alternative management structurecao.lacity.org/reports/zoopresentationalternate.pdf2011-12 2012-13...

Los Angeles Zoo

ALTERNATIVE MANAGEMENT STRUCTURE

City Administrative Officer

May 2011

City of Los Angeles Four-Year Budget Outlook

2011-12 2012-13 2013-14 2014-15 2015-16

4,379

4,7654,931

5,2005,086

4,484 4,627

4,9514,775

Revenues Expenses

-311-249

-281

-304

Mill

ions

City Administrative Officer

What have we done?

The City has addressed $1.0 Billion in collective deficit using:

•“Fiscal First Aid” techniques

•Long-Term Financial Planning Solutions

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Fiscal First Aid

• Evaluated overtime use

• Improved billing and collections procedures

• Explored fees for services

• Refinanced debt for lower interest rates

• Sought state and federal assistance

• Offered early retirement program

• Deferred and/or cancel capital projects

• Used Reserve Fund to soften the landing

• Instituted hiring freezes

• Reduced hours worked

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Long-Term Financial Planning• Reduced workforce by 4,000 positions

• Replenished the Reserve Fund and Placed Charter Amendment P on ballot requiring a 2.75% Emergency Reserve Account within the Reserve Fund (approved by voters)

• Addressing major drivers of future deficits

– Placed Charter Amendment to create a new pension tier for new sworn employees (approved by voters)

– Developing new pension tier for new civilian employees

– Negotiated increased co-pays and contribution amounts from employees for health care

• Pursuing alternative service delivery models

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Three-Year Plan to Fiscal Sustainability

• Smart fiscal policies

• Focus on core services

• Sustainable workforce

• Alternative service delivery models

Adopted by Council February 9, 2010

City Administrative Officer

Potential benefits of an alternative management structure

• Reduce or eliminate the General Fund subsidy

• Increased operational efficiencies

• Improved and expanded fundraising

• Improved marketing and advertising

• Greater operational flexibility

• Greater ability to pursue commercial activities

• Higher attendance and resultant higher revenue

• Improved concessions and resultant higher revenue

City Administrative Officer

Other Zoos that Transitioned

• Denver

• Dallas

• Tulsa

• Lincoln Park (Chicago)

• Woodland Park (Seattle)

• Zoo Atlanta

• Houston

• Fresno

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Government-owned facilities with alternative management structures

• Hollywood Bowl

• Los Angeles County Museum of Art

• Seattle Aquarium

• Central Park (New York City)

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Current Zoo Structure FY 2010-11

• Operated as a City Department

• $17.5 million operating budget

– $6.0 million General Fund subsidy

• $8.2 million in support costs subsidized by the General Fund

• 229 authorized full-time positions

City Administrative Officer

• Advisory Zoo Commission

• Council approves admission fee increases

• General Manager – Zoo Director

• Budget subject to annual appropriation through City budget process

• Operation and management under direct control by Mayor and Council

LA Zoo Adopted Budget FY 2005-06 to 2010-11

$14.35$15.20$15.37$15.24$15.02$14.47

$3.44$3.94 $3.96 $3.06 $3.13

$4.30

$17.91

$19.32$18.26

$19.33$19.18

$17.48

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Salaries Expenses

Mill

ions

City Administrative Officer

2011-12 2012-13 2013-14 2014-15 2015-16

14.7

3.23.3

5.7

26.9

15.03.33.3

6.4

28.1

17.53.6

3.7

8.9

33.7

16.53.53.6

8.0

31.6

15.73.43.5

7.2

29.8

Salaries Expenses Other Support Costs Retirement and Health

Projected Zoo Expenditure Growth for the Next Five Years

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56% Increase

Retirement and Health

Millions

Projected City Costs

33.731.629.828.126.9

2011-12 2012-13 2013-14 2014-15 2015-16

Zoo Expenditures

12.0 12.3 12.7 13.1 13.4

10.1 15.8 17.3 18.8 20.8

4.8

Operating Revenues General Fund Deficit

Mill

ions

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Authorized Zoo Staffing FY 2005-06 to 2010-11

256263 268

257245

229

1

1

2

1

00

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Regular Resolution

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Zoo Workforce

• The 2010-11 Adopted Budget includes 229 regular authority positions, one resolution authority position and one substitute authority position

• 109 are in classifications unique to the Zoo

• 122 are in classifications common among City Departments

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Common53%

Unique47%

Zoo Workforce - Labor Representation• 88 percent Coalition of City Unions

• 10 percent EAA

• 2 percent non-represented Non-Rep2%

Coalition88%

EAA10%

City Administrative Officer

Financial Consultant

• The CAO engaged the services of KPMG– To perform a financial analysis of the LA Zoo

– To determine what potential cost savings might be generated by an alternative management structure

– To identify an operating model that may present opportunities for improving cost efficiencies or revenues

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Request for Proposals

• The City Attorney recommended conducting a request for proposals (RFP) process to select an operator

• The City Attorney concluded that a competitive process is required to maintain transparency and fairness in the selection process

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SUMMARY

• The City’s goal is to improve and enhance Zoo operations while reducing or stabilizing the General Fund contribution

• Alternative Management Structure Benefits– Operational efficiencies– Improved and expanded fundraising– Improved marketing– Operational flexibility– Ability to pursue commercial activities– Higher attendance– Improved concessions

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Next Steps

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• Identify the labor relations issues

• Discuss challenges and solutions with the City Attorney

• Finalize the RFP in May 2011

• Present CAO report and draft RFP to the Arts, Parks, Health and Aging Committee on June 14, 2011

• Authority to release RFP from full Council

• Release RFP in the Summer of 2011

• Review of responses and selection of operator in the Fall of 2011

• Transition period from Winter 2011 through Spring 2012

• Alternative Management Structure – July 2012