Budget and Finance Advisory Committee

MINUTES – BUDGET AND FINANCE ADVISORY COMMITTEE (BFAC) Friday, April 3, 2026 ROOM 401, CITY HALL - 1:00 PM 200 NORTH SPRING STREET, LOS ANGELES, CA 90012 MEMBERS: RON S. GALPERIN, CHAIR DERRIC J. JOHNSON, VICE CHAIR GILDA HAAS JOSEPH M. LUMARDA TOM DE SIMONE Armando Bencomo - Legislative Assistant - (213) 978-1080 (or Clerk.BudgetandFinanceCommittee@lacity.org) Submit written comment at LACouncilComment.com The audio for this meeting is broadcast live on the internet at https://clerk.lacity.gov/calendar. Additional information regarding Committee procedures provided at the end of this agenda. ITEM(S) (1) Call to Order and Roll Call Members Present: Ron S. Galperin, Derric J. Johnson, Joseph M. Lumarda, Tom De Simone (4); Absent: Gilda Haas (1) Chairperson Ron S. Galperin called the meeting to order at 1:05 p.m. (2) Public Comment • Multiple Agenda Item Comment • General Public Comment The Committee provided an opportunity for Multiple Agenda Item and General Public Comments. (3) Approval of Minutes The Committee will review and approve the Minutes of the February 27, 2026, Budget and Finance Advisory Committee meeting. Member Tom De Simone moved to approve the Minutes of the February 27, 2026 Budget and Finance Advisory Committee Meeting, which was seconded by Member Joseph M. Lumarda – Ayes: Galperin, Johnson, Lumarda, De Simone (4); Nays: (0); Absent: Haas (1) (4) Office of the Controller Presentation Controller Kenneth Mejia will present on departmental trends related to City revenue sources, expenditures, liabilities and special funds. Kenneth Mejia, City Controller, and Controller’s Office representatives presented an overview of the Revenue Forecast Report for the remainder of Fiscal Year (FY) 2025-26 and the upcoming FY 2026-27 (available in Council file No. 26-0295), which contains revenue projections, current economic outlook, key risks, assumptions, areas of concern, and strategic approach recommendations. The Controller’s Office demonstrated the real time financial and performance monitoring dashboards available on the Controller’s website for departmental metrics, General Fund revenue and expenditure analysis, and liability payouts. The Committee, Controller Mejia, and Controller’s Office representatives discussed the prioritization of recommended solutions to address revenue shortfalls and departmental deficits, such as investment in the City’s infrastructure and trend analyses to mitigate liability claims, third-party insurance coverage, departmental spending accountability and performance measurements, and the City’s competitiveness in the business climate in comparison to other jurisdictions. The Controller’s Office representatives discussed the impact of budgetary reductions and staffing challenges on the management of special funds, Council scheduling of Controller’s Office audit reports, repayment by City departments and the write-off process for Reserve Fund loans, building relationships with City departments to serve as a catalyst for the utilization of special funds; and, recommendations for systematic changes for idle and underutilized special funds, such as using heat map diagrams to track the utilization of special funds, tracking grants with expiration dates, developing an internal City’s Cost Allocation Plan for non-grant reimbursements to capture the direct and indirect costs for full cost recovery, and collection of cannabis business taxes from both licensed and unlicensed cannabis dispensaries. Controller Mejia also discussed the resources needed to increase audit functions in the Controller’s Office, potential methods to reverse trends in liability claims and payouts, benefits of performance-based budgeting and metrics for expenditures and settlement trends, a recommendation that would provide the City Controller the ability to introduce  Motions on matters within the jurisdiction of the Budget and Finance Committee; and, upcoming audits undertaken by the Controller’s Office. (5) City Fund Overview The Committee will be briefed on the composition, structural framework, and usage restrictions of the City’s various fund categories. Sofia Martinez, Coro Fellow, and Golden Bachelder, UCLA Luskin School of Public Affairs Fellow, presented an overview of the City’s various funds and background information from the Controller’s Office website regarding special funds (available in Council file No. 25-0314). A total of 883 City funds are broken down in the categories of special purpose funds, proprietary department funds, General Fund, and the pension and retirement funds. A total of 678 special funds are divided into the categories of governmental, proprietary, fiduciary, and special revenue fund groups; with the governmental category being the largest fund group. The special funds are also broken down by function categories, the largest of which are in the categories of economic development, community and public safety, and debt related functions. The 678 special fund accounts were categorized by their respective primary fund sources, which include bond proceeds and debt financing, proprietary revenue, fees, fines, charges, and assessments; local and state funding, federal funding, General Fund transfers, and funds authorized by development agreements. Certain sources of funds restrict the City’s discretion in expending special funds, such as funds derived from state and federal grants, or ballot measures with specific usage restrictions. The City has established certain fees that do not rely on outside funding sources that dictate their respective utilization. Special funds, including funds from outside sources, are approved by the City Council; and, the City Council authorizes the City Controller to establish the special fund accounts. There are Reserve Fund implications for special funds because only the General Fund cash balance reverts to the Reserve Fund at the end of each fiscal year; whereas, uncommitted special funds are unspent encumbrances that remain in the respective fund accounts until expended. The ability to alter the scope of a special fund, whether it be to consolidate, reallocate, or change the terms within a special fund for expenditure, depends on separate regulatory factors. However, there is opportunity for discretion in the interpretation of informal restrictions that are not dictated by an outside funding source, but rather by the determination of the City’s legal counsel as to how a special fund can be spent. Therefore, changes in the interpretation of usage restrictions can also have implications on how the special funds can be spent. The average balance of a special fund is $11.9 million, and the median balance of $323,000, demonstrates that there are significant outliers among the special fund accounts. There are a total of 81 special fund accounts without any cash balances, 134 special fund accounts with less than $5,000; 265 special fund accounts with over $1  million, and 15 special accounts with over $100 million. The Committee, Fellows, and the City Attorney discussed the potential options of sunsetting funds and evaluating the City’s discretion in the interpretation of usage restrictions to address the idle and underutilized special funds. (6) Focus Area Updates Committee members will provide updates regarding the current status and trajectory of their ongoing research and policy development initiatives. The Committee discussed the current status of the research and policy development initiatives undertaken by the ad hoc subcommittees. The ad hoc subcommittee focused on economic development and asset management is exploring the creation of a new entity to manage certain City assets and properties, which could assist in repositioning real assets over time for a greater economic development and revenue generation. This subcommittee discussed exploring the process as to how City departments deem City- owned properties as surplus land, and identifying any impediments in the process; exploring revenue generation and community benefits from air rights for development purposes; identifying City assets that can be monetized for other forms of development as the City’s development patterns change around the City’s transportation system and the liberalization of housing development law. A meeting with the Department of City Planning was requested to discuss these potential revenue generation options, as well as a high-level review of the Surplus Land Act. This subcommittee may explore how to change the economic development climate around the City’s real estate assets that would result in lasting revenue generation, and how the repositioning of City-owned property can create new surrounding economic activity that would generate property and sales tax revenue and jobs, as opposed to the lease or sale of a specific asset as a one- time transaction. The economic development special purpose funds that have been idle can be evaluated to determine whether any of these funds can be accessed to hire an asset management company for a professional analysis to yield recommendations over the course of the next budget cycle, or to conduct a study on the formation of a private enterprise to manage the City’s real estate assets. The ad hoc subcommittee focused on revenue efficiency and evaluation reported on a meeting held with the City Treasurer regarding the enhancement of investment returns for the funds managed by the City, and the enhancement of returns from the management of Tax and Revenue Anticipation Notes, and special funds. The Committee can also explore identifying key and strategic locations for the installation of digital signage to generate an income stream. (7) Open Discussion The Committee will refine the BFAC work plan, goals, and focus areas for the year, as needed.  No discussion for this Item. (8) Consideration of Progress Report The Committee will deliberate on the necessity and scope of initiating work on a progress report to the City Council’s Budget and Finance Committee. No discussion for this item. (9) Next Steps and Calendar Review The Committee discussed the procedures for developing a report or list of recommendations at the next BFAC Meeting to move forward for consideration by the Budget and Finance Committee during the upcoming FY 2026-27 Budget Hearings. The next BFAC Meeting is scheduled on Friday, May 1, 2026 at 1:00 p.m. in City Hall. (10) Adjournment The Committee Meeting was adjourned at 3:15 p.m. with the following Members present: Ron S. Galperin, Joseph M. Lumarda, Tom De Simone (3); Absent: Gilda Haas, Derric J. Johnson (2) If you challenge this Committee's action(s) in court, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice, or in written correspondence delivered to the City Clerk at or prior to, the public hearing. Any written correspondence delivered to the City Clerk before the City Council's final action on a matter will become a part of the administrative record. Materials relative to items on this agenda can be obtained from the Office of the City Clerk's Council File Management System, at lacouncilfile.com by entering the Council File number listed immediately following the item number (e.g., 00-0000). Telecommunication Relay Services Telephone communication is one of the most important forms of communication in society today. Due to advancements in technology, telephone devices have evolved with new services and capabilities. Individuals who are deaf and hard of hearing, and individuals with a speech disability are following these trends and are rapidly migrating to more advanced telecommunications methods, both for peer-to-peer and third-party telecommunications relay service (TRS) communications. Telecommunications Relay Service is a telephone service that allows persons with hearing or speech disabilities to place and receive telephone calls. TRS is available in all 50 states, the District of Columbia, Puerto Rico and the U.S. territories for local and/or long distance calls. TRS providers - generally telephone companies - are compensated for the costs of providing TRS from either a state or a federal fund. There is no cost to the TRS user. What forms of TRS are available?There are several forms of TRS, depending on the particular needs of the user and the equipment available: TRS includes: Text to Voice TIY-Based TRS; Speech-to-Speech Relay Service; Shared Non-English Language Relay Service; Captioned Telephone Relay Service; Internet Protocol Relay Service; and Video Relay Service. Please visit this site for detail descriptions, https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs. Don't hang up! Some people hang up on TRS calls because they think the CA is a telemarketer. If you hear, "Hello. This is the relay service .. . " when you pick up the phone, please don't hang up! You are about to talk, through a TRS provider, to a person who is deaf, hard-of-hearing, or has a speech disability. For more information about FCC programs to promote access to telecommunications services for people with disabilities, visit theFCC's Disability Rights Office website.