City Administrative Officer. Los Angeles Zoo ALTERNATIVE MANAGEMENT STRUCTURE

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1 Los Angeles Zoo ALTERNATIVE MANAGEMENT STRUCTURE May 2011

2 City of Los Angeles Four-Year Budget Outlook Revenues Expenses 5,086 5,200 4,765 4, Millions 4,379 4,484 4,627 4,775 4,

3 What have we done? The City has addressed $1.0 Billion in collective deficit using: Fiscal First Aid techniques Long-Term Financial Planning Solutions

4 Fiscal First Aid Evaluated overtime use Improved billing and collections procedures Explored fees for services Refinanced debt for lower interest rates Sought state and federal assistance Offered early retirement program Deferred and/or cancel capital projects Used Reserve Fund to soften the landing Instituted hiring freezes Reduced hours worked

5 Long-Term Financial Planning Reduced workforce by 4,000 positions Replenished the Reserve Fund and Placed Charter Amendment P on ballot requiring a 2.75% Emergency Reserve Account within the Reserve Fund (approved by voters) Addressing major drivers of future deficits Placed Charter Amendment to create a new pension tier for new sworn employees (approved by voters) Developing new pension tier for new civilian employees Negotiated increased co-pays and contribution amounts from employees for health care Pursuing alternative service delivery models

6 Three-Year Plan to Fiscal Sustainability Adopted by Council February 9, 2010 Smart fiscal policies Focus on core services Sustainable workforce Alternative service delivery models

7 Potential benefits of an alternative management structure Reduce or eliminate the General Fund subsidy Increased operational efficiencies Improved and expanded fundraising Improved marketing and advertising Greater operational flexibility Greater ability to pursue commercial activities Higher attendance and resultant higher revenue Improved concessions and resultant higher revenue

8 Other Zoos that Transitioned Denver Dallas Tulsa Lincoln Park (Chicago) Woodland Park (Seattle) Zoo Atlanta Houston Fresno

9 Government-owned facilities with alternative management structures Hollywood Bowl Los Angeles County Museum of Art Seattle Aquarium Central Park (New York City)

10 Current Zoo Structure FY Operated as a City Department $17.5 million operating budget $6.0 million General Fund subsidy $8.2 million in support costs subsidized by the General Fund 229 authorized full-time positions Advisory Zoo Commission Council approves admission fee increases General Manager Zoo Director Budget subject to annual appropriation through City budget process Operation and management under direct control by Mayor and Council

11 LA Zoo Adopted Budget FY to Salaries Expenses Millions $17.91 $3.44 $14.47 $19.32 $4.30 $15.02 $19.18 $19.33 $3.94 $3.96 $15.24 $15.37 $18.26 $3.06 $15.20 $17.48 $3.13 $

12 Projected Zoo Expenditure Growth for the Next Five Years Salaries Expenses Other Support Costs Retirement and Health Millions % Increase Retirement and Health

13 Projected City Costs Zoo Expenditures Operating Revenues General Fund Deficit Millions

14 Authorized Zoo Staffing FY to Regular Resolution

15 Zoo Workforce The Adopted Budget includes 229 regular authority positions, one resolution authority position and one substitute authority position 109 are in classifications unique to the Zoo 122 are in classifications common among City Departments Common 53% Unique 47%

16 Zoo Workforce - Labor Representation 88 percent Coalition of City Unions 10 percent EAA 2 percent non-represented EAA 10% Non-Rep 2% Coalition 88%

17 Financial Consultant The CAO engaged the services of KPMG To perform a financial analysis of the LA Zoo To determine what potential cost savings might be generated by an alternative management structure To identify an operating model that may present opportunities for improving cost efficiencies or revenues

18 Request for Proposals The City Attorney recommended conducting a request for proposals (RFP) process to select an operator The City Attorney concluded that a competitive process is required to maintain transparency and fairness in the selection process

19 SUMMARY The City s goal is to improve and enhance Zoo operations while reducing or stabilizing the General Fund contribution Alternative Management Structure Benefits Operational efficiencies Improved and expanded fundraising Improved marketing Operational flexibility Ability to pursue commercial activities Higher attendance Improved concessions

20 Next Steps Identify the labor relations issues Discuss challenges and solutions with the City Attorney Finalize the RFP in May 2011 Present CAO report and draft RFP to the Arts, Parks, Health and Aging Committee on June 14, 2011 Authority to release RFP from full Council Release RFP in the Summer of 2011 Review of responses and selection of operator in the Fall of 2011 Transition period from Winter 2011 through Spring 2012 Alternative Management Structure July 2012