Budget and Finance Advisory Committee

MINUTES – BUDGET AND FINANCE ADVISORY COMMITTEE (BFAC) Friday, May 1, 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, Gilda Haas, Joseph M. Lumarda, Tom De Simone (4); Absent: Derric J. Johnson (1) Chairperson Galperin called the meeting to order at 1:14 p.m. Vice Chairperson Johnson subsequently arrived at 1:18 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 April 3, 2026, Budget and Finance Advisory Committee meeting. Member Joseph M. Lumarda moved to approve the Minutes of the April 3, 2026 Budget and Finance Advisory Committee Meeting, which was seconded by Member Tom De Simone – Ayes: Galperin, Haas, Lumarda, De Simone (4); Nays: (0); Absent: Johnson (1) (4) Progress Report Discussion Committee members will consider the possibility of preparing and presenting a progress report to the City Council’s Budget and Finance Committee on Phase 1 of the Budget and Finance Advisory Committee work. The Committee discussed the preparation of a summary report detailing the status of the BFAC’s work and priorities broken down by category, and the timing in which to present information and recommendations to the Budget and Finance Committee. (5) Presentation by Office of Finance The City Treasurer and the Chief Investment Officer will present on the management of the City’s General Pool and City investment programs. Diana Mangioglu, City Treasurer and Director of Finance, and Thomas Juarez, Chief Investment Officer, Office of Finance, presented an overview of the Investment Division’s responsibilities, investment practices and strategy (presentation is available in Council file No. 25-0314). The Investment Division is responsible for actively managing the City’s general investment pool, which includes approximately $16.5 billion in General Fund and Special Fund monies. The Investment Division also oversees approximately $2.5 billion of funds that are separately managed with special considerations outside of the general investment pool. Core responsibilities of the Investment Division include the management and assessment of daily and monthly cash flow needs to ensure there is sufficient liquidity for City operations, and revenue forecasting to incorporate into cash inflow and investment decisions, strategy and execution. The Investment Division operates in strict adherence to the California Government Code, and the Statement of Investment Policy for the City of Los Angeles approved the Mayor and City Council.  The Investment Policy objectives include safety of principal, liquidity, and a market rate of return. Regarding the safety of principal objective, emphasis is placed on high-quality, low-volatility assets such as fixed income securities. Securities that are invested on a daily basis include United States (U.S.) Treasury and government agency bonds, Fannie Mae, Freddie Mac, and home loan bank securities; Moody’s and S&P-rated corporate notes with an A rating or better, money market funds, short-term commercial paper, AAA- rated asset backed securities, and securities from supranational organizations. The liquidity objective is a key component that drives the daily investments in the core, reserve, and extended reserve portfolios of the general investment pool to meet the City’s liquidity needs. The Investment Division operates off a six-month cash flow projection model based on departmental inflows and outflows to match or immunize liabilities with individual security purchases that provide the highest available rate of return on investment and avoid costly overdraft charges, given the current interest rate environment. Regarding the market rate of return objective for the expected interest income earned in the current capital markets, the core, reserve, and extended reserve portfolios within the general investment pool each track a specific Index benchmark. The core portfolio, which contains a range of one-day to one-year investments, is benchmarked against the three-month Treasury Bill. The reserve portfolio, which contains a range of one-year to five-year investments, is benchmarked against the Bank of America one-year to five-year U.S. Corporate and Government Index. The extended reserve portfolio, which contains a range of five-year to ten-year investments, is benchmarked against the Bank of America five-year to ten-year U.S. Treasury Index. The Committee and Office of Finance representatives discussed the management of the core portfolio to meet the City’s liquidity needs and match anticipated departmental outflows, the management of the reserve and extended reserve portfolios in accordance with the risk characteristics of their respective benchmarks to safely enhance yield, and the month-end rebalancing to match the benchmark characteristics for each portfolio. The $2.5 billion in the special fund monies invested separately from the general investment pool have specific restrictions, and include construction-type monies from proprietary City departments and bond issuance funds that are managed to match specific cash flows. The Office of Finance representatives also discussed inter-fund borrowing through Tax and Revenue Anticipation Notes (TRAN) and from the City Treasury, staff retention efforts within the Investment Division, and the accounting of monies in the portfolios. (6) Presentation by Neighborhood Council Budget Advocates Co-chairs of the Neighborhood Council Budget Advocates, Jay Handal and Glenn Bailey, will present on the 2026 White Paper recommendations.  Jay Handal, Co-Chair of the Neighborhood Council Budget Advocates, presented an overview of the 2026 White Paper prepared by the Neighborhood Council Budget Advocates (document is available in Council file No. 25-0314). Mr. Handal and the Committee discussed the current challenges associated the City’s annual budget process, and potential solutions reflected in the list of recommendations contained in the 2026 White Paper. Recommended actionable items include institutionalizing a five-year financial plan, revenue diversification and expansion, operational efficiencies through technology and artificial intelligence such as predictive maintenance, automated permit review, and claims risk modeling; strengthening Reserve Fund policies, delivering equitable services throughout the City, financial stability through data-driven revenues, cultural change in accountability, potential bond issuances to address the structural deficits in the City’s budget, risk audits on systematic infrastructure needs, and the utilization of Geographic Information System (GIS) mapping and geo-fencing analytics to assess sidewalk and street repairs. The 2026 Los Angeles Neighborhood Council Budget Day is scheduled on June 27, 2026 in City Hall. (7) Discussion on 2026-27 Budget Process Committee members will discuss opportunities to engage the City Council’s Budget and Finance Committee on the ongoing 2026-27 Budget Process. Charles Turner, Council District 5, and the Committee discussed the process and timeline of the Budget and Finance Committee’s Budget Hearings for the consideration of the Mayor’s Fiscal Year 2026-27 Proposed Budget; and, options to present the BFAC’s recommendations during the Budget Hearings, or at a later date, to the Budget and Finance Committee. (8) Open Discussion Committee members will refine the BFAC work plan, goals, and focus areas for the year, as needed. The Committee discussed the focus areas prioritized by the ad hoc subcommittees. The ad hoc subcommittee focused on economic development and asset management held discussions facilitated by Councilmember Katy Yaroslavsky’s Office, Council District 5, regarding the exploration of using idle Special Funds dedicated to economic development to fund the design and establishment of a potential economic development corporation to manage and reuse City assets. Another recommendation is to establish a review process to assess how underutilized City properties are deemed as surplus land, and how to re-design the departmental determination process to achieve more objective  determinations. A third focus area may involve the assistance of the City Attorney’s Office to develop a thorough understanding of the Surplus Land Act and any other legal constraints or compliance issues that may impede the disposition of City assets, to recommend any policy changes or reforms. A fourth focus area is to evaluate the City’s assets as economic development drivers in a Citywide holistic approach. This ad hoc subcommittee may also explore pre-approved housing templates for the City’s development approval process for potential revenue growth. The ad hoc subcommittee focused on the area of financial management discussed the exploration of trends associated with idle Special Funds and the revenue impact of TRAN inter-fund borrowing. The ad hoc subcommittee focused on the area of new revenues, expenditures, efficiencies, and innovations is prioritizing the issues around the continuum of increasing liability costs related to public safety agencies, structural prevention of infrastructure liabilities, personnel-related costs, mechanisms for institutional accountability, claims management reform and structural budgeting process, and managing liability exposure. The Committee requested to engage the City Attorney’s Office to discuss the liability claims management process and the status of the proposed legislation that would impose limits or caps on liability claims against public entities. The Committee also discussed establishing a regular actionable process and a goal on an ongoing basis to establish momentum during each BFAC meeting, and holding discussions on the ad hoc subcommittee progress reports at the start of the meetings. (9) Next Steps and Calendar Review The Committee discussed the preparation of a summary report for review during the next BFAC meeting. The next BFAC meeting is scheduled on Friday, June 5, 2026 at 1:00 p.m. in Room 401, City Hall. (10) Adjournment The Committee Meeting was adjourned at 3:35 p.m. with the following Members present: Ron S. Galperin, Derric J. Johnson, Gilda Haas, Joseph M. Lumarda, Tom De Simone (5); Absent: (0) 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.