for one-time expenditures only. Budget Stabilization This fund is intended to prevent A total of $0.50M is included in This is the same Policy overspending during prosperous years amount provided in and provide resources to help maintain service levels during lean years

10 SIGNIFICANT ISSUES One Time Revenue/Expenditure Deferral: The Supporting Information to the Budget and Finance Committee states that the Proposed Budget includes $18.2M in one-time revenue, $129.46M in one-time expenditure deferrals and $42.62M in one-time source of fund adjustments for a total of $190.28M in one-time cash and deferrals. As a result, one-time financial resources of $154.87M are budgeted for ongoing expenditures. The use of onetime sources of revenue and cash from deferred payments should be considered very carefully as the economic downturn and sluggish recovery will limit growth of ongoing sources of revenue. One-Time Revenue identified in the Proposed Budget represents a transfer of $18.2M in funds from the Special Parking Revenue Fund. One-Time Expenditure Deferrals include $129.46M from employee furloughs ($76.67M), deferrals in capital improvement projects ($37.78M) and use of interest earnings from unspent bond proceeds resulting from the Police Administration Building project to partially offset debt service ($15M). One-Time Source of Fund Adjustments includes the use of commercial paper (borrowing) to pay the second installment of Early Retirement Incentive Program (ERIP) payments ($21.0M) and for Working Capital ($21.42M) to pay unspecified expenses, presumably for General Fund debt obligations. One-Time Expenditures include $35.41M for the following: City Administrative Officer ($0.30M) for an Asset Management Study; Office of Finance ($0.16M) for Financial Management System Centralization; Fire Department ($6.42M) made up of the following: Brush Clearance ($1.0M), resolution positions for the Deployment Plan ($4.65M), Network and Technology Infrastructure ($0.37M), and Paramedic Medical Equipment ($.0.40M); General Services ($0.09M) for FMS/SMS Interface Support; Information Technology Agency ($0.29M) for Public Safety Systems Development and Support; Planning ($0.26M) for Northeast LA New Community Plan; Police ($3.2M) made up of the following: Digital In-Car Video System ($0.39M), Groupwise Software Licenses ($0.26M), and Technology Related Contracts ($2.55M); Transportation ($0.11 M) for Los Angeles Unified School District Construction; Unappropriated Balance ($3.58M); and Various ($21.0M) for ERIP Payouts. Functional Transfers: The Proposed Budget implements functional transfers which have not yet been considered by the City Council, including: consolidation of the Office of the Treasurer with the Office of Finance; the transfer of Client Services Technology Support from the Information Technology Agency (ITA) to the Community Development Department; the transfer of Consent Decree Systems Support from IT A to the Police Department; the transfer of the Illegal Dumping and Debris Removal, Weed Abatement and Waste Receptacle Programs from the Bureau of Street Services to the Bureau of Sanitation; the transfer of the Special Events Perm it Office from the Bureau of Street Services to the Department of Transportation; and, the transfer of the Electrical Clearance function from the Department of Water and Power to the Bureau of Street Lighting

11 SIGNIFICANT ISSUES Funding Shifts: The Proposed Budget includes various funding shifts, primarily from the General Fund to various special funds for Transportation, General Services, Information Technology Agency, City Clerk, Sanitation, Engineering and numerous other departments. These shifts balance the General Fund budget but could create future consequences within those funding sources. Furlough Program: The Proposed Budget includes 36 furlough days for civilian employees scheduled to receive cost of living adjustments on or after July 1, 2011 and 26 furlough days for other civilian employees. The net pay reduction for both groups is estimated to be ten percent and salary accounts for departments have been adjusted to reflect this reduced number of working days. Consistent with the furlough program that was adopted in , the following proprietary departments, special fund departments and other departments and groups of employees are proposed to be exempted from furlough in : Proprietary Departments: Airports, Harbor, Water and Power, Los Angeles City Employees' Retirement System, Los Angeles Fire and Police Pension System Special Fund Departments and Bureaus: Building and Safety (Enterprise Fund positions), Community Development, Housing, Bureau of Sanitation (except Stormwater support positions), Bureau of Street Lighting, Other Departments: Convention Center, El Pueblo, Library, Zoo Groups of Employees: Animal Services field positions (subject to 13 unpaid days only), General Services Heliport Division, Traffic Officers and Senior Traffic Supervisors Efforts are underway to reach negotiated solutions with civilian labor organizations to eliminate the need for furloughs by reducing structural and one-time costs such as pensions and healthcare costs. In the absence of ratified agreements, the furlough program included in the Proposed Budget must be implemented beginning July 2011 to balance the budget. State Budget Impact: In March 2011, the State Legislature approved and the Governor signed measures that cut approximately $11.2B of the estimated $26B State deficit. This action included the elimination of State funds for local libraries, resulting in the reduction of approximately $1.3M to the Los Angeles Public Library. The Governor also proposed elimination of all redevelopment agencies, but that proposal did not pass the legislature. These initial cuts principally addressed the State deficit in fiscal year The remaining deficit of approximately $15B in fiscal year remains to be addressed. The Governor will release a revised budget for fiscal year in May It is expected to include new revenue projections that recognize previously unexpected revenue growth. The May revision is also expected to include additional proposals to address the deficit, as well as previous proposals that were not approved by the Legislature last month. The elimination of redevelopment agencies remains one of the key issues under consideration. Proposals related to redevelopment, such as those included in a February 2011 letter from the California Legislative Analyst's Office, may attempt to recognize additional redevelopment funds as State revenues. The other key unresolved issue is whether tax extensions or increases will be placed on a special ballot for voter - 10-

12 SIGNIFICANT ISSUES REVENUES consideration. If the Governor and Legislature do not realize additional tax revenues through these extensions and increases, they will need to adopt a budget which incorporates significant budget cuts. Additional impacts to local governments are still to be determined. Revenue Outlook: We have reviewed the revenue estimates and believe these are in line with general trends. However, there may be some which could be impacted by the recent disaster in Japan and others which are economy sensitive and will require careful monitoring throughout the year. DWP Power Revenue Transfer: The transfer from the Power Revenue Fund continues to be based on a percentage of prior-year gross operating power revenue, not to exceed net income. The current rate is eight percent, as established by the Board of Water and Power Commissioners. The amount included in the Proposed Budget for the Power Revenue transfer is $254.0M, a decrease of $4.8M from the current year estimated receipt of $258.8M. The recent passage of Charter Amendment J requires the Department of Water and Power to submit a preliminary budget for the upcoming fiscal year to the City Council by March 31 each year, allowing the Council to consider the impacts of the DWP budget on the City. This portion of the Charter Amendment will be effective on July 1, 2011, and its provisions will be applicable for the Fiscal Year budget consideration. Charter Amendment J also provides procedures for making surplus transfers from the Power Revenue Fund to the City. This provision will be in effect for the fiscal year. Fee Increases: A variety of fee increases are recommended in the Proposed Budget, including the following: Department of Building & Safety: General Fund Revenue is expected to increase by $1.3M, mostly from the Code Violation Inspection Fee authorized in December 2010 (CF ). City Attorney: As part of the proposed Deferred Entry of Judgment program, the City Attorney would be authorized to impose an administrative fee of $65 per case. Based on an estimated 8,000 misdemeanor and/or code enforcement cases expected in this program in , $0.52M in revenue is reflected in the Unappropriated Balance until those revenues are recognized. Fire Department: The Proposed Budget includes additional revenues from LAFD Industrial Building Inspection fees ($1M) and Above Ground Inspection fee ($0.15M) Information Technology Agency: The Proposed Budget includes one unfunded systems position to implement major enhancements to the Business Assistance Virtual Network (BAVN). BAVN is a system that provides vendors with information on City contracting opportunities and requirements. While no details are provided, the Proposed Budget notes that the cost of the new position may be reimbursed by a new fee for access to this system that is currently under development. Treasurer: A Merchant Card Convenience Fee is proposed for all online and telephone credit card transactions, to cover the cost of these transactions and for - II -

13 SIGNIFICANT ISSUES the convenience of using an alternate payment method. $0.50M in revenue is reflected in the Unappropriated Balance until those revenues are recognized. Planning: The Planning Department would be authorized to increase fees to recover full overhead costs ($0.50M) Zoo: A $2 increase in the Admissions Fee is proposed for and is projected to generate $1.44M. In addition, the City Attorney is instructed to prepare ordinances for a new special service fee for police permits consistent with the fees recently adopted by the Police Commission and to prepare ordinances amending the sign ordinance to allow the Zoo to maximize special fund revenue from advertising opportunities at the Zoo. Property Based Revenue: Property-related revenues comprise nearly one-third of City General Fund revenue. The County Assessor forecasts a 0. 7% increase in Countywide assessed values for Relative to the revised forecasts, property tax revenues are projected to increase by $12 million (0.9%) to $1.44B. However, after making an adjustment for a one-time event, this is still $55M below property tax receipts. In , property taxes are forecast to grow by 2.1 percent to $1.47B, and grow by 3.1 percent in to $1.51 B. With home prices and sales continuing to fall, there is still some uncertainty about the trend in property tax revenues, since property taxes are collected more than a year after valuations are determined. Documentary Transfer Tax: The documentary transfer tax is more volatile. Projections in the Proposed Budget are based on modest growth in the local real estate market. Tax revenue from the Documentary Transfer Tax, which is generated through the sale of real property and fluctuates based on purchase price and sales volume, reached a height of $217M in By , this revenue source had fallen to $84M for For , the Proposed Budget anticipates a five percent increase in Documentary Transfer Tax revenues from $100M to $105M. This funding source is projected to grow by ten percent in each of the next two fiscal years, to $117M in and $129M in Transient Occupancy Tax: The Transient Occupancy Tax (TOT) is one revenue which has shown increased growth in recent months. However, this improvement may be tempered somewhat by the recent disaster in Japan and other factors which could have an impact on local tourism. TOT revenues should continue to be monitored along with all other revenue sources. Reserve Fund: The Proposed Budget projects a $177.2M Reserve Fund, consisting of a $120.4M Emergency Reserve and a $56.8M Contingency Reserve. This equates to 4.05 percent of General Fund revenues on July 1, The Adopted Budget Reserve Fund was $127.19M, which equated to 2.91 percent of General Fund revenues. However, the actual Reserve Fund on July 1 was $171.3M or 3.91 percent of the General Fund. The projected Reserve Fund at the end of fiscal year is $149.2M or approximately 3.4 percent of General Fund Revenues

14 SIGNIFICANT ISSUES In March 2011, voters approved Charter Amendment P which requires the establishment of two accounts within the Reserve Fund. The Emergency Reserve Account must be no less than 2.75% of General Fund receipts. Expenditures from this Account have limits detailed in Charter Amendment P. A separate Contingency Reserve Account must also be created as part of the Reserve Fund, with funding in this Account used to cover shortfalls in City revenue or pay for unexpected expenses. Separate from Charter Amendment P, the City's Reserve Fund Policy provides for a phase-in of increasingly larger percentages of the General Fund to be deposited into the Reserve Fund, to reach a goal of five percent of General Fund revenues within ten years. The following chart illustrates the state of the Reserve Fund for the past five years: Actual Actual Actual Estimate Proposed Contingency Reserve $6.3M $40.6M $31.9M $51.6M $56.8M Emergency Reserve ;l!122.0m ;l!125.2m 121.0M ;l!120.3m ;l!120.4m Total on July 1 of FY $128.3M $165.8M $152.9M $171.3M $177.2M % of General Fund 2.89% 3.64% 3.45% 3.91% 4.05% Amount Transferred to Balance the Budget $71.23M $0 $0 $3.6M $0 The Emergency Reserve Account in the Proposed Budget is $120.4M, which equates to 2.75% of General Fund Revenues and, therefore, complies with the requirements of Charter Amendment P. The Proposed Budget does not rely on a Reserve Fund transfer, but the Estimated Budget has an anticipated transfer of $3.6M. Any transfers from the Reserve Fund are considered a one-time revenue source. American Recovery and Reinvestment Act (ARRA): From February 2009 through April 2011, approximately $616M in federal stimulus grant funds from the American Recovery and Reinvestment Act (ARRA) have been awarded to the City, in addition to $438.7M in Recovery Zone Bonds. ARRA funds are dedicated to a specific purpose in order to spur economic activity and long-term growth and to create and retain jobs. As such, the funds cannot be used to reduce the City's General Fund budget deficit or supplant local funding. Most grant lifecycles are for a period not to exceed three years. As of April2011, the City has approximately 110 projects which are funded by ARRA funds. The City has obligated 55 percent of the City's awards, and has expended approximately 40 percent of funds

15 SIGNIFICANT ISSUES Summary of ARRA funds awarded to the City: $118M for shovel-ready construction/transportation-related projects included street resurfacing and bridge-reconstruction $1OOM for the Housing Department Foreclosure Prevention Program and Neighborhood Stabilization $60.2M for DWP to develop smart grid demonstration projects that increase energy while decreasing energy costs $42M for the Community Development Department, in conjunction with the Workforce Investment Board, to provide job training programs for summer youth and adult dislocated workers $37M in Energy Efficiency and Conservation Block Grant funds $33M to allow the Housing Authority to renovate existing public housing units $19M in Community Development Block Grant funds $16M to the Police Department to help fund 50 additional police officers $1 0.8M to LAX, the majority of which will be used to construct a new Aircraft Rescue Firefighting Facility $7.5M to expand broadband access at public libraries, community and senior centers, and WorkSource centers $9.2 million to increase energy efficiency and reduce energy costs for low income families $6.1 M to Public Works/Sanitation for Clean Water-related projects $2M to the Port of Los Angeles for Clean Diesel-related projects $1M to the DWP for Energy Research and Demonstration programs $1M to Community Development Department for a Green Building Pre Apprenticeship Program $4. 7M to Community Redevelopment Agency for a Commercial Retrofit Municipal Program 35M for DWP to enhance the capacity of public water systems to deliver safe and affordable drinking water $29M for the Housing Department to aid in providing Emergency Shelter programs $30.5M in supplemental Justice Assistance Grant Program funds to the Mayor's Office, and the Fire Department for gang reduction programs, community law enforcement, county law enforcement programs, and an interoperable communications system. $1.4M to the Police Department for Internet Crimes Against Children Task Force Program. $6M to the Harbor Department for a Port Security Fiber Optics Project. $1 M to the Community Development Department for Green Jobs Corps Program. $0.03M to the Cultural Affairs Department for arts grant programs $1.1 M to the Department of Aging for Senior Nutrition Programs $0.05M to the Department of Aging for Senior Community Services Programs $8M to the Department of Transportation for purchase of commuter buses $0.07M to Public Works/Sanitation for Bike Safe Grating Replacement - 14-

16 SIGNIFICANT ISSUES Further, the following is a summary of the Recovery Zone Bond Financing Program funds, provided through ARRA: $179.5M in Recovery Zone Economic Development Bonds for low-interest bond financing for public sector development, or re-development projects in specified areas of the City (not included in grant fund total) $259.1 Min Recovery Zone Facility Bonds for low-interest bond financing for private sector development, or re-development projects in specified areas of the City (not included in grant fund total) Solid Waste Resources Revenue Fund (SWRRF): The Solid Waste Collection, Transfer, Recycling, Recovery of Waste Resources and Disposal Fee (Solid Waste Fee) is imposed on all single-family dwellings in the City and upon multiple-unit dwellings for which the City provides refuse collection services. All receipts from the Solid Waste Fee are deposited into the Solid Waste Resources Revenue Fund (SWRRF) and are used for principal and interest payments, lease payments, direct acquisitions and associated expenses to acquire and repair sanitation equipment used in the collection and disposal of household refuse. General City Purpose funding in the amount of $8.0M is included in the Proposed Budget to reimburse the SWRRF for costs attributed to the Solid Waste Fee Lifeline Rate Program. On February 3, 2010, the Council and Mayor approved a fee revision to this Program that reduces the subsidy to 30 percent of the fee, phased in over a two-year period beginning in Fiscal Year The Proposed Budget reflects this rate revision. The Proposed Budget increases funds by $43.65M for capital expenses for the Bureau of Sanitation; funding needs will be evaluated and determined on a priority basis. Funding for contamination reduction education and outreach is eliminated; funding for this line item is currently administered within the Bureau of Sanitation's operating budget. Measure R: In November 2008, Los Angeles County voters approved Measure R, which provides an additional one-half cent sales tax increase over the next 30 years to make a variety of improvements to the County's transportation system. As part of this funding stream, the City receives an annual15 percent Local Return share, which is based on the City's percentage share of the population in Los Angeles County. The City also receives an allocation from a 20 percent share of the revenue collected for transit capital and operations. Since the Budget, the annual budgets have set aside a three percent local match requirement for regional Measure R projects in the City of Los Angeles. The Proposed Budget sets aside $5.30M to continue to front-load the local match requirement for Metro's Measure R projects in the City of Los Angeles. Additionally, the Proposed Budget continues to appropriate Measure funds in the amount of $3.30M for the Bureau of Street Services to augment the City Sidewalk Access Ramp construction program that, combined with the Bureau of Street Services' base funding, an estimated total of 1,560 access ramps will be constructed

17 SIGNIFICANT ISSUES The Proposed Budget anticipates the City will receive just under $49M in Local Return funds and $2.5M in transit capital and operations funds. On April 28, 2010, the Council approved the annual allocation of ten percent of Measure R funds for the Bicycle Program (five percent) and Pedestrian Program (five percent), which are reflected in the Proposed FY Budget. Funding in the amount of $27.40M is provided for front funding for three ATSAC projects that were awarded Proposition 1 B grant funding. This funding will likely be delayed due to the State's financial crisis and the projects will be ready for construction in early FY The Proposed FY Budget also provides funding for the Department of Transportation's annual sign replacement program and contingency funds for emergency needs. As part of the Exposition Light Rail Project, the Proposed Budget provides $3M for the construction of an at-grade crossing at Sepulveda Boulevard between Tennessee Avenue and Pearl Street. EXPENDITURES Efficiencies/Reductions/Other Changes and Adjustments: The Mayor's Proposed Budget includes $62.07M in reductions and efficiencies affecting a wide variety of programs, $1 0.97M in reduced services and $257.43M in other changes and adjustments. A few of note include: Deletion of vacant positions in various departments and offices ($-25.2M); Animal Services closure of the Northeast Care Center ($-0.06M); a reduction in the Fire Department working in concert with the new Fire Department Deployment Plan ($-12.47M); General Services Fleet Reduction Plan ($-1.50M); use of interest earnings on bond proceeds from the Police Administration Building ($-15.0M); Information Technology Agency elimination of the Swing Shift ($-0.47M); Public Works Board Graffiti Abatement Services ($-0.50M); Transportation crossing guard services ($-2.0M); and, various adjustments in the budgets of elected officials, including Mayor ($-0.09M; -3.82%); Council ($-1.90M; -9.35%); Controller ($-0.03M; -0.22%) and City Attorney ($9.05M;10.54%). Potentially Underfunded Accounts: There are several accounts that may not have sufficient funding based on current expenditure patterns, as indicated in the following chart: Potentially Adopted Estimated Proposed Underfunded Budget Expenditures Budget Comments Accounts Fire Overtime $61M $93M $64M May be insufficient based on current expenditure patterns LAPD Overtime $9M $18M $16M May be insufficient based on current expenditure patterns - 16-

18 SIGNIFICANT ISSUES Petroleum $35M+$2M in $37M $35M+$4 May be insufficient if the UB = Min the fleet service $37M UB = reductions not $39M achieved or if prices continue to elevate significantly Outside Counsel $3.8M N/A $2.25M The Costs Proposed Budget does not provide an estimate of expenditures Liability Claims $49M $49M $49M May be sufficient based on current expenditure patterns, barring unexpectedly large judgments or settlements Outside Counsel Expenditures: The Proposed Budget provides $2.25M in the Unappropriated Balance for City Attorney Outside Counsel contracts for both general litigation and Workers' Compensation, which is $1M less than the amount set aside in the Adopted Budget Funding is provided for existing sworn Workers' Compensation cases only, because all new cases are being assigned to in-house staff, with the exception of conflict cases that cannot be handled by the City Attorney. Liability Claims/Judgment Obligation Bonds: A total appropriation of $48.85M is proposed for Liability Claims in , which is the same base amount as Funding between accounts is shifted slightly, as the amount allocated to pay claims under $100,000 is reduced by $0.91 M while the account used for claims exceeding $100,000 is increased by this same amount This estimate also includes $2M in funding for Attorney Conflict Panel cases managed by the City Administrative Officer. The Proposed Budget allocates $9.03M for the Judgment Obligation Bond Debt Service Fund to pay the debt service in on bonds issued to finance liabilities resulting from adverse decisions by the California courts in the Harper case ($20.50M) and the May Day settlement ($50.9M). The following chart illustrates the Debt Service Budget for outstanding Judgment Obligation Bonds, including the final payment for the Kimpel settlement bonds: - 17-

19 SIGNIFICANT ISSUES Budget Proposed Kimpel Settlement Harper Settlement May Day/Bekeredjian $1.43M $2.54M $6.80M $ -- $2.54M $6.49M $ -- $ -- $ -- $2.54M $2.54M $2.54M $6.49 $6.49M $6.49M Total $10.76M $9.03M $9.03M $9.03M $9.03M Partially Funded/Unfunded Positions: The Proposed Budget includes a total of 203 partially funded and unfunded positions. Of that number, 123 are authorized without funding. It is important to note that full year funding will be required to continue these positions beginning in Changes in Authorized Positions/Deletion of Filled Positions: The Proposed Budget deletes 675 net positions, consisting of the deletion of 697 regular authorities and the addition of 22 resolution authorities. Of the 697 positions, 82 are currently filled. Resolution authorities are typically assigned to positions that are limited-term or temporary positions, generally associated with a limited duration project or funding source. Unappropriated Balance: The Unappropriated Balance (UB) includes funds identified for specific purposes, including contingencies for accounts that may experience shortages, such as petroleum products, or for projects that would need funding during the fiscal year, but are not fully developed at the time the budget is adopted. The Proposed Budget includes $16M in the UB, which is a $-83.08M decrease from the allocation of $99.08M. The Proposed Budget earmarks funds for the following:,.. City Disaster Planning Study ($0.50M) to conduct phase one of a study to update the City's emergency operations plan.,.. Deferred Entry of Judgment ($0.52M) for the City Attorney's new diversion program and anticipated revenues.,.. Equipment Expenses, Alterations and Improvement ($3.58M).,.. GSD Petroleum Products ($4M) as a contingency to address price increases and volatility in the petroleum products market, which is a $2M increase from ,.. Information Technology Infrastructure Outsourcing Study ($0.25M).,.. Inspector General of Collections ($0.25M).,.. Merchant Card Convenience Fee Program ($0.50M) that the Treasurer expects to implement in ,.. Funding for Neighborhood Councils ($0.81 M) anticipated to be certified in for purposes designated by each neighborhood council.,.. Outside Counsel Including Workers' Compensation ($2.25M), which is $1M less than , for outside counsel attorneys to assist in litigation and transactional matters and for all sworn workers' compensation cases

20 SIGNIFICANT ISSUES Police Google Mail Software License ($0.57M) in the event that the Department transfers from Groupwise to Google during Redistricting Costs for Council and LAUSD ($1.50M). Software License Claim ($1M) for a potential software license claim that is currently under review by the City Attorney... Water and Electricity ($1M) as a contingency to account for the impact on the City's utility costs due to the Department of Water and Power's pending rate adjustments. Police Department:.. Police Sworn Hiring: To offset attrition, the Proposed Budget adds funding to hire 361 Police Officers. Of the number hired, 315 are projected to graduate from the Academy, which will offset the 315 sworn officers projected to leave the Department. Deferred Retirement Option Plan (DROP): In , up to 91 officers who enrolled in DROP will have reached the maximum five-year period of participation and must retire. In , up to 112 officers will have reached the maximum fiveyear period. Police Share of Unrestricted Revenue: LAPD's share of unrestricted revenue will increase from 52.6% in to 53.0% in the Proposed Budget. While the percentage does not appear significant, each one percent equates to approximately $37M. Unrestricted revenue are General Fund receipts which may be used for any municipal purpose... Police Vehicles: The Proposed Budget does not provide funding for new or replacement vehicles. In-Car Video Cameras: Funds totaling $5.5M were budgeted in to purchase video cameras. In , the cameras were acquired and installed in patrol cars at four stations in South Bureau. During field testing in , several technical issues were encountered requiring resolution by the vendor, IBM. In early , implementation in South Bureau was completed. Implementation of Phase II in Central Bureau is currently under evaluation. Debt service of $2.54M is included in the Capital Finance Administration Fund for Phase II... Consent Decree and Transition Agreement: On July 17, 2009, the Federal Court terminated the Consent Decree and implemented a Transition Agreement (TA) under the Court's jurisdiction that transferred oversight of the Los Angeles Police Department back to the Police Commission, and continued scrutiny over: (a) implementing programs/policies to eliminate biased policing; (b) compliance with a narrow provision of the Consent Decree on the use of the Training, Evaluation and Management System (TEAMS II); (c) management of Gang Units; and (d) implementing Financial Disclosure provisions. TheTA termination date for Biased Policing, TEAMS II, and Gang Units was January 17, The termination date for Financial Disclosure is July 17, April27,

21 SIGNIFICANT ISSUES DNA Backlog: The Proposed Budget provides $1.80M for contractual services to meet caseload demands in the Scientific Investigation Division. Fire Department: New LAFD Deployment Plan: The new Deployment Plan proposed by the Fire Department is a three-year plan with an estimated $190M in savings. The new Plan replaces the Modified Coverage Plan (MCP) that was in place since The new plan does not require any new hiring. Replacing the current rotating closures of the MCP with this structural change of company closures stabilizes the Department's deployment, provides greater consistency of command and minimizes fire company continuity issues. All1 06 fire stations remain open under the new Deployment Plan. 64 fire stations have no change and 10 fire stations have the addition of a firefighter/paramedic to an existing resource. There will be minimal increase to the average response time. The long-term structural change includes the deletion of 318 sworn regular authorities over three fiscal years. 51 vacant authorities are not continued and 77 are restored as partial-year resolution authorities in line with firefighters retiring through the Deferred Retirement Option Plan (DROP). The remaining 190 are continued for the full year as resolution authorities, which will be deleted over the following two fiscal years through attrition. The Plan enhances Emergency Medical Services throughout the City by adding ten paramedic assessment resources and the Proposed Budget provides funding ($0.40M) for additional medical equipment and supplies for these additional resources. The Plan also realigns existing resources to meet workload demands. No firefighters will be laid off due to this Plan. Deferred Retirement Option Plan (DROP): In , up to 76 firefighters who enrolled in the DROP program will have reached the maximum five year period of participation and must retire. In , up to 125 firefighters will have reached the maximum five year period. Constant Staffing Overtime: The Proposed Budget includes $63.85M for constant staffing overtime, which is an increase of $3.0M from Professional Standards Division: Nine resolution authority positions, including eight Special Investigators, are continued with funding. These positions were approved by the Council during fiscal year Homeland Security: The Proposed Budget continues funding ($1.14M) and resolution authority for one sworn position and six sworn positions that are regularized, and adds three sworn regular authorities without funding. Urban Search and Rescue (USAR) Team: The Proposed Budget adds $1.0M in Variable Staffing Overtime for additional training for the USAR Team. Funds will be used to pay overtime for staff who replace those attending training for this team. Fire Vehicle and Equipment Replacement: The Proposed Budget provides $6.83M in MICLA financing for 34 ambulances for the Fleet Replacement Program. Ambulance Billing: The Proposed Budget continues funding and adds six civilian regular authorities for Electronic Field Data Capture System and Emergency Services Billing System contract administration and compliance. The Proposed -20-

22 SIGNIFICANT ISSUES Budget assumes $67.3M in ambulance billing revenue. Despite delays encountered by the Fire Department in implementing efficiencies from handheld computerized billing devices and the use of an outside contractor for billing, ambulance revenues appear to be returning to plan and the department reports it will reach budget in Public Works Sanitation: The Proposed Budget includes the transition of refuse collection from 541,000 multifamily units from a permit-based open market system to a franchise structure to augment the City's waste diversion and recycling efforts, among other benefits. The Proposed Budget also transfers the Waste Receptacle Program and the Illegal Dumping and Debris Removal Program from the Bureau of Street Services. The Watershed Protection Division includes thirteen positions without funding and one position in the Solid Waste Integrated Resources Plan is eliminated in an effort to phase down staffing as the program concludes its six-year term in Public Works Street Services: Reorganization of the Bureau: The Proposed Budget reorganizes the Bureau of Street Services to improve services and efficiencies. This proposal includes the transfer of weed abatement, illegal dumping, debris removal and waste receptacle disposal activities to the Bureau of Sanitation. Pavement Preservation Plan: The Bureau of Street Services is responsible for maintaining the City's 6,500-mile street network through the Pavement Preservation Plan. The Pavement Preservation Plan of approximately 735 miles will maintain the current condition of the City's streets. The Proposed Budget provides $94.86M for the Plan, which is an increase of $4M from A portion of these additional funds will be used to fill an additional 50,000 potholes. Funding for the Pavement Preservation Plan is provided by Special Gas Tax, Proposition C, Street Damage Restoration Fee, ARRA and State Proposition 1 B Infrastructure Bond funds. A onetime expense amount of $5. 70M is provided from the Proposition 1 B Infrastructure Bond Fund in support of the 735-mile Pavement Preservation Plan. Reductions in other sources of funds require Proposition 1 B to offset those cuts and continue to allow the Bureau to meet the following targets: 235 miles for resurfacing, 400 miles for slurry sealing and 100 miles of crack sealing in order to maintain the City's roadway network. After June 2012, ARRA funds will be spent in accordance with Federal expenditure deadlines and will no longer be available. After June 2013, all State Proposition 1 B funds will be spent in accordance with State expenditure deadlines and will no longer be available. These funding reductions will require the City to find alternative funding sources to maintain the 735-mile Pavement Preservation Plan and prevent the City street system from deteriorating from its current condition. Street Resurfacing and Reconstruction and Maintaining Streets Programs: Appropriations for these programs are decreased to provide funds to the Department of General Services to maintain the Bureau's vehicles that are necessary for the 735-mile Pavement Preservation Plan. This action was provided April27,

23 SIGNIFICANT ISSUES through an interim Council action in Proposition A provides $1.79M to construct 30 concrete bus pads and Measure R provides $3.96M to construct an estimated 1,560 ADA sidewalk access ramps. Department of Transportation: Funding Realignments: The Proposed Budget realigns funding source for 35 positions, with annual salaries totaling approximately $3.0M and various expenses totaling approximately $2.9M, from the General Fund to the following special funds: Proposition C, Traffic Safety Fund, Gas Tax Fund and MeasureR. Crossing Guards: Funding is reduced within the Traffic Safety Fund to a level that is sufficient to support the current level of crossing guard staffing. Savings are reprogrammed to provide for the direct costs of 27 existing positions, previously funded through the General Fund, that perform critical traffic control infrastructure repair, maintenance and installation. Part-Time Traffic Officer Program: Approximately $1.68M is transferred from the Department's salaries account to provide funding for a Part-Time Traffic Officer program to provide a greater number of traffic officers at a lower cost. Anticipated revenue from the program is $9.0M. Special Events Permit Office: The Proposed Budget also reorganizes the Bureau of Street Services and transfers the Special Events Permits Office to the Department of Transportation to create efficiencies given the Department's recent success in automating manual processes, particularly the billing procedures for the special events process. Preferential/Overnight/Oversized Parking District Program: The Proposed Budget continues funding and adds five regular authority positions to continue the Preferential/Overnight/Oversized Parking District Program and moves this Program to the Overnight Parking Revenue Fund (OPRF). All revenue generated in support of this function will be deposited into the OPRF. Library Department: Charter Amendment L: In March 2011, Los Angeles City voters approved a measure to amend the City Charter and gradually increase the Charter mandated appropriation from the current level of percent in the City to percent of the assessed value of all property over the next four fiscal years. This Charter amendment would also require that the Library Department pay for all of its direct and related costs, including employee health, dental, and pension costs and building maintenance, security and utility costs beginning on July 1, In , the Library will receive an appropriation equal to percent of the assessed value of all property. The Proposed Budget reflects an increase of $13.45M. It should be noted, however, that the calculation of the increase as a result of the passage of Measure L may be overstated by approximately $1.7M, resulting in an allocation which exceeds the amount prescribed by the Charter. The Charter provision does not preclude the Mayor or Council from allocating additional General Fund dollars to the Library Department. -22-

24 SIGNIFICANT ISSUES Restoration of Six-Day Schedule: Funds are provided to restore service hours to a six-day schedule. Payment of Related Costs: The Proposed Budget includes the payment of a portion of Library related costs, consistent with Charter Amendment L which includes pension and employee health benefits ($18.22M) and utility and maintenance ($10.0M). ERIP payments are also included ($1.94M). Department of Recreation and Parks: Recreation Programming and Maintenance: The Proposed Budget adds funding for ten resolution authorities for recreation programming and maintenance at various new and expanded facilities and outdoor improvements. Housing Authority sites: Funding in the amount of $1.21 M has been added for maintenance and recreational programming at seven Housing Authority of the City of los Angeles (HACLA) sites: Nickerson Gardens, Imperial Courts, Jordan Downs, Mar Vista Gardens, Ramona Gardens, Pueblo del Rio and Aliso-Pice. Related Costs: The Proposed Budget includes the payment of a portion of Recreation and Parks related costs which includes pension and employee health benefits ($19.87M), Refuse Collection ($3. 7M) and the full cost of the department's water and electricity usage ($16M). As a result, funding for other departmental programs is reduced. ERIP payments are also included ($4.3M). General Services Department: Fleet and Fuel Services Reductions: The Proposed Budget deletes funding and 10 vacant positions for fleet services, and eliminates 450 pieces of equipment in the City's fleet. Departments will be required to identify a five percent reduction in their vehicles and equipment in order to meet anticipated funding reductions. Custodial Services Workload Adjustment: The Proposed Budget deletes funding and authority for 25 vacant custodial service positions that support 80 facilities in the North and South custodial districts. The resulting salary savings will be reallocated to contractual services to provide custodial services at these facilities. Metro Detention Center: The Proposed Budget adds funding ($1.32M) to provide Custodial and Building Maintenance services for the Metro Detention Center. Funding is also increased in the Water and Electricity Account ($0.39M) to support the facility. GSD Petroleum: The Proposed Budget provides $4 million in the Unappropriated Balance as a contingency to address price increases and volatility in the petroleum products market. Additional funding may be required in depending on increasing market prices. Information Technology Agency: Swing Shift Elimination: The Proposed Budget deletes funding and eight regular authorities that staff the Call Center's swing shift. The position eliminations will reduce the Call Center hours from the current 7:00a.m. - 10:00 p.m. to 8:00a.m.- 5:00p.m. -23-

25 SIGNIFICANT ISSUES Financial Management System Support: The Proposed Budget continues resolution authority for 15 positions that support the new Financial Management System (FMS), scheduled to go live in July The General City Purposes Budget provides funding for salaries and expenses ($9. 75M). Funding is provided for 11 of the 15 resolution authorities. Resolution authority is continued without funding for four positions. Cultural Affairs Department Partnering of Art Centers and Theaters: A Request for Proposals (RFP) to establish Public-Private Partnerships for City art facilities and theaters, including the Lincoln Heights Junior Art Center, Madrid Theater, Warner Grand Theater, and the Manchester Junior Arts Center and Vision Theater, is scheduled to be released in Funding for these facilities is proposed to continue service delivery until January 1, 2012, at which time the RFP process to select a qualified contractor should be completed. The Proposed Budget also allocates funds for Barnsdall Art Park and William Grant Still Art Center which were removed from the RFP process. Reduction in Grant Funding: Funding is reduced by approximately 18 percent in the Cultural Affairs Special Appropriations Account from $3.87M to $3.18M. The funds are typically provided to organizations and individuals for citywide art productions, festivals and other special events. Neighborhood Councils: The Proposed Budget reduces funding for each Neighborhood Council (NC) by ten percent from $45,000 to $40,500 and suspends the Council policy that allows each NC to rollover unspent funds that remain at the end of the fiscal year into NC accounts for the following fiscal year. It also postpones Neighborhood Council elections for two years from 2012 to This will defer the cost of conducting the NC elections. Funding ($0.12M) is provided in the Department of Neighborhood Empowerment budget for outreach to the Neighborhood Councils relative to the postponement of the elections. OTHER Fire and Police Pension Fund and Los Angeles City Employees' Retirement System (LAGERS) The City contribution to Pensions is $484.07M, an increase of $97.06M or percent, due to an increase in the contribution rate largely due to lower than expected investment returns in prior years (after smoothing). The Proposed Budget anticipates paying the entire contribution in July 2011 by funding the required contribution through the issuance of Tax and Revenue Anticipation Notes (TRANs). As a result, the Pensions Fund would gain additional interest earnings, which would reduce the required City contribution by 3.7% or $17.5M. The City's contribution rate also reflects recent policy changes extending the smoothing period from five to seven years, widening of the Market Value of Assets Corridor, a reduction in the assumed annual investment rate of return from 8 percent to 7.75 percent, and - 24-

26 SIGNIFICANT ISSUES changing the 10 percent medical trend assumption to three years. The System's funded ratio, using actuarial value of assets, decreased year-to-year from 89.4 percent to 83.3 percent as of June 20, The payment is estimated to be $66. 7M greater than , and is projected to further increase by $82.4M in The City contribution to LAGERS is $482.09M, an increase of $71.65M or percent, primarily attributable to the effect on the contribution rate of large deferred investment losses from the prior two years and a change in the covered payroll. The contribution rate also reflects recent policy changes enacted by the LAGERS Board to widen the Market Value of Assets Corridor and expand the asset smoothing period from five to seven years. The System's funded ratio, using actuarial value of assets decreased from 77.4 percent to 74 percent, as of June 30, The Proposed Budget anticipates paying the entire General Fund contribution ($394.6M) in July 2011 by funding the required contribution through the issuance of Tax and Revenue Anticipation Notes (TRANs). Proprietary departments will also fund their portion of the LAGERS contribution ($87.5M) in July Payment of the entire contribution in July will reduce the required City contribution by $17M. The estimated contribution is expected to increase by $53.8M in , and by an additional $39.4M in Human Resources Benefits and Workers' Compensation: The Human Resources Benefits and Workers' Compensation Fund provides for direct payments, exclusive of personnel and administrative costs, for various human resources benefits provided to City employees. The Proposed Budget includes $555.94M for the cost of human resources and Flex benefits for civilian and sworn employees, which is $10.21M over the appropriations. There is an overall increase of approximately 7.5 percent in the Civilian Flex program, which is lower than originally anticipated, due to plan design changes that reduced premium costs and eliminated Flex credits. Funding is based on no growth in the civilian workforce in Funding for Workers' Compensation is increased by approximately 4.27 percent that is attributable to medical costs associated with existing claims. There is an overall increase of approximately 2.3 percent in the Police Health and Welfare Program and 4.2 percent in Fire Health and Welfare Program due to an anticipated increases in plan rates. The FY Budget included additional funds for anticipated layoffs above the baseline for unemployment insurance program costs. The Proposed Budget reduces this funding by $14M to $8.90M to reflect a lower probability of layoffs. MICLA Debt Issue: The Capital Finance Administration Fund includes $202.48M for debt service cost for outstanding MICLA debt issued to date. This amount is $16.72M (7.6 percent) less than The decrease is mainly due to the proposed use of $15M in interest earnings from unspent bond proceeds that accumulated during the construction of the Police Headquarters Facility to partially meet debt service obligations. The Proposed Budget includes $10.52M for MICLA acquisitions including: Fire ambulances ($6.83M); ITA Antenna replacement ($0.35M); ITA Citywide network -25-

27 SIGNIFICANT ISSUES infrastructure upgrades ($2.2M) and Radio System upgrades ($0.4M); and upgrades to the backup systems at Data Centers ($0. 7 4M). It should be noted that the proposed MICLA acquisitions in the Proposed Budget, if approved, will not require further approval of the Council, unless directed by Council. The Proposed MICLA program also recommends borrowing $43M in MICLA Commercial Paper to fund one-time Early Retirement Incentive Program (ERIP) expenses ($21M), and unspecified General Fund working capital costs ($22M). This borrowing will be repaid over five years beginning in Based on assumed interest rates of 0.32% to 1.02%, the estimated debt service cost will be approximately $8.8M per year beginning in fiscal year , and the total interest cost to the General Fund over the five years will be approximately $0.96M Tax and Revenue Anticipation Notes (TRANs): The Proposed Budget includes funding totaling $895.69M to pay debt service on TRANs issued to fund the City's entire annual required contributions to the City Employees' Retirement System (LAGERS) ($401.02M) and the Fire and Police Pension Fund (Pensions) ($490.93M). In addition, $3.74M in funding is also included to pay interest costs for the issuance of TRANS to meet short-term cash flow needs occurring early in the fiscal year when certain revenues have not been received. The July 2011 payment of the entire annual contribution to LAGERS and Pensions will allow both Funds to earn additional interest to be used to discount the required City contribution without reducing the Funds' annual receipts. For comparison, $742.9M in TRANS debt service were authorized in the Adopted Budget and $665.53M in debt service was authorized in the Adopted Budget. New Initiatives: The Proposed Budget includes funding for the following new initiatives: Building and Safety: As Needed employment authority to meet peak workload demands City Administrative Officer: Asset Management Study City Attorney: Implementation of a Deferred Entry of Judgment Program Finance: implementation of a Merchant Card Convenience Fee Program for online and telephone credit card transactions Fire: implementation of a new Deployment Plan, overtime to replace staff training for a proposed national Urban Search and Rescue Team General Services: custodial and building maintenance services for LAPD's Metro Detention Center Information Technology Agency: enhancements to the Business Assistance Virtual Network (no funding provided), support and development for various public safety systems including e-subpoena, automated license plate recognition, graffiti control and vegetation management for fire prevention Neighborhood Empowerment: outreach services relative to the postponement of Neighborhood Council Elections until2014 Personnel Department: medical support for the Metropolitan Detention Center -26-

28 SIGNIFICANT ISSUES Planning: update of the Northeast Los Angeles (NELA) New Community Plan and the community Plan Implementation Overlay Bureau of Contract Administration: implementation of a Pubic Works Infrastructure Stabilization Policy Bureau of Sanitation: support for a new Multifamily Refuse Collection Franchise Program Transportation: implementation of a new Part-Time Traffic Officer Program Recreation and Parks: new and expanded facilities Contracting Proposals: The Proposed Budget provides for several contracting proposals that would affect a total of 83 positions, of which 36 are currently filled by City employees. The Northeast Care Animal Shelter is proposed to be a public private partnership venture that would affect 16 animal services personnel, of which nine positions are currently filled and seven are vacant. The Cultural Affairs Department is expected to issue a Request for Proposals in June 2011 for a partnership of one art center and four theaters to be effective January 1, 2012, which would affect two filled positions in the Department. Twenty-five vacant custodial personnel in the General Services Department are deleted in the Proposed Budget and the salary savings are reallocated to contractual services to provide services at 80 facilities that the vacant positions are currently assigned. The Proposed Budget also deletes 12 vacant building maintenance positions and the salary savings are reallocated to hiring hall accounts to provide critical services at facilities throughout the City. The debris removal and lot cleaning/weed abatement function, including 28 positions of which 25 are filled, is transferred to the Bureau of Sanitation from the Bureau of Street Services. Special Parking Revenue Fund (SPRF): The Special Parking Revenue Fund (SPRF) receives all monies collected from parking meters and City-owned parking lots in the City of Los Angeles, in accordance with Division 5 of the Los Angeles Administrative Code. In July 2009, the SPRF Ordinance was amended to allow the City Council to declare a surplus in the SPRF and transfer the amount to the Reserve Fund after providing for the payment of debt service and the cost of operations and maintenance. In November, 2010, the Ordinance was further amended to: make permanent the Council's ability to declare a surplus in the fund; require Council approval of a five-year operations and maintenance plan for the parking system prior to the declaration of a surplus; and specify that any funds declared surplus can only be considered a loan and must be returned to the SPRF within two years. The Budget proposes to suspend the loan repayment requirement on all surplus funds transferred during any fiscal year in which the City has declared a fiscal emergency and provides for a surplus transfer of $18.20M to the Reserve Fund. The Proposed Budget provides $7.09M for capital equipment purchases for new and continuing initiatives; however, $2.2M in capital expenditures that were included in the SPRF 5-Year Plan that was approved by the Council on April 13, 2011 (CF ) are not reflected. These changes include the elimination of new card/coin meters in low revenue areas and new -27-

29 SIGNIFICANT ISSUES enforcement technology sensors and in-vehicle equipment. Additionally, funding from new enforcement technology contractual services was also reduced. The Proposed Budget also assumes increased revenue from seven off-street parking facilities, consistent with a consultant study that recommended parking rate changes. A significant portion of this increase is the proposal to raise the parking rates at the Hollywood-Highland parking facility that has not yet been submitted for Council approval. Telecommunications Development Account (TDA): The Proposed Budget reduces by $0.26M funding for capital expenses for Channel 36, managed by the Los Angeles Cable Television Access Corporation (LACTAC). In , Channel36 received $0.51 M. This is part of a multi-year proposal to gradually eliminate all funding in subsequent years. Channel 36 broadcasts community based and public access programming. The Proposed Budget also includes several funding realignments which transfer eligible expenses from the General Fund to the TDA account. Consolidated Plan: On March 18, 2011, the Mayor and Council approved the 37th Program Year Consolidated Plan (Plan), which is made up of four Federal grants: Community Development Block Grant (CDBG), HOME Investment Partnership (HOME), Emergency Shelter Grant (ESG) and Housing Opportunities for Persons with AIDS (HOPWA). At the time the Plan was approved, the City's Federal entitlement allocations were unknown. Subsequent to approval of the Plan and the release of the Proposed Budget, the Department of Housing and Urban Development (HUD) released estimated/preliminary allocations. The Plan approved by the Council provides funds to various City departments, the Los Angeles Homeless Services Authority (LAHSA), and other contractors and community based organizations. Based on the estimated/preliminary HUD allocations, which have not been finalized, there would be decreases to the funding allocations included in the Plan approved by the Mayor and Council of approximately $6.49M in CDBG funds and $5.07M in HOME funds. The reduction in CDBG funding could adversely impact the City departments that receive CDBG funding, including Aging, Board of Public Works, City Attorney, Community Development, Disability and Housing, because of a need to reduce the overall funding allocations and reduce funding for public services and administration to comply with federal funding cap requirements. In addition, the Housing Department will be adversely impacted by the reductions in HOME funding. The estimated/preliminary allocations include an increase of approximately $1.20M in ESG funding, which provides funds to the Housing Department and LAHSA, and an increase of $0.06M in HOPWA funding. The CAO and CLA will be reporting on the impacts of the reduction in entitlement in a separate report. Exhibit H "Required Ordinance Changes and Other Budgetary Actions": Exhibit H outlines actions necessary to be taken by the Council and Mayor in order to implement the Proposed Budget. We note that there are a number of instructions for which the Council has already taken action. Additionally, there are a number of items that require - 28-

30 SIGNIFICANT ISSUES further explanation and/or context to determine whether they are necessary to implement the Proposed Budget, or are policy decisions affecting future budgets that should more appropriately be considered by Council policy committees outside of the annual budget approval process. For example, there are instructions to suspend the Special Parking Revenue Fund (SPRF) loan repayment requirement on all surplus funds transferred during any fiscal year in which the City has declared a fiscal emergency, which is inconsistent with current Council policy; instructions to the City Attorney to prepare and present an ordinance to establish metered parking in commercial loading zones located with City-designated Parking Meter Zones, with no detail on the locations of these new meters and implications to adjacent businesses; instructions to the CAO to report back on the City Attorney's proposal to establish a Deferred Entry of Judgment program that is assumed to be implemented in the Proposed Budget to achieve efficiencies and generate revenues; and instructions to Personnel to develop a streamlined process to enable departments to reacquire positions lost in the budget on an expedited basis, subject to the availability of funding and approval by Mayor and Council, which could counter efforts to address the City's on-going structural deficit. April27,

31 Department of Aging ($3.79M; 49 Total positions- 38 regular; 11 resolution) Detail of Department Programs, Page No. 1 Total Budget Change From : ($0.06M; 0 positions) Deletion of Funding for Resolution Authorities: -11 resolution authorities ($-1.09M), of which 11 are continued as follows: Senior Social Services, to be funded from CDBG (two resolution authorities; $0.13M) Family Caregiver Support, to be funded from Older Americans Act (nine resolution authorities; $0. 77M) Add funding to pay for the second ERIP payout ($0.07M) Reduce 36 working days for General Funded civilian employees that will receive a cost of living increase and 26 furlough days for the remainder, with certain exceptions ($-0.07M) Reduce funding in Salaries General (one-time) and shift staff to grant funded projects ($-0.2M) Department of Animal Services ($19.92M; 337 Total positions- 337 regular; 0 resolution) Detail of Department Programs, Page No. 11 Total Budget Change from : ($-0.43M; -26 positions) Deletion of Funding for Resolution Authorities: -36 resolution position authorities ($ M), of which 26 are regularized as follows: Shelter Operations Staffing (18 regular authorities; $1.33M) Administrative Hearing Program (two regular authorities; $0.16M) Management Realignment: Adjust position authorities by adding nine regular authoritiesincluding regularizing six positions previously filled as resolution authorities - and deleting nine other regular authorities (six regular authorities; $-0.28M). Long term leave: Regularize five authorities previously filled as resolution authorities, without funding, and continue those regular authorities and six others (for a total of 11) for employees on long-term unpaid leave (five regular authorities; $0.00M) Five resolution authorities are not continued for the Northeast Care Center (five regular authorities; $-0.06M) Delete one-time expense funding ($-0.09M) Add funding to pay for the second ERIP payout ($0.24M) Reduce funding in expense accounts to cover a portion of the obligatory salary increases for no net change ($0.00M) Delete funding and regular authorities for vacant positions (-21 positions; $-2.04M) Animal Control and Law Enforcement (15 regular authorities) Public Relations (one regular authority) Animal Medical Services (one regular authority) Call Center and Technology Support (one regular authority) General Administration and Support (three regular authorities) Reduce 36 working days for General Funded civilian employees that will receive a cost of living increase and 26 furlough days for the remainder, with certain exceptions ($-1.05M) - 30-

32 Reduce the salary savings rate from its current level of seven percent to one percent ($0.94M) Add funding for one-time expenses associated with transferring staff and resources from the existing South Los Angeles Animal Care Center to the new South Los Angeles facility ($0.2M) Delete funding for expenses at the Northeast Care Center while the City pursues an agreement with a non-profit organization to operate the facility ($-0.06M) Reduce funding in the General Salaries account by an amount equal to the projected reimbursement from the Animal Sterilization Trust Fund in FY for the costs associated with administering the Spay and Neuter Program ($-0.24M) Department of Building and Safety ($68.94M; 755 Total positions- 725 regular; 30 resolution) Detail of Department Programs, Page No. 29 Total Budget Change From : ($6.73M; -2 positions) Deletion of Funding for Resolution Authorities: -61 resolution authorities ($-4.2M), of which 11 are continued and 33 are regularized, as follows: Plan Check - Los Angeles World Airports, to be fully funded by the Building and Safety Building Permit Enterprise Fund and fully reimbursed by LAWA (two resolution authorities; $0.35M) Inspection - Los Angeles World Airports, to be fully funded by the Building and Safety Building Permit Enterprise Fund and fully reimbursed by LAWA (six resolution authorities; $1M) Off-site Sign Periodic Inspection Program, partially funded and supported by the Off-site Sign Periodic Inspection Fee and Trust Fund (three resolution authorities; $0. 17M) Engineering Plan Check Workload, to be fully funded by the Building and Safety Building Permit Enterprise Fund (seven regular authorities; $0.81 M) Inspection Workload, to be fully funded by the Building and Safety Building Permit Enterprise Fund (eight regular authorities; $1.06M) Seismic Gas Shutoff Valve Program, to be fully funded by the Building and Safety Building Permit Enterprise Fund (four regular authorities; $0.44M) Pressure Vessel and Elevator Workload, to be fully funded by the Building and Safety Building Permit Enterprise Fund (eight regular authorities; $1.07M) Technical Support Group Systems Support, to be fully funded by the Building and Safety Building Permit Enterprise Fund (five regular authorities; $0.57M) New Construction Inspection Administration, to be fully funded by the Building and Safety Building Permit Enterprise Fund (one regular authority; $0.15M) Discontinue Resolution Authorities: -17 resolution authorities Engineering Plan Check Workload (four resolution authorities) Inspection Workload (ten resolution authorities) Off-site Sign Periodic Inspection Program (two resolution authorities) Nuisance Abatement Revocations Program (one resolution authority) Add funding to pay for the second ERIP payout ($2.39M) Add funding for Enterprise Fund Overtime, to be fully funded by the Building and Safety Building Permit Enterprise Fund ($0.8M)

33 Reduce 36 working days for civilian employees that will receive a cost of living increase and 26 furlough days for the remainder, with certain exceptions ($ M) Add as-needed employment authority without funding to meet workload demands, to be fully funded by the Building and Safety Building Permit Enterprise Fund for no net change ($0.00M) Increase General Fund fee revenue for no net change ($0.00M) Realign Salaries General funding to the Building and Safety Permit Enterprise Fund and the Repair and Demolition Fund to reflect related expenditures for no net change ($0.00M) Continue funding and eight resolution authorities which were approved on an interim basis in for Green Building Code Plan Check Services, to be fully funded by the Building and Safety Building Permit Enterprise Fund ($1.08M) Continue funding and 11 resolution authorities which were approved on an interim basis in for Green Building Code Inspection Services, to be fully funded by the Building and Safety Building Permit Enterprise Fund ($1.33M) Delete funding and four vacant regular authorities ($-0.52M) City Administrative Officer ($11.28M; 111 Total positions -110 regular; 1 resolution) Detail of Department Programs, Page No. 49 Total Budget Change From : ($0.19M; -6 positions) Add funding to pay for the second ERIP payout ($0.23M) Delete funding from Contractual Services Account ($-0.05M) Reduce 36 working days for General Funded civilian employees that will receive a cost of living increase and 26 furlough days for the remainder, with certain exceptions ($-1.03M) Reduce funding in Salaries General account ($-0.32M) Continue funding and one resolution authority assigned to Financial Management System administration ($0.04M) Delete funding and two regular authorities that were approved per the Alternative Plan to the P3 Concession Agreement ($-0.34M) Delete funding and one vacant regular authority to assist in administering the City's debt management program ($-0.12M) Add funding for an Asset Management Study ($0.3M) Delete funding and two vacant regular authorities for management services ($-0.29M) Reduce funding in Salaries General account monitoring ARRA federal funding, to be reimbursed by grant funding ($-0.06M) Delete funding and one regular authority for risk management that was approved per the Alternative Plan to the P3 Concession Agreement ($-0.09M) City Attorney ($94.95M; 873 Total Positions- 776 regular; 97 resolution) Detail of Department Programs, Page No. 65 Total Budget Change From : ($9.05M; - 24 positions) Deletion of Funding for Resolution Authorities: -118 resolution authorities ($ M), of which 118 are continued as follows: - 32-

34 Tobacco Enforcement Program, to be fully reimbursed by the Tobacco Permit fee (seven resolution authorities; $1.18M) Workers Compensation Support (ten resolution authorities; $1.56M) Family Violence Prosecution Unit (three resolution authorities; $0.46M) Community Law Enforcement and Recovery (CLEAR) program (one resolution authority; $0.18M) Gang Operations (three resolution authorities; $0.58M) Citywide Nuisance Abatement Revocations program (two resolution authorities; $0.31 M) Neighborhood Prosecutor Program (12 resolution authorities; $2.28M) Safer Cities Initiative, without funding, (three resolution authorities; $0.00M) Police Transition Agreement (former Consent Decree) (one resolution authority; $0.23M) Police-Related Litigation (16 resolution authorities; $2.74M) Pitchess Motion staffing to advise on discovery issues (ten resolution authorities; $1.63M) Enhanced Revenue support for business tax collection efforts (two resolution authorities; $0.37M) Housing Department support, fully reimbursed by the Rent Stabilization and Systematic Code Enforcement Trust Funds (two resolution authorities; $0.29M) Neighborhood Council support (one resolution authority; $0.23M) Outside Counsel Oversight Unit to monitor proprietary departments' outside counsel expenditures, to be fully reimbursed by LADWP, LAWA and POLA (five resolution authorities; $0.69M) DWP legal support, to be fully reimbursed by LADWP (two resolution authorities; $0.51 M) LAGERS and Police & Fire Pensions systems support, to be fully reimbursed by LAGERS and the Pensions Department (one resolution authority; $0.19M) Legal support to Proprietary Departments (Harbor, Housing Authority, CRA, LAWA), to be fully reimbursed by the proprietary departments (14 resolution authorities; $2.49M) DWP Land Use support, to be fully reimbursed by LADWP (one resolution authority; $0.17M) CRA support, to be. fully reimbursed by the CRA (one resolution authority; $0.19M) Discontinue Resolution Authorities: (-21 positions) Community Gun Violence Prosecution Program (three resolution authorities) CLEAR Program (three resolution authorities) Gang Operations (four resolution authorities) Housing support (one resolution authority) Legal support to Proprietary Departments (one resolution authority) May Day Litigation support (six resolution authorities) Neighborhood Prosecutor Program (one resolution authority) Pitchess Motion support (one resolution authority) Police-related litigation (one resolution authority) Delete one-time expense funding ($-0.35M) Add funding to pay for the second ERIP payout ($1.81 M)

35 Increase funding in the department's Litigation Expense Account, instead of setting aside this amount in the Unappropriated Balance as in past years ($0. 75M) Reduce by $1.0M funding set aside in the Unappropriated Balance for Outside Counsel ($0.00M) Delete funding and three vacant regular authorities ($-0.24M) Reduce 36 working days for General Funded civilian employees that will receive a cost of living increase and 26 furlough days for the remainder, with certain exceptions ($-12.75M) Realign funding within the General Fund to fund direct salaries from the Consumer Protection Trust Fund ($0.00M) Add partial funding from SWRRF for one regular authority for Sanitation litigation, to be 50 percent special funded ($0.00M) Reduce SCM salary expense funding due to reduced workload ($-0.22M) Add funding to reduce the department's salary savings rate from four percent to two percent ($0.98M) City Clerk ($8.54M; 99 Total positions- 99 regular; 0 resolution) Detail of Department Programs, Page No. 87 Total Budget Change From : ($-15.34M; -6 positions) Deletion of one-time expense funding for 2011 Primary Nominating and Municipal Elections and On Demand Video and Audio Services ($-15.65M) Add funding to pay for the second ERIP payout ($0.53M) Reduce 36 working days for General Funded civilian employees that will receive a cost of living increase and 26 furlough days for the remainder, with certain exceptions ($-0.82M) Delete funding from Contractual Services Account ($-0.07M) Add funding from the TDA and delete General Funding for language interpretation contracts for no net change ($0.00M) Delete funding and one vacant regular authority for Council and Public Services ($-0.11 M) Delete funding and one vacant regular Principal Storekeeper authority and add funding and regular authority for one program aide for the administration of City elections ($-0.04M) Delete funding and one regular authority in creative services ($-0.07M) Delete funding and one vacant regular authority in records management and add funding and as-needed employment authority ($-0.4M) Add funding from the Business Improvement District Trust and reduce funding from the General Fund by the same amount for no net change ($0.00M) Delete funding and one regular authority in accounting support and add funding and regular authority for the appropriate level of supervision and accounting expertise ($0.02M) Delete funding and one vacant regular authority in Mayor and City Council Administrative Support ($-0.14M) Add funding from the TDA and delete General Funding for two positions to support online resources for no net change ($0.00M) Add one-time funding from the TDA for annual licensing of the Video and Audio on Demand service ($0.04M) - 34-

36 Reallocate one position in technology support, approved by the Board of Civil Service Commissioners during for no net change ($0.00M) Delete funding and two vacant regular positions in general administration and support ($-0.28M) Community Development Department ($26.62M; 295 Total positions -197 regular; 98 resolution) Detail of Department Programs, Page No. 105 Total Budget Change From : ($1.52M; 7 positions) Deletion of Funding for Resolution Authorities: -90 resolution position authorities ($-7.22M), of which 90 are continued as follows: Workforce Development, funding is provided by the Workforce Investment Act (62 resolution authorities; $6.62M) Human Services, funding is provided from the Community Development Block Grant and WIA-ARRA (24 resolution authorities; $6.62M) Systems Support Staff, to be funded from Community Development Block Grant, the Community Services Block Grant and the Workforce Investment Act (four resolution authorities; $0.46M) Deletion of one-time expense funding (-$0.18M) Add funding to pay for the second ERIP payout ($0.58M) Adjust funding between the Industrial Development Authority and the Community Development Trust Fund with no net change ($0.00M) Add funding and one regular authority for Commission on Community and Family Services, to be offset by the deletion of one regular authority, funding to be provided from the Community Development Block Grant ($0.18M) Delete funding and one regular authority for Workforce Development to offset the addition of one regular authority in General Administration and Support ( -$0.08M) Continue funding and one resolution authority for Green Sector Initiatives Coordinator, funding is provided from the Workforce Investment Act ($0.13M) Continue funding and four resolution authorities for the Human Relations Commission, funding is provided from the Community Development Block Grant ($0.45M) Delete funding and one regular authority for Human Relations Commission, per Council and Mayor instructions (C. F S1 ), funding was provided from the Community Development Block Grant ( -$0.13M) Delete funding and one regular authority and add funding and one regular authority for substitute authority adjustments, funding is provided from the Community Development Block Grant, the Community Services Block Grant and the Workforce Investment Act ($0.00M) Add funding and one regular authority for the Economic Development Program, funding is provided from the Section 108 Loan Guarantee Fund ($0.04M) Continue three resolution authorities and add funding for functional transfers for client services technology support, to be funded from the Community Development Block Grant, the Community Services Block Grant and the Workforce Investment Act ($0.47M)

37 Add funding and one regular authority for Executive Division support to be offset by the deletion of one Workforce Development position, funding is provided from the Section 108 Loan Guarantee Fund ($0.11 M) Delete funding and one regular authority for General Administration and Support to offset one regular position authority added in the Commission on Community and Family Services, funding is provided from the Community Development Block Grant (-$0.17M) Controller ($13.79M; 175 Total Positions -152 regular; 23 resolution) Detail of Department Programs, Page No. 127 Total Budget Change From : ($-0.03M; -19 positions) Deletion of Funding for Resolution Authorities: -31 resolution authorities ($-1.24M), of which 23 are continued as resolution authorities and eight are regularized, as follows: Financial Management System support and implementation (19 resolution authorities with funding in General City Purposes, and four resolution authorities without funding; $0. 79M) PaySR support and system development (eight regular authorities; $1.11 M) Add funding to pay for the second ERIP payout ($0.55M) Reduce 36 working days for civilian employees that will receive a cost of living increase and reduce 26 working days for the remaining civilian employees, with certain exceptions ($-1.39M) Delete funding and four vacant regular authorities in Accounting and Disbursement ($-0.44M) Delete funding and ten vacant regular authorities in the Audits Section ($-1.26M) Delete funding and four vacant regular authorities in FMS transition support ($-0.47M) Delete funding and one vacant regular authority in Management Services ($-0.13M) Convention Center ($24.26M; 143 Total Positions -133 regular; 10 resolution) Detail of Department Programs, Page 141 Total Budget Change From : ($3.81M; 1 position) Deletion of Funding for Resolution Authorities: nine resolution authorities ($-0.95M), of which eight are continued, as follows: Marketing and Event Services: Continue funding and three resolution authorities, and add funding for one regular authority and two new resolution authorities for sales and marketing services ($0.71M) Facility Infrastructure Maintenance Division (five resolution authorities; $0.58M) Discontinue one resolution authority for Marketing and Event Services Add funding to pay for the second ERIP payout ($0.39M) Add funding for As-Needed staff and contractual services to meet increased event demands ($2.69M) Increase funding in the Hiring Hall account and decrease funding in the same amount in the As-Needed Salaries and add various authorities to Hiring Hall and As-Needed accounts for no net change ($0.00M) Delete funding and one regular authority for Facility Infrastructure Maintenance ($-0.06M) -36-

38 Cultural Affairs Department ($7.33M; 40 Total positions- 40 regular; 0 resolution) Detail of Department Programs, Page No. 165 Total Budget Change From : ($-0.38M; 0 positions) Add funding to pay for the second ERIP payout ($0.19M) Adjust special appropriations to reflect adjusted program funding and reallocate funds to offset increased costs ($-0. 78M) Reduce 36 working days for General Funded civilian employees that will receive a cost of living increase and 26 furlough days for the remainder, with certain exceptions ($-0.33M) Realign positions between work programs for no net changes ($0.00M) Add one-time funding for As-Needed Salaries account to continue service delivery at facilities scheduled to be partnered by January 1, 2012 ($0.13M) Add funding and one regular authority for the William Grant Still Art Center and add funding to the As-Needed Salaries account for the Barnsdall Art Park and William Grant Still Art Center ($0.18M) Reduce funding for contractual services for theater payroll services ($-0.02M) Delete funding and four regular authorities and add funding and two regular authorities assigned to Art Centers and Theaters Operations to reflect restructuring necessitated by the partnering of art centers and theaters ($-0.16M) ~ Add funding and one regular authority to support the Cultural Affairs Commission ($0.09M) Department on Disability ($1.61M; 16 Total positions -10 regular; 6 resolution) Detail of Department Programs, Page No. 181 Total Budget Change From : ($0.00M; 0 positions) Deletion of Funding for Resolution Authorities: -6 resolution authorities ($-0.68M), of which six are continued, as follows: Computerized Information Center for the Disabled, partially funded by Community Development Block Grant (two resolution authorities; $0.22M) AIDS Coordination and Support, partially funded by Community Development Block Grant (four resolution authorities; $0.6M) Delete one-time expense funding ($-0.11 M) Add funding to pay for the second ERIP payout ($0.04M) Reduce 36 working days for General Funded civilian employees that receive a cost of living increase and 26 furlough days for the remainder, with certain exceptions ($-0.08M) Reduce funding for two positions partially-funded by Community Development Block Grant ($-0.10M) Reduce funding for contractual services ($-0.02M) Reduce funding in Salaries General and continue to hold one position responsible for the ADA Program vacant to offset this reduction ($-0.14M) -37-

39 El Pueblo de Los Angeles ($1.52M; 10 Total Positions -10 regular; 0 resolution) Detail of Department Programs, Page No. 193 Total Budget Change From : ($-0.02M; -4 positions) Add funding for traditional and special events at El Pueblo ($0.05M) Delete funding and one vacant regular authority that supports filming and special events ($-O.OBM) Delete funding and three vacant regular authorities for administration and human resources ($-0.29M) Emergency Management Department ($1.6M; 23 Total positions- 14 regular, 9 resolution) Detail of Department Programs, Page No. 203 Total Budget Change From : ($0.02M; 0 positions) Deletion of Funding for Resolution Authorities: -9 resolution position authorities ($-0.25M), of which nine are continued as follows: Homeland Security staffing, to be grant funded (six resolution authorities; $0.00M) Community Emergency Management Division, to be partially grant funded (two resolution authorities; $0.17M) Emergency Management administrative support (one resolution authority; $0.14M) Reduce 36 working days for General Funded civilian employees that will receive a cost of living increase and 26 furlough days for the remainder, with certain exceptions ($-0.16M) Employee Relations Board ($0.42M; 3 Total Positions- 3 regular; 0 resolution) Detail of Department Programs, Page No. 211 Total Budget Change From : ($0.05M; 0 positions) Add funding to pay for the second ERIP payout ($0.05M) Reduce 36 working days for General Funded civilian employees that will receive a cost of living increase and 26 furlough days for the remainder, with certain exceptions ($-0.02M) City Ethics Commission ($2.03M; 19 Total Positions -19 regular; 0 resolution) Detail of Department Programs, Page No. 219 Total Budget Change From : ($-0.13M; -2 positions) Add funding to pay for the second ERIP payout ($0.1 M) Delete funding and two regular authorities for Governmental Ethics ($-0.19M) Reduce 36 working days for General Funded civilian employees that will receive a cost of living increase and 26 furlough days for the remainder, with certain exceptions ($-0.19M) Add funding to the Transportation account for the Executive Director's monthly car allowance ($0.00M) Delete funding and regular authority for one ethics officer and add funding and regular authority for one ethics officer for the Policy and Legislation Division to effectuate the realignment of resources ($-0.03M) - 38-

40 Finance ($37.47M; 376 Total Positions- 367 regular; 9 resolution) Detail of Department Programs, Page No. 227 Total Budget Change From : ($12.29M; 20 positions).. Add funding to pay for the second ERIP payout ($0.38M).. Reduce 36 working days for General Funded civilian employees that will receive a cost of living increase and 26 furlough days for the remainder, with certain exceptions ($-3.09M).. Deletion of Funding for Resolution Authorities: - 19 resolution authorities ($-1.82M), of which seven are continued and ten are regularized, as follows: Tax Discovery and Enforcement (two resolution authorities; $0.22M) Workload Based Staffing for public counters and call centers (five resolution authorities; $0.46M) Audit Penetration Rate auditors and related expenses to increase rate from 2.2 percent to 2.5 percent (12 regular authorities; $1.39M) Delete one-time expense funding ($0.2M) Continue funding and two resolution authorities for the FMS Centralization project, as approved by Council (C.F S33) ($0.23M) Delete funding and eight vacant regular authorities in the Collections Unit ($0.65M) Reduce Overtime and Expense Funding ($0.3M).. Delete funding and one regular authority for general administrative support position no longer needed due to the consolidation of functions with the Treasurer's Office ($0.09M) Realign funding from the SCM Fund to the General Fund, with no net change ($0.00M).. Add funding to reduce the salary savings rates from 4.5 percent to 3 percent ($0.49M) Implement a Merchant Card Convenience Fee for credit card transactions, with estimated revenues of $0.50M set aside in the Unappropriated Balance ($0.00M) Increase funding and 27 regular authorities and transfer funding for bank service fees ($6M), to consolidate finance and treasury functions from the Office of the Treasurer ($9.53M) Increase funding for bank service fees, to be reimbursed by DWP and LAWA ($3.18M) Fire ($480.93M; 3,814 Total Positions: 3,486 Sworn- 3,218 regular, 268 resolution; 328 Civilian- 318 regular, 10 resolution) Detail of Department Programs, Page No. 241 Total Budget Change from : ($-14.08M; -127positions).. Deletion of Funding for Resolution Authorities: -50 resolution position authorities ($-5.36M), of which 26 are continued or regularized as follows: Operations Control Dispatch Center Support (one resolution authority; $0.17M) Homeland Security Enhancements (continue one sworn resolution authority, and add nine sworn regular authorities, three of which are added without funding; $1.14M) Claims Reimbursement Team (two regular authorities; $0.28M) Human Resources Division Support (one regular authority; $0.12M) Network and Technology Infrastructure (four regular authorities; $0.53M) Public Access Defibrillator Program (one regular authority; $0.14M) emergency dispatch systems support (one regular authority; $0.17M) April27,

41 EMS Contract Administration and Compliance (six regular authorities; $0.67M) Add funding to pay for the second ERIP payout ($0.83M) Delete funding and 61 vacant sworn regular authorities in various divisions, and add funding and six civilian regular authorities and delete funding and six vacant regular authorities of equal or greater salaries ($-7. 78M) Reduce 36 working days for General Funded civilian employees that will receive a cost of living increase and 26 furlough days for the remainder, with certain exceptions ($-2.92M) Add $6.83M in the MICLA financing program for 34 ambulances for the Fleet Replacement Program ($0.00M) Add funding in the Variable Staffing Overtime account for additional training for the Urban Search and Rescue (USAR) Team ($1.0M) Delete 318 sworn regular authorities (51 are vacant), restore 77 as resolution authorities with partial-year funding for firefighters retiring through the Deferred Retirement Option Plan (DROP) and delete the remaining 190 positions over the following two fiscal years through attrition as part of the new LAFD Deployment Plan, which replaces the Modified Coverage Plan (MCP) that has been in place since 2000 ($-7.22M) Continue funding and one sworn resolution authority as staff support for the new Emergency Operations Center facility to open in ($0.17M) Increase funding in the Brush Clearance Expense Account for clearing additional parcels ($1.0M) Add funding for additional medical equipment and supplies for ten additional paramedic assessment resources in the new LAFD Deployment Plan ($0.4M) Continue funding and eight civilian resolution authorities for the Professional Standards Division ($1.38M) Add as-needed employment authority for Student Workers and Student Professional Workers to provide support throughout the department ($0.00M) General Services Department ($228.07M; 1,510 Total Positions -1,509 regular; 1 resolution) Detail of Department Programs, Page No. 267 Total Budget Change From : ($8.79M; -65 positions) Deletion of Funding for Resolution Authorities: -nine resolution authorities ($-0. 79M) of which nine are regularized as follows: El Pueblo Parking Facilities (one regular authority; $0.08M) Fleet Services Helicopter Program Support Program (two regular authorities; $0.25M) Supply Services Support for Sewer Construction and Maintenance Program, to be funded by the Sewer Construction and Maintenance Fund (five regular authorities; $0.4M) Fleet Clean Air Program Support (one regular authority; $0.11 M) Add funding to pay for the second ERIP payout ($3.81 M) Delete one-time equipment funding ($-1.25M) Delete funding and nine vacant regular authorities and one-time funding ($-2.43M) -40-

42 Delete funding and ten regular authorities and expense accounts supporting general City fleet services, which will eliminate 450 pieces of equipment in the City's fleet, to be realized as revenue through surplus equipment sales ($-1.81M) Add funding to provide custodial and building maintenance services for the Metro Detention Center and increase the utility account to support this facility ($1.32M) Reduce 36 working days for General Funded civilian employees that will receive a cost of living increase and 26 furlough days for the remainder, with certain exceptions ($-9.3M) Swap funding from General Fund to eligible Special Gas Tax Fund, Prop A Fund, Prop 1 B Infrastructure Fund and Street Damage Special Fund to provide Fleet Services and Materials Testing Services support for the Bureau of Street Services Street Resurfacing Program with no net change ($0.00M) Add funding to reduce the Department's salary savings rate from 4.5 to one percent ($4.05M) Realign funding in Sewer Operation and Maintenance Fund and the Sewer Capital Fund to reflect projected expenditures with no net change ($0.00M) Delete funding and 25 vacant regular authorities for custodial service positions that support 80 facilities and reallocate savings to Contractual Services Account to provide custodial services at these facilities ($-0.57M) Add funding for the maintenance of Cultural Affairs-operated facilities, to be funded by the Arts and Cultural Facilities and Services Trust Fund ($0.25M) Delete funding and 12 vacant regular authorities, reduce As-Needed and Building Maintenance and Operating Supplies accounts and reallocate the salary savings to the Hiring Hall and Hiring Hall Benefits accounts ($-0.38M) Delete funding and seven vacant regular security officer authorities that support eight City facilities and reallocate the salary savings to Salaries, As-Needed Account to provide these services ($-0.18M) Realign funding in the Fleet Services Division from the Stormwater Pollution Abatement Fund to reflect a swap in funding from Overtime to Salaries General ($-0.01 M) Add salary funding for materials testing support of Special Gas Tax Street Improvement Fund projects funded in the Capital Improvement Expenditure Program ($0.14M) Continue funding and one resolution authority to assist with the interface between the Fiscal Management System and the Supply Management System ($0.13M) Delete funding and three vacant regular authorities in supply services ($-0.28M) Housing Department ($52. 15M; 576 Total positions- 534 regular; 42 resolution) Detail of Department Programs, Page No. 303 Total Budget Change From : ($0.7M;- one position) Deletion of Funding for Resolution Authorities: -42 resolution authorities ($-5.36M), of which 42 are continued as follows: Major Projects Staff, funding to be provided from the HOME Investment Partnerships Program Fund and the Municipal Housing Finance Fund (nine resolution authorities; $1.15M)

43 Portfolio Management Staff, funding to be provided from the HOME Investment Partnerships Program Fund and the Municipal Housing Finance Fund (three resolution authorities; $0.31 M) Housing Services Staff, funding is provided from the Community Development Block Grant, HOME Investment Partnerships Program Fund and the Emergency Shelter Grant (three resolution authorities; $0.29M) Rent Stabilization Staff, funding is provided from the Rent Stabilization Trust Fund (two resolution authorities; $0.19M) Executive Management Staff, funding is provided from the Community Development Block Grant, HOME Investment Partnerships Program Fund, Rent Stabilization Trust Fund, Code Enforcement Trust Fund, Municipal Housing Finance Fund, Affordable Housing Trust Fund and Neighborhood Stabilization Program Funds (five resolution authorities; $0.84M) Administrative Services Staff, funding is provided from the Community Development Block Grant, HOME Investment Partnerships Program Fund, Rent Stabilization Trust Fund and Code Enforcement Trust Fund (two resolution authorities; $0.21 M) Systems Division Staff, funding is provided from the Community Development Block Grant, HOME Investment Partnerships Program Fund, Rent Stabilization Trust Fund and Code Enforcement Trust Fund (nine resolution authorities; $1.19M) Accounting Support Staff, funding is provided from the Community Development Block Grant, HOME Investment Partnerships Program Fund, Rent Stabilization Trust Fund, Code Enforcement Trust Fund, Municipal Housing Finance Fund and Affordable Housing Trust Fund (nine resolution authorities; $0.83M) Add funding to pay for the second ERIP payout ($0.9M) Delete funding for 14 contracted services activities to enable them to be paid directly from various special funds ($-1.56M),. Add funding and ten regular authorities and delete funding and 11 regular authorities for substitute authority adjustments ($-0.03) Realign Salaries General funding ($1.5M) from grants and reassign existing staff accordingly, with no net change ($0.00M) Information Technology Agency ($78.48M; 504 Total Positions- 474 regular; 30 resolution) Detail of Department Programs, Page No. 329 Total Budget Change From : ($-1.69M; -22 positions) Deletion of Funding for Resolution Authorities: -51 resolution authorities ($-4.92M), of which 26 are continued and 15 are regularized, as follows: Supply Management System (six resolution authorities; $2.35M) Public Safety Systems Project (three resolution authorities; $0.62M) Systems Support of Call Center (one resolution authority; $0.13M) Public Works Fiscal Systems Support, funding to be provided by the Sewer Construction and Maintenance Fund (one resolution authority; $0.12M) Financial Management System (15 resolution authorities; $0.47M) -42-

44 Los Angeles Business Tax Support (five regular authorities; $0.75M) Emergency Command Control Communications System (four regular authorities; $0.58M) Fire Dispatch Support (three regular authorities; $0.4M) Payroll System Replacement Support (three regular authorities; $1.57M) Delete ten resolution authorities, as follows Supply Management System (one resolution authority) Consent Decree Systems Support (eight resolution authorities) Financial Management System Support (one resolution authority) Deletion of one-time expense and equipment funding ($ M) Add funding to pay for the second ERIP payout ($1.54M) Adjust expense funding to reflect price and service changes for ongoing services ($0.28M) Reduce funding in various expense accounts ($-0.9M) Add funding and regular authority for one position in the Finance and Administrative Services Division, offset by the deletion of funding and one regular authority in Public Safety Communications ($0.00M) Reduce 36 working days for General Funded civilian employees that will receive a cost of living increase and 26 furlough days for the remainder, with certain exceptions ($-4.76M) Transfer funding from the General Fund to the TDA for ongoing eligible services for a net of 14.5 positions in support of government access operations provided through LA Cityview Channel 35, for no net change ($0.00M) Add funding to reduce the salary savings rate from five percent to two percent ($1.82M) Add funding and three resolution authorities that support a variety of public safety applications ($0.41M) Transfer funding and seven resolution authorities and contractual services expenses to LAPD to support TEAMS II and discontinue one position ($-0.94M) Add funding for support, equipment and training related to the City's fleet of Police and Fire aircraft ($0.2M) Add $0.4M in MICLA funding to continue the upgrade of the 800 MHz radio system for no net change ($0.00M) Add $0.35M in MICLA funding to continue upgrades to the Fire Department's radio system for no net change ($0.00M) Delete funding and two vacant regular authorities that support the public safety communications division ($-0.21 M) Delete funding and eight regular authorities for the Call Center's swing shift to reflect reduced hours of service ($-0. 69M) Add one resolution authority, without funding, to oversee major enhancements to the Business Assistance Virtual Network, which may be reimbursed by a proposed fee for access to the system ($0.00M) Delete funding and one vacant regular authority that supports the application and database development unit ($-0.15M) Add $0.41 M in MICLA funding for continuing upgrades to the Marvin Braude Data Center for no net change ($0.00M) -43-

45 Add $0.34M in MICLA funding for upgrading the City Hall East Data Center for no net change ($0.00M) Delete funding and two vacant regular authorities that support the City's data center ($-0.2M) Add $2.2M in MICLA funding to continue upgrades to the City's network infrastructure for no net change ($0.00M) Delete funding and one regular authority that supports the network engineering and operations division ($-0.17M) Delete funding and two regular authorities that support the financial and administrative services division ($-0.24M) Library ($95. 75M; 828 Total positions regular; 0 resolution) Detail of Department Programs, Page No. 645 Total Budget Change From : ($12.94M; 0 positions) Add funding to pay for the second ERIP payout ($0.00M) Add as-needed salaries to fund the restoration of six-day service starting July 2011 ($1. 75M) Add funding for direct costs for expanded services including custodial, security and other related services ($0.56M) Adjust funding in expense accounts for accounting accuracy ($-0.16M) Measure L approved an incremental increase in the Charter Required Minimum Appropriation from percent in to in resulting in a $13.45M increase to fund the restoration of library services, related costs, and the reimbursement of direct costs Decrease projected department revenue to reflect increases in Fines and Fees and State funds offset by a decrease in unspent prior year funds from the Unreserved and Undesignated Fund Balance, for no net change Increase funding for retirement costs and employee health benefits ($8.13M) Reduce funding for direct costs to the Library Program ($-1.96M) Add funding for the direct cost for landscape services ($0.32M) Neighborhood Empowerment ($1.77M; 20 Total positions -17 regular, 3 resolution) Detail of Department Programs, Page No. 365 Total Budget Change From : ($1.48M;- 3 positions) Add funding to pay for the second ERIP payout ($0.06M) Continue funding in various expense accounts to support a stand-alone department ($0.14M) Continue funding and three resolution authorities to administer the Neighborhood Council Funding program, and discontinue two vacant resolution authorities ($0.36M) Reduce 36 working days for General Fund civilian employees that will receive a cost of living increase and 26 furlough days for the remainder, with certain exceptions ($-0.17M) Delete funding and one regular authority for the Neighborhood Council Funding Program ($-0.11 M) Add funding for Neighborhood Council Elections outreach services ($0.12M) -44-

46 Transfer funds between accounts to purchase computers for FMS implementation, for no net change ($0.00M) Personnel ($41.27M; 406 Total Positions- 388 regular; 18 resolution) Detail of Department Programs, Page No. 379 Total Budget Change From : ($0.25M; -42 positions) Deletion of Funding for Resolution Authorities: -34 resolution authorities ($-2.27M), of which 18 are continued as resolution authorities and four are regularized, as follows: Public Safety Bureau staffing (18 resolution authorities; $2.05M) Department of Water and Power Examining Support, which are fully reimbursed by LADWP (two regular authorities; $0.26M) Deferred Compensation & Rideshare Program Continue funding and add three regular authorities to support the Employee Benefits Division and the Deferred Compensation Program, to be funded by the Deferred Compensation Trust Fund and the Employee Benefits Trust Fund (three regular authorities; $0.29M) Delete funding and eleven regular authorities for the Public Safety Bureau ($-0.89M) Delete one-time equipment and expense funding ($-1.12M) Add funding to pay for the second ERIP payout ($0.88M) Reduce 36 working days for civilian employees that will receive a cost of living increase and 26 furlough days for the remaining civilian employees with certain exceptions ($-3.61 M) Delete funding and one vacant regular authority in the Employee Selection Division and add funding and one regular authority in the General Administration Support Division ($-O.OOM) Add funding to reduce the department's salary savings rate from five percent to 1.36 percent ($1.52M) Delete funding and fifteen vacant regular authorities in the Employee Selection Section ($-1.35M) Continue funding and add six regular authorities in the Workers' Compensation Program ($0.63M) Delete funding and four vacant regular authorities in the Workers' Compensation and Safety Program ($-0.38M) Continue funding for transit reimbursements, vanpoolleases and related items, to be funded from the City Employees Ridesharing Fund ($0.26M) Delete funding and one vacant regular authority in the Employee Benefits Division ($-0.08M) Delete funding and one vacant regular authority for an Occupational Health Nurse ($-0.11 M) Add funding and four regular authorities for correctional nurses at the Metropolitan Detention Center, as well as funding in the salaries as-needed account to provide flexibility in meeting staffing requirements ($0. 78M) Delete funding and three vacant regular authorities in the Equal Employment Opportunity Division ($-0.29M) Continue funding for workplace violence prevention training, intervention and response services ($0.25M) April27,

47 City Planning Department ($25.39M; 259 Total positions- 240 regular; 19 resolution) Detail of Department Programs, Page No. 403 Total Budget Change From : ($-1.04M; -10 positions) Deletion of Funding for Resolution Authorities: -12 resolution authorities ($-1.34M), of which 12 are continued, as follows: Expedited Case Processing, to be fully reimbursed by fees (12 resolution authorities; $1.47M) Delete One-Time expense and equipment funding ($-2.75M) Add funding for the second ERIP payout ($0.82M) Deletion of 17 vacant regular authorities ($-2.25M}, as follows: Citywide Policy Planning (one regular authority) Community Planning (nine regular authorities) Technology Support (four regular authorities) General Administration and Support (three regular authorities) Reduce 36 working days for civilian employees that will receive a cost of living increase and 26 furlough days for the remainder, with certain exceptions ($-0. 73M) Reduce funding ($-0.90M) in various accounts to offset reduction in salary savings rate, for no net change ($0.00M) Add funding and two resolution authorities for the Northeast LA New Community Plan, funding to be provided by the CRA ($0.32M) Reduce funding for one regular authority from the Stormwater Pollution Abatement Fund by fifty percent; the remaining cost of the position will be absorbed through special fund vacancies ($-0.07M) Delete funding for two regular authorities from the Sewer Construction and Maintenance Fund by two full-time equivalents; the cost of the positions will be absorbed through special fund vacancies ($-0.17M) Continue funding and two resolution authorities to support the Universal City Evolution Plan and the Metro Universal projects, to be fully funded by developer fees ($0.28M) Continue funding and one resolution authority to support Westfield projects, to be fully funded by developer fees ($0.14M) Add funding and two resolution authorities to expand expedited case processing services, to be fully reimbursed by fees ($0.39M) Add funding and as-needed employment authority for Environmental Impact Reports, to be fully reimbursed by fees ($0.17M) Continue funding in the City Planning Systems Development Trust Fund for GIS and systems support ($1.37M) -46-

48 Police Department {$1.198; 13,746 Total Positions: 10,548 Sworn - 10,480 Regular, 68 Resolution; 3,198 Civilian - 3,197 Regular, 1 Resolution) Detail of Department Programs, Page No. 421 Total Budget Change from : ($13.32M; -98 positions) Deletion of Funding for Resolution Authorities: -104 resolution authorities ($-8.67M), of which 69 are continued as resolution authorities and 35 are regularized, as follows: Community Law Enforcement and Recovery, with funding in the base budget (18 resolution authorities; $0.00M) American Recovery and Reinvestment Act (ARRA) COPS Hiring Grant (50 resolution authorities; $3.63M) Grant Administration (one resolution authority; $D. 12M) Management Systems Re-Engineering to implement TEAMS II (18 regular authorities; $2.27M) Constitutional Policing for monitoring Consent Decree compliance (five regular authorities; $0.87M) Internal Audit and Inspection Division for the Consent Decree (11 regular authorities; $1.36M) Confidential Financial Disclosure to review gang and narcotics unit members' financial records (one regular authority; $D. 14M) Delete one-time expense funding ($-1.89M) Add funding to pay for the second ERIP payout ($4.05M) Add funding to increase the Sworn Overtime account to accurately reflect expenditures related to reimbursable activities ($7.7M) Add funding to hire 315 Police Officers to offset projected attrition, and provide funding for firearms, uniforms, and training material ($11.5M) Decrease funding to reflect anticipated attrition of 315 sworn offers, of which 112 are required due to participation in the Deferred Retirement Option Program (DROP) ($-22.17M) Decrease funding in the Accumulated Overtime account to more accurately reflect expenditures from this account ($-1.0M) Decrease funding in the Sworn Salaries account due to the City's fiscal constraints ($-20.0M) Reduce 36 working days for General Funded civilian employees that will receive a cost of living increase and 26 furlough days for the remainder, with certain exceptions ($-26.25M) Add funding for Uniform Allowance and Excess Sick Time payouts ($14.61M) Delete 24 vacant unfunded regular authorities for civilian positions in Field Forces ($0.00M) Increase funding by $6.1 M in the Local Public Safety Fund (Schedule 17) from funding generated by a one-half cent sales tax ($0.00M) Delete 15 vacant unfunded regular civilian authorities in Specialized Crime Suppression and Investigation ($0.00M) Add funding for transportation of City arrestees to court by County personnel, and supplies for Jail Division ($0.46M) Delete 27 vacant unfunded civilian regular authorities in Personnel Training and Support ($0.00M) April27,

49 Delete 32 vacant unfunded civilian regular authorities in Operational Support ($0.00M) Add funding for maintenance of handheld radios ($0.23M) Add funding for a replacement maintenance contract and replacement of damaged In-Car Video equipment ($0.39M) Add funding for the annual cost of Groupwise software licenses ($0.26M) Add funding in the Contractual Services account for service contracts, maintenance and warranties for specialized software, systems and equipment ($2.55M) Continue funding and add seven regular authorities and contractual services expenses, and transfer these resources from the ITA to the Police Department, to support TEAMS II (seven positions; $1.98M); discontinue one resolution authority Delete six vacant unfunded regular civilian authorities in General Administration and Support ($0.00M) Delete one vacant unfunded regular civilian authority in Internal Integrity and Standards Enforcement ($0.00M) Board of Public Works ($15.21M; 95 Total Positions- 95 regular; 0 resolution) Detail of Department Programs, Page No. 449 Total Budget Change From : ($-0.94M; -8 positions) Delete funding for one resolution authority for Sewer System Accounting Support ($-0.1 M) Delete one-time expense funding ($-0.55M) Add funding to pay for the second ERIP payout ($0.57M).. Reduce funding in the Overtime Salaries and Printing and Binding accounts ($-0.06M) Reduce 36 working days for General Funded civilian employees that will receive a cost of living increase and reduce 26 working days for the remaining civilian employees, with certain exceptions ($-0.41 M) Adjust funding sources within the Office of Accounting and Office of Management Employee Services that results in no net change ($0.00M) Add funding to reduce the salary savings rate from 3.2 percent to one percent ($0.23M) Reduce funding for the graffiti abatement contracts ($-O.SM) Adjust position authorities to reflect position levels currently filled in the Office of Community Beautification and delete one vacant regular authority ($-0.17M) Delete funding for one position that will be funded by Project Restore ($-0.15M) Delete funding and five vacant regular authorities in the Public Works Accounting Section ($- 0.51M) Delete funding and one vacant regular authority that supports the Public Works Board ($-0.09M) Contract Administration ($28.49M; 321 Total Positions- 230 regular; 91 resolution) Detail of Department Programs, Page No. 463 Total Budget Change From : ($-0.89M; -7 positions) Deletion of Funding for Resolution Authorities: -91 resolution authorities ($-9.81 M), of which 69 are continued as resolution authorities, as follows: -48-

50 Wastewater Capital Program, to be funded by the SCM Fund (three resolution authorities; $0.1M) Port of LA Inspection and Compliance, to be fully reimbursed by POLA (15 resolution authorities; $1. 77M) Signal Synchronization, to be funded by Proposition C Funds (13 resolution authorities; $1.65M) Public Right of Way Enforcement, to be fully reimbursed by permit compliance fees (seven resolution authorities; $0.83M) Los Angeles Airport Inspection Program, to be fully reimbursed by LAWA (18 resolution authorities; $4.24M) Compliance Services to Other Departments, to be fully reimbursed by DWP, POLA, LAWA and CRA (nine resolution authorities; $0.96M) Subcontractor Outreach Program, to be offset by direct charges to capital projects (two resolution authorities; $0.2M) Centralized Certification and Equal Employment Opportunity Enforcement Section, to be partially offset by funding from the proprietary departments (two resolution authorities; $0.2M) Discontinue Resolution Authorities (-22 positions) Port of LA Inspection and Compliance Program (five positions) Wastewater Program (17 positions) Delete one-time expense funding ($-0.68M) Add funding to pay for the second ERIP payout ($0.83M) Reduce 36 working days for General Funded civilian employees that will receive a cost of living increase and reduce 26 working days for the remaining civilian employees, with certain exceptions ($-1.9M) Adjust funding source for six positions supporting MTA projects from Proposition A to Proposition C that results in no net change ($0.00M) Reduce salaries and expense funding from the Stormwater Pollution Abatement Fund due to decline in construction activity in the Stormwater Capital Program ($-0.14M) Add funding and five resolution authorities to provide inspection services to capital projects under the Transportation Grant Fund Annual Work Program, to be funded by Proposition C Funds ($0.68M) Delete funding and four vacant regular authorities in the Construction Inspection Section ($-0.5M) Recognize $0.5M as revenue from reimbursements from various Proposition K projects that results in no net change ($0.00M) Reduce salaries and expense funding from the Street Lighting Maintenance Assessment Fund due to decline in construction activity in the Street Lighting Capital Program ($-0.14M) Add two resolution authorities, without funding, to implement, administer and enforce the Public Works Infrastructure Stabilization Policy, to be fully funded through direct charges to the projects ($0.02M) -49-

51 Delete funding and three vacant regular authorities in the General Administration and Support Section ($-0.27M) Bureau of Engineering ($71.57M; 746 Total Positions- 701 regular; 45 resolution) Detail of Department Programs, Page No. 477 Total Budget Change From : ($0.43M; -50 positions) Deletion of Funding for Resolution Authorities: -44 resolution authorities ($-5.11 M), of which 37 are continued as resolution authorities and one is regularized, as follows: Signal Synchronization Support, to be funded by Proposition C (one resolution authority; $0.15M) Transportation Grant Fund Annual Work Program, to be funded by Proposition C (27 resolution authorities; $4.01 M) Zoo Capital Program, to be reimbursed by project funding (two resolution authorities; $0.27M) Storm Damage Repair Program, to be initially funded by Gas Tax and might be eligible for disaster assistance reimbursements (five resolution authorities; $0.66M) Los Angeles River Revitalization Master Plan Implementation, to be funded by the General Fund and the Stormwater Pollution Abatement Fund (two resolution authorities; $0.32M) Continue funding and add one regular authority in the Wastewater Capital Improvement Program, to be funded by the Sewer Capital Fund, and delete funding and 36 vacant regular authorities ($-3.89M) Discontinue six resolution authorities, as follows: Signal Synchronization Support (one resolution authority) Survey Support for Landfill Sites (two resolution authorities) Plan Checking Activities (three resolution authorities) Delete one-time expense funding ($-0.2M) Add funding to pay for the second ERIP payout ($2.9M) Reduce 36 working days for civilian employees that will receive a cost of living increase and reduce 26 working days for the remaining civilian employees, with certain exceptions ($-2.84M) Reduce overtime and expense account funding to offset the implementation of furloughs per the Alternative Plan to P3 (C.F S2) ($-0.21M) Reduce the salary savings rate for the Sewer Capital Fund from seven percent to four percent pursuant to the deletion of the 36 vacant regular authorities in the Wastewater Capital Improvement Program ($1.43M) Continue funding and add one regular authority in Wastewater Engineering, to be partially offset by the deletion of one regular authority, to be funded by the Sewer Capital Fund ($-0.01 M) Delete funding and four vacant regular authorities related to privately financed improvements engineering ($-0.48M) Continue funding and six resolution authorities to staff two survey crews that support the street resurfacing program and add funding for field equipment expense that previously received -50-

52 appropriations and funding through interim reports on ARRA projects, to be continued with Gas Tax funds ($0.68M) Delete funding and two vacant regular authorities in the Street Improvement Section ($-0.22M) Adjust funding source for six positions supporting MTA projects from Proposition A to Proposition C that results in no net change ($0.00M) Add funding from Gas Tax funds and delete the same amount in General Fund allocation to one survey crew for street resurfacing that results in no net change ($0.00M) Delete funding and five vacant regular authorities in the municipal facilities engineering section ($-0.58M) Realign positions to funding sources that results in no net change ($0.00M) Offset $2.0M in project delivery costs for municipal facilities projects with reimbursements from Proposition K and other special funds that results in no net change ($0.00M) Delete funding and one vacant regular authority in the general engineering services section ($-0.12M) Delete funding and one vacant regular authority in the land records section ($-0.1 M) Amend detail of positions and salaries to reflect pay grade approves of two positions that results in no net change ($0.00M) Delete funding and one vacant regular authority in general mapping and survey ($-0.12M) Delete funding and two vacant regular authorities in general administration ($-0.14M) Bureau of Sanitation ($223.35M; 2,827 Total Positions- 2,769 regular; 58 resolution) Detail of Department Programs, Page No. 505 Total Budget Change From : ($9.94M; -51 positions) Deletion of Funding for Resolution Authorities: -55 resolution authorities ($-5.16M), of which 44 are continued as resolution authorities and nine are regularized, as follows: Blue Bin Recycling Program, fully funded by the Citywide Recycling Trust Fund (three resolution authorities; $0.26M) Solid Waste Integrated Resources Plan, fully funded by the Solid Waste Resources Fund and the Citywide Recycling Trust Fund: Continue five resolution authorities, and discontinue one resolution authority to begin phasing down staffing (five resolution authorities; $0.68M) Non-Curbside Recycling Program support, which is funded by the Used Oil Collection Fund (one resolution authority; $0.12M) Multi-Family Bulky Item Program, which is funded by the Multi-Family Bulky Item Revenue Fund (35 resolution authorities; $3.36M) Sewer Service Charge Task Force, which is fully funded by the Sewer Construction Maintenance Fund (one regular authority; $0.13M) Construction and Demolition Recycling Program: Regularize three positions, and discontinue one resolution authority for this program, which is fully funded by the Citywide Recycling Trust Fund (three regular authorities; $0.33M) Roll-Off Bin Disposal Services, which is funded by the Solid Waste Resources Revenue Fund and reimbursed by the proprietary departments (four regular authorities; $0.38M) -51 -