LA “special fund” loses $42.6 million between sofa cushions


Some critics (me) contend that local governments slice their budgets into far too many “special funds” that are designed to protect pet projects, so that a surplus in one fund – let’s say the Porcupine Mating Area EIR Fund – can’t be used to fill a deficit in another special fund – like the Bike Share Feasability Study Fund.

This practice of stashing dollars in different silos has finally raised a few public hackles. Last year, the California Parks system issued urgent notices that they would close 70 state parks – nearly 25% of the total – to save $22 million. This was only short months before Governor Jerry Brown hoped voters would approve new taxes.  In response, a number of outdoors-loving citizens had fundraisers, volunteered labor, and generally stood on their heads to keep their favorite parks open, only to learn that the state had a spare $54 million they had collected from the Off-Road Vehicle License Fund. Money that could have kept the parks open. Citizens, not surprisingly, went ballistic.

Now that problem could be dwarfed by another “special fund” faux pas, this time by the City of Los Angeles. For 17 years, the LA  Department of Transportation has quietly stuffed $42.6 million into a special account. Money that could have gone to the general fund, where it could have prevented layoffs of LA teachers, police, and firefighters.

“It frankly makes me a little concerned about what other costs aren’t being accounted for,” City Councilman Paul Krekorian said. “$42.6 million is a lot to fall through the cracks.”

Krekorian is chairman of the city council budget committee, and he has given LADOT 30 days to come back with a detailed report that explains how one department managed to misplace that much loose change. In the meantime, the LADOT’s general manager blames “accounting errors.” Deep.

Krekorian is also proposing new procedures that will make it harder to make this kind of mistake in the future. But here’s the real eye-opener. If this were just one special fund that lost track of $3 million a year, on average, that would be one thing. But LA has more than 600 local funds. And who knows how many of those have a few million squirreled away here or there?

City Controller Wendy Greuel, who recently ran for mayor, blames the LA City Council. “As Controller, I have been concerned about the lack of accountability in the city’s Special Revenue Funds and have raised this issue repeatedly,” Greuel said. “I am currently auditing the city’s 600 special funds, which include transportation grant funds,” she stated.

On May 21, Greuel participated in a run-off election against City Councilman Eric Garcetti on May 21. Garcetti was elected Mayor, with 54% of the vote. The race was the most expensive in LA history, with $33 million spent. It also had the one of the lowest voter turnouts for a runoff election, about 20%.

Los Angeles still faces a $100 million budget deficit. Perhaps Ms. Greuel can now focus 100% on her responsibilities as Controller, and find more dollars between the cracks of LA’s many sofas.

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