CITY OF LOS ANGELES, CALIFORNIA And...

CITY OF LOS ANGELES, CALIFORNIA

Cost Allocation Plan 39 For Department Administration and Support,

And Compensated Time Off

(With Independent Auditor's Report)

For the Fiscal Year Ended June 30, 2015

n'IGO Certified Public Accountants

CITY OF LOS ANGELES, CALIFORNIA Cost Allocation Plan 39

For Department Administration and Support, And Compensated Time Off

For the Fiscal Year Ended June 30, 2015

Table of Contents

Page(s)

Independent Auditor's Report ............................................... .................................................................. I

Schedule of Department Administration and Support Salary Base, Administration and Support Costs, and Rates by Department

To be Applied in Fiscal Year 2016-201 7 ............ ........... ...................................... ........................... 3

Schedule of Compensated Time Off Salary Base, Compensated Time Off Costs, and Rates by Department

To be Applied in Fiscal Year 2016-2017 ... .................... ......................... ... .... .................. ............... 6

Notes to Schedules ................................................................................... ......... ............. .......... ............... 9

Cert ified Public Account ants

Century City

Los Angeles

Newport Beach

Oakland

Sacramento

San Diego

Independent Auditor's Report San Franosco

Honorable Members of the City Council City of Los Angeles, California

Walnut Creek

Woodland Hills

We have audited the accompanying Schedule of Department Administration and Support Salary Base. Administration and Support Costs, and Rates by Department and the Schedule of Compensated Time Off Salary Base, Compensated Time Off Costs, and Rates by Department (Schedules) of the City of Los Angeles, California (City) Cost Allocation Plan 39 for the fiscal year ended June 30, 2015, and the related notes to the Schedules as listed in the table of contents.

Management's Responsibility for the Schedules

Management is responsible for the preparation and fair presentation of the Schedules in accordance with Title 2 in the Code of Federal Regulations (CFR), Subtitle A, Chapter II, Part 225, "Cost Principles for State, Local, and Indian Tribal Governments " (formerly Office of Management and Budget Circular A-87); this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the Schedules that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on the Schedules based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Schedules are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Schedules. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the Schedules, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity' s preparation and fair presentation of the Schedules in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity 's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the Schedules.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the Schedules referred to above present fairly, in all material respects, the Department Administration and Support Salary Base, Admini stration and Support Costs, and Rates by Department and Compensated Time Off Salary Base, Compensated Time Off Costs, and Rates by Department for the City Cost Allocation Plan 39 for the fiscal year ended June 30, 2015 in accordance with the basis of accounting described in Note 1.

M aoas G1n1 & O'Connell LLP 777 S. Figueroa Street. Suite 2SOO Los Angeles, CA 90017 www.mgocpa .com

Basis of Accounting

We draw attention to Note I to the Schedules, which describes the basis of accounting. The Schedules were prepared by the City on the cash basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to that matter.

Restriction on Use

This report is intended solely for the information and use of City management, City Council, others within the City, and the U.S. Department of Housing and Urban Development, and is not intended to be and should not be used by anyone other than these specified parties.

H«ei'4 bw ( 0'Ct>Mdf @ Los Angeles California November 23 , 2016

2



Based on the Fiscal Year Ended June 30, 2015 To Be Appl ied in Fiscal Year 2016-2017

DEPARTMENT/Cost Center

AGING Balance of Department Special Fund (Title V)

A !MAL SERVICES

BUILDING & SAFETY

CITY ADMIN ISTRATIVE OFFICER (CAO) Petroleum Admin., Proprietary.

Capital Projects (Phy. Plant) Disaster Grants Coordination

CITY A TTOR EY Criminal Direct Billed - User's Site (Proprietary Depts.) Direct in City Space (CDD, Hous. Auth.)

CITY CLERK Elections Special Assessment Section

CONTROLLER Direct Billed (at User's site) Direct Billed (in City space)

CULTURAL AFFAIRS

DEPARTMENT ON DISABILITY

ECON. & WORKFORCE DEV'MT. (was CDD) EWDD. Balance of Department As Needed Employees

EL PUEBLO

EMERGENCY MANAGEME T Em. Prep. Policy & Public In fo.

Department Administration

and Support Salary Base

NIA NIA

$ 17.990. 187

62.720,164

1,510,120

286,843

42,9 12.570 13,963,018 4,079,404

6.133.813 918.010

773,373 697,531

3, 713,292

1,131,444

NIA NIA

987,661

978,887

Administration and Support

Costs

NIA NIA

$ 2, 159,368

14.182,584

379,011 125.357

5,383,945 2, 127, 158

443,526

2,920.838 (140, 194) •

248,432 126,951

2.593,29 1

305,925

NIA NIA

( 140,073) •

2 11,346

Rates

NIA NIA

12.00%

22.6 1%

25.10% 43.70%

12.55% 15.23% 10.87%

47.62% 0.00%

32. 12% 18.20%

69.84%

27.04%

NIA NIA

0.00%

21.59%

* In some years, the total apportioned amounts may be negative because the negative carryforward amount is higher than the apportioned amounts. In such cases. the rate is set at 0.00%.

The accompanying notes are an integral part of this schedule. 3

(Continued)



Based on the Fiscal Year Ended June 30, 2015 To Be Applied in Fiscal Year 2016-2017

Department Administration Administration

and Support and Support DEPARTM ENT/Cost Center Salary Base Costs

FINANCE, OFFICE OF Revenue Collections $ 21.549,839 $ 3,876,558 Cash Management & Street Bonds 849,386 154,7 14

FIRE Civilian 6.2 19,060 2,270.345 Sworn 326,301,676 11 3,034,840

Field Support rate. Sworn only -> 311.432,227 45,158.359

GE ERAL SERVICES Materials Testing 6.708.222 1,084,739 Print Shop 2.592,066 388,055

HOUSING+ COMMUNITY I VESTME T Grant Funded Housing NIA N/A Enforcement N/A N/A Housing, Internal Administration NIA N/A

LIBRARY 54,765,528 I I,553.966

LOS ANGELES CONVENTION CENTER 675.0 14 1,842.464

MAYOR Executive/Pol icy 6,308,896 717.926 Grant Funded/Spec. Prog. 5,264.741 800.351 Direct in City Space (45,048) *

NEIGHBORHOOD EMPOWERMENT 1.229.898 2.022,943

PER SO EL Custody Care (Jails) 4,980,076 714,989 Grant-Funded & Special Programs 888.592 100,028

PLANNING 20.640,419 5,752,298

POLICE Civilian 123.430.5 13 27,582,628 Sworn (Police Officers) 879,986,486 543.712,276

Field Supporr rare. Sworn only-> 866,925,943 189,005.780

Rates

17.99% 18.21 %

36.51% 34.64% 14.50%

16.17% 14.97%

N/A N/A NIA

21.10%

272.95%

11 .38% 15.20% 0.00%

164.48%

14.36% 11 .26%

27.87%

22.35% 61.79% 21.80%

* In some years. the total apportioned amounts may be negative because the negative carryforward amount is higher than the apportioned amounts. In such cases, the rate is set at 0.00%.


(Continued)



Based on the Fiscal Year Ended June 30, 20 15 To Be Applied in Fiscal Year 2016-2017

Department Administration Administration

and Support and Support DEPARTMENT/Cost Center Salary Base Costs

PUBLIC WORKS Board Office Direct: Pub. Svcs. $ 734,069 $ 67,655

Contract Administration Construction Inspection 21,014.380 2,516,767

Engineering Clean Water Infrastructure 29.671.264 4,420,314 Development Services 8,720.270 1,285,867 Mobility 13,030,325 1,909,076 Public Buildings and Open Spaces 12.987,092 1.958.312

Sanitation Solid Waste Program 84.926,581 6,000.799 Wastewater/Flood Control 104,050,591 6,514,484

Street Lighting 16,144,496 3,562,576

Street Services (St. Maintenance) 62,456,019 14,518.828

RECREATION AND PARKS I 13.141.578 I 6,50 I ,450

TRA SPORTATION 96,909, 148 I 3,023,872

zoo 13,464,235 3,625.259


Rates

9.22%

11.98%

14.90% 14.75% 14.65% 15.08%

7.07% 6.26%

22.07%

23.25%

14.58%

13.44%

26.93%



Based on the Fiscal Year Ended June 30, 2015 To Be Applied in Fiscal Year 20 16-20 17

Compensated Compensated Time Off Time Off

DEPARTMENT/Cost Center Salary Base Costs

AGING Balance of Department $ 2,584,389 $ 5 19,985 Special Fund (Title V) 1,123 50,494

ANIMAL SERVICES 14,680,365 3,570,294

BUILDING & SAFETY 56,210,357 12,576,040

CITY ADMINISTRATIVE OFFICER (CAO) Petroleum Admin., Proprietary,

Capital Projects (Phy. Plant) 10,495,827 2,008,790 Disaster Grants Coordination 10,495,827 2,008,790

CITY ATTORNEY Criminal 85,085,892 16,459,457 Direct Billed - User's Site (Proprietary Depts.) 85,085,892 16,459,457 Direct in City Space (COD, Hous. Auth.) 85,085,892 16,459,457

CITY CLERK Elections 2,985,762 128,443 Special Assessment Section 4,919,653 1,0 13,801

CONTROLLER Direct Billed (at User's site) 11 ,572,153 2,3 15,865 Direct Billed (in City space) 11 ,572, 153 2,3 15,865

CULTURAL AFFAIRS 2,606, 132 407,581

DEPARTMENT ON DISABILITY l, 147,389 194,296

ECON. & WORKFORCE DEV'MT. (was COD) EWDD, Balance of Department 10, 152,696 2,377,758 As Needed Employees NIA NIA

EL PUEBLO 665,336 154,852

EMERGENCY MANAGEMENT Em. Prep. Policy & Public Info. 2,130,675 385,520

Rates

20.12%

0.00% *

24.32%

22.37%

19.14% 19.14%

19.34% 19.34% 19.34%

4.30% 20.6 1%

20.0 1% 20.0 1%

15.64%

16.93%

23.42% NIA

23.27%

18.09% *The Compensated Time Off (CTO) rate was reduced to 0.00% due to the high CTO costs over the low CTO salary base causing an extraordinarily high rate that would result in a large negative carryforward in future years.


(Continued)



Based on the Fiscal Year Ended June 30, 20 15 To Be Applied in Fiscal Year 2016-2017

Compensated Compensated

DEPARTMENT/Cost Center

FfNANCE, OFFICE OF Revenue Collections Cash Management & Street Bonds

FIRE Civilian Sworn

GENERAL SER VICES Materials Testing Print Shop

HOUSfNG + COMMUNITY fNVESTMENT Grant Funded Housing Enforcement Housing, Internal Administration

LIBRARY

LOS ANGELES CONVENTION CENTER

MAYOR Executive/Policy Grant Funded/Spec. Prog. Direct in City Space

NEIGHBORHOOD EMPOWERMENT

PERSONNEL Custody Care (Jai ls) Grant-Funded & Special Programs

PLANNING

POLICE Civi lian Sworn (Police Officers)

$

Time Off Time Off Salary Base Costs

20,932,717 $ 5,011 ,694 20,932,717 5,0 11,694

19,225,644 4,222,502 262,454,235 33,892,666

4,863,274 1,076,375 2,0 18, 145 542,273

40,443 ,0 13 8,623,411 40,443,0 13 8,623,411 40,443,0 13 8,623 ,41 1

46,883,778 9,501,105

1,038,367 177,634

7,670,622 741,906 2,486,725 367,071 7,670,622 741,906

1,275, 182 342,0 13

30,923,429 6,518,345 30,923,429 6,518,345

19,335,928 3,665,411

164,444,680 46,841,876 736,382,491 240,925,360

The accompanying notes are an integra l part of this schedule. 7

Rates

23.94% 23.94%

2 1.96% 12.91%

22.13% 26.87%

2 1.32% 2 1.32% 21.32%

20.27%

17.11%

9.67% 14.76% 9.67%

26.82%

21.08% 21.08%

18.96%

28 .48% 32.72%

(Continued)

C ITY OF LOS ANGELES, CALI FORN IA Cost Allocation Plan 39


Based on the Fiscal Year Ended June 30, 20 I 5 To Be Applied in Fiscal Year 20I6-2017

Compensated Compensated Time Off Time Off

DEPARTMENT/Cost Center Salary Base Costs

PUBLIC WORKS Board Office Direct: Pub. Svcs. $ 3,73 1,090 $ 809,075

Contract Administration Construction Inspection 20,634,076 4,189,836

Engineering Clean Water lnfrastructure 57,897,485 I 1,783,502 Development Services 57,897,485 I I, 783,502 Mobility 57,897,485 I 1,783,502 Public Buildings and Open Spaces 57,897,485 I 1,783,502

Sanitation Solid Waste Program I 5 I ,084,344 34,248,918 Wastewater/Flood Control I 5 1,084,344 34,248,918

Street Lighting I 3,44 I ,896 2,757,461

Street Services (St. Maintenance) 50,002,467 13,927,329

RECREATION AND PARKS 62,293, 110 13,962,996

TRANSPORTATION 74,892,982 I 9,533,973

zoo 10,806,034 2,365,223


Rates

2 1.68%

20.31%

20.35% 20.35% 20.35% 20.35%

22.67% 22.67%

20.51 %

27.85%

22.41 %

26.08%

21 .89%

Note 1 - Accounting Policies



Notes to Schedules For the Fiscal Year Ended June 30, 2015

The City of Los Angeles (City) prepares its Cost Allocation Plan (CAP) in accordance with Title 2 in the Code of Federal Regulations (CFR), Subtitle A, Chapter II, Part 225, "Cost Principles for State, Local, and Indian Tribal Governments" (formerly Office of Management and Budget's Circular A-87) .

The Department Administration and Support CAP is prepared for certain City departments (see Note 2) to allow for the recovery of administrative overhead costs incurred within departments from Federal and State grants. The administrative costs included in the Department Administration and Support CAP represent the actual costs incurred in fiscal year 2014-2015 as reported in the City's basic accounting system, Financial Management System (FMS). Costs reported in FMS are accounted for on the cash basis method of accounting. The administrat ive and support indirect costs are not always the same as the City's General Administration and Support Program (GASP). Expenditures are included in the Department Administration and Support CAP if they conform to the following criteria: benefit the department as a whole; are not directly charged to a Federal or State grant; are not direct operating expenditures; and are costs which are not practical to directly bill, even though they might be considered al locable to di rect operations. Actual costs incurred during fiscal year 2014-20 15 are added to "carry forward" amounts, which represent the difference between the costs theoretically recovered in fiscal year 201 4-20 15 and the costs entitled to be recovered in fi scal year 2014-2015. The sum of the actual and carry forward costs (i.e., total allocated costs) is divided by departmental administrative and support salary base (see Note 3) to calculate overhead rates for each department cost center (see Note 4). Overhead rates are calculated for "direct" departments, which are departments that do not provide services to other City departments, and for '·support" departments with direct cost objectives. Overhead rates of support departments are only calculated for the "direct" components of such departments.

The Compensated Time Off (CTO) rates are to be used only when sick, vacation, and other CTO hours are not directly charged to a fee or grant project (see Notes 5 and 6). For employees who charge only part of their hours worked to a grant, their time off is usually not being charged to the project, so the cost of that time off may be recovered using the CTO rates. For employees whose entire annual salary is charged to a fee or grant, CTO is recovered as they take their time off, and the CTO rates are not to be used. When applicable, CTO costs should be billed to granting agencies or recipients of special services, either as a separate line item, or as an adjustment to salaries, increasing net salaries to gross salaries. The adjustment to salaries resulting in gross salaries is computed by applying the CTO rate to net salaries and adding this derived amount to net salaries. The derived gross salaries become the base against which the fringe benefit rate and other indirect cost rates are applied.

Note 2 - Departments without Department Administration and Support Rates

The City does not calculate Department Administration and Support rates for the Departments of Aging, Economic and Workforce Development, and Housing + Community Investment. These departments have been presented to be consistent with the presentation of the City's Central Services CAP.

The Department of Aging cannot recover administrative costs from its grants due to grant expenditure limitations. Department Administration and Support rates are not computed for the Departments of Economic & Workforce Development and Housing + Community Investment because their administrative and support costs are directly billed to the grants.

9



Notes to Schedules For the Fiscal Year Ended June 30, 2015

(Continued)

Note 3 - Department Administration and Support CAP - Salary Base and Overhead Rates

The salary base used to calculate overhead rates includes salaries of line employees only. It includes CTO and excludes overtime and unused sick and vacation pay. Line employees are those employees directly involved with the administration of the grant program.

Note 4 - Cost Centers and Cost Categories

Cost centers are determined based on department functions. As the City reorganizes its departments, cost centers are revised to adjust to the City's reorganization. Cost centers are also revised to allocate costs more accurately to the proper organizational units, and to accommodate the inclusion of allowable, but previously unrecovered costs. The cost categories are the Department Administration and Support costs and CTO costs for each cost center, as discussed in Note 1.

Note 5 - Compensated Time Off CAP - Salary Base and Overhead Rates

The salary base used to calculate the CTO rates includes salaries for actual hours worked (without CTO). The CTO cost includes salaries paid to employees who are on paid leave such as:

Sick Leave Injury on Duty Vacation Jury Duty Holiday Bereavement Leave Military Leave Preventive Medicine Family Illness Floating Holiday Workers' Compensation (Salary continuance paid by the employing department)

Note 6- Cost Center with no Compensated Time Off Rate

The City does not calculate a CTO rate for the Economic & Workforce Development Department - As Needed Employees since this cost center consists of part-time employees who are not entitled to CTO.

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