Miguel Santana the City Administrative Officer has released an Update to the Three-Year Plan to Fiscal Sustainability. In this comprehensive report he highlights the challenges faced by the City of Los Angeles, future outlooks, recommendations, and does a brilliant job of painting the economic sustainability of the City of Los Angeles in the grimmest light possible. One would think bankruptcy is inevitable. Clearly the message is sent to the LA City Council, make these tough choices or else. Some of you may recall our previous reports on the detailed budget plans submitted by the CAO, for those of you that may be reading this for the first time here are some things to consider.
This outlook is not final, it will be used by the council to make the choices on what get’s cut, who gets raises, and who gets eliminated. This by all means is not the only thing taken into consideration, but judging by the last few years, the city council gives great weight to the input of Mr. Santana, and the Mayor.
As we have previously reported countless times, this tough stance on raises by the union is nothing more then a fiasco to allow the implementation of the 10% Health care contribution on the workforce.
LADWP not only makes more in every classification, they are now under consideration to be removed from city employment all together to once and for all end the talk of Wage Parity becoming it’s own entity. Let us not forget while we took furloughs, and other cuts, LADWP continued to get raises as they raised LA Residents Water & Power rates.
Our unions allowed us to be put into this position time and again by making concessions and sending the sign that we were not worthy of our salary. Finally the CAO exposes the unions true motives the realignment of the workforce by employing a low income dues paying workforce. For your review included below are some highlights of the report.
Four-Year Budget Outlook and Update to the Three-Year Plan to Fiscal Sustainability
SUBMITTED BY Miguel A. Santana City Administrative Officer
A. Prioritize services and fund accordingly including support costs (do not assume priorities will get accomplished if not funded)
Focus on Core Services
services as being core. Correspondingly, budgets must reflect these priorities and fund all aspects of the service delivery system in accordance with the outcomes being sought and available funding. These are the principles of performance-based budgeting. For example, in
budgeting to achieve a certain number of street miles to be reconstructed, appropriate levels of funding must be provided to cover the salaries and indirect costs of all involved employees as well as for the necessary equipment, the maintenance of the equipment, and all other related
expenditures such as fuel and testing of materials. Should sufficient funding not be available, the desired outcomes must be reevaluated to match the funding. Alternatively, additional funding may be made available through new revenue sources or through the elimination of programs or
services of a lower priority.
with the development of departmental performance metrics to be integrated into the
City’s budget document, which will be organized to reflect an outcome-centered
2. Facilitate the development of desired outcomes for every service provided by the
City, the cost associated with achieving those outcomes, and identify the metrics
that will demonstrate progress towards the outcomes is being made.
B. Reestablish a base service level for priorities consistent with available funding
Over the years, the City has taken on additional responsibilities or adopted policies requiring a
corresponding increase to the level of services provided. In some cases these service level
increases were funded through fees charged to those individuals, groups, or projects accessing
those services. However, for General Fund supported services, service level increases have
often become the burden of departments to provide without additional funding. The capacity for
departments to absorb these service enhancements without funding is gone. The City is now at a
point where it must reestablish its base service levels consistent with available funding from its
fees or the General Fund and in support of its mission and vision.
3. Direct all departments to develop a five year strategic plan that re-establishes the
mission and vision of the department as well as goals and base level service targets
for their department.
4. Evaluate various options and best practices for the provision of emergency medical
transport services in the City.
5. Conduct a third-party analysis of the constant staffing deployment model currently
utilized by the Los Angeles Fire Department to determine the most efficient and
effective deployment of fire department resources citywide.
C. Realign services across departments based on core-competencies
The significant reductions in staff and funding for departments over the last several years have greatly impacted the ability of departments to be the self-contained and supporting entities they once were. Departments can no longer afford to have their own human resources, information technology, or accounting staff. In many cases, retirements, position elimination, and the City’s hiring freeze have diminished the ability of departments to fulfill these roles on their own. With the existence of centralized departments whose primary mission is the delivery of these services, the City must pursue the consolidation of functions and the realignment of services across departments to ensure all departments continue to function properly.
2. Implement the consolidation of the Office of Public Safety into the Los Angeles Police Department to improve the deployment of safety and security resources
3. Develop a plan for the consolidation of all the bureaus within the Department of Public Works.
4. Examine opportunities to consolidate or realign accounting, auditing, and information technology services citywide.
III. Pursue Alternative Service Delivery Models
The City’s capacity to provide high quality services in every area of its service portfolio has deteriorated. In this era fiscal crisis, if the City expects to continue providing certain services, it must explore alternative service delivery models that meet the needs of the public, reduce cost, promote
efficiency, and guarantee an acceptable quality and level of service. Two alternative service delivery models that the City must continue to pursue are Public-Private Partnerships (P3) and Managed Competition. Both models offer the City unique opportunities to preserve or enhance service levels and reduce cost.
1. Address the inequity of the upcoming compensation increases for the Coalition of Los Angeles City Unions and the City Attorneys Association, by initiating the
process to eliminate these increases.
2. Maintain essential healthcare services for employees by increasing their share of the cost of healthcare premiums by 10%.
3. Establish a new pension tier for future civilian employees that increases the retirement age, lowers automatic cost of living adjustments, controls for future
medical costs, averages final compensation over five years, and more equitably shares future funding risks between employer and employees while still providing a
quality retirement benefit.
4. Lower the entry level compensation in all City classifications by 20% to reduce the City’s annual salary costs.
B. Reduce the ongoing cost of the City’s workforce through strategic size reductions
3. Create a new economic development model with the larger economic goals of creating new jobs, attracting new business and industries, maximizing the City’s
assets, and increasing the General Fund revenue.
A. Implement alternative service delivery models.
With the initial adoption of the Three-Year Plan to Fiscal Sustainability, the Mayor and City Council concurred with this Office’s recommendation to examine opportunities for Public-Private
Partnerships for the following reasons:
- Cost containment
- Service efficiencies
- Market flexibility and innovation
- Transfer of risk
- Limit or reduce City financial leverage
- Improved service delivery
Our efforts in this regard initially focused on services where private firms had a strong presence in managing or providing parking structures. However, significant milestones with alternative service delivery models have been made in partnerships with non-profit organizations.
1. Improve the long-term sustainability of the Los Angeles Zoo by partnering with a non-profit organization in the daily management and operation of the zoo.
2. Expand the City’s capacity to provide services at its animal care centers and increase pet adoptions by collaborating with non-profit organizations in the
management and operation of animal care centers.
3. Release a proposal to continue the City’s collaboration with non-profit organizations at several cultural facilities and explore the feasibility of transferring management of cultural facilities to organizations focused on the arts.
B. Establish a managed competition process for select services
The tool of managed competition allows governments to seek the best price for providing a
service through internal (City workforce) or external providers (outside contractors). Key to the
decision making process on whether a service should be provided “in-house” or outsourced is
cost-effectiveness. However, in addition to cost, other factors to consider are language within
labor agreements, legal issues, desired service levels, efficiencies, effectiveness, quality of
service, transition period, and the ability to monitor the service provider’s work.
Furthermore, managed competition should not only be viewed within the context of choosing one
provider over another. At times, the best outcome for the City may be achieved through a shared
provision of services by the City workforce and outside contractors. As demonstrated by recent
City projects, the City workforce may be better suited to provide a base level of service while outside contractors can assist with workflow increases or time constraints.
2. Initiate a managed competition process to select the most cost-effective service providers that complement the City’s base-level of custodial services.
3. Initiate a managed competition process to select the most cost-effective service providers that complement the City’s base-level of fleet maintenance.
4. Initiate a managed competition process to select the most cost-effective service providers that complement the City’s base-level of street maintenance services including but not limited to weed abatement and tree trimming.
5. Following a review and assessment of the City’s technology services by a Strategic Advisor, initiate a process to procure the most cost-effective technology services for the City which will access current technological innovations and developments along with industry best practices, processes, and capabilities.