Public Financial Management Preliminary Work Plan
Los Angeles County Local Agency Formation Commission Special Reorganization
Study
Made public by LAFCO mailing to their list 3-17-99 and posting
it to their website 3-20-00 to be heard at the 3-22-99
meeting
Index added by ValleyVote
Initial Data Collection And Fiscal Analysis
Step 1. Applicant Identifies Needs for Data Collection
Step 2. LAFCO Prepares a Request for Information
Step 3. Data Collection
Step 4. Review, Analysis of Data
Analysis Of Applicant's Proposals And City's Responses
Step 5. Applicant Reorganization Proposal
Step 6. Response to Applicant Proposal
Prepare Draft Comprehensive Fiscal Analysis
Step 7. Final Plan - Comprehensive Fiscal Analysis
Public Hearings
Preparation/Submittal Of Final Comprehensive Fiscal Analysis
Initial Data Collection And Fiscal Analysis
The initial phase will involve the analysis of the services to be
provided by the proposed new cities, and the development of the data collection
process with the City. This phase will result in the preparation of a strategic
plan by the Applicant for each proposed new city that will be the primary
component of the application for Special Reorganization. The strategic plan will
identify and describe the services to be provided by the proposed new cities and
project its financial operations for three years.
To index
Step 1. Applicant Identifies Needs for Data Collection
PFM will meet with the Applicants to discuss the
requirements of the Special Reorganization process and the expected PFM work
plan. This first step of the seven-step process will conclude with the
submission to LAFCO, by the Applicant, of a request for information from the
City.
Task 1-1. Review and Analysis of Previously Collected Data
PFM will review and analyze data previously collected from the City and
other affected parties.
Task 1-2. Prepare Guidelines for Development of Strategic Plan
PFM will meet with each Applicant to discuss the process for Special
Reorganization, as set forth by the Cortese-Knox Act. PFM will discuss its work
plan with each Applicant and describe the expected work products of the study,
including the development of a strategic plan and initial fiscal analysis. PFM
will assist LAFCO in providing the Applicants with guidelines for the
development of the strategic plan in order to ascertain from the Applicants what
services will be provided and how those services will be provided. The
guidelines will also request that the Applicants identify the key
decision-makers for the strategic plan development process.
Task 1-3. Review Services Proposed by Applicants
PFM will assist LAFCO in reviewing the services proposed by each
Applicant, and assess whether the responses provided are sufficient to determine
the information to be requested from the City.
Task 1-4. Review Applicants' Request for Information
PFM will review the request for information submitted by the Applicants,
and assess whether the data requested is consistent with the services proposed
by the Applicants, and consistent with the requirements of the Cortese-Knox Act.
To index
Step 2. LAFCO Prepares a Request for Information
PFM will assist LAFCO in the preparation of a request for information
from the City based on the data request by the Applicants.
Task 2-1. Discuss Work Plan and Data Needs with City
PFM will meet with the City of Los Angeles and provide a formal
presentation on the parameters and goals of the Comprehensive Fiscal Analysis,
as well as the expected data requirements of the study. PFM will request that
key City staff members be identified that can assist in the identification of
municipal services currently provided in the proposed new cities, and of any
constraints on the apportionment of those services.
Task 2-2. Prepare Request for Information
PFM will assist LAFCO in preparing a request for information from the
City and other affected agencies. To index
Step 3. Data Collection
The City of Los Angeles responds to LAFCO's request for information and
provides comprehensive data. To index
Step 4. Review, Analysis of Data
PFM will assist LAFCO in the review and analysis of the data provided by
the City, and identify any necessary clarifications or reformatting. Based on
information provided by the City, PFM will facilitate each Applicant's effort to
develop a strategic plan as part of the proposal for Special Reorganization. The
strategic plan will be constructed as a three-year budget (modeled after the
City of Los Angeles Budget) and will provide a description of services to be
provided by the proposed new city and identify the funding sources and estimated
costs of each service. The strategic plan will project the financial operation
of each proposed new city to determine its financial viability. PFM will develop
a computer model that will project the cash flow for each department and special
revenue fund of the proposed new cities. Upon completion of the strategic plan,
PFM will prepare an initial fiscal analysis (Tasks 4-9 and 4-10).
Task 4-1.Estimate Revenues Transferred to Proposed New Cities
PFM will identify all General Fund and Special Revenue currently
contributed to the City by residents and business located within the proposed
boundaries of the proposed new cities. PFM will develop projections of revenue
for each proposed new city based on actual amounts and on any trends over the
last three fiscal years. PFM will provide a discussion and analysis of major
revenue items. PFM will project revenues for the general fund, special revenue
funds, and enterprise funds of each proposed new city.
Task 4-2. Apportionment of Municipal Services and Costs to Proposed New
Cities
PFM will identify the municipal services to be provided by the proposed
new cities, based on the structure defined by the Applicants. During this phase,
annual expenditure estimates will be derived for each service transferred.
For each City and proprietary department, a contact person at the City
will be identified that can describe the specific assets and services to be
transferred and provide the required budgetary data. A description of the
services to be transferred and three-year cash flows will be developed for each
department and special revenue fund.
For all support functions that are not specifically allocated by
geographical area, PFM will initially (unless otherwise directed by LAFCO)
apportion those services assuming the Applicants will retain a comparable
organizational structure and level of services as currently maintained by the
City.
Task 4-2(a). Administrative and Finance Departments
This task involves the analysis and apportionment of service and annual
expenditures (if any) of the following City departments: City Administrative
Officer, City Clerk, Council, Mayor, Bureau of Accounting, Bureau of Contract
Administration, Board of Public Works, Treasurer, and Bureau of Engineering.
This task will identify City-owned buildings located within the boundaries of
the proposed new cities that could support administrative and governing
functions.
Task 4-2(b). City Attorney
This task involves the analysis and apportionment of service and annual
expenditures of the City Attorney's office. A governance structure and
prosecution responsibility will be identified so that an accurate apportionment
of personnel can be made.
Task 4-2(c). Control
This task involves the analysis and apportionment of service and annual
expenditures of the Controller's office.
Task 4-2(d). Community Development
This task involves the analysis and apportionment of service and annual
expenditures of the Community Development and Housing Departments. A review of
existing and pending community development and housing grants will be
undertaken. PFM will not undertake discussions with State and federal agencies
involving the apportionment of existing grants.
Task 4-2(e). Fire
This task involves the analysis and apportionment of service and annual
expenditures of the Fire Department. Existing stations and equipment within and
in proximity to the proposed new cities will be identified and allocated.
Task 4-2(f). General Services
This task involves the analysis and apportionment of the General Services
Department.
Task 4-2(g). Information Technology Agent
This task includes the analysis and apportionment of service and annual
expenditures of the Information Technology Agency. A review of on-going capital
projects and equipment purchases will be undertaken.
Task 4-2(h). Personnel
This task involves the analysis and apportionment of service and annual
expenditures of the Personnel Department.
Task 4-2(i). Planning
This task involves the analysis and apportionment of service and annual
expenditures of the Planning Department.
Task 4-2(j). Police
PFM will review the current delivery of police service in the proposed
new cities, and identify the specific personnel to be transferred, any
additional personnel required for management of the new department, and the
facilities and equipment required.
Task 4-2(k). Bureau of Sanitatio
n
This task involves the analysis of service and apportionment of service
and annual expenditures of the Bureau of Sanitation. This task will identify
specific alternatives of providing solid waste and sewerage services to the
proposed new cities, and determine the capacity requirements for both proposed
new cities.
Task 4-2(l). Street Services/Lighting
This task involves the analysis and apportionment and annual expenditures
of the Bureau of Street Services and Bureau of Lighting. State and federal gas
tax revenue attributable to each proposed new city will be identified and
apportioned accordingly.
Task 4-2(m). Transportation
This task involves the analysis and apportionment of service and annual
expenditures of the Transportation Department. This task will involve the
computation of Proposition A and C Local Return sales tax revenue allocable to
the proposed new cities. This task will also identify the existing transit
service to be apportioned to the proposed new cities.
Task 4-2(n). Other Departments
This task involves the analysis and apportionment of service and annual
expenditures (if any) of the following City departments: Aging; Animal Services;
Building and Safety; Commission for Children, Youth and Their Families;
Commission on Status of Women; Cultural Affairs; Department on Disability;
Employee Relations Board; Environmental Affairs; Ethics Commission; Human
Relations Commission; Los Angeles Convention Center; Bureau of
Management-Employee Services; and Zoo.
Task 4-2(o). Airports
Execution of this task will depend whether the Applicant(s) request the
apportionment of the Airports, and the structure of such an arrangement. PFM
will describe the possible apportionment methods with the applicants and
identify the fiscal advantages and disadvantages. Depending on the structure,
PFM will identify the respective allocation of service and annual expenditures.
Task 4-2(p). Pensions
This task shall involve the review of existing legislation restricting
the divestiture of the City retirement system and Police and Fire pension, and
the review of the current funding status of each. A structure that may involve
the creation of a separate or pooled pension fund will be identified.
Task 4-2(q). Harbor
Execution of this task will depend whether the Applicant(s) request the
apportionment of the Harbor, and the structure of such an arrangement. PFM will
describe the possible apportionment methods with the Applicants and identify the
fiscal advantages and disadvantages. Depending on the structure, PFM will
identify the respective allocation of service and annual expenditures.
Task 4-2(r). Library
This task involves the analysis and apportionment of service and annual
expenditures of the Library system. Existing libraries and equipment within and
in proximity to the proposed new cities will be identified.
Task 4-2(s). Recreation and Parks
This task involves the analysis of service and apportionment of service
and annual expenditures of the Recreation and Parks Department. Existing parks,
golf courses, and allocable equipment within and in proximity to the proposed
new cities will be identified.
Task 4-2(t). Water and Power
Execution of a majority of this task will depend whether the Applicant(s)
request the apportionment of the Department, and the structure of such an
arrangement. PFM will describe the possible apportionment methods with the
Applicants and identify the fiscal advantages and disadvantages. Depending on
the structure, PFM will identify the respective allocation of service and annual
expenditures.
This task will identify any legal barriers to the divestiture or equity
sharing of the water and/or power systems. This task may involve the estimation
of any equity rights and the value of those rights as they relate to General
Fund transfers. An analysis of the impact on any existing bondholders of any
divestiture or apportionment plan will also be provided.
A determination of the feasibility of apportioning the City's
"Pueblo water rights" will be undertaken. Alternatives other than
ownership of the water system such as wholesale purchases from the Metropolitan
Water Department will be identified and assessed.
Task 4-2(u). Community Redevelopment Agency
PFM will assess the apportionment of project areas within the boundaries
of the proposed new cities and identify the debt, assets, and property tax
revenues transferred to the proposed new cities. The CFA will assess the
possibilities of debt repayment through a lump-sum payment or through ongoing
debt service.
PFM will identify the historic equity contributions via sewer fees and
capacity charges made by residents and business within the proposed new cities.
Based on historic cost, PFM will identify the value of distribution lines within
the boundaries of the proposed new cities, and system treatment and disposal
facilities.
Options will be identified for a potential transfer of facilities and
capacity rights to the proposed new cities. Capacity as a Contract Agency to the
wastewater system will be determined and any rate differential (compared to
current City rates) will be identified. Any payment to the City required for
revenue neutrality will be identified. Legal analysis in regard to any payment
to the City, in consideration of Proposition 218, will be undertaken. Capacity
rights to reclaimed water will be identified based on an analysis of the
Applicant’s respective equity contributions.
Task 4-4. Apportionment of Regional City-Owned Assets
Execution of this task will depend whether the Applicant(s) request the
apportionment of any specific asset outside the boundaries of the proposed new
cities, such as the Convention Center. To index
Analysis of Applicant's Proposals and City's Responses
To the extent concerns of the City were not previously identified, PFM
will address any responses from the City regarding the allocation of service and
annual expenditures in each Applicant’s strategic plan.
To index
Step 5. Applicant Reorganization Proposal
Applicant submits proposal for Special Reorganization based on strategic
plan and initial fiscal analysis. To index
Step 6. Response to Applicant Proposal
Task 4-5. Apportionment of Investment Portfolio
PFM will develop a methodology for apportioning the City's investment
portfolio to each proposed new city. Any risks associated with market loss,
caused by divesting investments prior to maturity, will be identified. PFM will
estimate the composition of the City’s portfolio after the secession, and
determine whether the City's investment policy is maintained. Any reduction in
City interest earnings because of the apportionment will be identified.
Task 4-6. Apportionment of Outstanding Debt
PFM will identify alternative scenarios for apportioning debt to the
proposed new cities based on criteria that may include an analysis of the
debt-financed assets transferred to the proposed new cities. If any debt is
apportioned to the proposed new cities, a feasible payment arrangement will be
developed and a review of bond covenants will be undertaken to determine the
appropriateness of the apportionment. If a refunding of some debt is required or
requested by the Applicants, PFM will compute the economic costs of the
refunding.
Task 4-7. Identify Non-Recurring Costs
PFM will identify any actions relating to the Special Reorganization that
may result in costs based on the physical apportionment of personnel and
physical assets, and actions associated with the construction of new facilities
and purchase of equipment required in the management of new services. PFM will
describe any additional services requested and defined by the Applicants that
are not currently available from the City. Cost estimates for new facilities and
equipment will not be provided by PFM.
Task 4-8. Identify Cost Saving Initiatives
Subsequent to the initial allocation of services and annual expenditures,
PFM will review the aggregate structure of proposed new services and assess the
operational feasibility of such a structure. Alternatives that may reconfigure,
add or reduce services in order to more effectively deliver municipal services
may be provided. PFM may identify potential cost saving initiatives that can
reasonably be implemented during the three-year planning horizon of the CFA. PFM
will meet with each Applicant to determine which initiatives, if any, will be
incorporated into the strategic plans.
Task 4-9. Determine Fiscal Impact on City
Based on the each Applicant's strategic plan, PFM will assess the fiscal
impact on the City of the proposed transfer of revenue and apportionment of
services and annual expenditures. PFM will use the estimates of revenue and
annual expenditures set forth in the strategic plans to determine the amounts
apportioned from the City for the next three years. If the City looses more
revenue than the amount of expenditures transferred, PFM will identify the
annual payment required by the proposed new cities to achieve revenue
neutrality.
In addition to immediate reductions in cash flow due to the apportionment
of revenue, PFM will also assess the impact of any long-term fiscal impacts such
as salary ratcheting of public service employees, and diseconomies of scale.
Task 4-10. Assess Financial Viability of Proposed New Cities In accordance with
the requirements of the Cortese-Knox Act, PFM will project the operating cash
flows of each proposed new city and determine whether the cities are financial
viable and can maintain a reasonable level of reserves over the planning
horizon.
To index
Prepare Draft Comprehensive Fiscal Analysis
Once each Applicant’s strategic plan is deemed feasible, PFM will
refine the Initial Fiscal Analysis, as needed, to ensure the CFA is accurate and
defendable. To index
Step 7. Final Plan - Comprehensive Fiscal Analysis
To index
Public Hearings
PFM will develop a communication strategy to effectively relate the
Applicants’ and the LAFCO’s goals and objectives to the public, to
departments, to legislators, and to other affected organizations.
Task 7-2. Develop Communications Strategy
PFM will work with LAFCO to develop a communications strategy to present
its findings and identify the proper forum and medium to disseminate information
on the CFA.
Task 7-3. Public Hearings
PFM will assist LAFCO in presenting the results of the CFA to affected
stakeholders and will respond, as necessary, to any input. To
index
Preparation/Submittal Of Final Comprehensive Fiscal
Analysis
Task 7-4. Revise Draft Comprehensive Fiscal Analysis
PFM will further refine the Draft
CFA, upon direction from LAFCO, and submit a bound final draft of the
Comprehensive Fiscal Analysis to LAFCO.
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