My comments regarding agenda Item # 1 for 912 Commission meeting on May 24, 2007 in response to the Staff Report below....
 
 
#4 - I think a staff person should be provided to act as treasurer for each NC, This would not be a boardmember but a paid staffmember from a company like Apple One. The NC could have its own boardmember treasurer (in addition, if it wants), but I do not think NCs should be expected to find someone with accounting skills or train someone for this task.  Some communities simply do not have anyone interested or skilled with numbers. I would like to see this staff position funded separately by the city (the money would not be taken out of the $50,000 per year).
 
#10 - I think the money should not be transferred into a regional outreach account for three years. Raphe suggests 18 months, which I believe is too short a period. Some NCs have very expensive projects that they will not be able to complete if they look at losing their money so quickly. It has greatly benefited my council that we accumulated over $100,000. We were able to do a $40,000 landscaping project, plus pay for "Valley Glen" signs as well as pay for expensive school grounds upgrades. Without this huge lump sum available, we would have had to forgo some of these projects. In the future, I would recommend that my council try to "accumulate funds" for big projects that can make a noticeable difference in the community. 20 very small projects may not make a visible impact on the community. A NC may want to do something really big that every stakeholder can see and appreciate. If we are going to keep the "use it or lose it" idea, I would like to see it remain as it is.      
 
#11 - FYI, there are many NCs who do not want to subdivide even though they have a huge number of stakeholders. They feel it will disconnect the community. I don't have a problem with a coming up with a minimum number of stakeholders for the $50,000, but am not exactly sure how that number is to be determined. We have already said that a stakeholder is anyone who says "I'm a stakeholder," so there is no way to determine how many would make this claim in an area. The minimum for the $50,000 would have to be based on something like the number of residents in an area, yet I think this is problematic. Some NCs will call this unfair if they, for example, have few residents and numerous businesses / employees in their community. Downtown L.A., for example, would be at a disadvantage.   
 
Thanks,
 
Charlotte Laws

____________________________

 

May 23, 2007

Agenda Item #1

To:                   NCRC Commissioners

From:               Raphael Sonenshein, Executive Director

Subject:            Staff Report on Funding of Neighborhood Councils for May 24, 2007

Commission Meeting

Finding #1: The Charter made no provisions for City funds to financially support the Neighborhood Councils.  After the Charter passed in 1999, there was discussion of allowing Neighborhood Councils to apply for grant funds from the City.  However, no such grant programs were ever developed.

Some debate took place about whether Neighborhood Councils could become non-profit organizations, an idea that was incorporated into the Plan.  So far, however, the City Attorney has determined that Neighborhood Councils may not directly accept donations without Council approval. Discussions are proceeding with the City Attorney and others about new legislation to allow Neighborhood Councils to accept gifts.  

Finding #2:  In 2002, Mayor James Hahn announced a program to provide direct funding to all Neighborhood Councils, in the amount of $50,000 each.

DONE was tasked with administering the funding.  Ultimately, the design of the program involved checks to be authorized by Neighborhood Councils and issued with the approval of DONE, and pre-paid debit cards to be used by Neighborhood Councils for smaller amounts with original receipts required.

Neighborhood Councils are expected to spend their money on administrative expenses, outreach, communications, or other purposes.  DONE provides a list of approved and unapproved expenditures.

Neighborhood Councils receive an allocation of $50,000 every fiscal year.  They can accumulate an unexpended balance of no more than $150,000.  After three years, any funds totaling more than $100,000 are “swept” back in the City’s general fund.

Finding #3: Valuable activities have been undertaken by a number of Neighborhood Councils using their funding allocations. The funding program seems to provide a sense of control and autonomy for advisory Neighborhood Councils.

 

(See attachment for list provided by DONE from which these examples are taken)

Finding #4:  The administration of the fiscal program by DONE (e.g., answering questions from Neighborhood Councils, tracking expenditures, ensuring that expenditures are within budget and within Controller and City guidelines, and preparing summary expenditure reports) has occupied significant staff time. 

Even with all the staff effort, the requirements of the program have been difficult to implement. Thus, the system has experienced the worst of both worlds: too big a bureaucratic role to suit the mission of DONE, without the staff resources to do a complete and thorough job.

In November 2006, City Controller Laura Chick released a performance and management audit of DONE.  The audit highlighted a number of problems with the fiscal management of the program, such as missing receipts and other documents, inconsistent application of funding rules by DONE, lack of controls over the debit cards, and the limited effectiveness of Neighborhood Council budgets that must be submitted to DONE before expenditures can be approved.

Finding #5:  The funding program requires each Neighborhood Council to have a treasurer, and the City and the Controller impose significant financial reporting requirements on each Neighborhood Council.

The necessity for DONE to monitor the financial transactions of individual Neighborhood Councils creates mutual frustration, including missed deadlines, absent or incomplete paperwork, and lots of correspondence back and forth.  It is difficult to expect all 89 Neighborhood Councils to recruit highly effective treasurers, especially since many treasurers are elected.  Calls for treasurer training are added to the array of other training programs recommended for Neighborhood Councils, and turnover of treasurers complicates the situation. There is no clear plan for what to do with incompetent or unresponsive treasurers.  Neighborhood Council bylaws contain detailed language about financial reporting.

Finding #6: Considerable funds are not expended by Neighborhood Councils.  Inevitably, these unspent balances are tempting targets for City budget officials.

The Controller found that by the end of fiscal year 2005-06, that while the City had appropriated $10.9 million to this program, more than 50% had not been spent.

NCRC staff analysis of spending data through June, 2007 (including estimates of spending in June) indicates wide variations among Neighborhood Councils in their spending patterns. 

Fourteen (14) Neighborhood Councils had less than 25% of their current allocation remaining, while for 9 Neighborhood Councils over 75% of their allocation remains unspent.  More experienced Neighborhood Councils seem to be more likely to spend their city funding.  The average Neighborhood Council that started receiving funds in 2003 has spent roughly 60% of its total appropriation, while Neighborhood Councils that started receiving funds in 2005 and 2006 have spent approximately 35% of their allocation. (These figures are based on mid-year spending and may change by the end of the fiscal year.)

New ways of thinking about the unexpended funds should be explored in a way that invests the funds within the Neighborhood Council system, and avoids the accumulation of large sums of unspent funds. 

Finding #7:  In light of previous recommendations by the NCRC, DONE’s role in managing the funding program seems inappropriate.

DONE staff are not trained in financial management, nor should they be.  They have managed, however, to provide considerable valuable information to Neighborhood Councils regarding funding.  

The requirement that Neighborhood Councils pass a planned budget before expending funds seems more appropriate for a City agency or department than for a participatory organization.

The NCRC previously directed staff to explore a fiscal agent or sponsor model.  The fiscal sponsor would pay Neighborhood Council authorized expenditures and potentially provide such additional services as recruiting clerical help. The Tides Foundation has received funding from the Kellogg Foundation to link together organizations that can provide these services.

Finding #8:  Replacing the funding program with a grant program could introduce new problems and possible inequities.

While a grant program would provide the potential for innovative programs selected on a competitive basis, it might also add another level of paperwork both for Neighborhood Councils and for DONE.  Experience with grants-seeking organizations indicates that the ability to write successful grant proposals varies widely.  The experience with Community Impact Statements suggests that a competitive grant program as a substitute for direct funding may heavily skew the availability of City funds.

Finding #9: Discussions about subdividing existing Neighborhood Councils have implications for the funding program.

Should Neighborhood Councils be allowed to subdivide?  And if they do, should new Neighborhood Councils receive the full $50,000 allocation?  While there is an ideal size in the literature of neighborhood democracy that is much smaller than the existing Los Angeles system, some criteria are needed to ensure that the funding program does not become a motivating factor for drawing new boundaries, and to prevent an explosion of the budget.

Some Possible General Approaches

 

  1. The funding program should not create major bureaucratic obstacles for Neighborhood Councils or for DONE.

 

  1. As much as possible, the paperwork elements of the funding program should be handled outside of the Neighborhood Councils and DONE.

 

  1. The funding program should be easily audited by other City agencies and offices, such as the Controller.

 

  1. Neighborhood Councils should have maximum flexibility in spending their funds as long as city regulations are not violated.  There is no reason to impose percentages for various categories of spending, nor should there be requirements for full budget planning in advance of expenditures.

 

  1. Neighborhood Councils should not be obligated to spend all or even any of their funds, and a specific use should be made of funds that Neighborhood Councils do not choose to spend.

 

  1. Funds appropriated for the Neighborhood Council system should remain within the system and not be swept back into the General Fund. 

 

  1. The purposes of the funding program are likely to evolve.  Hopefully, some of the administrative expenses will be picked up in a regional or citywide approach. Some of these future uses may create problems, e.g., if City departments view the funding program as a source of extra funds for their own programs.  Or, Neighborhood Councils may hope to use their funds to “buy” services that could be more effectively obtained by effective lobbying at City Hall.  These are wrinkles that will simply have to be worked out over time. 

 Possible Draft Motions

  1. The Neighborhood Council funding program should continue at current levels of funding in the amount of $50,000 per Neighborhood Council.

 

  1. DONE should set aside some funds for a competitive grant program for special projects for which Neighborhood Councils could apply for special projects.

 

  1. DONE’s role as monitor of the funding program for individual Neighborhood Councils should be reduced.  DONE should continue to implement the City Council’s policies on funding Neighborhood Councils.  DONE should continue to inform Neighborhood Councils of guidelines for the use of funds, and to inform Neighborhood Councils about the avoidance of such conflicts of interest as self-dealing by Board members.  DONE should not act as the regular monitor of the expenditures of individual Neighborhood Councils.

 

  1. The role of the Treasurers in the Neighborhood Councils should be reduced, and the reporting requirements of Neighborhood Councils should be simplified.  The main activity of Neighborhood Councils in the funding program should be the approval of expenditures by the Board.  Neighborhood Councils should not be required to approve an annual budget before authorizing expenditures.

 

  1. The day-to-day monitoring function should be turned over to a regional or citywide fiscal agent or fiscal sponsor identified thorough a competitive Request for Qualifications.  This fiscal sponsor would authorize and pay monies as appropriated by Neighborhood Councils, in accordance with announced guidelines for authorized and unauthorized expenditures. 

 

  1. The fiscal agent/sponsor will help Neighborhood Councils to obtain clerical assistance if the Neighborhood Councils choose to allocate their funds for that purpose.

 

  1. For the sake of transparency, all expenditures should be noted by category.  Debit card expenditures should be logged in a manner that is transparent.

 

  1. Flexibility of expenditures should be emphasized, including donations to non-profit organizations by Neighborhood Councils.  However, any such donations must be for specific, stated purposes related to the mission of the Neighborhood Council.

 

  1. The Controller will continue to audit the fiscal program by examining the records of the fiscal agent/sponsor.

 

  1. If Neighborhood Councils do not expend their funds after 18 months, those monies shall be transferred to a Regional Outreach Account to be spent on behalf of the Neighborhood Council programs in that region.  Neighborhood Councils may also choose to designate some of their funds for this regional outreach program at any time.  The Regional Outreach Account shall be under the control of the Regional Authority made up largely of Neighborhood Council representatives.

 

  1. If a policy is enacted to allow Neighborhood Councils to subdivide, the $50,000 allocation should be given only to those Neighborhood Councils whose original population base was greater than a specified number.

 

 


Spending Patterns of Neighborhood Council Funds 2003-Present

Staff Document - Neighborhood Council Review Commission 

May 24, 2007

 

 

 SPENDING BY CATEGORY

 

 Operations

 Outreach

 Community Improvement

 Card/ Uncategorized

 Total Expended to May 1

 Total Unspent to May 1

Total

$928,581

$1,500,456

$1,679,897

$3,792,027

$7,900,961

$7,289,594

 # of NCs

81

84

74

86

86

86

 % of Total Spending

12%

19%

21%

48%

100%

-

 

 

SPENDING BY REGION

 

 

 

 

 

 

Region

 Operations

 Outreach

 Community Improvement

 Card/ Uncategorized

 Total Expended to May 1

 Total Unspent to May 1

 # of NCs

East

 $   120,210

 $      300,813

 $     359,529

 $  487,951

 $   1,268,503

 $  1,006,497

12

Central

 $   178,645

 $      203,167

 $     196,977

 $  567,715

 $   1,146,504

 $  1,278,496

14

Harbor

 $     75,174

 $      153,535

 $     218,689

 $  518,511

 $      965,909

 $     484,091

7

N. Valley

 $   151,790

 $      103,082

 $     234,666

 $  512,886

 $   1,002,424

 $  1,022,576

14

South

 $   147,260

 $      194,319

 $     163,697

 $  621,723

 $   1,126,999

 $  1,476,055

14

S. Valley

 $   169,865

 $      419,652

 $     345,513

 $  756,798

 $   1,691,828

 $  1,258,172

16

West

 $     85,639

 $      125,889

 $     160,825

 $  326,442

 $      698,795

 $     763,705

9

TOTAL

 $   928,581

 $   1,500,456

 $  1,679,897

 $      3,792,027

 $   7,900,961

 $  7,289,594

86

 

 

DISTRIBUTION OF SPENDING WITHIN REGIONS

Region

 Operations

 Outreach

 Community Improvement

 Card/ Uncategorized

 Unspent Funds

 TOTAL

 # of NCs

East

5%

13%

16%

21%

44%

100%

12

Central

7%

8%

8%

23%

53%

100%

14

Harbor

5%

11%

15%

36%

33%

100%

7

N. Valley

7%

5%

12%

25%

50%

100%

14

South

6%

7%

6%

24%

57%

100%

14

S. Valley

6%

14%

12%

26%

43%

100%

16

West

6%

9%

11%

22%

52%

100%

9

 

 

NEIGHBORHOOD COUNCIL SPENDING BY YEAR OF CERTIFICATION (INCLUDING JUNE SPENDING ESTIMATES)

Year NC Started Receiving Funds

# of NCs

Total Unspent $

Total Spent $

Ave Unspent Funds

Ave Spent Funds

Ave % of Total Funds Remaining Unspent

2003

51

 $4,168,248

 $6,029,899

 $      81,730

 $       118,233

40%

2004

18

 $1,627,696

 $1,288,224

 $      90,428

 $         71,568

54%

2005

14

 $   948,388

 $   509,632

 $      67,742

 $         36,402

64%

2006

3

 $   110,787

 $     57,652

 $      36,929

 $         19,217

67%

Total

86

 $6,855,120

 $7,885,406

 $      79,711

 $         91,691

45%

 

 

DISTRIBUTION OF AMOUNTS OF UNSPENT FUNDS (INCLUDING JUNE SPENDING ESTIMATES)

Amount Unspent

# of NCs

Less than $25,000

2

$25,000-$50,000

15

$50,000-$75,000

21

$75,000 - $100,000

26

Over $100,000

22

DISTRIBUTION OF PERCENTAGES OF UNSPENT FUNDS (INCLUDING JUNE SPENDING ESTIMATES)

% Unspent

# of NCs

Less than 25%

14

25-50%

31

50-75%

32

75-100%

9

 


 

 
 

 

 

 

 

 

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