Los Angeles City Controller Ron Galperin released a report Wednesday calling on the city to reform the way it handles hundreds of special funds that he said hold more than $4 billion.
The special funds are set aside for specific projects or purposes and make up roughly half of the city’s treasury, but nearly 600 special funds are not included in the yearly budget, the report said.
“We need to untangle the web of special funds to determine how billions in taxpayer dollars can be better used to achieve the city’s priorities, like building more parks and investing in affordable housing,” Galperin said. “This is an opportunity to be more transparent with our finances and allocate unspent money to meet neighborhood needs. The city has taken steps in this direction based on recommendations I’ve made in recent years, but we need a more comprehensive approach to address the magnitude of the issue.”
The special funds are for particular projects, like creating parks, building bridges and constructing affordable housing, but the city lacks standard rules for the special funds which results in tens of millions of dollars often going unused, Galperin said.
In the 2018 fiscal year, the city spent just 1.4 percent of an $18.2 million special fund dedicated to improving parks and recreation centers; the city’s bicycle plan used 3.3 percent of its $1.7 million balance; and there were zero expenditures from one $1.7 million fund to improve public safety, according to the report.
The report also shows that 188 of the city’s special funds haven’t been touched for three or more years, which is long enough for them to be considered idle, and that the idle funds hold more than $31 million.
Galperin has previously highlighted the issue of special funds, and said a 2018 report resulted in city departments closing nine idle funds and freeing up $1.2 million.
The report also found that there is $3.3 million sitting in a 7-year-old fund for reducing neighborhood traffic, $3.1 million set aside to create affordable housing in a small geographic area that could be repurposed to be used citywide, and $1.2 million in a decade-old fund called “Healthy Alternatives to Smoking.”
The report recommends that the City Council implement standard procedures on special funds, review revenue and spending plans for each fund yearly, and adopt new procedures to repurpose and close out idle funds.
The report can be found at lacontroller.org/specialfunds.