County of Los Angeles - Basic Financial Statements, Required Supplementary Information, and Single Audit - 6.30.2023 - Final

COUNTY OF LOS ANGELES BASIC FINANCIAL STATEMENTS, REQUIRED SUPPLEMENTARY INFORMATION, AND SINGLE AUDIT FOR THE YEAR ENDED JUNE 30, 2023 COUNTY OF LOS ANGELES BASIC FINANCIAL STATEMENTS, REQUIRED SUPPLEMENTARY INFORMATION, AND SINGLE AUDIT FOR THE YEAR ENDED JUNE 30, 2023 Table of Contents Page Independent Auditor’s Report ............................................................................................................... 1 Management’s Discussion and Analysis (Required Supplementary Information – Unaudited) ............................................................................................................................................. 4 Basic Financial Statements Government-wide Financial Statements: Statement of Net Position ....................................................................................................... 29 Statement of Activities ............................................................................................................ 30 Fund Financial Statements: Balance Sheet – Governmental Funds .................................................................................. 32 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position .................................................................................................. 34 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds ......................................................................................................... 36 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ............................. 38 Statement of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual on Budgetary Basis: General Fund............................................................................................................. 39 Fire Protection District ............................................................................................... 40 Flood Control District ................................................................................................. 41 LA County Library ...................................................................................................... 42 Regional Park and Open Space District .................................................................... 43 Mental Health Services Act ....................................................................................... 44 Statement of Net Position – Proprietary Funds ...................................................................... 46 Statement of Revenues, Expenses and Changes in Fund Net Position – Proprietary Funds ................................................................................................................ 48 Statement of Cash Flows – Proprietary Funds ...................................................................... 50 Statement of Fiduciary Net Position – Fiduciary Funds ......................................................... 54 Statement of Changes in Fiduciary Net Position – Fiduciary Funds ...................................... 55 Statement of Net Position – Discretely Presented Component Units .................................... 56 Statement of Activities – Discretely Presented Component Units.......................................... 57 Notes to the Basic Financial Statements ........................................................................................ 59 Required Supplementary Information (Unaudited): Schedule of the County’s Proportionate Share of the Net Pension Liability and Related Ratios – Last 10 Fiscal Years ...................................................................... 174 Schedule of County’s Pension Contributions – Last 10 Fiscal Years ...................................... 174 Schedule of Changes in Net RHC OPEB Liability and Related Ratios – Last 10 Fiscal Years.......................................................................................................... 176 Schedule of County’s RHC OPEB Contributions – Last 10 Fiscal Years ................................ 177 Schedule of Changes in the Total LTD OPEB Liability and Related Ratios – Last 10 Fiscal Years ........................................................................................................ 178 Single Audit: Schedule of Expenditures of Federal Awards ................................................................................ 181 Notes to Schedule of Expenditures of Federal Awards .................................................................. 198 Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards ........................ 204 Independent Auditor’s Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance Required by the Uniform Guidance .................. 206 Schedule of Findings and Questioned Costs ................................................................................. 210 Status of Prior Years’ Findings ....................................................................................................... 235 COUNTY OF LOS ANGELES BASIC FINANCIAL STATEMENTS, REQUIRED SUPPLEMENTARY INFORMATION, AND SINGLE AUDIT FOR THE YEAR ENDED JUNE 30, 2023 Supplementary Information: Supplementary Schedules of Revenue and Expenditures – Community Services Block Grants (CSBG) ......................................................................................................................... 251 Supplementary Schedule of Expenditures of Federal and State Awards Granted by the California Department of Aging ................................................................................................ 258 INDEPENDENT AUDITOR’S REPORT The Honorable Board of Supervisors County of Los Angeles, California Report on the Audit of the Financial Statements Opinions We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the County of Los Angeles, California (County), as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the County’s basic financial statements as listed in the table of contents. In our opinion, based on our audit and the reports of the other auditors, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the County as of June 30, 2023, and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparison for the General Fund, Fire Protection District, Flood Control District, LA County Library, Regional Park and Open Space District, and Mental Health Services Act for the year then ended in accordance with accounting principles generally accepted in the United States of America. We did not audit the financial statements of the Los Angeles County Development Authority (LACDA) (discretely presented component unit), the Los Angeles County Children and Families First – Proposition 10 Commission (First 5 LA) (discretely presented component unit), and the Los Angeles County Employees Retirement Association (LACERA), which represent the following percentages of the assets, net position/fund balances, and revenues/additions of the following opinion units. Net Position/ Revenues/ Opinion Unit Assets Fund Balances Additions Aggregate discretely presented component units 100% 100% 100% Aggregate remaining fund information 66% 67% 9% Those statements were audited by other auditors whose reports have been furnished to us, and our opinions, insofar as it relates to the amounts included for LACDA, First 5 LA, and LACERA, are based solely on the reports of the other auditors. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (Government Auditing Standards). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the County and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Emphasis of Matters As discussed in Note 2 to the basic financial statements, effective July 1, 2022, the County adopted the provisions of Governmental Accounting Standards Board Statement No. 96, Subscription-Based Information Technology Arrangements. Our opinions are not modified with respect to this matter. Macias Gini & O’Connell LLP 700 South Flower Street, Suite 800 www.mgocpa.com Los Angeles, CA 90017 1 As discussed in Note 22 to the basic financial statements, in March 2020, a presidential emergency was declared due to the Coronavirus Disease 2019 (COVID-19) pandemic. The County was advanced federal and State disaster assistance funding to supplement the County’s recovery efforts. As of June 30, 2023, the County reported $1.19 billion in advances payable (unearned revenues) related to these advances. Our opinions are not modified with respect to this matter. Responsibilities of Management for the Financial Statements The County’s management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the County’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS and Government Auditing Standards, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit 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 County’s internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the County’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. 2 Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, the schedule of the County’s proportionate share of the net pension liability and related ratios, the schedule of County’s pension contributions, the schedule of changes in net RHC OPEB liability and related ratios, the schedule of County’s RHC OPEB contributions, and the schedule of changes in the total LTD OPEB liability and related ratios as listed on the table of contents be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County’s basic financial statements. The accompanying schedule of expenditures of federal awards, the community services block grant supplementary schedules of revenue and expenditures, and the supplementary schedule of expenditures of federal and State awards granted by the California Department of Aging are presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, the California Department of Community Services and Development, and the California Department of Aging, respectively, and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, the schedule of expenditures of federal awards, the community services block grant supplementary schedules of revenue and expenditures, and the supplementary schedule of expenditures of federal and State awards granted by the California Department of Aging are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 8, 2023, on our consideration of the County’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County’s internal control over financial reporting and compliance. Los Angeles, California December 8, 2023, except for the report on the schedule of expenditures of federal awards, the community services block grant supplementary schedules of revenue and expenditures, and the supplementary schedule of expenditures of federal and State awards granted by the California Department of Aging, as to which the date is March 28, 2024. 3 COUNTY OF LOS ANGELES MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) FOR THE YEAR ENDED JUNE 30, 2023 This section of the County’s Annual Comprehensive Financial Report (ACFR) presents a narrative overview and analysis of financial activities for the year ended June 30, 2023. We recommend that this information be used in conjunction with additional information contained in the letter of transmittal. Financial Highlights At the end of the current year, the net position (total assets and deferred outflows of resources, reduced by total liabilities and deferred inflows of resources) of the County was negative $11.859 billion. Net position is classified into three categories and the unrestricted component was negative $35.387 billion. During the current year, the County implemented Governmental Accounting Standards Board (GASB) Statement No. 96, "Subscription-Based Information Technology Arrangements" (SBITA or Subscription), and recognized certain Subscription assets and liabilities. GASB 96 had an effect on the County's beginning net position, which was restated and increased governmental activities net position by $565,000. See further discussion in Note 2 to the basic financial statements. During the current year, the County’s net position decreased by $1.269 billion. Net position related to governmental activities decreased by $1.928 billion, while net position related to business-type activities increased by $658 million. At the end of the current year, the County’s General Fund reported a total fund balance of $6.483 billion. The fund balance categories and amounts consisted of nonspendable fund balance of $263 million, restricted fund balance of $78 million, committed fund balance of $833 million, assigned fund balance of $1.029 billion, and $4.280 billion of unassigned fund balance. The County’s capital asset balances were $23.069 billion at year-end and increased by $638 million during the year. A restatement increased the capital asset beginning balance by $56 million as discussed in Note 5 to the basic financial statements. During the current year, the County’s long-term debt related to bonds, notes and loans from direct borrowings and direct placements decreased by $100 million. Newly issued and accreted long-term debt of $268 million was less than the long-term debt maturities of $368 million. Overview of the Basic Financial Statements This discussion and analysis are intended to serve as an introduction to the County’s basic financial statements, which are comprised of the following three components: • Government-wide financial statements • Fund financial statements • Notes to the basic financial statements This report also includes other supplementary information in addition to the basic financial statements. 4 COUNTY OF LOS ANGELES MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)-Continued FOR THE YEAR ENDED JUNE 30, 2023 GOVERNMENT-WIDE FINANCIAL STATEMENTS The government-wide financial statements are designed to provide readers with a broad overview of the County’s finances, in a manner similar to a private-sector business. The Statement of Net Position presents information on all County assets and deferred outflows of resources reduced by liabilities and deferred inflows of resources, which represent net position. Over time, increases and decreases in net position may serve as an indicator of whether the financial position of the County is improving or deteriorating. The Statement of Activities presents information that indicates how the County’s net position changed during the fiscal year. All changes in net position are reported as soon as the underlying events giving rise to the changes occur, regardless of the timing of related cash flows. Therefore, revenues and expenses are reported in these statements for some items that affect cash flows in future periods. For example, property tax revenues have been recorded that have been earned but not yet collected and pension and other postemployment benefits (OPEB) expenses have been accrued but not yet paid. The government-wide financial statements report the following different types of programs or activities: • Governmental Activities - The majority of County services are reported under this category. Taxes and intergovernmental revenues are the major revenue sources that fund these activities, which include general government, public protection, public ways and facilities, health and sanitation, public assistance, education, recreation and cultural services, and interest on long-term debt. • Business-type Activities - County services that are intended to recover costs through user charges and fees are reported under this category. The County Hospitals, Waterworks Districts, and Aviation Funds represent the County’s business activities. • Discretely Presented Component Units - Component units are separate entities for which the County is financially accountable. The Los Angeles County Development Authority and First 5 LA are displayed as discretely presented in the financial statements. 5 COUNTY OF LOS ANGELES MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)-Continued FOR THE YEAR ENDED JUNE 30, 2023 FUND FINANCIAL STATEMENTS The fund financial statements contain information regarding major individual funds. A fund is a fiscal and accounting entity with a balanced set of accounts. The County uses separate funds to ensure compliance with fiscal and legal requirements. The County’s funds are classified into the following three categories: • Governmental Funds - These funds are used to account for essentially the same services that were previously described as governmental activities above. However, the fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the County’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Governmental funds include the General Fund, as well as Special Revenue Funds, Debt Service Funds, Capital Projects Funds, and Permanent Funds. • Proprietary Funds - These Enterprise Funds are used to account for functions that are classified as “business-type activities” in the government-wide financial statements. The County’s Internal Service Funds are also reported within the proprietary fund section. The County’s four Hospital Funds and Waterworks Fund are all considered major funds for presentation purposes. There is one nonmajor Enterprise Fund (Aviation Fund) and it is displayed with the other major enterprise funds. • Fiduciary Funds - These funds are used to account for resources held for the benefit of parties outside the County. The Fiduciary Funds category are reported in the Pension and Other Postemployment Benefit (OPEB) Trust Funds, the Investment Trust Fund, and Custodial Funds using the economic resources measurement focus and the accrual basis of accounting. Since the resources of these funds are not available to support the County's own programs, they are not reflected in the government-wide financial statements. NOTES TO THE BASIC FINANCIAL STATEMENTS The notes to the basic financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and the fund financial statements. 6 COUNTY OF LOS ANGELES MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)-Continued FOR THE YEAR ENDED JUNE 30, 2023 REQUIRED SUPPLEMENTARY INFORMATION In addition to the basic financial statements and accompanying notes, this report presents certain required supplementary information concerning the County’s proportionate share of the net pension liability and related ratios, the County’s contributions to pension benefits, the County's schedule of changes in net Retiree Healthcare (RHC) OPEB liability and related ratios, the County's contributions to RHC OPEB, and the schedule of changes in the total Long-Term Disability OPEB liability and related ratios. Government-wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the County, liabilities and deferred inflows of resources exceeded assets and deferred outflows of resources by $11.859 billion at the close of the most recent fiscal year. Summary of Net Position As of June 30, 2023 and 2022 (in thousands) Governmental Business-type Activities Activities Total 2023 2022 2023 2022 2023 2022 (1) (1) (1) Current and other assets $ 22,643,936 $ 21,683,997 $ 4,663,966 $ 4,146,378 $ 27,307,902 $ 25,830,375 Capital assets 19,709,385 19,202,670 3,359,596 3,172,279 23,068,981 22,374,949 Total assets 42,353,321 40,886,667 8,023,562 7,318,657 50,376,883 48,205,324 Deferred outflows of resources 10,817,003 11,493,075 1,634,388 1,783,810 12,451,391 13,276,885 Current and other liabilities 7,719,806 7,750,943 958,829 779,092 8,678,635 8,530,035 Long-term liabilities 46,002,627 39,028,682 7,682,704 7,285,745 53,685,331 46,314,427 Total liabilities 53,722,433 46,779,625 8,641,533 8,064,837 62,363,966 54,844,462 Deferred inflows of resources 10,490,505 14,715,572 1,832,739 2,512,350 12,323,244 17,227,922 Net position: Net investment in capital assets 15,833,971 15,588,360 2,525,430 2,309,804 18,359,401 17,898,164 Restricted 5,083,496 4,646,341 84,718 65,363 5,168,214 4,711,704 Unrestricted (deficit) (31,960,081) (29,350,156) (3,426,470) (3,849,887) (35,386,551) (33,200,043) Total net position $ (11,042,614) $ (9,115,455) $ (816,322) $ (1,474,720) $ (11,858,936) $ (10,590,175) (1) The 2022 amounts were not restated for GASB 96. 7 COUNTY OF LOS ANGELES MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)-Continued FOR THE YEAR ENDED JUNE 30, 2023 Significant changes in assets, deferred outflows of resources, liabilities, and deferred inflows of resources included the following: Current and Other Assets Current and other assets increased by $960 million for governmental activities. There was an increase of $720 million in pooled cash and investments, largely due to the improved cash position of the County's General Fund, the nonmajor governmental funds, and the Regional Park and Open Space District fund of $383 million, $261 million, and $96 million, respectively. There was an increase of $349 million in other receivables primarily from Mental Health, Social Services, and COVID-19 accrued revenues at year-end. This was offset by a decrease of $94 million and $27 million in internal receivables and lease receivables, respectively, from the prior year. For business-type activities, current and other assets increased by $518 million. The business-type activities accounts receivables and internal receivables increased by $821 million and $94 million, respectively, from the prior year. This was offset by a decrease in other receivables and pooled cash and investments of $330 million and $63 million, respectively. The change in receivables was primarily from an increase of accrued revenue in the hospitals for Medi-cal Managed Care, Medi-Cal Managed Care Rate Supplements, and Cost Based Reimbursement Clinics, as discussed in Note 14. This was offset by a decrease in other receivables of $330 million from the prior year. Deferred Outflows of Resources In the current year, the County's deferred outflows of resources balances were $12.451 billion. The deferred outflows of resources were $10.817 billion and $1.634 billion for governmental and business- type activities, respectively. The total deferred outflows of resources amounts and net decreases of $825 million were mostly related to pension and OPEB RHC. The total pension related deferred outflows decreased by $462 million and $85 million for governmental and business-type activities, respectively, from the prior year. The total OPEB RHC related deferred outflows decreased by $212 million and $64 million for governmental and business-type activities, respectively, from the prior year. The pension and OPEB RHC amounts vary from year to year due to differences between projected and actual experience, assumption changes and changes in proportion. Liabilities Current and other liabilities decreased by $31 million for governmental activities primarily from a decrease in advances payable by $261 million which was largely attributable to the American Rescue Plan (ARP) federal funds, as discussed in Note 22. This was offset by an increase in other payables, accounts payable, and accrued payroll of $130 million, $62 million and $38 million, respectively, for amounts owed at year-end. For business-type activities, a net increase of $180 million in current and other liabilities was largely associated with an increase in accounts payable of $178 million for amounts owed at year-end. Long-term liabilities increased by $6.974 billion and $397 million for governmental and business-type activities, respectively. Net pension liabilities significantly increased in the current year by $5.309 billion and $821 million for governmental and business-type activities, respectively. Net OPEB liabilities decreased by $1.868 billion and $389 million for governmental and business-type activities, respectively. Pension and OPEB liabilities changes were due to the projected and actual experience, assumption changes and changes in proportion. 8 COUNTY OF LOS ANGELES MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)-Continued FOR THE YEAR ENDED JUNE 30, 2023 Liabilities-Continued For governmental activities, Litigation and self-insurance liabilities increased by approximately $3.186 billion primarily from the Child Victims Act (AB 218) cases. AB 218, which became effective January 1, 2020, among other things, extended the statute of limitations for commencing an action for recovery of damages suffered as a result of childhood sexual assault to 22 years from the date the plaintiff attains the age of majority or within five years of the date the plaintiff discovers or reasonably should have discovered that the psychological injury or illness occurring after the age of majority was caused by sexual assault, whichever is later. In addition, AB 218 provided for the revival of certain claims from the procedures set forth in the Government Claims Act for a three-year window. AB 218 potential liabilities are preliminary estimates based upon a number of factors, including, but not limited to, the County's early assessment of the claims based on the limited information currently available, the number of total claims the County anticipated would be filed, the estimated fees and costs the County will incur to investigate and defend the claims, and the resources the County can responsibly agree to devote to the claims. The amount and timing of payments are dependent upon the outcome of the lawsuits, which are in their early stages. The County also added $159 million and $31 million in lease and subscription liabilities, respectively. As a lessee, the County recognized a lease and subscription liability and a corresponding right-to-use asset based on the provisions of the lease agreements. The lease and subscription liabilities were measured at the present value of the lease and subscription payments expected to be made during the lease and subscription term as discussed in Notes 9 and 10. For governmental activities and business-type activities, liabilities for bonds, notes and loans from direct borrowings and direct placements, accrued compensated absences, and workers’ compensation were higher by $185 million and lower by $32 million, respectively. For business-type activities, amounts owed to third party payors by the County's hospitals were higher by $30 million as discussed in Note 14. Specific disclosures related to pension liabilities, OPEB liabilities, lease liabilities, subscription liabilities, and other changes in long-term liabilities are discussed and referenced in Notes 7, 8, 9, 10 and 11 to the basic financial statements, respectively. Deferred Inflows of Resources In the current year, the County's deferred inflows of resources were $12.323 billion. Deferred inflows of resources decreased by $4.225 billion and $680 million for governmental and business-type activities, respectively. The total OPEB RHC related deferred inflows increased by $1.825 billion and $282 million for governmental and business-type activities, respectively, from the prior year. Pension related deferred inflows of resources decreased by $6.036 billion and $961 million for governmental and business-type activities, respectively. The OPEB RHC and pension changes in deferred inflows of resources will vary from year to year due to differences between projected and actual experience, assumption changes and changes in proportion. Pension and OPEB matters are discussed in more detail in Notes 7 and 8, respectively, to the basic financial statements. The County implemented GASB 94, “Public-Private and Public-Public Partnerships (PPPs) and Availability Payment Arrangements (APAs)". Under the GASB 94 definition, the County's golf courses met the definition of a PPP-Service Concession Arrangement. There were $85 million of related deferred inflows of resources recognized in the current year, which represents an increase of $12 million from the prior year in governmental activities. This amount represents the present value of installment payments associated with private operators of twenty County golf courses, as discussed in Note 6. 9 COUNTY OF LOS ANGELES MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)-Continued FOR THE YEAR ENDED JUNE 30, 2023 The County’s total net position consists of the following three components: Net Investment in Capital Assets The largest portion of the County’s net position, $18.359 billion, represents its investment in capital assets (i.e., land and easements, buildings and improvements, infrastructure, software, equipment, lease and subscription assets, net of related depreciation and amortization), less any related debt and related deferred outflows of resources used to acquire those assets that is still outstanding. The County uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the County’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Restricted Net Position The County’s restricted net position at year-end was $5.168 billion. Asset restrictions are primarily due to external restrictions imposed by State legislation and bond covenants. Net position that pertains to the various separate legal entities included in the basic financial statements is also generally restricted because the entities’ funding sources require that funds be used for specific purposes. Unrestricted Net Position (Deficit) The County’s total unrestricted net position is negative $35.387 billion. Both governmental and business- type activities reported deficits in this category of $31.960 billion and $3.426 billion, respectively. OPEB related liabilities of $24.741 billion, along with pension liabilities totaling $13.161 billion, continued to be the most significant factors associated with the reported deficits. 10 11 COUNTY OF LOS ANGELES MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)-Continued FOR THE YEAR ENDED JUNE 30, 2023 The following table details and identifies changes in net position for governmental and business-type activities: Summary of Changes in Net Position For the Years Ended June 30, 2023 and 2022 (in thousands) Governmental Business-type Activities Activities Total 2023 2022 2023 2022 2023 2022 Revenues: (1) (1) (1) Program revenues: Charges for services $ 4,342,851 $ 4,040,659 $ 5,018,952 $ 4,878,673 $ 9,361,803 $ 8,919,332 Operating grants and contributions 14,134,795 13,466,206 182,601 931,722 14,317,396 14,397,928 Capital grants and contributions 64,023 42,426 1,193 81 65,216 42,507 General revenues: Taxes 10,297,844 9,648,848 8,368 7,730 10,306,212 9,656,578 Unrestricted grants and contributions 632,188 631,429 114 3 632,302 631,432 Investment income (loss) 347,504 (456,803) 22,949 (39,782) 370,453 (496,585) Miscellaneous 278,413 175,385 59 — 278,472 175,385 Total revenues 30,097,618 27,548,150 5,234,236 5,778,427 35,331,854 33,326,577 Expenses: General government 1,626,902 1,243,850 1,626,902 1,243,850 Public protection 10,535,212 8,354,532 10,535,212 8,354,532 Public ways and facilities 543,472 468,413 543,472 468,413 Health and sanitation 6,906,927 6,690,851 6,906,927 6,690,851 Public assistance 10,390,815 7,741,363 10,390,815 7,741,363 Education 154,258 152,330 154,258 152,330 Recreation and cultural services 588,735 568,447 588,735 568,447 Interest on long-term debt 161,604 147,433 161,604 147,433 Hospitals 5,560,504 5,491,898 5,560,504 5,491,898 Waterworks 113,074 111,190 113,074 111,190 Aviation 19,677 17,582 19,677 17,582 Total expenses 30,907,925 25,367,219 5,693,255 5,620,670 36,601,180 30,987,889 Excess (deficiency) before transfers (810,307) 2,180,931 (459,019) 157,757 (1,269,326) 2,338,688 Transfers (1,117,417) (936,810) 1,117,417 936,810 Change in net position (1,927,724) 1,244,121 658,398 1,094,567 (1,269,326) 2,338,688 Net position - beginning, as restated in 2023 (9,114,890) (10,359,576) (1,474,720) (2,569,287) (10,589,610) (12,928,863) Net position - ending $ (11,042,614) $ (9,115,455) $ (816,322) $ (1,474,720) $ (11,858,936) $ (10,590,175) (1) The 2022 amounts were not restated for GASB 96. 12 COUNTY OF LOS ANGELES MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)-Continued REVENUES BY SOURCE – ALL ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2023 Operating grants and contributions 41% Taxes 29% Charges for services Other 26% 4% EXPENSES BY TYPE – ALL ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2023 General government Other 5% 4% Public assistance Health and sanitation 28% 19% Hospitals 15% Public protection 29% 13 COUNTY OF LOS ANGELES MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)-Continued FOR THE YEAR ENDED JUNE 30, 2023 Governmental Activities Revenues from governmental activities increased by $2.549 billion (9.3%) when compared with the prior year. The most significant changes in specific revenue sources were experienced in the following areas: • Program revenues recognized from operating grants and contributions increased by $669 million, which was primary attributable to an increase in public assistance and public protection programs from State and federal revenues. Revenues for public assistance programs grew by $868 million as there were higher State realignment sales tax and higher levels of administrative and program reimbursable costs. Revenues for public protection programs increased by $193 million primarily due to the ARP funds for the Public Defender and Consumer and Business Affairs by $93 million and $26 million, respectively. In addition, an increase in State revenues for Juvenile Justice Realignment and Diversion and Reentry program of $38 million and $31 million, respectively. This was offset by a reduction of $540 million in health and sanitation federal and State revenues. Health and sanitation revenues declined from lower Mental Health Services Act (MHSA) State revenues of $301 million, lower reimbursable costs associated with the ambulatory care network $56 million, and public health programs from lower COVID-19 revenues of $77 million. • Taxes, the County's largest general revenue source, were $649 million higher than the prior year and were mostly attributable to property taxes and sales and other taxes, which grew by $586 million and $63 million, respectively. The County's total taxable assessed property tax value is $1.911 trillion, which grew by 7.03% in the current year and property tax revenue increased by $452 million from the prior year. Property tax revenues were also recognized in conjunction with the dissolution of redevelopment agencies “pass through”. Payments from redevelopment dissolution were $504 million and increased by $67 million from the prior year. Redevelopment dissolution also provides residual property taxes to local governments, including the County. The County's share of such residual tax revenues in the current year was $473 million, an increase of $102 million compared to the prior year. Other general revenues also increased by $54 million for voter approved taxes, $41 million from the sales and use taxes in the Homeless and Housing Measure H program and $5 million from the local generated sales tax due to increased consumer spending. This was offset by a decrease in deed transfer tax revenue of $57 million due to the decline in real estate sales. • Program revenues recognized from charges for services increased by $302 million which was primary attributable to an increase in health and sanitation, general government, and public protection functional categories by $193 million, $59 million, and $48 million, respectively. Health and sanitation increase was due to an increase in patient services from the ambulatory care network of $271 million and mental health services of $11 million, which was offset by a decline in public health services of $94 million. General government was higher primarily from an increase of Public Works services in the Internal Service fund by $45 million. The public protection increase was due to an increase in Sheriff law enforcement and Flood Control District services by $31 million and $14 million, respectively. • Investment income increased by $804 million due to an increase in interest income of $413 million and an increase in the fair value change in investments at year-end of $391 billion, which was primarily from an increase in market yields throughout the fiscal year. 14 COUNTY OF LOS ANGELES MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)-Continued FOR THE YEAR ENDED JUNE 30, 2023 Governmental Activities-Continued Expenses related to governmental activities increased by $5.541 billion (21.8%) during the current year. This was attributable to an increase in salaries and employee benefit (S&EB) expenses of $1.252 billion and an increase in operating expenses of $4.289 billion. The S&EB increase was largely attributable for general salary increases by $626 million, an increase in pension by $941 million, a decrease in OPEB by $479 million, and an increase in compensated absences of $162 million, in all functional categories. The increase in the operating expenses of $4.289 billion was primarily from public assistance and public protection by $2.448 billion and $1.548 billion, respectively. In addition, general government and public ways and facilities operating expenses increased by $230 million and $75 million, respectively. Public assistance operating expenses were higher from public social services programs by $629 million and affordable and homeless housing programs by $344 million. In addition, there were higher litigation and self-insurance expenses of $1.548 billion primarily from the AB 218 cases. Public protection operating expenses were higher from litigation and self-insurance expenses by $1.477 billion primarily from the AB 218 cases. General government operating expenses were higher primarily for insurance, establishment of a new Economic Development department, and litigation of $87 million, $69 million, and $53 million, respectively. Public ways and facilities were primarily higher due to increased costs for road operations, maintenance, safety, and improvements of unincorporated area municipal streets and highways of $70 million. Interest on long-term debt was $162 million, an increase of $14 million from the prior year. Depreciation/ amortization expense was $584 million in the current year, an decrease of $4 million from the prior year amount of $588 million. Business-type Activities Revenues from business-type activities for the current year were $5.234 billion, a decrease of $544 million (9.4%) from the previous year. The most significant decrease was in operating grants and contributions to the County's hospitals by $748 million. Charges and services increased by $147 million for the County's hospitals. Operating grants and contributions decrease was attributed to a decline in Patient Service Revenue, Global Payment Program, and Quality Incentive Program by $353 million, $309 million, and $159 million, respectively, This was offset by a $97 million increase in Cost Based Reimbursement Clinics revenue, The increase in charges for services can be primarily attributed to an increase in CalAIM specialty mental health services of $124 million. As discussed in Note 14 to the basic financial statements, County hospital revenues are derived from a wide range of federal and State funding sources. Expenses related to business-type activities increased from the previous year by a net total of $73 million (1.3%), and were associated primarily with the County’s hospitals, where expenses increased by $69 million. The hospital expenses for S&EB consisted of an increase from pension and general salary increases of $143 million and $139 million, respectively. The S&EB increase was offset by a decrease in OPEB expense of $93 million. In addition, there was an increase of $123 million for services and supplies and professional services related to an increase in patient care services. This was offset by a decrease in the County's hospital Intergovernmental transfer expense of $230 million primarily for the Global Payment, Medi-Cal Managed Care Graduate Medical Education, Quality Incentive Programs. 15 COUNTY OF LOS ANGELES MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)-Continued FOR THE YEAR ENDED JUNE 30, 2023 Financial Analysis of the County’s Funds As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. Governmental Funds The focus of the County’s governmental funds is to provide information on near-term inflows, outflows, and balances of resources that are available for spending. Such information is useful in assessing the County’s financing requirements. Types of governmental funds reported by the County include the General Fund, Special Revenue Funds, Debt Service Funds, Capital Projects Funds, and the Permanent Funds. As of the end of the current fiscal year, the County’s governmental funds reported combined total fund balances of $12.155 billion, an increase of $1.179 billion in comparison with the prior year. Of the total fund balances, $279 million is nonspendable to indicate the extent that funds are not in spendable form or are required to remain intact. An additional $5.307 billion is classified as restricted, $975 million as committed, and $1.314 billion as assigned. The remaining balance of $4.280 billion is classified as unassigned and is entirely associated with the General Fund. Revenues from all governmental funds for the current year were $30.111 billion, an increase of $2.590 billion (9.4%) from the previous year. Expenditures for all governmental funds in the current year were $28.321 billion, an increase of $2.087 billion (8.0%) from the previous year. In addition, net other financing uses were $611 million, an increase of $155 million (34.0%) as compared to $456 million in the prior year. The General Fund is the County’s principal operating fund. During the current year, the fund balance in the General Fund increased by $865 million (15.4%). At the end of the current fiscal year, the General Fund’s total fund balance was $6.483 billion. Of this amount, $263 million is classified as nonspendable, $78 million as restricted, $833 million as committed, $1.029 billion as assigned and the remaining $4.280 billion is classified as unassigned. General Fund revenues during the current year were $25.221 billion, an increase of $2.359 billion (10.3%) from the previous year. General Fund expenditures during the current year were $24.614 billion, an increase of $2.525 billion (11.4%) from the previous year. Net other financing sources/uses was positive $258 million in the current year as compared to negative $89 million in the prior year. Following are significant changes in General Fund revenues and expenditures: • Intergovernmental revenues increased by $1.140 billion overall, and were primarily associated with an increase in State revenue by $967 million, an increase in federal revenue by $191 million and a decrease in Other governmental agencies revenue by $18 million. State and federal revenues related to the Coronavirus Aid, Relief, and Economic Security (CARES) Act funds decreased by $174 million and were offset by an increase of $305 million from the American Rescue Plan (ARP) funds. Health Services Realignment State sales tax and vehicle license fees were higher by $43 million primarily due to the steady rise in consumer spending. Other State and federal revenue growth was attributable to higher levels of reimbursable program and administrative costs in the social services, public health, mental health, homeless and housing, capital projects, diversion reentry, and probation programs of $648 million, $171 million, $123 million, $54 million, $39 million, $31 million, and $12 million, respectively. The County also received State funds of $13 million to backfill revenues lost from the repeal of court fees and fines under California Senate Bill 1869. 16 COUNTY OF LOS ANGELES MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)-Continued FOR THE YEAR ENDED JUNE 30, 2023 Governmental Funds-Continued This was offset by lower levels of reimbursable program and administrative costs of $91 million, and $58 million in the ambulatory care network and health administration programs. In addition, State revenue for election services decreased by $57 million for the Registrar-Recorder. The remaining variance was an increase of $81 million. • Investment income resulted in an increase of $540 million due to an increase of $286 million in interest earnings and a gain of $254 million in the fair value change in investments at year-end, which was primarily from an increase in market yields throughout the fiscal year. • Revenues from taxes increased by $483 million and were primarily associated with an increase in property taxes of $519 million and a decrease in other taxes of $36 million. The property taxes increase was primarily associated with $381 million of revenue from a growth in assessed property values. Residual property tax revenues, which are associated with redevelopment dissolution, were $391 million in the current year, $75 million higher than the prior year. Property tax was also reflected in “pass through” property tax revenues, which were $56 million higher in the current year. Documentary transfer taxes decreased other taxes by $57 million fueled by higher interest rates in the real estate market and the County median home sales slowed down in this fiscal year. Sales, use and utility tax increased other taxes by $21 million from increased consumer spending and higher prices. • General Fund expenditures increased by a total of $2.525 billion, or 11.4%. Current expenditures increased by $2.199 billion, and debt service and capital outlay expenditures increased by $326 million. • Public assistance expenditures increased by $994 million. This was primarily due to a increase of $564 million for public social services, $296 million for affordable housing programs, $75 million for children and family services, and $21 million for homeless and housing programs. There was also an increase of $105 million for general salary increase for S&EB. This was offset by a transfer of $61 million from the public assistance expenditures to general government services for the establishment of the new the Economic Opportunities department. • General government spending increased by $677 million and was primarily associated with increases of $82 million for costs associated with capital improvements, $76 million for the Economic Opportunity department, $53 million for judgments and damages, $43 million for the Board of Supervisors community programs, $32 million for the Internal Services Department, $26 million for nondepartmental special accounts, $19 million for the Care First and Community Investment program, and $17 million in rent expense. There was an increase of $39 million for general salary increases in S&EB and $39 million for compensated absences. In addition, $239 million increased the operating expenditures, from the prior year, related to the commercial paper program. • Public protection program costs were higher by $390 million, and were primarily associated with an increase in S&EB expenditures of $256 million and an increase in law enforcement expenditures of $124 million for the Sheriff and Probation departments. • Capital Outlay costs increased by $282 million from an increase in leases by $222 million and subscriptions by $61 million. 17 COUNTY OF LOS ANGELES MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)-Continued FOR THE YEAR ENDED JUNE 30, 2023 Governmental Funds-Continued The Fire Protection District reported a year-end fund balance of $216 million, which represented an increase of $27 million compared to the previous year decrease of $24 million, resulting in a net difference of $51 million. The Fire Protection District responds to a number of major incidents and emergencies and provide essential fire protection and emergency medical services during the fiscal year. Revenues increased by $80 million, of which $84 million was related to property taxes and primarily associated with growth in assessed property values. This was offset by $7 million in lower federal and State COVID-19 prior year revenues. Expenditures were higher by $67 million, of which S&EB, services and supplies costs, and capital outlay increased by $42 million, $22 million, and $3 million, respectively. The Flood Control District reported a year-end fund balance of $364 million, which represented a decrease of $42 million in fund balance compared to the previous year's decrease of $93 million, resulting in a net difference of $51 million. The change in fund balance was primarily due to higher revenues of $15 million from higher property taxes and $14 million for charges for services from the previous year. Interest revenue was also higher by $28 million due to favorable interest rates. This was offset by lower services and supplies and capital assets infrastructure expenditures of $4 million for infrastructure improvement projects to support flood protection and water conservation. The LA County Library Fund reported a year-end fund balance of $169 million, which represented an increase of $38 million in fund balance compared to the previous year increase of $22 million, resulting in a net difference of $16 million. Revenues increased by $5 million, of which $9 million was related to property taxes associated with growth in assessed valuation, $2 million higher State and federal revenues and $3 million higher interest revenue and was offset by a decline of $12 million in charges for service. Expenditures were $3 million higher than the previous year and other financing sources from Safe, Clean Water Program Measure W were higher by $14 million. The Regional Park and Open Space District reported a year-end fund balance of $676 million, which represented an increase of $101 million in fund balance compared to the previous year increase of $57 million, resulting in a net difference of $44 million. The net change in fund balance was primarily attributable to an increase in investment income of $28 million from higher interest rates. Property tax was nearly the same as the previous year. Expenditures were higher by $16 million due to an decrease in grant awards to empower communities and preserve parks and open space from the previous year. The MHSA Fund reported a year-end fund balance of $1.233 billion , which represented a decrease of $46 million in fund balance compared to the previous increase of $182 million, resulting in a net difference of $228 million. Current year revenues were lower by $211 million, primarily from a decrease of $301 million in State revenues, offset by an investment gain of $90 million, while transfers out decreased by $16 million to support the five MHSA program components (Community Services and Supports; Prevention and Early Intervention; Innovation; Workforce Education and Training; and Capital Facilities and Technological Needs. Proprietary Funds The County’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The County’s principal proprietary funds consist of four hospital enterprise funds and each one is reported as a major fund. All of the four hospital funds had a net deficit as discussed in Note 3. 18 COUNTY OF LOS ANGELES MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)-Continued FOR THE YEAR ENDED JUNE 30, 2023 Proprietary Funds-Continued The County is legally required to provide local matching funds to the health care system in order to remain eligible for federal and State assistance. Such funds were provided to the hospitals as operating subsidies from the County General Fund during the year as discussed in Note 15 to the basic financial statements. The amount of subsidy, per facility, ranged from $91 million for the Olive View-UCLA Medical Center to $360 million for the Los Angles General Medical Center. The total subsidy amount was $906 million and is reflected in the Statement of Revenues, Expenses and Changes in Fund Net Position as “transfers in.” By comparison, the total General Fund subsidy in the prior year was $722 million. During the current year, the County’s hospital operations experienced higher levels of patient care revenues and operating expenses in comparison to the prior year as previously discussed. An additional source of local funding for the Hospitals is the Health Services Measure B Special Revenue Fund (Measure B Fund). The Measure B Fund receives voter approved property taxes for trauma and emergency services. In the current year, the Measure B Fund provided transfers to the Los Angeles General Medical Center ($110 million), Harbor-UCLA Medical Center ($53 million), and Olive-View UCLA Medical Center ($30 million). The total current year amount of $193 million in Measure B transfers was nearly the same as the prior year. Waterworks Fund reported year-end net position of $762 million, which was $9 million lower than the previous year due to lower operating revenues. There were no significant operational changes during the current year. Current year operating revenues of $91 million were slightly lower by $8 million than the previous year's amount of $99 million. Current year operating expenses of $113 million were slightly higher by $2 million than the previous year. General Fund Budgetary Highlights The accompanying basic financial statements include a Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual on Budgetary Basis for the County’s General Fund. The County’s budgetary basis of accounting is discussed in Notes 1 and 16 to the basic financial statements. There are approximately 160 separate budget units within the General Fund, excluding capital improvement projects, which are individually budgeted. The data presented below represents the net budgetary changes for the General Fund in a highly summarized format. Accordingly, in certain instances, budgets have been increased for programs within a category even though actual amounts have not been realized for the category in its entirety. Under the budgetary basis, there was a net increase of $587 million in the General Fund’s available (unassigned) fund balance from the previous year. 19 COUNTY OF LOS ANGELES MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)-Continued FOR THE YEAR ENDED JUNE 30, 2023 Budgetary Summary - Revenues/Financing Sources Following is a summary of current year budgetary changes and actual results (on the County’s budgetary basis) for General Fund revenues and other financing sources (in thousands): Increase (Decrease) Variance- From Original Final Budget Actual Positive Category Budget Amount Amount (Negative) Taxes $ 13,714 $ 7,404,760 $ 7,639,271 $ 234,511 Intergovernmental revenues 1,177,002 15,494,728 13,761,596 (1,733,132) Charges for services 180,702 3,125,586 2,906,002 (219,584) All other revenues 100,832 756,626 978,197 221,571 Other sources and transfers in 106,277 1,570,052 1,173,722 (396,330) Total $ 1,578,527 $ 28,351,752 $ 26,458,788 $ (1,892,964) Changes from Amounts Originally Budgeted During the year, net increases in budgeted revenues and other financing sources were approximately $1.579 billion. The changes occurred in the following areas: • The budget for "Taxes" increased by $14 million. The $14 million increase was primarily associated with year-end budgetary changes that are designed to demonstrate compliance with legal provisions related to the appropriation of revenues from property taxes and certain other tax related revenues. • The estimated revenue for "Intergovernmental revenues" increased by $1.177 billion The increase is primarily from COVID-19 federal ARP Act revenues, which is associated with $556 million for a variety of ARP programs and $318 million under the ARP Revenue Loss Provision. There was an increase of $232 million in federal and State revenues for social services and children and family programs. Capital projects funded by federal and State revenues increased by $140 million. The remaining net budget decreases of $69 million were related to a variety of federal and State funded programs. • The estimated revenue for "Charge for services" increased by $181 million. The increase is primarily from $161 million for the ambulatory care network services, $9 million for the Sheriff's department contracted services, $5 million for public works building and permit fees, and $4 million for the Registrar-Recorder election services. There were $2 million of net budget increases in charges for services from a variety of programs. • The budget for "All other revenues" increased by $101 million from tobacco settlement revenues. There were $1 million of net budget increases in licenses, permits, and franchises revenues. • The budget for "Other sources and transfers in" increased by $106 million from transfers of $46 million from the Nonmajor Other Special Revenue for capital projects, $40 million from the Homeless and Housing Measure H Nonmajor Special Revenue Funds for general fund homeless programs, $13 million from Health Services Measure B for general fund trauma programs, and $7 million in other transfers for a variety of programs. 20 COUNTY OF LOS ANGELES MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)-Continued FOR THE YEAR ENDED JUNE 30, 2023 Actual Revenues/Financing Sources Compared with Final Budget Amounts Actual revenues and other financing sources recognized by the General Fund were approximately $26.459 billion. This amount was $1.893 billion, or 6.7%, lower than budget. As discussed below, the changes occurred in the following areas. • Actual "Taxes" were higher by $234 million from the amount budgeted. Of this increase, $198 million increase was associated with property tax revenue due to a growth in assessed property values. Other taxes increased by $37 million primarily from an increase in transient occupancy tax, aircraft assessment, and local sales revenue by $17 million, $11 million, and $11 million, respectively. There were net decrease of $1 million from other taxes. • Actual "Intergovernmental revenues" were $1.733 billion lower than the amount budgeted. The ARP programs in various departments accounted for $611 million as these program costs were not completed prior to year-end. Approximately $438 million of intergovernmental revenues were associated with social services and child and family programs, where reimbursable costs were lower than anticipated due to delays in hiring and promoting staff, reduced contractual spending for services and child care provider payments, and delays in implementing new systems. Mental Health and ambulatory network programs accounted for approximately $214 million, which experienced lower than anticipated reimbursable costs and correspondingly lower than expected revenues. Budgeted intergovernmental revenues of $182 million were not realized for various capital improvements and disaster recovery programs, as these initiatives were not completed prior to year-end. Homeless and housing program revenue of $111 million experienced lower than anticipated revenue for State funded homeless and housing initiatives. Probation and Sheriff budgeted intergovernmental revenues were lower by $82 million, which experienced lower than anticipated reimbursable operating expenditures and staffing vacancies. Justice reformed departments in diversion and reentry, Justice, Care and Opportunities (JCOD), and Youth Development budgeted intergovernmental revenues were lower by $89 million as new programs and initiatives were still being developed prior to year-end. There were net decreases of $6 million from a variety of programs. • Actual "Charges for services" were $220 million lower than the amount budgeted. The decrease was primarily attributable to $129 million, $56 million and $36 million of costs associated with Public Health, health services administration and ambulatory care network programs, respectively, which experienced lower than anticipated reimbursable costs for charges for services due to the transition to a post-pandemic environment. In addition, JCOD programs, a newly established department in FY 2022-2023, were lower by $26 million than the budgeted amount as they develop and ramp up services. This was offset by $24 million in higher revenue from contracted services by the Sheriff's Department. There were net decreases of $3 million from a variety of programs. • Actual "All other revenues" were $222 million higher than budgeted. Interest revenue was higher by $140 million due to an increase in market yields throughout the fiscal year. Miscellaneous revenue were $52 million higher than budget primarily from the Rent Expense and Mental Health programs by $27 million and $25 million, respectively. Fine and penalties were higher by $38 million. License Permits and Franchise revenue were higher by $5 million. There were net decreases of $3 million from other revenues for the remaining variance. 21 COUNTY OF LOS ANGELES MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)-Continued FOR THE YEAR ENDED JUNE 30, 2023 • The actual amount of “Other sources and transfers in” was $396 million lower than the amount budgeted. Of this amount, mental health programs funded by the MHSA Special Revenue Fund did not fully materialize at the budgeted level and “transfers in” were $239 million lower than budgeted. Costs associated with Consumer Protection, Diversion and Reentry, Probation, Sheriff, and Youth Development departmental programs funded by the Other Public Protection Special Revenue Funds were $40 million less than budgeted. The "transfers in" for health services trauma programs, funded by the Health Services Measure B nonmajor special revenue fund, were $27 million less than budgeted. Costs associated with the public health programs funded by the Health and Sanitation Special Revenue funds were $10 million less than budgeted. The Homeless and Housing Measure H costs were $29 million less than budgeted. In addition, “transfers in” totaling $28 million were assumed in the budget for capital improvements and extraordinary building maintenance projects, which did not incur expected costs. There were various other sources and transfers that comprised the remaining variance of $23 million. Budgetary Summary - Expenditures/Other Financing Uses Following is a summary of current year budgetary changes and actual results (on the County’s budgetary basis) for General Fund expenditures, transfers out, and changes in fund balance components (in thousands): Increase (Decrease) From Original Final Budget Actual Variance- Category Budget Amount Amount Positive General government $ 51,390 $ 3,484,416 $ 1,893,037 $ 1,591,379 Public protection 462,234 7,353,877 6,800,230 553,647 Health and sanitation (25,930) 7,382,127 6,600,293 781,834 Public assistance 535,801 9,810,107 8,673,154 1,136,953 All other expenditures 299,813 2,219,260 881,177 1,338,083 Transfers out 292,450 1,130,106 1,126,968 3,138 Contingencies (118,856) (41,665) (41,665) Fund balance changes-net 81,625 191,495 (102,589) 294,084 Total $ 1,578,527 $ 31,529,723 $ 25,872,270 $ 5,657,453 Changes from Amounts Originally Budgeted During the year, net increases in General Fund appropriations and fund balance component changes were approximately $1.579 billion. The most significant changes occurred in the following areas: • "Public protection" appropriations were increased by $462 million. As previously mentioned, an increase of $122 million of S&EB was appropriated to reflect the Board approved S&EB increases. Law enforcement appropriations were increased by $181 million which was funded by provisional financing uses and other revenues for the Sheriff's department operations costs which include increases in services and supplies, contracts, legal settlements, and costs for the ARP programs. The Consumer and Business Affairs appropriation increased by $47 million for ARP grant programs to provide mortgage relief, expand the income tax assistance program, financial coaching, landlord-tenant mediation, and rent relief. JCOD appropriations were increased by $98 million to fund justice reform initiatives for vulnerable justice-impacted individuals and their communities. There were net increases of $14 million for other public protection programs. 22 COUNTY OF LOS ANGELES MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)-Continued FOR THE YEAR ENDED JUNE 30, 2023 Changes from Amounts Originally Budgeted-Continued • "Public assistance" appropriations were increased by $536 million. The increase in appropriation was to support the ARP Fiscal Recovery Fund Spending Plan, which included an increase of $186 million to provide rental assistance and support the conversion of Project Homekey interim housing units to permanent housing. Public social and children and family services appropriation increased by $275 million to provide assistance to foster children, CalWORKS, Child Care programs and legal settlements. FEMA reimbursed the County for Project Roomkey costs which decreased the nonspendable long-term receivable and increased the homeless and housing budget by $36 million. An increase of $37 million of S&EB was appropriated to reflect the Board approved S&EB increases. There were net increases of $2 million for other public assistance programs. • Appropriations for "All other expenditures" were increased by $300 million. The increase was primarily attributable to the continued development, design, and construction of capital projects to support the long-term goals to sustain and/or rehabilitate County facilities. • Appropriations for "transfers out" were increased by $292 million. The increase was primarily attributable to augmenting the amount of fund transfers from the General Fund to the various Hospital Enterprise Funds by $291 million. There were net increases of $1 million from transfers out to various other funds. Actual Expenditures/Other Financing Uses Compared with Final Budget Amount Actual expenditures/other financing uses for the current year were $5.657 billion (17.9%) lower than the final total budget of $31.530 billion. There were budgetary savings in all functional expenditure categories. Following are the functional areas that recognized the variations from the final budget: • The "general government" function reported actual expenditures that were $1.591 billion less than the amount budgeted. Of this amount, $1.033 billion represented budgetary savings for items that are not associated with specific County departments, such as provisional appropriations and central non-departmental appropriations. The Board of Supervisors had budgetary savings of $122 million to be spent in future years for various community projects. S&EB savings for general government departments of $115 million were due to the hiring freeze and vacancies. CFCI had budgetary savings of $110 million due to the length of time needed to design, develop, launch and implement Board-approved CFCI new programs. Chief Executive Office had budgetary savings of $42 million due to lower than anticipated program costs. The Real Estate budget had a budgetary savings of $11 million due to lower than anticipated debt service and rent expenditures. In addition, the Board Initiatives and Programs budget had budgetary savings of $20 million due to longer-than-anticipated implementations for the Alternative to Incarceration Initiative, Poverty Alleviation Initiative, Equity and Diversity Program, and ARP programs. There were also budgetary savings from the ARP programs, which included savings from $91 million for economic and career assistance to small businesses, nonprofits, restaurants, child care facilities, and rent relief, and $44 million for the Delete the Divide campaign. The remaining net $3 million was spread across the general government departments and was mostly related to savings in the areas of services and supplies. 23 COUNTY OF LOS ANGELES MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)-Continued FOR THE YEAR ENDED JUNE 30, 2023 Actual Expenditures/Other Financing Uses Compared with Final Budget Amount-Continued • Actual "public protection" expenditures were $554 million less than the budgeted amount. S&EB savings of $155 million were due to the vacancies, staff on approved leave, and for hard to recruit items. The Probation department had budgetary savings of $45 million due to delays in hiring and delays in implementing new programs. The Diversion and Reentry budget unit had budgetary savings of $76 million from lower than anticipated contracted services. The Department of Consumer and Business Affairs had budgetary savings of $80 million from delays in implementing the ARP projects. Trial Court operations had a budgetary savings of $9 million from lower court facilities operating expenditures and indigent defense aid cases. JCOD and Youth Development had budgetary savings of $98 million and $32 million, respectively, from ongoing implementation of the justice-reform programs. The federal and State Disaster had budgetary savings of $52 million since a major disaster did not occur during the fiscal year. The remaining variance of $7 million was related to other public protection programs. • Overall expenditures for the "health and sanitation" category were $782 million less than the budgeted amount. Specifically, the budgetary savings were from the mental health, public health program, health services administration, CFCI health programs, and correctional health facilities of $239 million, $167 million, $67 million, $56 million, and $51 million, respectively, due to lower than anticipated costs for professional, contracted, and information technology services, and implementing new programs. There was also $203 million from S&EB savings from the staffing vacancies and hiring delays. The remaining variance of $1 million was related to other health and sanitation programs. • Actual "public assistance" expenditures were $1.137 billion lower than the final budget. The variance of $490 million was related to affordable housing and homeless programs due to delays in carrying out multi-year projects. Social services and children and family were lower than budgeted by $224 million and $250 million, respectively. Cost savings in these areas were due to lower than anticipated costs in implementing new assistance programs, General Relief Guaranteed Income Pilot Program, Anti-Homelessness subsidy program, and Family First Prevention Services Act programs. There were also direct program savings associated with lower than anticipated caseloads. In addition, there were S&EB savings of $166 million due to the hiring delays and vacancies. The remaining variance of $7 million was related to other public assistance programs. • The category referred to as “all other expenditures” reflected actual spending of $1.338 billion less than the budgeted amount. Of this variance, $1.304 billion was in the capital outlay category and was related to numerous capital improvements anticipated in the budget that remained in the planning and development stages and did not incur expenditures during the year. Most of the unused balance has been re-established in the following year’s budget to ensure the continuity of the projects, many of which are multi-year in nature. Capital Assets The County’s capital assets for its governmental and business-type activities as of June 30, 2023, were $23.069 billion (net of depreciation and amortization). Capital assets include land and easements, buildings and improvements, infrastructure, equipment, software, capital assets in progress, lease assets, and subscription assets. The major infrastructure network elements are roads, sewers, water, flood control, and aviation. Specific capital asset changes during the current year are presented in Note 5 to the basic financial statements. 24 COUNTY OF LOS ANGELES MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)-Continued FOR THE YEAR ENDED JUNE 30, 2023 The total increase in the County’s capital assets (net of depreciation/amortization) for the current fiscal year was $694.03 million as shown in the following table. Changes in Capital Assets, Net of Depreciation/Amortization Primary Government - All Activities (in thousands) Current Prior Increase Year Year (1) (Decrease) Land and easements $ 7,815,091 $ 7,712,101 $ 102,990 Buildings and improvements 6,141,339 6,223,775 (82,436) Infrastructure 3,856,261 4,001,638 (145,377) Equipment 599,197 603,431 (4,234) Software 166,611 205,512 (38,901) Capital assets, in progress 2,876,906 2,233,515 643,391 Lease assets 1,526,637 1,394,977 131,660 Subscription assets 86,939 86,939 $ 23,068,981 $ 22,374,949 $ 694,032 (1) The 2022 amounts were not restated for GASB 96. The County’s major capital asset initiatives during the current year continued to focus on new facilities and major improvements. The most significant increase in capital assets was in capital assets, in progress, which increased by $643 million. Governmental activities for capital assets, in progress, increased by $448 million which included major construction-in-progress for general government of $42 million, public protection of $61 million, health and sanitation of $49 million, education of $11 million, and recreation and cultural services of $179 million. The major projects include $86 million for the Los Angeles County Museum of Art Building for the Permanent Collection, $63 million for various deferred maintenance projects under the Facility Reinvestment Program, $21 million for the Natural History Museum Commons Renovation, $15 million for the Civic Center Power Plant Boilers and Chillers Replacement, and $10 million for the Whittier Aquatics Center. In addition, there were capitalized software-in-progress costs of $17 million for the Assessor’s Modernization Project Phase 4. Although there was a net decrease in buildings and improvements totaling $82 million, completed major capital projects included $34 million for the Safe Landing project from the County’s Capital Improvement Intermediary Program and $13 million for the Edward R. Roybal Comprehensive Health Center Air Handler Replacement project. Business-type activities capital assets, in progress, increased by $195 million. The major construction-in- progress was $171 million at the Harbor-UCLA Medical Center primarily for the Harbor-UCLA Medical Center Replacement Program. There were also $36 million of construction-in-progress costs at Olive View-UCLA Medical Center for the Fire Alarm and Nurse Call Systems project, and $12 million of construction-in-progress costs at Rancho Los Amigos National Rehabilitation Center primarily for the Harriman Building Renovation Project. Completed major capital projects included $9 million for the Harbor-UCLA Medical Center Electrical Switchgear Replacement and $9 million for the Los Angeles General Medical Center Child Care Center. As previously discussed, the County implemented GASB 96 during the year, which added new subscription right-to-use assets in governmental activities. As of June 30, 2023, the subscription assets net of accumulated amortization and subscription assets, in progress were $87 million and $8 million, respectively. As of June 30, 2023, there were $1.114 billion of capital asset commitments outstanding. 25 COUNTY OF LOS ANGELES MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)-Continued FOR THE YEAR ENDED JUNE 30, 2023 Debt Administration During the current year, the County’s liabilities for long-term debt related to bonds, notes and loans from direct borrowings and direct placements, including accreted interest, decreased by $100 million, as newly issued debt and accretions of $268 million were less than the debt maturities of $368 million. Specific changes related to governmental and business-type activities are presented in Note 11 to the basic financial statements. During the current year, significant long-term debt transactions related to bonds, notes and loans from direct borrowings and direct placements were as follows: • Lease Revenue Obligation Notes (LRON) of $251 million were issued for governmental and business-type activities in the amounts of $135 million and $115 million, respectively. For governmental activities, debt was issued to finance renovations for public health centers, social service, probation buildings, beach and park facilities, libraries and various general government buildings. For business-type activities, debt was issued to finance hospital facilities improvements. Lease liabilities increased by $159 million, as newly issued leases of $285 million were less than the lease maturities of $126 million related to governmental and business-type activities. As previously discussed, the County implemented GASB 96, which added $86 million in subscription liabilities. There were eight outstanding financed purchase obligations, where the asset transfers ownership to the County by the end of the agreement. Financed purchase obligations balance for governmental activities was $23 million as of June 30, 2023. Business-type activities had one financed purchase obligation and was completely paid off during the fiscal year. In addition to the above borrowing, the County continued to finance General Fund cash flow shortages occurring periodically during the fiscal year by selling $900 million in tax and revenue anticipation notes. The notes matured and were redeemed on June 30, 2023. Bond Ratings The County's debt is rated by Moody's, S&P Global Ratings (S&P), and Fitch. The following is a schedule of ratings assigned by the respective rating agencies: Moody's S&P Fitch Certificates of Participation Aa3 AA+ AA Equipment/Non-Essential Leases Aa2 AA+ AA Operating/Non-Essential Leases Aa2 AA+ AA Short-Term MIG1 SP-1+ F1+ During the current year, the County’s bond ratings and outlook remained the same as the previous year. 26 COUNTY OF LOS ANGELES MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)-Continued FOR THE YEAR ENDED JUNE 30, 2023 Economic Conditions and Outlook Los Angeles County's FY 2023-2024 budget is the first spending blueprint since the end of the COVID-19 emergency and the start of the local emergency for homelessness. These are two defining milestones of this transformative moment in which we are addressing the longstanding racial, social, and economic inequalities; realizing the Board's Care First, Jails Last vision; and delivering extensive safety net services to our residents. The County’s 2023-2024 Budget sustains the ambitious work underway across multiple County departments and strengthens the County workforce as it serves the public with expanding existing programs. The budget does not include significant funding to launch new programs, although critical needs may be considered later in the budget process as a fuller picture of the revenues and obligations become available. The County's budget continues to reflect the County's long-standing commitment to responsible and sustainable fiscal practices. The Board of Supervisors adopted the County’s 2023-2024 Budget on June 26, 2023. The Budget was adopted based on estimated fund balances that would be available at the end of 2022-2023. The Board updated the Budget on October 3, 2023 to reflect final 2022-2023 fund balances and other pertinent financial information. For the County’s General Fund, the 2023-2024 Budget utilized $3.764 billion of fund balance, which exceeded the previously estimated fund balance of $2.256 billion. Of the additional fund balance of $1.508 billion, $489 million was used to carryover lapsed appropriations and ensure the continuity of funded program initiatives. The remaining $1.019 billion was primarily used for the continued momentum for Care First, Jails Last initiative, respond to the local emergency for homelessness and affordable housing, changes in the Mental Health and Public Health services delivery system, help children and families, older adults and people with disabilities, provide immigrant assistance services, promote jobs, workforce and business development, make community and equity investments, invest in information technology, invest in sustainability and energy efficiencies, provide transparency and public accountability, provide for public safety protection, and invest in the County's public assets. Over the past year, the federal government's rapid hikes in the federal funds borrowing rate to combat inflation have led to significant increases in both interest earnings and mortgage rates. The County is forecasting higher interest earnings and a moderate growth in a variety of locally generated revenues along with increases in statewide sales tax revenue due to recent consumer spending trends. We are forecasting an increase of 5.91% to the property tax assessment roll based on Consumer Price Index annual inflation adjustment of 1.88% and increases in property transfers at 3.46%. The mortgage rates surge is making it more expensive for prospective buyers to borrow, while applying downward pressure on home sales. The federal rate hikes to control inflation have yet to be effective to reach their two percent target. The potential pullback for consumer and business spending could lead to an economic slowdown or increase the risk of a recession. The County also faces higher operating costs as a result of increased salaries and employee benefits as part of the three-year approved labor agreements which expire in 2024-2025. In addition, the County must continue to prepare for potential legal settlements and judgments that could negatively impact the County's finances in future budget phases. The County will continue to advocate for additional federal and State funding. We will closely monitor key economic indicators and the risks of a recession to guide our efforts in the development of future budget recommendations that will impact the County's revenues, support the needs of County residents and advance the Board's priorities. The County’s budget outlook continues to be influenced by the fiscal condition and outlook of the State of California. The State Legislative Analyst’s Office (LAO) reports that future economic conditions are particularly mixed. By some measures, the economy is booming. Unemployment is at record lows and wages continue to grow at a strong pace. From other vantage points, however, the economy seems to be 27 COUNTY OF LOS ANGELES MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)-Continued FOR THE YEAR ENDED JUNE 30, 2023 on less sound footing. Housing clearly is in a slump, manufacturing and trade sectors have slowed, and recently a number of regional banks has failed. Overall, the broadest measure of economic activity (inflation-adjusted gross domestic product [real GDP]) continues to grow, albeit at a below-average pace. Regardless of the mixed economic picture, it is projected that State revenues are in a downturn. In addition, the LAO has forecasted an operating budget deficit through FY 2026-2027 averaging $18 billion annually. Proposed spending plans for multiyear one-time, temporary spending commitments, and spending delays are no longer affordable. The combination of reserves and reduced one-time spending can extend the budget capacity for the State to sustain core, ongoing programs. However, the LAO recommends addressing the State budget problem by reducing one-time spending as part of the budget process. Health and human services programs are subject to considerable challenges and uncertainty as the County depends on funding from the State and federal government. Obtaining Additional Information This financial report is designed to provide a general overview of the County’s finances for all interested parties. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Los Angeles County Auditor-Controller, 500 West Temple Street, Room 525, Los Angeles, CA 90012-3873. 28 COUNTY OF LOS ANGELES STATEMENT OF NET POSITION JUNE 30, 2023 (in thousands) PRIMARY GOVERNMENT DISCRETELY GOVERNMENTAL BUSINESS-TYPE PRESENTED ACTIVITIES ACTIVITIES TOTAL COMPONENT UNITS ASSETS Pooled cash and investments: (Notes 1 and 4) Operating $ 10,182,270 1,031,910 $ 11,214,180 $ 182,030 Other 5,797,539 57,469 5,855,008 — Total pooled cash and investments 15,979,809 1,089,379 17,069,188 182,030 Other investments (Note 4) 62,382 — 62,382 791,448 Taxes receivable 377,589 864 378,453 — Accounts receivable - net (Note 14) — 2,567,286 2,567,286 27,475 Interest receivable 52,701 2,952 55,653 1,209 Lease receivable (Note 9) 1,873,408 20,565 1,893,973 9,259 Other receivables (Note 14) 4,178,243 803,944 4,982,187 58,125 Internal balances (Note 15) (42,544) 42,544 — — Inventories 160,749 38,376 199,125 10,942 Restricted assets (Note 4) 1,599 98,056 99,655 11,870 Capital assets: (Notes 1, 5, 9 and 10) Capital assets, not being depreciated 9,949,254 742,743 10,691,997 93,560 Capital assets, net of accumulated depreciation/ amortization 9,760,131 2,616,853 12,376,984 103,922 Total capital assets 19,709,385 3,359,596 23,068,981 197,482 TOTAL ASSETS 42,353,321 8,023,562 50,376,883 1,289,840 DEFERRED OUTFLOWS OF RESOURCES (Note 20) 10,817,003 1,634,388 12,451,391 38,722 LIABILITIES Accounts payable 818,707 817,775 1,636,482 63,390 Accrued payroll 606,055 113,939 719,994 — Other payables 169,680 12,836 182,516 9,328 Accrued interest payable 14,126 13,020 27,146 — Advances payable 6,111,238 1,259 6,112,497 4,606 Long-term liabilities: (Note 11) Due within one year 1,555,818 355,901 1,911,719 6,145 Due in more than one year 44,446,809 7,326,803 51,773,612 122,570 TOTAL LIABILITIES 53,722,433 8,641,533 62,363,966 206,039 DEFERRED INFLOWS OF RESOURCES (Note 20) 10,490,505 1,832,739 12,323,244 14,871 NET POSITION Net investment in capital assets 15,833,971 2,525,430 18,359,401 161,837 Restricted for: 0 Capital projects 34,250 — 34,250 — Debt service 4,979 84,718 89,697 — Permanent funds - nonspendable 2,109 — 2,109 — General government 362,598 — 362,598 — Public protection 987,073 — 987,073 — Public ways and facilities 958,265 — 958,265 — Health and sanitation 1,573,577 — 1,573,577 — Public assistance 452,901 — 452,901 Education 1,642 — 1,642 Recreation 706,102 — 706,102 — Community development — — 621,977 First 5 LA — — 278,642 Unrestricted (deficit) (31,960,081) (3,426,470) (35,386,551) 45,196 TOTAL NET POSITION (DEFICIT) (Note 3) $ (11,042,614) (816,322) $ (11,858,936) $ 1,107,652 The notes to the basic financial statements are an integral part of this statement. 29 COUNTY OF LOS ANGELES STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2023 (in thousands) PROGRAM REVENUES OPERATING CAPITAL FUNCTIONS CHARGES FOR GRANTS AND GRANTS AND PRIMARY GOVERNMENT: EXPENSES SERVICES CONTRIBUTIONS CONTRIBUTIONS Governmental activities: General government $ 1,626,902 691,118 198,679 20,020 Public protection 10,535,212 1,704,995 2,242,819 40,913 Public ways and facilities 543,472 49,777 310,209 1,188 Health and sanitation 6,906,927 1,743,967 3,856,356 1,822 Public assistance 10,390,815 8,727 7,486,162 — Education 154,258 1,955 9,879 — Recreation and cultural services 588,735 142,312 30,691 80 Interest on long-term debt 161,604 — — — Total governmental activities 30,907,925 4,342,851 14,134,795 64,023 Business-type activities: Hospitals 5,560,504 4,912,895 180,043 — Waterworks 113,074 90,902 350 1,188 Aviation 19,677 15,155 2,208 5 Total business-type activities 5,693,255 5,018,952 182,601 1,193 Total primary government $ 36,601,180 9,361,803 14,317,396 65,216 DISCRETELY PRESENTED COMPONENT UNITS $ 937,130 35,570 960,461 13,142 GENERAL REVENUES: Taxes: Property taxes Utility users taxes Voter approved taxes Documentary transfer taxes Other taxes Sales and use taxes, levied by the State Grants and contributions not restricted to special programs Investment income Miscellaneous TRANSFERS - NET Total general revenues and transfers CHANGE IN NET POSITION NET POSITION (DEFICIT), JULY 1, 2022, AS RESTATED (Note 2) NET POSITION (DEFICIT), JUNE 30, 2023 The notes to the basic financial statements are an integral part of this statement. 30 NET (EXPENSES) REVENUES AND CHANGES IN NET POSITION DISCRETELY PRESENTED COMPONENT PRIMARY GOVERNMENT UNITS GOVERNMENTAL BUSINESS-TYPE FUNCTIONS ACTIVITIES ACTIVITIES TOTAL PRIMARY GOVERNMENT: Governmental activities: $ (717,085) $ (717,085) General government (6,546,485) (6,546,485) Public protection (182,298) (182,298) Public ways and facilities (1,304,782) (1,304,782) Health and sanitation (2,895,926) (2,895,926) Public assistance (142,424) (142,424) Education (415,652) (415,652) Recreation and cultural services (161,604) (161,604) Interest on long-term debt (12,366,256) (12,366,256) Total governmental activities Business-type activities: (467,566) (467,566) Hospitals (20,634) (20,634) Waterworks (2,309) (2,309) Aviation (490,509) (490,509) Total business-type activities (12,366,256) (490,509) (12,856,765) Total primary government $ 72,043 DISCRETELY PRESENTED COMPONENT UNITS GENERAL REVENUES: Taxes: 8,843,564 8,368 8,851,932 — Property taxes 60,923 — 60,923 — Utility users taxes 547,125 — 547,125 — Voter approved taxes 84,870 — 84,870 — Documentary transfer taxes 48,491 — 48,491 — Other taxes 712,871 — 712,871 Sales and use taxes, levied by the State Grants and contributions not restricted to special 632,188 114 632,302 — programs 347,504 22,949 370,453 9,596 Investment income 278,413 59 278,472 2,006 Miscellaneous (1,117,417) 1,117,417 — — TRANSFERS - NET 10,438,532 1,148,907 11,587,439 11,602 Total general revenues and transfers (1,927,724) 658,398 (1,269,326) 83,645 CHANGE IN NET POSITION NET POSITION (DEFICIT), JULY 1, 2022, AS (9,114,890) (1,474,720) (10,589,610) 1,024,007 RESTATED (Note 2) $ (11,042,614) (816,322) $ (11,858,936) $ 1,107,652 NET POSITION (DEFICIT), JUNE 30, 2023 31 COUNTY OF LOS ANGELES BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2023 (in thousands) REGIONAL FIRE FLOOD PARK AND GENERAL PROTECTION CONTROL LA COUNTY OPEN SPACE FUND DISTRICT DISTRICT LIBRARY DISTRICT ASSETS Pooled cash and investments: (Notes 1 and 4) Operating $ 4,249,353 243,413 425,631 166,324 670,386 Other 5,684,773 20,785 4,788 4,695 3,760 Total pooled cash and investments 9,934,126 264,198 430,419 171,019 674,146 Other investments (Note 4) 2,588 — — 114 — Taxes receivable 273,191 56,197 14,783 8,327 1,912 Interest receivable 39,225 595 1,037 363 1,403 Lease receivable (Note 9) 1,833,620 34,781 Other receivables 3,790,268 43,310 16,011 1,987 1,960 Due from other funds (Note 15) 836,933 1,872 22,940 7,927 — Advances to other funds (Note 15) 17,738 — 6,672 — — Inventories 137,240 12,780 200 146 — TOTAL ASSETS 16,864,929 378,952 526,843 189,883 679,421 DEFERRED OUTFLOWS OF RESOURCES (Note 20) — — TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES $ 16,864,929 378,952 526,843 189,883 679,421 LIABILITIES Accounts payable $ 712,573 7,756 10,248 3,352 100 Accrued payroll 523,652 52,539 — 4,629 — Other payables 163,099 2,933 — 596 — Due to other funds (Note 15) 345,155 48,143 34,849 6,054 1,960 Advances payable 5,979,531 — 72,765 — — Third party payor (Notes 11 and 14) 195,652 — — — — TOTAL LIABILITIES 7,919,662 111,371 117,862 14,631 2,060 DEFERRED INFLOWS OF RESOURCES (Note 20) 2,462,210 51,144 44,657 5,857 1,638 FUND BALANCES (Note 21) Nonspendable 263,367 12,780 200 146 — Restricted 77,629 203,657 364,025 82,037 675,723 Committed 832,792 — — — — Assigned 1,028,770 — 99 87,212 — Unassigned 4,280,499 — — — — TOTAL FUND BALANCES 6,483,057 216,437 364,324 169,395 675,723 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES $ 16,864,929 378,952 526,843 189,883 679,421 ` The notes to the basic financial statements are an integral part of this statement. 32 MENTAL HEALTH NONMAJOR TOTAL SERVICES GOVERNMENTAL GOVERNMENTAL ACT FUNDS FUNDS ASSETS Pooled cash and investments: (Notes 1 and 4) $ 1,441,882 2,928,578 $ 10,125,567 Operating 6,078 62,324 5,787,203 Other 1,447,960 2,990,902 15,912,770 Total pooled cash and investments — 59,680 62,382 Other investments (Note 4) — 23,179 377,589 Taxes receivable 3,753 5,853 52,229 Interest receivable 5,007 1,873,408 Lease receivable (Note 9) — 227,509 4,081,045 Other receivables — 123,993 993,665 Due from other funds (Note 15) — 11,014 35,424 Advances to other funds (Note 15) — 1 150,367 Inventories 1,451,713 3,447,138 23,538,879 TOTAL ASSETS — 183,207 183,207 DEFERRED OUTFLOWS OF RESOURCES (Note 20) TOTAL ASSETS AND DEFERRED OUTFLOWS OF $ 1,451,713 3,630,345 $ 23,722,086 RESOURCES LIABILITIES $ — 75,873 $ 809,902 Accounts payable — 44 580,864 Accrued payroll — — 166,628 Other payables 218,840 462,630 1,117,631 Due to other funds (Note 15) — 58,454 6,110,750 Advances payable — 246 195,898 Third party payor (Notes 11 and 14) 218,840 597,247 8,981,673 TOTAL LIABILITIES — 20,224 2,585,730 DEFERRED INFLOWS OF RESOURCES (Note 20) FUND BALANCES (Note 21) — 2,137 278,630 Nonspendable 1,232,873 2,670,624 5,306,568 Restricted — 141,900 974,692 Committed — 198,213 1,314,294 Assigned — — 4,280,499 Unassigned 1,232,873 3,012,874 12,154,683 TOTAL FUND BALANCES TOTAL LIABILITIES, DEFERRED INFLOWS OF $ 1,451,713 3,630,345 $ 23,722,086 RESOURCES, AND FUND BALANCES 33 COUNTY OF LOS ANGELES RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION JUNE 30, 2023 (in thousands) Fund balances - total governmental funds (page 33) $ 12,154,683 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not reported in governmental funds: Land and easements - net $ 7,649,936 Construction in progress 2,302,337 Buildings and improvements - net 5,758,480 Equipment - net 349,735 Intangible software - net 251,081 Infrastructure - net 3,279,360 19,590,929 Deferred outflows and inflows of resources reported in the statement of net position, but not recognized in the governmental funds: Deferred outflows from losses on refunding of debt $ 7,999 Deferred outflows from OPEB 4,973,775 Deferred outflows from pension 5,402,065 Deferred inflows from gains on refunding of debt (10,920) Deferred inflows from private-public partnerships (84,995) Deferred inflows from OPEB (7,750,905) Deferred inflows from pension (424,437) 2,112,582 Deferred outflows and inflows of resources reported in the balance sheet, but not recognized in the statement of net position: Deferred outflows from tobacco settlement revenues $ (183,207) Deferred inflows from tobacco settlement revenues 183,207 Deferred inflows from property taxes 256,912 Deferred inflows from long-term receivables 272,203 529,115 Other long-term asset transactions are not available for the current period and are not recognized in governmental funds: Payables and receivables related to capital assets $ 338 Accrued interest on long-term receivables 328 666 Installment receivables from public-private and public-public partnerships 84,995 Accrued interest payable is not recognized in governmental funds (14,110) Long-term liabilities, including bonds and notes payable, are not due and payable in the current period and, therefore, are not reported in the governmental funds: Bonds and notes $ (2,242,274) Unamortized premiums on bonds (289,086) Accreted interest on bonds (14,227) Lease liability (1,577,412) Subscription liability (85,621) Financed purchase obligations (22,750) Accrued compensated absences (2,092,305) Workers' compensation (3,048,397) Litigation and self-insurance (3,732,163) Pollution remediation obligation (37,166) Net pension liability (10,940,285) Net OPEB liability (20,072,830) Third party payor liability (136,623) (44,291,139) Assets and liabilities of certain internal service funds are included in governmental activities in the accompanying statement of net position. (1,210,335) Net position (deficit) of governmental activities (page 29) $ (11,042,614) The notes to the basic financial statements are an integral part of this statement. 34 35 COUNTY OF LOS ANGELES STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2023 (in thousands) REGIONAL FIRE FLOOD PARK AND GENERAL PROTECTION CONTROL LA COUNTY OPEN SPACE FUND DISTRICT DISTRICT LIBRARY DISTRICT REVENUES Taxes $ 7,643,986 1,119,730 203,064 121,542 109,747 Licenses, permits and franchises 72,609 20,843 1,670 1 — Fines, forfeitures and penalties 176,923 3,471 2,304 540 1,014 Revenue from use of money and property: Investment income (loss) (Note 4) 246,295 (1,344) 13,138 (58) 9,676 Rents and concessions (Note 9) 54,268 62 5,316 5 — Lease revenue (Note 9) 68,592 1,349 Royalties 18 — 616 — — Intergovernmental revenues: Federal 5,366,215 12,988 — 4,608 — State 8,421,882 10,225 17,631 5,652 — Other 16,738 581 105 81 — Charges for services 2,908,286 296,570 134,264 1,292 244 Miscellaneous 245,625 4,344 7,704 4,767 — TOTAL REVENUES 25,221,437 1,467,470 387,161 138,430 120,681 EXPENDITURES Current: General government 1,870,449 — — — — Public protection 6,720,622 1,497,919 427,825 — — Public ways and facilities — — — — — Health and sanitation 6,468,543 — — — — Public assistance 8,549,336 — — — — Education — — — 159,443 — Recreation and cultural services 477,197 — — — 19,335 Debt service: Principal 128,544 7,646 1,313 815 — Interest and other charges 57,853 1,078 81 320 — Capital outlay 341,816 3,140 — 446 — TOTAL EXPENDITURES 24,614,360 1,509,783 429,219 161,024 19,335 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 607,077 (42,313) (42,058) (22,594) 101,346 OTHER FINANCING SOURCES (USES) Transfers in (Note 15) 1,194,387 88,201 2,392 61,837 — Transfers out (Note 15) (1,279,057) (22,284) (2,302) (1,834) — Issuance of debt (Note 11) — — — — — Sales of capital assets 1,180 105 268 — — Leases (Note 9) 280,778 3,140 446 Subscriptions (Note 10) 61,038 — TOTAL OTHER FINANCING SOURCES (USES) 258,326 69,162 358 60,449 — NET CHANGE IN FUND BALANCES 865,403 26,849 (41,700) 37,855 101,346 FUND BALANCES, JULY 1, 2022 5,617,654 189,588 406,024 131,540 574,377 FUND BALANCES, JUNE 30, 2023 $ 6,483,057 216,437 364,324 169,395 675,723 The notes to the basic financial statements are an integral part of this statement. 36 MENTAL HEALTH NONMAJOR TOTAL SERVICES GOVERNMENTAL GOVERNMENTAL ACT FUNDS FUNDS REVENUES $ 1,004,070 $ 10,202,139 Taxes — 26,066 121,189 Licenses, permits and franchises — 38,062 222,314 Fines, forfeitures and penalties Revenue from use of money and property: 39,588 42,026 349,321 Investment income (loss) (Note 4) — 46,583 106,234 Rents and concessions (Note 9) 283 70,224 Lease revenue (Note 9) — 6 640 Royalties Intergovernmental revenues: — 7,478 5,391,289 Federal 571,915 449,399 9,476,704 State — 11,399 28,904 Other — 431,263 3,771,919 Charges for services — 107,412 369,852 Miscellaneous 611,503 2,164,047 30,110,729 TOTAL REVENUES EXPENDITURES Current: — 11,225 1,881,674 General government — 249,261 8,895,627 Public protection — 498,034 498,034 Public ways and facilities — 177,562 6,646,105 Health and sanitation — 196,079 8,745,415 Public assistance — 62 159,505 Education — 8,499 505,031 Recreation and cultural services Debt service: — 184,674 322,992 Principal — 111,636 170,968 Interest and other charges — 150,105 495,507 Capital outlay — 1,587,137 28,320,858 TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER 611,503 576,910 1,789,871 EXPENDITURES OTHER FINANCING SOURCES (USES) — 289,037 1,635,854 Transfers in (Note 15) (657,350) (766,847) (2,729,674) Transfers out (Note 15) — 135,467 135,467 Issuance of debt (Note 11) — 784 2,337 Sales of capital assets 284,364 Leases (Note 9) 61,038 Subscriptions (Note 10) (657,350) (341,559) (610,614) TOTAL OTHER FINANCING SOURCES (USES) (45,847) 235,351 1,179,257 NET CHANGE IN FUND BALANCES 1,278,720 2,777,523 10,975,426 FUND BALANCES, JULY 1, 2022 $ 1,232,873 3,012,874 $ 12,154,683 FUND BALANCES, JUNE 30, 2023 37 COUNTY OF LOS ANGELES RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2023 (in thousands) Net change in fund balances - total governmental funds (page 37) $ 1,179,257 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlay as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation/amortization expense: Expenditures for general capital assets, infrastructure and other related capital asset adjustments $ 679,893 Less - current year depreciation expense (420,633) Expenditures for right-to-use lease and subscription assets 345,402 Less - current year amortization expense (143,929) 460,733 In the statement of activities, only the gain or loss on the disposal and impairment of capital assets is reported, whereas in the governmental funds, the proceeds from the sale are reported as an increase in financial resources. Thus, the change in net position differs from the change in fund balance. (4,976) Contribution of capital assets is not recognized in the governmental funds. 43,923 Amortization of gain or loss on refunding of debt are reported as changes to deferred outflows of resources in governmental activities, but not reported for governmental funds. (1,395) Changes in unavailable revenues are reported as changes in deferred inflows of resources for governmental funds, but were recognized when earned for governmental activities. (87,522) Timing differences result in more or less revenues and expenses in the statement of activities. Change in accrued interest on long-term receivables $ 273 Change in unamortized premiums 5,260 5,533 Issuance of long-term debt provides resources in the governmental funds, but increases long-term liabilities in the statement of net position. (480,869) Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position: Certificates of participation and bonds $ 85,432 Notes, loans, and lease revenue obligation notes 100,379 Other long-term notes, loans, leases and subscriptions 137,181 322,992 Some expenses reported in the accompanying statement of activities do not require (or provide) the use of current financial resources and, therefore, are not reported as expenditures in governmental funds: Change in workers' compensation $ (96,739) Change in litigation and self-insurance (3,186,156) Change in pollution remediation obligation 866 Change in accrued compensated absences (130,204) Change in net pension liability, net of related deferred outflows of resources and deferred inflows of resources 254,831 Change in net OPEB liability, net of related deferred outflows of resources and deferred inflows of resources (160,383) Change in third party payor liability (18,478) Change in accrued interest payable 1,389 Change in accretion of tobacco settlement bonds (5,035) Transfer of capital assets between governmental fund and enterprise fund (18,291) (3,358,200) The portion of internal service funds that is reported with governmental activities. (7,200) Change in net position of governmental activities (page 31) $ (1,927,724) The notes to the basic financial statements are an integral part of this statement. 38 COUNTY OF LOS ANGELES STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL ON BUDGETARY BASIS GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2023 (in thousands) GENERAL FUND ORIGINAL FINAL ACTUAL ON VARIANCE WITH BUDGET BUDGET BUDGETARY FINAL BUDGET BASIS POSITIVE (NEGATIVE) REVENUES Taxes $ 7,391,046 7,404,760 7,639,271 234,511 Licenses, permits and franchises 67,304 68,335 73,257 4,922 Fines, forfeitures and penalties 140,175 140,360 176,923 36,563 Revenue from use of money and property: Investment income 120,491 208,259 348,272 140,013 Rents and concessions 134,927 134,177 122,212 (11,965) Royalties — — 18 18 Intergovernmental revenues: Federal 5,489,011 6,472,583 5,256,621 (1,215,962) State 8,769,178 8,959,162 8,474,744 (484,418) Other 59,537 62,983 30,231 (32,752) Charges for services 2,944,884 3,125,586 2,906,002 (219,584) Miscellaneous 192,897 205,495 257,515 52,020 TOTAL REVENUES 25,309,450 26,781,700 25,285,066 (1,496,634) EXPENDITURES Current: General government 3,433,026 3,484,416 1,893,037 1,591,379 Public protection 6,891,643 7,353,877 6,800,230 553,647 Health and sanitation 7,408,057 7,382,127 6,600,293 781,834 Public assistance 9,274,306 9,810,107 8,673,154 1,136,953 Recreation and cultural services 525,772 547,310 513,250 34,060 Debt service- Interest 15,921 15,921 15,921 Capital outlay 1,377,754 1,656,029 352,006 1,304,023 TOTAL EXPENDITURES 28,926,479 30,249,787 24,847,891 5,401,896 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (3,617,029) (3,468,087) 437,175 3,905,262 OTHER FINANCING SOURCES (USES) Sales of capital assets 814 814 1,180 366 Transfers in 1,462,961 1,569,238 1,172,542 (396,696) Transfers out (837,656) (1,130,106) (1,126,968) 3,138 Appropriations for contingencies (77,191) 41,665 — (41,665) Changes in fund balance (109,870) (191,495) 102,589 294,084 TOTAL OTHER FINANCING SOURCES (USES) 439,058 290,116 149,343 (140,773) NET CHANGE IN FUND BALANCE (3,177,971) (3,177,971) 586,518 3,764,489 FUND BALANCE, JULY 1, 2022 3,177,971 3,177,971 3,177,971 FUND BALANCE, JUNE 30, 2023 (Note 16) $ 3,764,489 3,764,489 The notes to the basic financial statements are an integral part of this statement. 39 COUNTY OF LOS ANGELES STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL ON BUDGETARY BASIS FIRE PROTECTION DISTRICT FOR THE YEAR ENDED JUNE 30, 2023 (in thousands) FIRE PROTECTION DISTRICT ORIGINAL FINAL ACTUAL ON VARIANCE WITH BUDGET BUDGET BUDGETARY FINAL BUDGET BASIS POSITIVE (NEGATIVE) REVENUES Taxes $ 1,097,807 1,115,599 1,118,772 3,173 Licenses, permits and franchises 18,876 18,876 20,843 1,967 Fines, forfeitures and penalties 3,446 3,446 3,471 25 Revenue from use of money and property: Investment income 937 937 3,893 2,956 Rents and concessions 90 90 62 (28) Intergovernmental revenues: Federal 35,518 37,101 13,359 (23,742) State 14,756 16,291 10,225 (6,066) Other — — 581 581 Charges for services 271,807 277,390 299,327 21,937 Miscellaneous 805 1,046 4,344 3,298 TOTAL REVENUES 1,444,042 1,470,776 1,474,877 4,101 EXPENDITURES Current-Public protection: Salaries and employee benefits 1,277,298 1,310,469 1,287,996 22,473 Services and supplies 193,756 183,929 170,166 13,763 Other charges 45,701 41,157 32,427 8,730 Capital assets 8,144 12,851 11,049 1,802 TOTAL EXPENDITURES 1,524,899 1,548,406 1,501,638 46,768 DEFICIENCY OF REVENUES OVER EXPENDITURES (80,857) (77,630) (26,761) 50,869 OTHER FINANCING SOURCES (USES) Sales of capital assets 127 127 105 (22) Transfers in 85,573 91,414 88,201 (3,213) Transfers out (8,738) (19,838) (19,838) — Appropriations for contingencies (19,824) (17,792) — 17,792 Changes in fund balance (38,523) (38,523) (33,095) 5,428 TOTAL OTHER FINANCING SOURCES (USES) 18,615 15,388 35,373 19,985 NET CHANGE IN FUND BALANCE (62,242) (62,242) 8,612 70,854 FUND BALANCE, JULY 1, 2022 62,242 62,242 62,242 FUND BALANCE, JUNE 30, 2023 (Note 16) $ 70,854 70,854 The notes to the basic financial statements are an integral part of this statement. 40 COUNTY OF LOS ANGELES STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL ON BUDGETARY BASIS FLOOD CONTROL DISTRICT FOR THE YEAR ENDED JUNE 30, 2023 (in thousands) FLOOD CONTROL DISTRICT ORIGINAL FINAL ACTUAL ON VARIANCE WITH BUDGET BUDGET BUDGETARY FINAL BUDGET BASIS POSITIVE (NEGATIVE) REVENUES Taxes $ 192,581 200,828 202,452 1,624 Licenses, permits and franchises 1,546 1,546 1,670 124 Fines, forfeitures and penalties 1,023 1,023 2,304 1,281 Revenue from use of money and property: Investment income 2,788 8,172 13,189 5,017 Rents and concessions 7,920 7,920 6,665 (1,255) Royalties 428 428 616 188 Intergovernmental revenues: State 1,344 1,344 17,631 16,287 Other 4,209 4,209 105 (4,104) Charges for services 133,582 133,582 133,675 93 Miscellaneous 83 83 7,704 7,621 TOTAL REVENUES 345,504 359,135 386,011 26,876 EXPENDITURES Current-Public protection: Services and supplies 369,464 399,483 396,945 2,538 Other charges 5,231 7,068 1,359 5,709 Capital assets 1,243 1,387 899 488 Capital outlay 89,711 55,411 43,172 12,239 TOTAL EXPENDITURES 465,649 463,349 442,375 20,974 DEFICIENCY OF REVENUES OVER EXPENDITURES (120,145) (104,214) (56,364) 47,850 OTHER FINANCING SOURCES (USES) Sales of capital assets 97 97 268 171 Transfers in 6,730 6,730 90 (6,640) Transfers out (1,981) (4,281) — 4,281 Appropriations for contingencies — (13,631) — 13,631 Changes in fund balance — — 9,855 9,855 TOTAL OTHER FINANCING SOURCES (USES) 4,846 (11,085) 10,213 21,298 NET CHANGE IN FUND BALANCE (115,299) (115,299) (46,151) 69,148 FUND BALANCE, JULY 1, 2022 115,299 115,299 115,299 FUND BALANCE, JUNE 30, 2023 (Note 16) $ 69,148 69,148 The notes to the basic financial statements are an integral part of this statement. 41 COUNTY OF LOS ANGELES STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL ON BUDGETARY BASIS LA COUNTY LIBRARY FOR THE YEAR ENDED JUNE 30, 2023 (in thousands) LA COUNTY LIBRARY ORIGINAL FINAL ACTUAL ON VARIANCE WITH BUDGET BUDGET BUDGETARY FINAL BUDGET BASIS POSITIVE (NEGATIVE) REVENUES Taxes $ 115,619 120,470 121,438 968 Licenses, permits and franchises — — 1 1 Fines, forfeitures and penalties 375 375 540 165 Revenue from use of money and property: Investment income 1,200 2,796 4,198 1,402 Rents and concessions 15 15 5 (10) Intergovernmental revenues: Federal — 500 4,608 4,108 State 540 540 5,652 5,112 Other 7,305 7,305 81 (7,224) Charges for services 1,728 1,728 1,292 (436) Miscellaneous 584 584 4,767 4,183 TOTAL REVENUES 127,366 134,313 142,582 8,269 EXPENDITURES Current-Education: Salaries and employee benefits 128,291 128,291 104,310 23,981 Services and supplies 106,839 105,591 62,878 42,713 Other charges 1,172 1,913 987 926 Capital assets 694 694 14 680 TOTAL EXPENDITURES 236,996 236,489 168,189 68,300 DEFICIENCY OF REVENUES OVER EXPENDITURES (109,630) (102,176) (25,607) 76,569 OTHER FINANCING SOURCES (USES) Sales of capital assets 13 13 — (13) Transfers in 67,820 67,882 61,837 (6,045) Transfers out — (1,069) (1,069) — Appropriation for contingencies — (6,447) — 6,447 Changes in fund balance (34,534) (34,534) (32,472) 2,062 TOTAL OTHER FINANCING SOURCES (USES) 33,299 25,845 28,296 2,451 NET CHANGE IN FUND BALANCE (76,331) (76,331) 2,689 79,020 FUND BALANCE, JULY 1, 2022 76,331 76,331 76,331 FUND BALANCE, JUNE 30, 2023 (Note 16) $ 79,020 79,020 The notes to the basic financial statements are an integral part of this statement. 42 COUNTY OF LOS ANGELES STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL ON BUDGETARY BASIS REGIONAL PARK AND OPEN SPACE DISTRICT FOR THE YEAR ENDED JUNE 30, 2023 (in thousands) REGIONAL PARK AND OPEN SPACE DISTRICT ORIGINAL FINAL ACTUAL ON VARIANCE WITH BUDGET BUDGET BUDGETARY FINAL BUDGET BASIS POSITIVE (NEGATIVE) REVENUES Taxes $ 109,513 109,513 109,747 234 Fines, forfeitures and penalties 580 1,564 1,014 (550) Revenue from use of money and property- Investment income 1,500 1,500 18,923 17,423 Charges for services — — 460 460 TOTAL REVENUES 111,593 112,577 130,144 17,567 EXPENDITURES Current-Recreation and cultural services: Services and supplies 25,070 24,779 8,099 16,680 Other charges 472,728 474,003 37,810 436,193 TOTAL EXPENDITURES 497,798 498,782 45,909 452,873 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (386,205) (386,205) 84,235 470,440 OTHER FINANCING SOURCES (USES) Transfers in 121,583 122,191 119,097 (3,094) Transfers out (121,583) (122,191) (119,097) 3,094 Changes in fund balance (18,870) (18,870) (17,820) 1,050 TOTAL OTHER FINANCING SOURCES (USES) (18,870) (18,870) (17,820) 1,050 NET CHANGE IN FUND BALANCE (405,075) (405,075) 66,415 471,490 FUND BALANCE, JULY 1, 2022 405,075 405,075 405,075 FUND BALANCE, JUNE 30, 2023 (Note 16) $ — 471,490 471,490 The notes to the basic financial statements are an integral part of this statement. 43 COUNTY OF LOS ANGELES STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL ON BUDGETARY BASIS MENTAL HEALTH SERVICES ACT FOR THE YEAR ENDED JUNE 30, 2023 (in thousands) MENTAL HEALTH SERVICES ACT ORIGINAL FINAL ACTUAL ON VARIANCE WITH BUDGET BUDGET BUDGETARY FINAL BUDGET BASIS POSITIVE (NEGATIVE) REVENUES Revenue from use of money and property- Investment income $ 7,443 7,443 45,829 38,386 Intergovernmental revenues- State 895,657 895,657 571,915 (323,742) TOTAL REVENUES 903,100 903,100 617,744 (285,356) OTHER FINANCING USES Transfers out (879,250) (883,356) (657,350) 226,006 Appropriations for contingencies (214,420) (214,420) — 214,420 Changes in fund balance (561,313) (557,207) (557,207) — TOTAL OTHER FINANCING USES (1,654,983) (1,654,983) (1,214,557) 440,426 NET CHANGE IN FUND BALANCE (751,883) (751,883) (596,813) 155,070 FUND BALANCE, JULY 1, 2022 751,883 751,883 751,883 FUND BALANCE, JUNE 30, 2023 (Note 16) $ 155,070 155,070 The notes to the basic financial statements are an integral part of this statement. 44 45 COUNTY OF LOS ANGELES STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30, 2023 (in thousands) BUSINESS-TYPE ACTIVITIES - Los Angeles Harbor-UCLA Olive View- General Rancho Los Medical UCLA Medical Medical Amigos National Center Center Center Rehab Center ASSETS Current assets: Pooled cash and investments: (Notes 1 and 4) Operating $ 427,561 77,200 188,001 182,528 Other 18,703 8,791 21,888 5,116 Total pooled cash and investments 446,264 85,991 209,889 187,644 Taxes receivable — — — — Accounts receivable - net (Note 14) 804,876 462,281 1,057,355 225,211 Interest receivable 1,686 357 405 145 Lease receivable (Note 9) Other receivables (Note 14) 18,008 10,544 25,516 4,878 Due from other funds (Note 15) 315,923 184,010 475,746 186,384 Advances to other funds (Note 15) — — — — Inventories 12,876 6,812 16,211 1,942 Total current assets 1,599,633 749,995 1,785,122 606,204 Noncurrent assets: Restricted assets (Note 4) 65,188 18,417 2,188 12,263 Lease receivable (Note 9) Other receivables (Note 14) 208,356 199,661 310,467 22,748 Capital assets: (Notes 1, 5, 9 and 10) Land and easements 1,671 1,894 16,194 217 Buildings and improvements, equipment, and intangible software 1,110,444 367,069 1,274,932 542,731 Infrastructure — — — — Construction in progress 323,695 59,684 8,379 123,719 Lease assets 422 389 988 291 Subscription assets Less accumulated depreciation/amortization (396,059) (226,120) (480,229) (184,005) Total capital assets - net 1,040,173 202,916 820,264 482,953 Total noncurrent assets 1,313,717 420,994 1,132,919 517,964 TOTAL ASSETS 2,913,350 1,170,989 2,918,041 1,124,168 DEFERRED OUTFLOWS OF RESOURCES (Note 20) 498,420 278,421 707,960 149,587 LIABILITIES Current liabilities: Accounts payable 251,505 216,459 267,125 77,007 Accrued payroll 36,875 19,820 47,476 9,768 Other payables 4,812 2,361 4,256 1,349 Accrued interest payable 10,323 1,948 44 689 Due to other funds (Note 15) 311,175 193,142 383,063 203,326 Advances from other funds (Note 15) 4,737 2,554 6,400 1,265 Advances payable 647 126 460 3 Current portion of long-term liabilities (Note 11) 158,682 61,698 92,369 42,731 Total current liabilities 778,756 498,108 801,193 336,138 Noncurrent liabilities: Accrued compensated absences (Note 11) 88,880 49,253 106,217 22,133 Bonds and notes (Note 11) 472,254 74,175 15,140 211,521 Lease liability (Note 9 and 11) 293 226 622 165 Subscription liability (Note 10 and 11) Workers' compensation (Notes 11 and 18) 111,463 45,612 166,037 32,299 Litigation and self-insurance (Notes 11 and 18) 2,381 469 8,760 93 Net pension liability (Notes 7 and 11) 551,648 311,487 750,195 164,789 Net OPEB liability (Notes 8 and 11) 1,110,588 636,610 1,656,132 342,651 Third party payor (Notes 11 and 14) 132,769 49,631 179,753 22,485 Total noncurrent liabilities 2,470,276 1,167,463 2,882,856 796,136 TOTAL LIABILITIES 3,249,032 1,665,571 3,684,049 1,132,274 DEFERRED INFLOWS OF RESOURCES (Note 20) 514,198 368,563 771,467 157,946 NET POSITION Net investment in capital assets 529,431 134,513 804,531 253,520 Restricted - Debt service 35,636 616 2,978 45,488 Unrestricted (deficit) (916,527) (719,853) (1,637,024) (315,473) TOTAL NET POSITION (DEFICIT) (Note 3) $ (351,460) (584,724) (829,515) (16,465) The notes to the basic financial statements are an integral part of this statement. 46 GOVERNMENTAL ENTERPRISE FUNDS ACTIVITIES Internal Nonmajor Service Waterworks Aviation Total Funds ASSETS Current assets: Pooled cash and investments: (Notes 1 and 4) $ 143,925 12,695 $ 1,031,910 $ 56,703 Operating 2,971 57,469 10,336 Other 146,896 12,695 1,089,379 67,039 Total pooled cash and investments 864 — 864 Taxes receivable 16,665 898 2,567,286 Accounts receivable - net (Note 14) 335 24 2,952 144 Interest receivable 847 847 Lease receivable (Note 9) 3,765 1 62,712 11,537 Other receivables (Note 14) 2,073 291 1,164,427 123,741 Due from other funds (Note 15) 1,260 272 1,532 Advances to other funds (Note 15) — 535 38,376 10,382 Inventories 171,858 15,563 4,928,375 212,843 Total current assets Noncurrent assets: — — 98,056 1,599 Restricted assets (Note 4) 19,718 19,718 Lease receivable (Note 9) — 741,232 Other receivables (Note 14) Capital assets: (Notes 1, 5, 9 and 10) 13,506 134,692 168,174 — Land and easements 124,031 44,009 3,463,216 266,236 Buildings and improvements, equipment, and intangible software 1,224,785 96,755 1,321,540 — Infrastructure 58,991 101 574,569 — Construction in progress — 2,090 1,224 Lease assets 613 Subscription assets (800,555) (83,025) (2,169,993) (149,617) Less accumulated depreciation/amortization 620,758 192,532 3,359,596 118,456 Total capital assets - net 620,758 212,250 4,218,602 120,055 Total noncurrent assets 792,616 227,813 9,146,977 332,898 TOTAL ASSETS — — 1,634,388 433,164 DEFERRED OUTFLOWS OF RESOURCES (Note 20) LIABILITIES Current liabilities: 4,500 1,179 817,775 8,805 Accounts payable — 113,939 25,191 Accrued payroll — 58 12,836 3,052 Other payables — 16 13,020 16 Accrued interest payable 16,576 1,177 1,108,459 55,743 Due to other funds (Note 15) — 14,956 22,000 Advances from other funds (Note 15) 23 — 1,259 160 Advances payable 305 116 355,901 13,197 Current portion of long-term liabilities (Note 11) 21,404 2,546 2,438,145 128,164 Total current liabilities Noncurrent liabilities: — — 266,483 76,017 Accrued compensated absences (Note 11) 8,370 1,064 782,524 5,000 Bonds and notes (Note 11) — 1,306 528 Lease liability (Note 9 and 11) 80 Subscription liability (Note 10 and 11) — 355,411 56,838 Workers' compensation (Notes 11 and 18) 638 — 12,341 — Litigation and self-insurance (Notes 11 and 18) — 1,778,119 442,156 Net pension liability (Notes 7 and 11) — 3,745,981 921,774 Net OPEB liability (Notes 8 and 11) — 384,638 Third party payor (Notes 11 and 14) 9,008 1,064 7,326,803 1,502,393 Total noncurrent liabilities 30,412 3,610 9,764,948 1,630,557 TOTAL LIABILITIES — 20,565 1,832,739 345,840 DEFERRED INFLOWS OF RESOURCES (Note 20) NET POSITION 612,083 191,352 2,525,430 113,971 Net investment in capital assets — — 84,718 — Restricted - Debt service 150,121 12,286 (3,426,470) (1,324,306) Unrestricted (deficit) $ 762,204 203,638 (816,322) $ (1,210,335) TOTAL NET POSITION (DEFICIT) (Note 3) 47 COUNTY OF LOS ANGELES STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2023 (in thousands) BUSINESS-TYPE ACTIVITIES - Los Angeles Harbor-UCLA Olive View- General Rancho Los Medical UCLA Medical Medical Amigos National Center Center Center Rehab Center OPERATING REVENUES: Net patient service revenues (Note 14) $ 1,588,405 960,280 2,052,830 311,380 Charges for services — — — — Other (Note 14) 70,497 23,777 80,751 6,363 TOTAL OPERATING REVENUES 1,658,902 984,057 2,133,581 317,743 OPERATING EXPENSES: Salaries and employee benefits 848,080 435,740 1,092,071 222,360 Services and supplies 261,591 125,798 292,387 46,945 Other professional services 361,083 192,400 538,318 77,102 Depreciation and amortization (Note 5) 28,094 11,544 30,901 13,456 Medical malpractice — 2,340 — 218 TOTAL OPERATING EXPENSES 1,498,848 767,822 1,953,677 360,081 OPERATING INCOME (LOSS) 160,054 216,235 179,904 (42,338) NONOPERATING REVENUES (EXPENSES): Taxes — — — — Investment income (loss) 5,019 2,715 10,585 1,592 Gain (loss) on disposal of property (1,245) (41) (104) (28) Interest revenue Interest expense (33,364) (5,694) (800) (11,926) Intergovernmental transfers expense (Note 14) (234,129) (226,036) (364,617) (100,970) Intergovernmental revenues: State — — — — Federal — — — — Other — — — — TOTAL NONOPERATING REVENUES (EXPENSES) (263,719) (229,056) (354,936) (111,332) LOSS BEFORE CONTRIBUTIONS AND TRANSFERS (103,665) (12,821) (175,032) (153,670) Capital contributions 2,444 — 14,063 1,784 Transfers in (Note 15) 368,723 201,570 762,915 327,352 Transfers out (Note 15) (199,955) (34,383) (212,661) (114,574) CHANGE IN NET POSITION 67,547 154,366 389,285 60,892 NET POSITION (DEFICIT), JULY 1, 2022 (419,007) (739,090) (1,218,800) (77,357) NET POSITION (DEFICIT), JUNE 30, 2023 $ (351,460) (584,724) (829,515) (16,465) The notes to the basic financial statements are an integral part of this statement. 48 GOVERNMENTAL ENTERPRISE FUNDS ACTIVITIES Internal Nonmajor Service Waterworks Aviation Total Funds OPERATING REVENUES: $ $ 4,912,895 $ Net patient service revenues (Note 14) 90,902 4,261 95,163 740,566 Charges for services 42 92 181,522 Other (Note 14) 90,944 4,353 5,189,580 740,566 TOTAL OPERATING REVENUES OPERATING EXPENSES: — 2,598,251 589,535 Salaries and employee benefits 86,327 13,749 826,797 59,853 Services and supplies 2,640 2,258 1,173,801 77,050 Other professional services 23,850 3,632 111,477 19,212 Depreciation and amortization (Note 5) — 2,558 Medical malpractice 112,817 19,639 4,712,884 745,650 TOTAL OPERATING EXPENSES (21,873) (15,286) 476,696 (5,084) OPERATING INCOME (LOSS) NONOPERATING REVENUES (EXPENSES): 8,368 — 8,368 Taxes 2,849 189 22,949 (2,086) Investment income (loss) (95) (1,513) 752 Gain (loss) on disposal of property 10,894 10,894 2,182 Interest revenue (163) (38) (51,985) (199) Interest expense — (925,752) Intergovernmental transfers expense (Note 14) Intergovernmental revenues: 30 1,490 1,520 State 350 718 1,068 — Federal 84 — 84 Other 11,423 13,253 (934,367) 649 TOTAL NONOPERATING REVENUES (EXPENSES) (10,450) (2,033) (457,671) (4,435) LOSS BEFORE CONTRIBUTIONS AND TRANSFERS 1,188 5 19,484 Capital contributions 142 — 1,660,702 3,421 Transfers in (Note 15) — (3) (561,576) (8,727) Transfers out (Note 15) (9,120) (2,031) 660,939 (9,741) CHANGE IN NET POSITION 771,324 205,669 (1,200,594) NET POSITION (DEFICIT), JULY 1, 2022 $ 762,204 203,638 $ (1,210,335) NET POSITION (DEFICIT), JUNE 30, 2023 Adjustment to reflect the consolidation of internal (2,541) service fund activities related to enterprise funds CHANGE IN NET POSITION OF BUSINESS-TYPE $ 658,398 ACTIVITIES (PAGE 31) 49 COUNTY OF LOS ANGELES STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2023 (in thousands) BUSINESS-TYPE ACTIVITIES - Los Angeles Harbor-UCLA Olive View- General Rancho Los Medical UCLA Medical Medical Amigos National Center Center Center Rehab Center CASH FLOWS FROM OPERATING ACTIVITIES Cash received from patient services $ 1,595,526 615,048 1,618,102 298,749 Cash received from charges for services Other operating revenues 70,497 23,777 80,751 6,363 Cash received for services provided to other funds 25,820 24,404 38,208 466 Cash paid for salaries and employee benefits (862,734) (176,519) (1,116,842) (228,816) Cash (paid) returned for services and supplies 5,256 99,732 71,270 (56,743) Other operating expenses (372,488) (478,107) (552,962) (77,118) Cash (paid) returned for services from other funds (86,589) 28,295 (200,648) (751) Net cash provided by (required for) operating activities 375,288 136,630 (62,121) (57,850) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Cash advances received from other funds 10,244 154,954 305,816 — Cash advances paid to other funds (10,244) (154,847) (306,515) (12) Interest paid on advances — (34) (91) — Intergovernmental transfers paid (234,129) (226,036) (364,617) (100,970) Intergovernmental receipts — — — — Transfers in 368,723 153,378 527,377 327,352 Transfers out (199,955) (34,383) (212,661) (114,574) Net cash provided by (required for) noncapital financing activities (65,361) (106,968) (50,691) 111,796 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from taxes Capital contributions — — — — Proceeds from bonds and notes 77,361 9,892 1,699 26,524 Interest paid on capital borrowing (34,068) (5,750) (745) (12,246) Interest revenue Principal payments on bonds and notes (106,029) (27,541) (7,146) (30,278) Principal payments on financed purchase obligations — (11) — — Leases paid (38) (72) (155) (54) Subscriptions paid Acquisition and construction of capital assets (186,847) (39,815) (27,716) (15,484) Net cash provided by (required for) capital and related financing activities (249,621) (63,297) (34,063) (31,538) CASH FLOWS FROM INVESTING ACTIVITIES Investment income (loss) 3,462 2,461 10,696 1,471 Net increase (decrease) in cash and cash equivalents 63,768 (31,174) (136,179) 23,879 Cash and cash equivalents, July 1, 2022 447,684 135,582 348,256 176,028 Cash and cash equivalents, June 30, 2023 $ 511,452 104,408 212,077 199,907 The notes to the basic financial statements are an integral part of this statement. 50 GOVERNMENTAL ENTERPRISE FUNDS ACTIVITIES Internal Nonmajor Service Waterworks Aviation Total Funds CASH FLOWS FROM OPERATING ACTIVITIES $ $ 4,127,425 $ Cash received from patient services 93,771 4,290 98,061 116,111 Cash received from charges for services 42 92 181,522 Other operating revenues 88,898 651,725 Cash received for services provided to other funds — (2,384,911) (585,362) Cash paid for salaries and employee benefits (74,412) (13,372) 31,731 (47,034) Cash (paid) returned for services and supplies (12,002) (2,258) (1,494,935) (77,050) Other operating expenses — (259,693) Cash (paid) returned for services from other funds 7,399 (11,248) 388,098 58,390 Net cash provided by (required for) operating activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES 120 — 471,134 130 Cash advances received from other funds — (148) (471,766) — Cash advances paid to other funds (125) Interest paid on advances (925,752) Intergovernmental transfers paid 464 2,208 2,672 — Intergovernmental receipts 142 — 1,376,972 3,421 Transfers in — (3) (561,576) (8,727) Transfers out 726 2,057 (108,441) (5,176) Net cash provided by (required for) noncapital financing activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES 8,350 — 8,350 Proceeds from taxes — 5 5 Capital contributions 2,322 — 117,798 10,000 Proceeds from bonds and notes (163) (38) (53,010) (184) Interest paid on capital borrowing — 2,182 Interest revenue (417) (113) (171,524) (5,245) Principal payments on bonds and notes — (11) Principal payments on financed purchase obligations (319) (247) Leases paid — (309) Subscriptions paid (10,058) (28) (279,948) (14,248) Acquisition and construction of capital assets 34 (174) (378,659) (8,051) Net cash provided by (required for) capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES 2,690 11,072 31,852 (2,220) Investment income (loss) 10,849 1,707 (67,150) 42,943 Net increase (decrease) in cash and cash equivalents 136,047 10,988 1,254,585 25,695 Cash and cash equivalents, July 1, 2022 $ 146,896 12,695 $ 1,187,435 $ 68,638 Cash and cash equivalents, June 30, 2023 Continued… 51 COUNTY OF LOS ANGELES STATEMENT OF CASH FLOWS - Continued PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2023 (in thousands) BUSINESS-TYPE ACTIVITIES - Los Angeles Harbor-UCLA Olive View- General Rancho Los Medical UCLA Medical Medical Amigos National Center Center Center Rehab Center RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (REQUIRED FOR) OPERATING ACTIVITIES: Operating income (loss) $ 160,054 216,235 179,904 (42,338) Adjustments to reconcile operating income (loss) to net cash provided by (required for) operating activities: Depreciation and amortization 28,094 11,544 30,901 13,456 (Increase) decrease in: Accounts receivable - net (220,583) (181,256) (293,412) (129,863) Other receivables 220,619 (49,804) (81,294) 240,907 Due from other funds 56,771 (94,471) (75,728) (117,639) Inventories (556) (997) 932 (118) Increase (decrease) in: Accounts payable 37,121 110,585 85,298 (57,620) Accrued payroll 2,523 1,473 3,486 716 Other payables (41) (37) (32) (13) Accrued compensated absences 5,701 3,293 6,423 1,321 Due to other funds 143,693 144,237 76,779 47,189 Advances payable (1,990) (1,117) (2,136) (446) Workers' compensation 1,659 900 2,701 659 Litigation and self-insurance (11,405) 1,348 (14,644) 202 Net pension liability and related changes in deferred outflows and inflows of resources (15,501) (12,612) (21,662) (4,788) Net OPEB liability and related changes in deferred outflows and inflows of resources (7,498) (17,794) (13,567) (3,688) Third party payor (23,373) 5,103 53,930 (5,787) TOTAL ADJUSTMENTS 215,234 (79,605) (242,025) (15,512) NET CASH PROVIDED BY (REQUIRED FOR) OPERATING ACTIVITIES $ 375,288 136,630 (62,121) (57,850) SCHEDULE OF NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES: Contributions of capital assets $ 2,444 — 14,063 1,784 Loss on disposal of capital assets (1,245) (41) (104) (28) Lease asset acquisition (422) (480) RECONCILIATION OF CASH AND CASH EQUIVALENTS TO THE STATEMENT OF NET POSITION: Pooled cash and investments $ 446,264 85,991 209,889 187,644 Restricted assets 65,188 18,417 2,188 12,263 TOTAL $ 511,452 104,408 212,077 199,907 The notes to the basic financial statements are an integral part of this statement. 52 GOVERNMENTAL ENTERPRISE FUNDS ACTIVITIES Internal Nonmajor Service Waterworks Aviation Total Funds RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (REQUIRED FOR) OPERATING ACTIVITIES: $ (21,873) (15,286) $ 476,696 $ (5,084) Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by (required for) operating activities: 23,850 3,632 111,477 19,212 Depreciation and amortization (Increase) decrease in: 3,844 234 (821,036) Accounts receivable - net (15) — 330,413 (123) Other receivables (960) (205) (232,232) 25,855 Due from other funds — (535) (1,274) (1,323) Inventories Increase (decrease) in: 1,985 934 178,303 1,292 Accounts payable 8,198 1,822 Accrued payroll — 2 (121) (22) Other payables — 16,738 3,255 Accrued compensated absences 9,930 (24) 421,804 12,850 Due to other funds — (5,689) — Advances payable 5,919 1,112 Workers' compensation (9,362) (33,861) Litigation and self-insurance Net pension liability and related changes in deferred outflows and — (54,563) (9,432) inflows of resources Net OPEB liability and related changes in deferred outflows and (42,547) 8,976 inflows of resources 29,873 — Third party payor 29,272 4,038 (88,598) 63,474 TOTAL ADJUSTMENTS $ 7,399 (11,248) $ 388,098 $ 58,390 NET CASH PROVIDED BY (REQUIRED FOR) OPERATING ACTIVITIES SCHEDULE OF NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES: $ 1,188 — $ 19,479 Contributions of capital assets (95) (1,513) Loss on disposal of capital assets (902) Lease asset acquisition RECONCILIATION OF CASH AND CASH EQUIVALENTS TO THE STATEMENT OF NET POSITION: $ 146,896 12,695 $ 1,089,379 $ 67,039 Pooled cash and investments 98,056 1,599 Restricted assets $ 146,896 12,695 $ 1,187,435 $ 68,638 TOTAL 53 COUNTY OF LOS ANGELES STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS JUNE 30, 2023 (in thousands) CUSTODIAL PENSION AND OTHER EXTERNAL POSTEMPLOYMENT INVESTMENT INVESTMENT OTHER BENEFIT TRUST TRUST POOLS CUSTODIAL ASSETS Pooled cash and investments (Note 4) $ 129,878 503,162 32,704,271 1,526,034 Other investments: (Note 4) — 146,148 300 Short-term investments 2,289,958 Equity 28,598,874 — Fixed income 19,162,790 — Private equity 13,894,495 — Real estate 5,421,420 — Real assets 2,514,132 Hedge funds 4,890,856 — Cash collateral on loaned securities 1,869,433 — Taxes receivable 973,332 Interest receivable 221,251 1,109 51,720 Other receivables 239,466 — 403,270 Due from other governments 429 TOTAL ASSETS 79,232,553 504,271 32,902,139 2,903,365 LIABILITIES Accounts payable 333,715 4,398 Other payables (Note 4) 1,955,112 26 1,000,526 Due to other governments — 82,753 TOTAL LIABILITIES 2,288,827 — 26 1,087,677 NET POSITION Restricted for: Pension 73,851,886 OPEB 3,091,840 Individuals, organizations and other governments 504,271 32,902,113 1,815,688 TOTAL NET POSITION $ 76,943,726 504,271 32,902,113 1,815,688 The notes to the basic financial statements are an integral part of this statement. 54 COUNTY OF LOS ANGELES STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS FOR THE YEAR ENDED JUNE 30, 2023 (in thousands) CUSTODIAL PENSION AND OTHER EXTERNAL POSTEMPLOYMENT INVESTMENT INVESTMENT OTHER BENEFIT TRUST TRUST POOLS CUSTODIAL ADDITIONS Contributions: Pension and OPEB trust contributions: Employer $ 3,497,911 Member 841,644 Contributions to investment trust and custodial funds — 121,663 67,317,145 25,585,553 Total contributions 4,339,555 121,663 67,317,145 25,585,553 Investment earnings: Investment income 3,114,572 26,968 126,675 Net increase in the fair value of investments 2,165,702 Securities lending income (Note 4) 63,652 Total investment earnings 5,343,926 26,968 126,675 — Less - Investment expenses: Expense from investing activities 190,596 Expense from securities lending activities (Note 4) 49,556 Total net investment expense 240,152 — — — Net investment earnings 5,103,774 26,968 126,675 — Other additions 2,906,377 Miscellaneous 5,009 TOTAL ADDITIONS 9,448,338 148,631 67,443,820 28,491,930 DEDUCTIONS Administrative expenses: Salaries and employee benefits 78,866 Services and supplies 34,226 Total administrative expenses 113,092 — — Benefit payments 5,031,364 Distributions from investment trust and custodial funds — 458,388 61,131,451 25,594,245 Other deductions 2,815,988 Miscellaneous 43,870 TOTAL DEDUCTIONS 5,188,326 458,388 61,131,451 28,410,233 CHANGE IN NET POSITION 4,260,012 (309,757) 6,312,369 81,697 NET POSITION, JULY 1, 2022 72,683,714 814,028 26,589,744 1,733,991 NET POSITION, JUNE 30, 2023 $ 76,943,726 504,271 32,902,113 1,815,688 The notes to the basic financial statements are an integral part of this statement. 55 COUNTY OF LOS ANGELES STATEMENT OF NET POSITION DISCRETELY PRESENTED COMPONENT UNITS JUNE 30, 2023 (in thousands) LOS ANGELES COUNTY DEVELOPMENT AUTHORITY FIRST 5 LA TOTAL ASSETS Pooled cash and investments- Operating (Notes 1 and 4) $ 27,931 154,099 $ 182,030 Other investments (Note 4) 658,788 132,660 791,448 Accounts receivable - net 27,475 — 27,475 Interest receivable — 1,209 1,209 Lease receivable 9,259 — 9,259 Other receivables 45,757 12,368 58,125 Inventories 10,942 — 10,942 Restricted assets (Note 4) 11,870 — 11,870 Capital assets: (Notes 1 and 5) Capital assets, not being depreciated/amortized 91,521 2,039 93,560 Capital assets, net of accumulated depreciation/amortization 92,496 11,426 103,922 Total capital assets 184,017 13,465 197,482 TOTAL ASSETS 976,039 313,801 1,289,840 DEFERRED OUTFLOWS OF RESOURCES 38,722 — 38,722 LIABILITIES Accounts payable 42,701 20,689 63,390 Other payables 9,328 — 9,328 Advances payable 4,606 — 4,606 Long-term liabilities: (Note 11) Due within one year 6,024 121 6,145 Due in more than one year 121,686 884 122,570 TOTAL LIABILITIES 184,345 21,694 206,039 DEFERRED INFLOWS OF RESOURCES 14,871 — 14,871 NET POSITION Net investment in capital assets 148,372 13,465 161,837 Restricted for: Community development 621,977 — 621,977 First 5 LA — 278,642 278,642 Unrestricted 45,196 — 45,196 TOTAL NET POSITION $ 815,545 292,107 $ 1,107,652 The notes to the basic financial statements are an integral part of this statement. 56 COUNTY OF LOS ANGELES STATEMENT OF ACTIVITIES DISCRETELY PRESENTED COMPONENT UNITS FOR THE YEAR ENDED JUNE 30, 2023 (in thousands) LOS ANGELES COUNTY DEVELOPMENT AUTHORITY FIRST 5 LA TOTAL PROGRAM (EXPENSES) REVENUES: Expenses $ (845,180) (91,950) $ (937,130) Program revenues: Charges for services 35,570 — 35,570 Operating grants and contributions 890,064 70,397 960,461 Capital grants and contributions 13,142 — 13,142 Net program (expenses) revenues 93,596 (21,553) 72,043 GENERAL REVENUES: Investment income (loss) (3,495) 13,091 9,596 Miscellaneous 2,004 2 2,006 Total general revenues (1,491) 13,093 11,602 CHANGE IN NET POSITION 92,105 (8,460) 83,645 NET POSITION, JULY 1, 2022, AS RESTATED (Note 2) 723,440 300,567 1,024,007 NET POSITION, JUNE 30, 2023 $ 815,545 292,107 $ 1,107,652 The notes to the basic financial statements are an integral part of this statement. 57 58 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reporting Entity The County of Los Angeles (County), which was established in 1850, is a legal subdivision of the State of California (State) charged with general governmental powers. The County's powers are exercised through an elected five member Board of Supervisors (Board), which, as the governing body of the County, is responsible for the legislative and executive control of the County. As required by generally accepted accounting principles (GAAP), these basic financial statements include both those of the County and its component units. The component units discussed below are included in the County’s reporting entity because of the significance of their operational or financial relationships with the County. The basic financial statements include blended, fiduciary and discretely presented component units. The blended component units, although legally separate entities are, in substance, part of the County’s operations. The data from these units are combined with data of the primary government. The fiduciary component unit is reported under Fiduciary Funds in the basic financial statements. The discretely presented component units, on the other hand, are reported in a separate column in the government-wide financial statements. Blended Component Units While each of the component units is legally separate from the County, the County is financially accountable for these entities. Financial accountability is primarily demonstrated by the County’s Board acting as the governing board for each of the component units and its ability to impose its will or an existence of a financial benefit/burden relationship. County management has determined that the following related entities should be included in the basic financial statements as blended component units: Fire Protection District Waterworks Districts Flood Control District Los Angeles County Capital Asset Leasing Garbage Disposal Districts Corporation (a Not-for-Profit Corporation) (NPC) Improvement Districts Various Joint Powers Authorities (JPAs) Regional Park and Open Space District Los Angeles County Securitization Corporation Sewer Maintenance Districts (LACSC) Street Lighting Districts Los Angeles County Facilities Inc. (LACF) The various districts are included primarily because the Board is also their governing board and the County has operational responsibilities for the districts. As such, the Board establishes policy, appoints management and exercises budgetary control. The NPC and JPAs have been included because their sole purpose is to finance and construct County capital assets and because they are dependent upon the County for funding. The Los Angeles County Capital Asset Leasing Corporation (LACCAL) is organized as a not-for- profit corporation in which the primary government is the sole corporate member, as identified in LACCAL's articles of incorporation or bylaws, and the component unit is included in the financial reporting entity. 59 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued Blended Component Units-Continued The LACSC is a California public benefit corporation created by the County Board in January 2006. Three directors, the County’s Auditor-Controller, Treasurer and Tax Collector, and an independent party designated by at least one of the County directors, govern the LACSC. The LACSC purpose is to acquire the County’s rights in relation to future tobacco settlement payments and to facilitate the issuance of long-term bonds secured by the County Tobacco Assets. The LACSC provides service solely to the County and is reported as a blended component unit of the County. LACF is a California nonprofit public benefit corporation and an organization described under Section 501(c)(3) of the Internal Revenue Code of 1986. It was formed on April 25, 2016. On July 26, 2018, LACF issued $302.38 million of lease revenue bonds to be used to finance the construction of the Vermont Corridor County Administration Building and parking structure. LACF is reported as a blended component unit because it provides services solely to the County and it is fiscally dependent on the County. It is reported under Public Buildings Debt Service and Capital Projects funds. Fiduciary Component Unit The County pension plan is administered by the Los Angeles County Employees Retirement Association (LACERA), which was established under the County Employees' Retirement Law of 1937 (CERL). LACERA is a cost-sharing, multi-employer defined benefit plan. LACERA provides retirement, disability, death benefits and cost of living adjustments to eligible members. LACERA also administers an agent multiple-employer Other Postemployment Benefit (OPEB) or Retiree Healthcare Program on behalf of the County. LACERA is reported in the Pension and OPEB Trust Funds on the Statement of Net Position - Fiduciary Funds of the basic financial statements and has been included because its operations are dependent upon County funding and because its operations, almost exclusively, benefit the County. LACERA issues a stand-alone financial report, which is available at its offices located at Gateway Plaza, 300 N. Lake Avenue, Pasadena, California 91101-4199 or at www.LACERA.com. Discretely Presented Component Units Los Angeles County Development Authority The Los Angeles County Development Authority (LACDA) was established on July 1, 1982 under the provisions of Section 34100-34160 of the Health and Safety Code of the State of California. LACDA is responsible for: • Administering the Housing Choice Voucher and other Section 8 programs; • Directing the County’s housing programs, including planning, housing finance, production and conservation, and management of the County’s public housing developments; • Financing community improvements such as resurfacing streets and rehabilitating homes and businesses; • Providing economic development, business revitalization services, and comprehensive planning systems for affordable housing; and • Developing housing, business, and industry in designated areas. 60 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued Discretely Presented Component Units-Continued Los Angeles County Development Authority-Continued While its Board members are the same as the County Board, LACDA does not meet the criteria for blending due to the following: 1) there is no financial burden or benefit relationship with the County nor does management of the County have operational responsibilities over it; 2) LACDA does not provide services entirely or almost entirely to the County; and 3) LACDA's total debt outstanding is not expected to be repaid with resources of the County. The financial activity of LACDA is reported within the Discretely Presented Component Units column of the government-wide financial statements. LACDA issues a separate financial report that can be obtained at https://www.lacda.org/ home/about/agency-overview or by writing to the Los Angeles County Development Authority at 700 W. Main Street, Alhambra, California 91801. Los Angeles County Children and Families First - Proposition 10 Commission Los Angeles County Children and Families First - Proposition 10 Commission, also known as First 5 LA, was established by the County as a separate legal entity to administer the County's share of tobacco taxes levied by the State pursuant to Proposition 10. The Board established First 5 LA with nine voting members and four non-voting representatives. Of the nine voting members, one is a member of the Board of Supervisors, three are heads of County Departments (Public Health, Mental Health, and Children and Family Services), and five are public members appointed by the Board. The non-voting representatives are from other County commissions and planning groups. First 5 LA services support programs and services for children ages prenatal through five, and their families, in the areas of health, safety, early education and literacy. First 5 LA is a discretely presented component unit of the County because the County’s Board appoints the voting Commissioners and the County has the ability to impose its will by removing those Commissioners at will. First 5 LA hires its own employees, including an Executive Director and functions independent of the County. It is discretely presented because its governing body is not substantially the same as the County's governing body and it does not provide services entirely or exclusively to the County. The financial activity of First 5 LA is reported within the Discretely Presented Component Units column of the government-wide financial statements. First 5 LA issues a separate financial report that can be obtained at www.first5la.org/our-board/financials or by writing to First 5 LA at 750 N. Alameda Street, Suite 300, Los Angeles, California 90012. Related Organization Los Angeles County Office of Education (LACOE) is a legally separate entity from the County. LACOE is governed by a seven-member Board of Education appointed by the County Board. However, the County’s accountability for LACOE does not extend beyond making appointments and no financial benefit/burden relationship exists between the County and LACOE. LACOE is deemed to be a related organization. LACOE issues a separate financial report that can be obtained by writing to the Los Angeles County Office of Education at 9300 Imperial Highway, Downey, California 90242-2890. 61 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued Basic Financial Statements In accordance with Governmental Accounting Standards Board Statement (GASB) 34, "Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments," the basic financial statements consist of the following: • Government-wide financial statements; • Fund financial statements; and • Notes to the basic financial statements. Government-wide Financial Statements The statement of net position and statement of activities display information about the primary government, the County, and its blended and discretely presented component units. These statements include the financial activities of the overall government, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities, except for services provided among funds (other than internal service funds). These statements distinguish between the governmental and business-type activities of the County and between the County and its discretely presented component units. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees charged to external parties. The statement of activities presents a comparison between direct expenses and program revenues for each segment of the business-type activities of the County and for each function of the County’s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include charges paid by the recipients of goods or services offered by the programs. Grants and contributions that are restricted to meeting the operational or capital requirements of a particular program are also recognized as program revenues. Revenues that are not classified as program revenues, including all taxes, are presented instead as general revenues. Net position is classified into the following three components: 1) net investment in capital assets; 2) restricted; and 3) unrestricted. Net position is reported as restricted when it has external restrictions imposed by creditors, grantors, or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation. At June 30, 2023, the restricted net position balances were $5.083 billion and $84.72 million for governmental activities and business- type activities, respectively. For governmental activities, $1.053 billion was restricted by enabling legislation. When both the restricted and unrestricted components of net position are available, restricted resources are used first and then unrestricted resources are used to the extent necessary. 62 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued Fund Financial Statements The fund financial statements provide information about the County’s funds, including fiduciary funds and blended component units. Separate statements for each fund category - governmental, proprietary, and fiduciary are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are separately aggregated and reported as nonmajor funds. In accordance with GAAP, the County reports on each major fund. By definition, the General Fund is always considered a major fund. Funds other than the General Fund must be reported as major funds if they meet both the ten percent and five percent criterion, defined respectively, 1) an individual fund reports at least ten percent of any of the following: a) total fund assets and deferred outflows of resources, b) total fund liabilities and deferred inflows of resources, c) total fund revenues, or d) total fund expenditures/expenses; 2) an individual fund reports at least five percent of the aggregated total for both governmental funds and enterprise funds of any one of the items for which it met the ten percent criterion. In addition, a fund may be reported as major if it is believed to be of particular importance to financial statement users. The County reports the following major governmental funds: General Fund The General Fund is available for any authorized purpose and is used to account for and report all financial resources not accounted for and reported in another fund. Fire Protection District The Fire Protection District Fund is used to account for fire prevention and suppression, rescue service, management of hazardous materials incidents, ocean lifeguard services, and acquisition and maintenance of the Fire Protection District property and equipment. Funding comes primarily from the Fire Protection District’s statutory share of the Countywide tax levy, voter-approved taxes and charges for services. Flood Control District The Flood Control District Fund provides flood protection services that incorporate an integrated water resource management approach in providing flood protection; increases local water availability through conservation efforts; increases stormwater capture and reduces stormwater and urban runoff pollution; and provides passive recreational opportunities. The primary sources of revenue for the Flood Control District are property taxes and benefit assessments (charges for services). LA County Library The LA County Library Fund is used to account for free library services to the unincorporated areas of the County and to cities that contract for these services. Funding comes primarily from the Library’s statutory share of the Countywide tax levy and voter-approved taxes. Regional Park and Open Space District The Regional Park and Open Space District Fund is used to account for the programs designed to preserve beaches, parks, and wild lands, to acquire and renovate new and existing recreational facilities, and to restore rivers, streams, and trails in the County. Funding comes primarily from voter-approved special taxes. 63 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued Fund Financial Statements-Continued Mental Health Services Act The Mental Health Services Act (MHSA) Fund is used to account for the County's mental health delivery system for children, transition age youth, adults, older adults, and families. Revenues are derived primarily by the passage of State Proposition 63 in November 2004. Proposition 63 generates mental health revenue through a one percent income surcharge on individuals with State taxable incomes over $1.00 million. The County's four Hospital Funds and Waterworks Fund are all considered major funds for presentation purposes. There is one nonmajor enterprise fund (Aviation Fund). The Hospital Enterprise funds provide health services to County residents. Revenues are principally patient service fees. Subsidies are also received from the General Fund. The Waterworks Enterprise Fund provides water services to County residents. Revenues are derived primarily from the sale of water and water service standby charges. The Aviation Enterprise Fund provides airport services for five County airports. Revenues are derived primarily from airport charges and lease payments. A description of each enterprise fund is provided below: Harbor-UCLA Medical Center The Harbor-UCLA Medical Center (H-UCLA) provides acute and intensive care unit medical/ surgical inpatient and outpatient services, trauma and emergency room services, acute psychiatric services, pediatric and obstetric services, and transplants. Olive View-UCLA Medical Center The Olive View-UCLA Medical Center (OV-UCLA) provides acute and intensive care, emergency services, medical/surgical inpatient and outpatient health care services, obstetric and gynecological services, and psychiatric services. Los Angeles General Medical Center The Los Angeles General Medical Center, formerly known as the LAC+USC Medical Center, provides acute and intensive care unit medical/surgical inpatient and outpatient services, trauma and emergency room services, a burn center, psychiatric services, renal dialysis, AIDS services, pediatric and obstetric services, and communicable disease services. Rancho Los Amigos National Rehabilitation Center The Rancho Los Amigos National Rehabilitation Center (Rancho) specializes in the rehabilitation for victims of spinal cord injuries and strokes, pathokinesiology and polio services, services for liver diseases, pediatrics, ortho diabetes, dentistry, and neuro-science. Waterworks The Waterworks Enterprise Fund is used to account for the administration, maintenance, operation and improvement of district water systems. Nonmajor Aviation The Aviation Enterprise Fund is used to account for the administration, maintenance, operation and improvement of the five airports which are owned by the County. 64 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued Fund Financial Statements-Continued The following fund types have also been reported: Internal Service Funds The Internal Service Funds (ISFs) are used to account for the financing of services provided by a department or agency to other departments or agencies on a cost-reimbursement basis. The County's principal Internal Service Fund is used to account for the cost of services provided by the Department of Public Works to various other County funds and agencies. Fiduciary Fund Types Pension and Other Postemployment Benefit Trust The Pension Trust Fund is used to account for the fiduciary activities of the County’s Pension Plan administered by LACERA. The OPEB Trust Fund is used to account for the fiduciary activities of the OPEB trust for the purpose of holding and investing assets to pre-fund the Retiree Healthcare Program administered by LACERA. Investment Trust The Investment Trust Fund is used to account for the fiduciary activities from the external portion of the investment pool and individual investment accounts which are administered through a trust agreement or equivalent arrangement in which the County is not a beneficiary. Participants include deposits held on behalf of cities and special districts. Custodial External Investment Pools The External Investment Pools Funds are used to account for the fiduciary activities from the external portion of the investment pool for participants that do not have a trust agreement or equivalent arrangement in which the County is not a beneficiary. The participants primarily consist of deposits held on behalf of school districts, courts, and sanitation districts. Other Custodial The Other Custodial Funds include the property tax funds used to account for the fiduciary activities for the monies received from property and other taxes, which must be held pending authority for distribution. They also are used to account for funds which are held for other governmental agencies, including school districts and community college districts, or individuals in a custodial capacity. 65 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued Basis of Accounting The government-wide, proprietary, and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the County gives (or receives) value without directly receiving (or giving) equal value in exchange, include property and sales taxes, grants, entitlements and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenues from grants and similar items are recognized in the fiscal year in which all eligibility requirements have been satisfied. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The County considers revenues to be available if collectible within one year after year-end, except for property taxes, which are considered available to the extent that they are collectible within 60 days after year-end. When property taxes are measurable but not available, the collectible portion (taxes levied less estimated uncollectibles) is recorded as deferred inflows of resources in the period when an enforceable legal claim to the assets arises. Expenditures are generally recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims (including workers’ compensation) and judgments are recorded only when payment is due. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of long-term debt, financed purchase obligations, lease liabilities, and subscription liabilities are reported as other financing sources. For the governmental funds financial statements, revenues are recorded when they are susceptible to accrual. Specifically, ad valorem property taxes (except for redevelopment agency dissolution), sales taxes, investment income (loss), charges for services, and other miscellaneous revenue are all considered to be susceptible to accrual and have been recognized as revenue in the current fiscal period. Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria are met. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other eligibility requirements have been met and are recorded at the time of receipt or earlier, if the susceptible to accrual criteria are met. When all eligibility requirements are met, except for the timing requirements, a deferred inflow of resources is reported until the time requirements have passed. All other revenues are not considered susceptible to accrual and are recognized when received, including property tax revenues derived from redevelopment agency dissolution. 66 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued Basis of Accounting-Continued Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the County’s four Hospital Enterprise Funds (Hospitals) are from patient services. The principal operating revenues for the Waterworks Enterprise Fund, Nonmajor Aviation Enterprise Fund and Internal Service Funds are charges for services. Operating expenses for all Enterprise Funds and the Internal Service Funds include the cost of sales and services, administrative expenses and depreciation and amortization on capital assets. Medical malpractice expenses, which are self- insured, are classified as operating expenses of the Hospitals. All other revenues and expenses not meeting this definition are reported as nonoperating items. As discussed in Note 14, intergovernmental transfer payments are recorded in the Hospitals and this item is classified as a nonoperating expense. Budgetary Data In accordance with the provisions of Sections 29000-29144 of the Government Code of the State of California (Government Code), commonly known as the County Budget Act, the County prepares and adopts a budget on or before October 2 for each fiscal year. Budgets are adopted for the major governmental funds and certain nonmajor governmental funds on a basis of accounting that is different from GAAP. Annual budgets were not adopted for the JPAs, Public Buildings and the LACSC debt service funds, the capital project funds and the permanent funds. The County budget is organized by budget unit and by expenditure object. Budget units are established at the discretion of the Board. Within the General Fund (with certain exceptions), budget units are generally defined as individual departments. For other funds, each individual fund constitutes a budget unit. Expenditures are controlled at the object level for all budget units within the County, except for capital asset expenditures, which are controlled at the sub-object level. The total budget exceeds $46.323 billion and is currently controlled through the use of approximately 500 separate budget units. There were no excesses of expenditures over the related appropriations within any fund for the year ended June 30, 2023. The County prepares a separate budgetary document, the County Budget, which demonstrates legal compliance with budgetary control. This document is made available to the public on the County’s website at https://ceo.lacounty.gov/budget, or can be obtained from the Auditor-Controller’s office. Transfers of appropriations between budget units must be approved by the Board. Supplemental appropriations financed by unanticipated revenue during the year must also be approved by the Board. Transfers of appropriations between objects of expenditure within the same budget unit must be approved by the Board or the Chief Executive Office, depending upon the amount transferred. The original and final budget amounts are reported in the accompanying basic financial statements. Any excess of budgetary expenditures and other financing uses over revenues and other financing sources is financed by beginning available fund balances as provided for in the County Budget Act. Note 16 describes the differences between the budgetary basis of accounting and GAAP. A reconciling schedule is also presented for the major governmental funds. 67 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued Property Taxes All jurisdictions within California derive their taxing authority from the State Constitution and various legislative provisions contained in the Government Code and Revenue and Taxation Code. Property is assessed at 100% of full cash or market value (with some exceptions) pursuant to Article XIIIA of the California State Constitution and statutory provisions by the County Assessor and State Board of Equalization. The total Fiscal Year (FY) 2022-2023 assessed valuation of the County approximated $1.911 trillion. The property tax levy to support general operations of the various jurisdictions is limited to one percent (1%) of full cash value and is distributed in accordance with statutory formulae. Amounts needed to finance the annual requirements of voter-approved debt are excluded from this limitation and are separately calculated and levied each fiscal year. The rates are formally adopted by either the Board or the city councils and, in some instances, the governing board of a special district. The County is divided into 13,016 tax rate areas, which are unique combinations of various jurisdictions servicing a specific geographic area. The rates levied within each tax rate area vary only in relation to levies assessed as a result of voter-approved taxes or indebtedness. Property taxes are levied on both real and personal property. Secured property taxes are levied during September of each year. They become a lien on real property on January 1 preceding the fiscal year for which taxes are levied. These tax payments can be made in two equal installments; the first is due November 1 and delinquent with penalties after December 10; the second is due February 1 and delinquent with penalties after April 10. Secured property taxes, which are delinquent and unpaid as of June 30, are declared to be tax defaulted and are subject to redemption penalties, costs, and interest when paid. If the delinquent taxes are not paid at the end of 5 years, the property may be sold at public auction. The proceeds are used to pay the delinquent amounts due, and any excess is remitted, if claimed, to the taxpayer. Additional tax liens are created when there is a change in ownership of property or upon completion of new construction. Tax bills for these new tax liens are issued throughout the fiscal year and contain various payment and delinquent dates but are generally due within one year. If the new tax liens are lower, the taxpayer receives a tax refund rather than a tax bill. Unsecured personal property taxes are not a lien against real property. These taxes are due on August 1 and become delinquent, if unpaid, on August 31. Property owners affected by the Coronavirus Disease 2019 (COVID-19) pandemic may have late payment penalties cancelled if they were unable to pay their FY 2022-2023 property taxes by the deadline. The California Revenue and Taxation Code grants the Treasurer and Tax Collector the authority to cancel payment penalties in limited circumstances. The Treasurer and Tax Collector has been accepting requests for a property tax penalty cancellation related to COVID-19. The program ended in March 2023. 68 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued Legislation Dissolving Redevelopment Agencies and Affect on Property Taxes State Assembly Bill (AB) x1 26, also referred to as the “Redevelopment Dissolution Act” was approved in 2011. Under AB x1 26, property tax revenues are allocated to pay enforceable legal obligations, pass-through payments and eligible administrative costs. Any remaining property tax revenues, otherwise known as “residual taxes,” are distributed as property tax revenue to the appropriate local government agencies, including the County. In FY 2018-2019, 5 Oversight Boards were established in the County per Senate Bill 107. The Oversight Boards are required to evaluate and approve the successor agencies’ remaining enforceable legal obligations. The County Auditor- Controller is responsible for disbursing property tax increment revenues in accordance with provisions of AB x1 26 and applicable amendments. For the year ended June 30, 2023, the County’s share of residual property tax revenues was $473.40 million, of which $390.53 million was recognized in the County’s General Fund. Deposits and Investments Deposits and investments as discussed in Note 4 are reflected in the following asset accounts: Pooled Cash and Investments As provided for by the Government Code, the cash balances of substantially all funds are pooled and invested by the County Treasurer for the purpose of increasing interest earnings through investment activities. Interest earned on pooled investments is deposited to participating funds based upon each fund's average daily deposit balance during the allocation period. Each respective fund's share of the total pooled cash and investments is included among asset balances under the caption "Pooled Cash and Investments." Pooled Cash and Investments are identified within the following categories for all County operating funds: Operating Pooled Cash and Investments This account represents amounts reflected in the County’s day-to-day financial records. Such amounts are utilized to determine the availability of cash for purposes of disbursing and borrowing funds. Other Pooled Cash and Investments This account represents amounts identified in various funds as of June 30, 2023, that were owed to or were more appropriately classified in County operating funds. Accordingly, certain cash balances have been reclassified from the custodial funds. Other Investments This account represents Pension and OPEB Trust Fund investments, various JPAs, NPCs and Public Buildings (bond financed capital assets, including leases), and amounts on deposit with the County Treasurer, which are invested separately as provided by the Government Code or by specific instructions from the depositing entities. 69 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued Deposits and Investments-Continued Restricted Assets Enterprise Funds’ restricted assets represent cash and investments of certain JPAs and Public Buildings projects restricted in accordance with the provisions of the certificates of participation issued. The Internal Service Funds’ restricted assets represent cash and investments restricted for debt service in accordance with the provisions of the LACCAL bond indenture. All of the above noted assets are included in the various disclosures in Note 4. These restricted assets are presented as noncurrent assets and are generally associated with long-term bonds and certificates of participation payable. Lease Receivable As a lessor, the County recognized a lease receivable and a corresponding deferred inflow of resources based on the payment provisions of the contracts in the government-wide Statement of Net Position and the governmental funds balance sheet as discussed in Note 9. The lease receivable was measured at the present value of lease payments expected to be received during the lease term. The deferred inflows of resources was measured at the value of the lease receivable plus any payments received at or before the commencement of the lease term that relate to future periods. The amount of lease revenue and interest revenue are reflected as program revenues under "Charges for Services" on the Statement of Activities. Inventories Inventories, which consist of materials and supplies held for consumption, are valued at cost using the first in/first out basis. The inventory costs of the governmental funds are accounted for as expenditures when the inventory items are purchased. Reported inventories are categorized as nonspendable fund balance as required by GASB 54, "Fund Balance Reporting and Governmental Fund Type Definitions" (GASB 54) because these amounts are not available for appropriation and expenditure. Capital Assets Capital assets, which include land and easements, buildings and improvements, equipment, intangible assets, infrastructure assets, lease assets, intangible right-to-use assets, and subscription assets, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Infrastructure assets are divided into the five following networks: road, water, sewer, flood control and aviation. Capital assets are recorded at historical cost or estimated historical cost if purchased or constructed. Intangible right-to-use assets are defined as lease assets and subscription assets with a useful life of more than one year and are recorded at the present value of future lease or subscription payments, including expenses to place the asset into service. In accordance with GASB Statement Nos. 87 and 96, the County has reported intangible right-to-use assets for land, buildings and improvements, equipment, and subscriptions. Donated capital assets, donated works of art and similar items, and capital assets received in a service concession arrangement are reported at acquisition value rather than fair value. 70 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued Capital Assets-Continued Capital outlay is recorded as expenditures in the governmental fund financial statements and as assets in the government-wide financial statements to the extent the County’s capitalization threshold is met. GASB 89, "Accounting for Interest Cost Incurred before the End of a Construction Period," changed the accounting for interest cost incurred before the end of a construction period for business-type activities and enterprise funds. It requires that such interest cost be recognized as an expense in the period in which the cost is incurred. Accordingly, such interest costs for business- type activity and enterprise funds are no longer capitalized as part of the historical cost of a capital asset. The County’s capitalization thresholds are $5,000 for equipment, $100,000 for buildings and improvements, $1 million for software intangible assets, $100,000 for non-software intangible assets, $25,000 for infrastructure assets, $500,000 for lease assets, and $5,000 for subscription assets. Maintenance and repairs are charged to operations when incurred. Betterments and major improvements, which significantly increase values, change capacities, or extend useful lives are capitalized subject to the threshold in the affected asset category. Upon sale or retirement of capital assets, the cost and the related accumulated depreciation or amortization, as applicable, are removed from the respective accounts and any resulting gain or loss is included in the results of operations. Specific disclosures related to capital assets appear in Note 5. Amortization for software, other intangible assets, lease assets, and subscription assets is included in the reporting of depreciation. Capital assets are depreciated or amortized using the straight-line method over the following estimated useful lives: Buildings and Improvements 10 to 50 years Equipment 2 to 35 years Software 5 to 25 years Infrastructure 15 to 100 years Lease assets Shorter of the asset's useful life or the lease term Subscription assets Shorter of the asset's useful life or the agreement term Works of art and historical treasures held for public exhibition, education, or research in furtherance of public service, rather than financial gain, are not capitalized. These items are protected, encumbered, conserved, and preserved by the County. It is the County’s policy to utilize proceeds from the sale of these items for the acquisition of other items for collection and display. Deferred Outflows and Inflows of Resources Pursuant to GASB 63, “Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position,” and GASB 65, “Items Previously Reported as Assets and Liabilities,” the County recognizes deferred outflows of resources and/or deferred inflows of resources in the government-wide statement of net position, governmental funds balance sheets, and proprietary funds statement of net position. 71 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued Deferred Outflows and Inflows of Resources-Continued In addition to assets, the financial statements report a separate section for deferred outflows of resources. Deferred outflows of resources represent a consumption of net assets that applies to future periods and will not be recognized as an outflow of resources (expense/expenditures) until then. In addition to liabilities, the financial statements report a separate section for deferred inflows of resources. Deferred inflows of resources represent an acquisition of net assets that applies to future periods and will not be recognized as an inflow of resources (revenue) until that time, except for pension and OPEB related deferred inflows of resources, which will be recognized as a credit to expense. Specific disclosures of items representing deferred outflows and inflows of resources appear in Note 20. Advances Payable The County uses certain funds as clearing accounts for the distribution of financial resources to other County funds. Pursuant to GASB 34, for external financial reporting purposes, the portions of the clearing account balances that pertain to other County funds should be reported as cash of the appropriate funds. The corresponding liability is included in “Advances Payable” because the amounts represent unearned revenue. The unspent balance of certain COVID-19 related financial assistance payments are recognized as Advances Payable due to the uncertainty on the revenue recognition. See Note 22 for additional information. Compensated Absences Vacation pay benefits accrue to employees ranging from 10 to 25 days per year depending on years of service and the benefit plan. Sick leave benefits accrue at the rate of 10 to 12 days per year for union represented employees depending on years of service. Non-represented employees accrue at a rate of up to eight days of sick leave per year depending on the benefit plan. Employees can also accumulate unused holiday and compensatory time off benefits throughout the year. All benefits are payable upon termination, if unused, within limits and rates as specified in the County Salary Ordinance. Liabilities for accrued compensated absences are accrued in the government-wide financial statements and in the proprietary funds. For the governmental funds, expenditures are recorded when amounts become due and payable (i.e., when employees terminate from service). Lease Liability As a lessee, a lease is defined as a contractual agreement that conveys control of the right-to-use another entity's nonfinancial asset, for a minimum contractual period of greater than one year, in an exchange or exchange-like transaction. The County leases a significant amount of nonfinancial assets such as land, buildings, and equipment. The related lease liabilities are presented in the amounts equal to the present value of lease payments, payable during the remaining lease term. A lease liability, as discussed in Note 9, and the associated right-to-use lease asset, as discussed in Note 5, is recognized on the government-wide Statement of Net Position. 72 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued Subscription Liability A subscription is defined as a contractual agreement that conveys control of the right-to-use another entity's information technology software, for a minimum contractual period of greater than one year, in an exchange or exchange-like transaction. The County has entered into various subscription based information technology arrangements. The related subscription liabilities are presented in the amounts equal to the present value of subscription payments, payable during the remaining subscription term. A subscription liability, as discussed in Note 10, and the associated right-to-use subscription asset, as discussed in Note 5, is recognized on the government-wide Statement of Net Position. Net Pension Liability and Related Balances For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of LACERA and additions to/deductions from LACERA’s fiduciary net position have been determined on the same basis as they are reported by LACERA. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Reported results pertain to liability and asset information within the following defined timeframes: Valuation Date - June 30, 2021 rolled forward to June 30, 2022 Measurement Date - June 30, 2022 Measurement Period - July 1, 2021 to June 30, 2022 Net OPEB Liability and Related Balances - Retiree Healthcare For purposes of measuring the net OPEB liability related to Retiree Healthcare, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of LACERA and additions to/deductions from LACERA’s fiduciary net position have been determined on the same basis as they are reported by LACERA. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Reported results pertain to liability and asset information within the following defined timeframes: Valuation Date - June 30, 2021 rolled forward to June 30, 2022 Measurement Date - June 30, 2022 Measurement Period - July 1, 2021 to June 30, 2022 73 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued Total OPEB Liability and Related Balances - Long-Term Disability For purposes of measuring the total OPEB liability related to Long-Term Disability (LTD), deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, have been determined on the same basis as they are reported by the plan. For this purpose, the LTD plan recognizes benefit payments when due and payable in accordance with the benefit terms. Reported results pertain to liability information within the following defined timeframes: Valuation Date - June 30, 2021 rolled forward to June 30, 2022 Measurement Date - June 30, 2022 Measurement Period - July 1, 2021 to June 30, 2022 Long-term Debt In the government-wide and proprietary funds financial statements, long-term debt and other long- term obligations, including financed purchase obligations, are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary funds statement of net position. Bond premiums and discounts are amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are recognized in the period issued. In the governmental funds financial statements, bond premiums, discounts, and issuance costs are recognized in the period issued. Issuance costs, even if withheld from the actual net proceeds received, are reported as debt service expenditures. Interest is reported as an expenditure in the period in which the related payment is made. The matured portion of long-term debt (i.e., portion that has come due for payment) is reported as a liability in the fund financial statements of the related fund. Fund Balances In the fund financial statements, the governmental funds report the classification of fund balance in accordance with GASB 54. The reported fund balances are categorized as nonspendable, restricted, committed, assigned, or unassigned based on the extent to which the County is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. Specific details related to Fund Balances appear in Note 21. Nonspendable Fund Balance - amounts that cannot be spent because they are either (a) not in spendable form, or (b) legally or contractually required to be maintained intact. The “not in spendable form” criterion includes items that are not expected to be converted to cash, for example: inventories and long-term notes receivable. Restricted Fund Balance - amounts with constraints placed on their use that are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments; or (b) imposed by law through constitutional provisions or enabling legislation. Restrictions may effectively be changed or lifted only by changing the condition of the constraint. 74 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued Fund Balances-Continued Committed Fund Balance - amounts that can only be used for the specific purposes determined by a formal action of the County’s highest level of decision-making authority, the County’s Board. Commitments may be changed or lifted only by the County taking the same formal action that imposed the constraint originally. The underlying action that imposed the limitation needs to occur no later than the close of the fiscal year. Assigned Fund Balance - amounts intended to be used by the County for specific purposes that are neither restricted nor committed. The intent can be established at either the highest level of decision making, or by a body or an official designated for that purpose. Authorization to assign fund balance rests with the County’s Board through the budget process. The Board has also delegated authority to the Chief Executive Officer and County Department Heads for contracts and purchasing authority. Unassigned Fund Balance - the residual classification for the County’s General Fund that includes amounts not contained in other classifications. In other funds, the unassigned classification is used only if expenditures incurred for specific purposes exceed the amounts restricted, committed, or assigned to those purposes. The Board establishes, modifies, or rescinds fund balance commitments by passage of an ordinance or resolution. For its budget, the County utilizes the GASB 54 criteria and an ordinance or resolution that are equally binding, for purposes of establishing a fund balance commitment. This is done through the adoption of the budget and subsequent amendments that occur throughout the fiscal year. In circumstances when an expenditure is made for a purpose for which amounts are available in multiple fund balance classifications, fund balance is generally depleted in the order of restricted, committed, assigned, and unassigned. Cash Flows For purposes of reporting cash flows, all amounts reported as "Pooled Cash and Investments," "Other Investments," and "Restricted Assets" are considered cash equivalents. Pooled cash and investment amounts represent funds held in the County Treasurer's cash management pool. Other investments and restricted assets are invested in money market mutual funds and U.S. Treasury securities held by outside trustees. Such amounts are similar in nature to demand deposits (i.e., funds may be deposited and withdrawn at any time without prior notice or penalty). Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and deferred outflows of resources, liabilities and deferred inflows of resources, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. 75 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 2. NEW ACCOUNTING PRONOUNCEMENTS The following GASB Statements have been implemented in the current basic financial statements. GASB Statement No. 91 - Statement No. 91, "Conduit Debt Obligations", provides a single method of reporting conduit debt obligations by issuer and eliminates diversity in practice associated with (1) commitments extended by issuers, (2) arrangements associated with conduit debt obligations, and (3) related note disclosures. This statement is effective for reporting periods beginning after December 15, 2021. This statement did not have a material impact on the financial statements. See Note 13 for additional information. GASB Statement No. 94 - Statement No. 94, "Public-Private and Public-Public Partnerships and Availability Payment Arrangements", improves financial reporting by addressing issues related to public-private and public-public partnership arrangements (PPPs). As used in this statement, a PPP is an arrangement in which a government (the transferor) contracts with an operator (a governmental or nongovernmental entity) to provide public services by conveying control of the right to operate or use a nonfinancial asset, such as infrastructure or other capital asset (the underlying PPP asset), for a period of time in an exchange or exchange-like transaction. Some PPPs meet the definition of a service concession arrangement (SCA), which the Board defines in this statement as a PPP in which (1) the operator collects and is compensated by fees from third parties; (2) the transferor determines or has the ability to modify or approve which services the operator is required to provide, to whom the operator is required to provide the services, and the prices or rates that can be charged for the services; and (3) the transferor is entitled to significant residual interest in the service utility of the underlying PPP asset at the end of the arrangement. This statement also provides guidance for accounting and financial reporting for availability payment arrangements (APAs). As defined in this statement, an APA is an arrangement in which a government compensates an operator for services that may include designing, constructing, financing, maintaining, or operating an underlying nonfinancial asset for a period of time in an exchange or exchange-like transaction. The statement is effective for reporting periods beginning after June 15, 2022. See Note 6 for additional information. GASB Statement No. 96 - Statement No. 96, "Subscription-Based Information Technology Arrangements" provides guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs). This statement (1) defines a SBITA; (2) establishes that a SBITA results in a right-to-use subscription asset—an intangible asset—and a corresponding subscription liability; (3) provides the capitalization criteria for outlays other than subscription payments, including implementation costs of a SBITA; and (4) requires note disclosures regarding a SBITA. This statement is effective for fiscal years beginning after June 15, 2022. See below for the restatement of Net Position, capital assets and long-term obligations due to implementation of this statement. GASB Statement No. 99 - Statement No. 99, "Omnibus 2022", enhances comparability in accounting and financial reporting and improves the consistency of authoritative literature by addressing (1) practice issues that have been identified during implementation and application of certain GASB Statements and (2) accounting and financial reporting for financial guarantees. GASB Statement No. 99, paragraphs 11-25 are effective for reporting periods beginning after June 15, 2022. This statement did not have a material impact to the financial statements. 76 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 2. NEW ACCOUNTING PRONOUNCEMENTS-Continued Restatement of Net Position GASB 96 The County implemented GASB 96 during the fiscal year, which resulted in a restatement of net position, capital assets and long-term obligations. LACDA's net position was also restated due to the acquisition of a prior year capital asset. Net position at July 1, 2022, as restated is shown in the table below. Table of beginning net position and fund balance restatements (in thousands): Government-wide Governmental Activities Net position at July 1, 2022, as previously reported $ (9,115,455) Add capital assets, intangible asset - right-to-use subscription asset under GASB Statement No. 96 at July 1, 2022 (See Note 5) 55,802 Less subscription liabilities under GASB Statement No. 96 at July 1, 2022 (See Note 11) (55,237) Net position at July 1, 2022, as restated $ (9,114,890) Discretely Presented Internal Service Component Funds Units Public Works LACDA Net position at July 1, 2022, as previously reported $ (1,207,154) $ 719,671 Add capital assets, intangible asset - right-to-use subscription asset under GASB Statement No. 96 at July 1, 2022 (See Note 5) 613 271 Less subscription liabilities under GASB Statement No. 96 at July 1, 2022 (613) Prior year capital asset acquisition (See Note 5) 3,498 Net position at July 1, 2022, as restated $ (1,207,154) $ 723,440 Although the net position for the Internal Service Funds was not restated, it was included in the table above to show the impact of the implementation of GASB 96. 77 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 3. DEFICIT NET POSITION The following activities/funds had a net deficit at June 30, 2023 (in thousands): Accumulated Deficit Government-wide: Governmental Activities $ 11,042,614 Business-type Activities 816,322 Enterprise Funds: Harbor-UCLA Medical Center 351,460 Olive View-UCLA Medical Center 584,724 Los Angeles General Medical Center 829,515 Rancho Los Amigos National Rehab Center 16,465 Internal Service Funds: Public Works 1,213,476 The government-wide governmental and business-type activities, enterprise and internal service funds deficits result primarily from the recognition of certain liabilities including accrued compensated absences, net pension liability, net OPEB liability, workers’ compensation, self-insurance and, for the enterprise funds, medical malpractice, and third party payors, as required by GAAP. Deficits are expected to continue until such liabilities are retired through user charges or otherwise funded. 78 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 4. CASH AND INVESTMENTS Investments in the County's cash and investment pool, other cash and investments, and Pension and OPEB Trust Funds investments, are stated at fair value. Aggregate pooled cash and investments and other cash and investments are as follows at June 30, 2023 (in thousands): Restricted Assets Pooled Cash Other Pooled Cash Other and Investments Investments and Investments Investments Total Governmental Funds $ 15,912,770 62,382 $ 15,975,152 Proprietary Funds 1,156,418 96,265 3,390 1,256,073 Fiduciary Funds (excluding Pension and OPEB) 34,733,467 146,448 34,879,915 Pension and OPEB Trust Funds 129,878 78,641,958 78,771,836 Discretely Presented Component Units 182,030 791,448 11,870 985,348 Total $ 52,114,563 79,642,236 96,265 15,260 $ 131,868,324 A summary of cash and investments (by type) as of June 30, 2023 is as follows (in thousands): Cash: Cash and investments are reported as follows: County Imprest Cash $ 6,099 Governmental Funds $ 15,975,152 Cash in Vault 188 Proprietary Funds 1,256,073 Cash in Bank 256,436 Investment Trust Fund 503,162 Deposits in Transit 11,697 Custodial Funds 34,376,753 Held by Outside Trustees 1 Pension and OPEB LACDA 28,045 Trust Funds (LACERA) 78,771,836 Total Cash 302,466 Discretely presented component units: First 5 LA 286,759 LACDA 698,589 Total Cash and Investments $ 131,868,324 Investments: In Treasury Pool 51,936,404 In Specific Purpose Investment (SPI) 281,398 In Other Specific Investments 302 Held by Outside Trustees 63,183 In LACERA 78,641,958 In Discretely Presented Component Unit - LACDA 642,613 Total Investments 131,565,858 Total Cash and Investments $ 131,868,324 79 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 4. CASH AND INVESTMENTS-Continued County Treasurer Cash As of June 30, 2023, the County Treasurer (Treasurer) maintained accounts in six banks. The carrying amount of the Treasurer’s total deposits in financial institutions was $256.44 million, deposits in transit were $11.70 million, and cash in the Treasurer’s vault was $188 thousand. Under California Government Code Section 53652, each financial institution in California is required to pledge a pool of securities as collateral against all of its public deposits. California Government Code Section 53651 and 53652 delineate the types of eligible securities and the required collateral percentage of at least 110%, respectively. However, for the letters of credit issued by the Federal Home Loan Bank of San Francisco, with the consent of the Treasurer, the California Government Code 53632 only requests the collateral percentage to be 105%. In addition, under California Government Code Section 53653, the Treasurer has discretion to waive security for the portion of any deposits as insured pursuant to federal law. Through contractual agreement, the Treasurer has opted to waive security for the portion of deposits that is federally insured. The total balance of deposits in financial institutions was covered by federal depository insurance or collateralized with securities monitored by the Department of Financial Protection and Innovation (DFPI). DFPI confirmed that the pools of collateral related to the County Treasurer’s deposits were maintained at required levels as of June 30, 2023. County Investment Pool California Government Code Sections 53601 and 53635 authorize the Treasurer to invest the External Investment Pool (Pool) and SPI funds in obligations of the United States Treasury, federal agencies, municipalities, asset-backed securities, bankers’ acceptances, commercial paper, negotiable certificates of deposit, medium-term notes, corporate notes, repurchase agreements, reverse repurchase agreements, forwards, futures, options, shares of beneficial interest of a Joint Powers Authority (JPA) that invests in authorized securities, shares of beneficial interest issued by diversified management companies known as money market mutual funds (MMF) registered with the Securities and Exchange Commission (SEC), securities lending agreements, the State of California’s Local Agency Investment Fund (LAIF), and supranational institutions. California Government Code Section 53534 authorizes the Treasurer to enter into interest rate swap agreements. However, these agreements are only used in conjunction with the sale of the bonds approved by the Board. As permitted by the California Government Code, the Treasurer developed, and the Board adopted, an Investment Policy that further defines and restricts the limits within which the Treasurer may invest. The investments are managed by the Treasurer, which reports investment activity to the Board on a monthly basis. In addition, the Treasurer's investment activity is subject to an annual investment policy review, compliance oversight, quarterly financial review, and annual financial reporting. The Treasurer also maintains Other Specific Investments, which are invested pursuant to Section 1300.76.1, Title 28, California Code of Regulations. The County has not provided nor obtained any legally binding guarantees during the year ended June 30, 2023, to support the value of shares in the Pool. 80 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 4. CASH AND INVESTMENTS-Continued County Investment Pool-Continued The School Districts and the Superior Court are required by legal provisions to participate in the County’s investment pool. Sixty percent (59.87%) of the Treasurer’s Pool consists of these involuntary participants. Voluntary participants in the County’s Pool include the Sanitation Districts, Metropolitan Transportation Authority, the South Coast Air Quality Management District and other special districts with independent governing boards. The deposits held for both involuntary and voluntary entities are included in either the Investment Trust Fund or the External Investment Pool (Custodial Fund). Certain SPI have been made by the County as directed by external depositors. This investment activity occurs separately from the County’s Pool and is reported in the External Specific Investment Pool (Custodial Fund) in the amount of $146.15 million. The Pool is not registered as an investment company with the SEC. California Government Code statutes and the County Board set forth the various investment policies that the Treasurer must follow. Investments are stated at fair value and are valued on a monthly basis. The Treasurer categorizes its fair value measurements within the fair value hierarchy established by GAAP. Securities classified in Level 1 of the fair value hierarchy are valued using prices quoted in active markets for those securities. Securities classified in Level 2 of the fair value hierarchy are valued using other observable inputs such as matrix pricing techniques or based on quoted prices for assets in markets that are not active. Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted prices. Level 3 inputs are significant unobservable inputs. Securities classified in Level 3 are valued using the income approach such as discounted cash flow techniques. Investment in an external government investment pool is not subject to reporting within the level hierarchy. Investments in LAIF are governed by the California Government Code and overseen by a five member Local Investment Advisory Board as designated by the California Government Code. As of June 30, 2023, the total amount invested by all California local governments and special districts in LAIF was $25.680 billion. LAIF is part of the State of California’s Pooled Money Investment Account (PMIA), which as of June 30, 2023 had a balance of $178.383 billion. The PMIA is not SEC registered, but is required to invest according to the California Government Code. Included in the PMIA’s investment portfolio are structured notes and asset-backed securities totaling $4.960 billion at June 30, 2023. Collectively, these represent 2.78% of the PMIA balance of $178.383 billion. The SPI holdings in the LAIF investment pool as of June 30, 2023, were $40.63 million, which were valued using a fair value factor provided by LAIF. 81 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 4. CASH AND INVESTMENTS-Continued County Investment Pool-Continued The Treasurer has the following recurring fair value measurements as of June 30, 2023 (in thousands): Fair Value Measurement Using Quoted Prices in Active Significant Markets for Other Significant External Identical Observable Unobservable Government Assets Inputs Inputs Investment Pool Fair Value (Level 1) (Level 2) (Level 3) Pools Commercial Paper $ 13,701,956 $ $ 13,701,956 $ $ Corporate and Deposit Notes 10,480 10,480 Los Angeles County Securities 4,725 4,725 Negotiable Certificates of Deposit 2,948,935 2,948,935 U.S. Agency Securities 25,342,975 25,342,975 U.S. Treasury Securities: U.S. Treasury Notes 2,544,684 2,544,684 U.S. Treasury Bills 7,360,319 7,360,319 Municipals 22,330 22,330 Total Investments $ 51,936,404 $ $ 51,931,679 $ 4,725 $ SPI Local Agency Investment Fund $ 40,634 $ $ $ $ 40,634 Los Angeles County Securities 2,588 2,588 U.S. Agency Securities 199,199 199,199 U.S. Treasury Securities: U.S. Treasury Notes 38,977 38,977 Total Investments $ 281,398 $ $ 238,176 $ 2,588 $ 40,634 Other Specific Investments U.S. Treasury Bills $ 302 $ $ 302 $ $ Total Investments $ 302 $ $ 302 $ $ 82 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 4. CASH AND INVESTMENTS-Continued County Investment Pool-Continued As permitted by the Government Code, the Treasurer developed, and the Board adopted, an Investment Policy that further defines and restricts the limits within which the Treasurer may invest. The table below identifies the investment types that are authorized by the County, along with the related concentration of credit limits: Maximum Maximum Percentage Maximum Investment Minimum Maturity of Portfolio In One Issuer Rating Authorized Investment Gov. Gov. Gov. Gov. Type Code Pool Policy Code Pool Policy Code Pool Policy Code Pool Policy U. S. Treasury Notes, Bills and Bonds 5 years None (1) None None None None None None U.S. Agency Securities 5 years None (1) None None None None None None Local Agency Obligations 5 years 5 years (2) None 10%* None None None None (2) Asset-Backed Securities 5 years 5 years 20% 20% None $750 million* AA AA (3)* Bankers' Acceptances 180 days 180 days 40% 40% 30% $750 million* None A-1/P-1/F1* Negotiable Certificates of Deposit (4) 5 years 3 years* 30% 30% None $750 million* None A-1/P-1/F1* Commercial Paper 270 days 270 days 40% 40% 10% $1.5 billion* A-1 A-1/P-1/F1 Corporate and Depository Medium-Term Notes (5) 5 years 3 years* 30% 30% None $750 million* A A-1/P-1/F1* LAIF N/A N/A None $75 million (6) None None None None Shares of Beneficial Interest N/A N/A 20% 15%* 10% 10% AAA AAA Repurchase Agreements 1 year 30 days* None $1 billion* None $500 million* None None Reverse Repurchase Agreements 92 days 92 days 20% $500 million* None $250 million* None None Forwards, Futures, and Options N/A 90 days* None $100 million* None $50 million* None A* Interest Rate Swaps N/A None None None None None A A Securities Lending Agreements 92 days 92 days 20% 20% (7) None None None None Supranationals 5 years 5 years 30% 30% None None AA AA (1) Pursuant to the California Government Code 53601, the Board granted authority to make investments in U.S. Treasury Notes, Bills and Bonds, and U.S. Agency Securities that have maturities beyond 5 years. (2) Any obligation issued or caused to be issued on behalf of other County affiliates must have a minimum rating of "A3" (Moody’s) or "A-" (S&P or Fitch) and the maximum maturity is limited to thirty years. Any short- or medium-term obligation issued by the State of California or a California local agency must have a minimum rating of "MIG-1" or "A2" (Moody's) or "SP-1" or "A" (S&P) and the maximum maturity is limited to 5 years. (3) All Asset-Backed securities must be rated at least “AA.” Pool Policy also requires that Asset-Backed securities issuers' debts be rated "A" or its equivalent or better. (4) Euro Certificates of Deposit are further restricted to a maximum maturity of one year and a maximum percentage of portfolio of 10%. (5) Floating Rate Notes are further restricted to a maximum maturity of 5 years, maximum of 10% of the portfolio, and maximum investment in one issuer of $750 million. The maximum maturity may be 7 years, provided that the Board’s authorization to exceed maturities in excess of 5 years is in effect, of which $100 million par value may be greater than 5 years to maturity. (6) The maximum percentage of the portfolio is based on the investment limit established by LAIF for each account, not by Pool Policy. (7) The maximum par value is limited to a combined total of reverse repurchase agreements and securities lending agreements of 20% of the base value of the portfolio. *Represents restriction in which the County’s Investment Policy is more restrictive than the California Government Code. 83 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 4. CASH AND INVESTMENTS-Continued County Investment Pool-Continued A summary of investments held by the Pool at June 30, 2023 is as follows (dollars in thousands): Weighted Average Pool Fair Value Principal Interest Rate Range Maturity Range Maturity In Years Commercial Paper $ 13,701,956 $ 13,704,557 4.77% - 5.50% 07/03/23 - 11/03/23 0.12 Corporate and Deposit Notes 10,480 10,996 0.50% 06/18/24 0.97 Los Angeles County Securities 4,725 5,000 5.83% 06/30/25 2.00 Negotiable Certificates of Deposit 2,948,935 2,950,000 4.95% - 5.91% 07/03/23 - 04/01/24 0.23 Municipals 22,330 23,462 2.96% 08/01/24 1.09 U.S. Agency Securities 25,342,975 27,673,715 0.50% - 6.00% 07/03/23 - 01/05/34 3.32 U.S. Treasury Securities: U.S. Treasury Notes 2,544,684 2,842,726 0.25% - 1.13% 05/15/24 - 11/15/30 3.14 U.S. Treasury Bills 7,360,319 7,363,691 4.33% - 5.26% 07/05/23 - 06/13/24 0.29 Total $ 51,936,404 $ 54,574,147 1.86 The unrealized loss on investments held in the Pool was $2.638 billion as of June 30, 2023. This amount takes into account all changes in fair value that occurred during the year. The method used to apportion the unrealized loss was based on a pro-rata share of each funds’ cash balance as of June 30, 2023 relative to the County Pool balances. A separate financial report is issued for the Pool for the year ended June 30, 2023 and can be obtained at https://ttc.lacounty.gov/investor- information/. Specific Purpose Investments and Other Specific Investments A summary of investments held by the SPI and Other Specific Investments at June 30, 2023 is as follows (dollars in thousands): Weighted Average Maturity In SPI Fair Value Principal Interest Rate Range Maturity Range Years Local Agency Investment Fund $ 40,634 $ 41,260 Los Angeles County Securities 2,588 2,475 5.00% 12/02/27 4.43 U.S. Agency Securities 199,199 222,542 2.00% - 5.21% 11/15/23 - 08/27/43 6.26 U.S. Treasury Notes 38,977 39,940 1.50% 02/29/24 0.67 Total $ 281,398 $ 306,217 4.46 Weighted Average Other Specific Maturity In Investments Fair Value Principal Interest Rate Range Maturity Range Years U.S. Treasury Bills $ 302 $ 302 5.07% 11/24/23 0.40 84 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 4. CASH AND INVESTMENTS-Continued Interest Rate Risk Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The County’s Investment Policy limits most investment maturities to less than five years, with the exception of U.S. Treasury Notes, Bills, and Bonds and U.S. Agency Securities, which may have maturities beyond five years. The Treasurer manages the Pool and mitigates exposure to declines in fair value by generally investing in short-term investments with maturities of six months or less and by holding all investments to maturity. Historically, the Treasurer manages the Pool’s exposure to declines in fair value by limiting its weighted average maturity target to a range between 1.0 and 2.0 years, in accordance with the Investment Policy. However, due to increased fluctuations of the Pool size and market activity resulting from COVID-19, the Treasurer increased the weighted average maturity target to between 1.0 and 3.0 years in FY 2020-2021 as permitted under the Investment Policy. Due to continued fluctuations in the Pool size and market activity resulting from COVID-19, the Treasurer further increased the weighted average maturity target to between 1.0 and 4.0 years on August 30, 2021. For purposes of computing weighted average maturity, the maturity date of variable-rate notes is the stated maturity. The balance of the Pool's investments at June 30, 2023, is $51.936 billion, of which 61.38% will mature in six months or less. Of the remainder, 35.44% have a maturity of more than one year. At June 30, 2023, the weighted average maturity in years for the Pool was 1.86 years. The California Government Code and the Investment Policy allow the Treasurer to purchase floating rate notes, that is, any instruments that have a coupon interest rate that is adjusted periodically due to changes in a base or benchmark rate. The Investment Policy limits the amount invested in floating rate notes to 10% of the Pool portfolio. The Investment Policy prohibits the purchase of inverse floating rate notes and hybrid or complex structured investments and for the year ended June 30, 2023, the Pool contained floating rate notes at fair value of $5.00 million (0.01% of the Pool). The notes are tied to the six-month U.S. Treasury Bill and Bank of America prime rates. The fair value of variable securities is generally less susceptible to changes in value than fixed rate securities because the variable-rate coupon resets back to the market rate on a periodic basis. At June 30, 2023, there were no variable rate notes in the SPI and Other Specific Investments. Fair value fluctuates with interest rates, and increasing interest rates could cause fair value to decline below original cost. County management believes the liquidity in the portfolios is adequate to meet cash flow requirements and to preclude the County from having to sell investments below original cost for that purpose. Custodial Credit Risk Custodial credit risk for investments is the risk that the Treasurer will not be able to recover the value of investment securities that are in the possession of an outside party. Investments are exposed to custodial credit risk if the securities are uninsured, are not registered in the name of the Treasurer and are held by either the counterparty, or the counterparty's trust department or agent but not in the Treasurer's name. At year-end, all Pool, SPI and Other Specific Investment securities, except for the Rancho Palos Verdes Redevelopment Agency Tax Allocation Bond (RPV Bond), Bond Anticipation Notes (BANS) and LAIF, were held by the custodian bank in the name of the Treasurer. The RPV Bond and BANS were held in the Treasurer’s vault and are recorded in the Los Angeles County Securities line item. The LAIF investments were managed by the State of California and the County is considered a pool participant. 85 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 4. CASH AND INVESTMENTS-Continued Credit Risk and Concentration of Credit Risk Credit risk is the risk that an issuer, or other counterparty to an investment, will not fulfill its obligations. Concentration of credit risk is the risk of loss attributed to the magnitude of an investment in a single issuer. The County mitigates these risks by holding a diversified portfolio of high quality investments. The Investment Policy establishes acceptable credit ratings for investments from any two of three Nationally Recognized Statistical Rating Organizations (NRSRO). For an issuer of short-term debt, the rating must be no less than A-1 (S&P) or P-1 (Moody’s), and F-1 (Fitch) while an issuer of long- term debt shall be rated no less than an “A.” All investments purchased during the year ended June 30, 2023 met the credit rating criteria in the Investment Policy, at the issuer level. However, while the NRSROs did rate the issuer of the investments purchased, the NRSROs did not, in all instances, rate the investment itself (e.g., commercial paper, corporate and deposit notes, negotiable certificates of deposit, and U.S. Treasury bills, bonds and notes). Accordingly, for purposes of reporting the credit quality distribution of investments, some investments are reported as not rated. The Investment Policy also permits investments in LAIF, pursuant to California Government Code Section 16429.1. At June 30, 2023, a portion of the SPI was invested in LAIF, which is unrated as to credit quality. The Pool and SPI had the following investments in a single issuer that represent 5% or more of total investments at June 30, 2023 (dollars in thousands): Issuer Pool SPI Fair Value % of Portfolio Fair Value % of Portfolio Federal Home Loan Bank $ 9,613,104 18.51% $ 104,718 37.21% Federal Home Loan Mortgage Corporation 6,581,349 12.67% 55,223 19.63% Federal Farm Credit Bank 6,496,390 12.51% 39,258 13.95% Federal National Mortgage Association 2,652,132 5.11% 86 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 4. CASH AND INVESTMENTS-Continued Credit Risk and Concentration of Credit Risk-Continued The following is a summary of the credit quality distribution and concentration of credit risk by investment type as a percentage of each portfolio’s fair value at June 30, 2023: Pool S&P Moody's Fitch % of Portfolio Commercial Paper Not Rated Not Rated Not Rated 26.38 % Corporate and Deposit Notes A+ A1 A+ 0.02 % Los Angeles County Securities Not Rated Not Rated Not Rated 0.01 % Municipals AA Not Rated AA 0.04 % Negotiable Certificates of Deposits Not Rated Not Rated Not Rated 5.68 % U.S. Agency Securities AA+ Aaa AAA 17.53 % AA+ Not Rated AAA 0.05 % AA+ Aaa Not Rated 8.74 % AA+ WR AAA 0.26 % Not Rated Aaa A+ 0.09 % Not Rated Aaa AAA 5.59 % Not Rated Aaa Not Rated 0.05 % Not Rated Not Rated Not Rated 16.49 % U.S. Treasury Securities* 19.07 % 100.00 % SPI Local Agency Investment Fund Not Rated Not Rated Not Rated 14.44 % Los Angeles County Securities Not Rated Not Rated Not Rated 0.92 % U.S. Agency Securities AA+ Aaa AAA 19.76 % AA+ Aaa Not Rated 30.01 % Not Rated Aaa AAA 1.39 % Not Rated Aaa Not Rated 2.07 % Not Rated Not Rated Not Rated 17.56 % U.S. Treasury Securities* 13.85 % 100.00 % Other Specific Investments U.S. Treasury Securities* 100.00 % 100.00 % *Pursuant to GASB Statement No. 40, unless there is information to the contrary, obligations of the U.S. government or obligations explicitly guaranteed by the U.S. government are not considered to have credit risk and do not require disclosure of credit quality. 87 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 4. CASH AND INVESTMENTS-Continued Reverse Repurchase Agreements The California Government Code permits the Treasurer to enter into reverse repurchase agreements, that is, a sale of securities with a simultaneous agreement to repurchase them in the future at the same price plus a contract rate of interest. The fair value of the securities underlying reverse repurchase agreements normally exceeds the cash received, providing the broker-dealer a margin against a decline in the fair value of the securities. If the broker-dealer defaults on the obligation to resell these securities to the County or provide securities or cash of equal value, the County would suffer an economic loss equal to the difference between the fair value plus accrued interest of the underlying securities and the agreement obligation, including accrued interest. The County's investment guidelines limit the maximum par value of reverse repurchase agreements to $500.00 million and proceeds from reverse repurchase agreements may only be reinvested in instruments with maturities at or before the maturity of the reverse repurchase agreement. During the fiscal year, the County did not enter into any reverse repurchase agreements. Securities Lending Transactions For the year ended June 30, 2023, the Pool did not enter into any securities lending transactions. Cash and Investments - Held by Outside Trustees NPC and JPAs have been established for the purpose of rendering assistance to the County to refinance, acquire, construct, improve, lease and sell properties and equipment, including the construction of buildings, and purchase of equipment, land, and any other real or personal property, for the benefit of County residents, through the issuance of bonds, certificates of participation notes (COPs) and commercial paper. The NPC and JPAs’ cash is invested with the outside trustees and the amounts are held in the NPC and JPAs name. Investment practices are governed by the County’s investment guidelines, established pursuant to the California Government Code and the County Board's action. Investments are stated at fair value. Deposits held by outside trustees as of June 30, 2023 were $626. A total of $72.29 million of investments held by outside trustees are invested in the Pool. In addition, the outside trustees invested $63.18 million outside of the Pool. The following is a summary of investments held by outside trustees as of June 30, 2023 (dollars in thousands): Weighted Interest Rate Average Fair Value Principal Range Maturity Range Maturity (Years) U.S. Treasury Securities: U.S. Treasury Bonds $ 19,943 $ 19,943 11/15/26 - 11/15/28 4.56 U.S. Treasury Notes 2,955 2,955 0.41% - 2.99% 11/30/23 - 05/31/26 0.22 Net Asset Value Money Market Mutual Funds $ 40,285 88 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 4. CASH AND INVESTMENTS-Continued The following is a summary of the credit quality distribution and concentration of credit risk as of June 30, 2023: Other Investments S&P Moody's Fitch % of Portfolio Money Market Mutual Funds Not Rated Not Rated Not Rated 63.76% U.S. Treasury Securities * 36.24% 100.00% *Pursuant to GASB Statement No. 40, unless there is information to the contrary, obligations of the U.S. government or obligations explicitly guaranteed by the U.S. government are not considered to have credit risk and do not require disclosure of credit quality. LACERA Investment Portfolio Narratives and tables presented for the Pension and OPEB Trust funds managed by LACERA are taken directly from LACERA’s ACFR for the year ended June 30, 2023 (certain terms have been modified to conform with the County’s ACFR presentation). The custodial credit risk, credit risk, concentration of credit risk, interest rate risk, and foreign currency risk related to Pension and OPEB Trust Fund investments are different than the corresponding risk on investments held by the Treasurer. Detailed deposit and investment risk disclosures are included in Note G and Note I and the fair value measurement disclosures are included in Note P of LACERA’s ACFR. Investments The investments of the Pension and OPEB Trust Funds are reported at fair value at June 30, 2023, (in thousands) and are as follows: Fair Value Cash Collateral on Loaned Securities $ 1,869,433 Short-term Investments 2,289,958 Domestic and International Equity 28,598,874 Fixed Income 19,162,790 Real Estate* 5,421,420 Real Assets 2,514,132 Private Equity 13,894,495 Hedge Funds 4,890,856 Total $ 78,641,958 * Refer to Note J of LACERA’s ACFR for the year ended June 30, 2023, for additional discussion on special purpose entities. The Pension and OPEB Trust Funds also had deposits with the Pool at June 30, 2023 totaling $129.88 million. 89 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 4. CASH AND INVESTMENTS-Continued LACERA Investment Portfolio-Continued Investment Risks The County Employees Retirement Law of 1937 (CERL) vests the Board of Investments (BOI) with exclusive control over LACERA’s investment portfolio. The BOI established Investment Policy Statements and Manager Guidelines for the management of the LACERA defined benefit retirement plan (Pension Plan) and the LACERA Other Post-Employment Benefit Master Trust (OPEB Master Trust or OPEB Trust). BOI exercises authority and control over the management of LACERA’s Fiduciary Net Position Restricted for Benefits by setting a policy that the investment staff executes either internally or through the use of prudent external experts. Each Investment Policy Statement recognizes that every investment asset class and type is subject to certain risks. Outlined below are the deposit and investment risks as they relate to fixed income investments. Credit Risk Credit risk is the risk that an issuer or a counterparty to an investment transaction will not fulfill its obligations, causing the investment to decline in value. LACERA seeks to maintain a diversified portfolio of fixed income instruments in order to obtain the highest total return for the Pension plan at an acceptable level of risk within this asset class. To control credit risk, credit quality guidelines have been established. Investment Grade Bonds Investment Grade bonds are categorized as a component of the Risk Reduction and Mitigation functional asset category. LACERA invests with Core investment grade bond managers. Investment guidelines for Core managers require that they invest predominantly in sectors represented in their benchmark index, which consists 100% of bonds rated investment grade. As a result, Core portfolios contain almost 100% of bonds rated investment grade by the major credit rating agencies: Moody’s, S&P, and Fitch. High Yield Bonds Dedicated High Yield bond portfolios are categorized in the Credit functional asset category. By definition, high yield bonds are securities rated below investment grade. Therefore, the majority of bonds in the high yield portfolios are rated below investment grade by at least one of the major credit rating agencies: Moody's, S&P, and Fitch. The credit portfolios allow for the assumption of more credit risk than Investment Grade portfolios by investing in securities that include unrated bonds, bonds rated below investment grade issued by corporations undergoing financial stress or distress, junior tranches of structured securities backed by residential and commercial mortgages, bank loans, illiquid credit, and emerging market debt. LACERA utilizes specific investment manager guidelines for these portfolios that may include limiting maximum exposure by issuer, industry, and sector, which result in well-diversified portfolios. 90 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 4. CASH AND INVESTMENTS-Continued LACERA Investment Portfolio-Continued Credit Quality Ratings The following is a schedule as of June 30, 2023 of the credit quality ratings by Moody’s, a nationally recognized statistical rating organization, of investments in fixed income securities. Whole loan mortgages included in the Pension Plan portfolio of $9.89 million are excluded from this presentation. Credit Quality Ratings of Investments in Fixed Income Securities - Pension Plan As of June 30, 2023 (dollars in thousands) Private Corporate Non U.S. Placement U.S. U.S. Govt. Debt/Credit Pooled Fixed Fixed Percentage Quality Ratings Treasuries Agencies Municipals Securities Investment Income Income Total of Portfolio Aaa $ 5,565,802 809,069 130,970 1,293,657 1,030 91,385 $ 7,891,913 44.06 % Aa 5,129 21,880 61,540 635 21,854 111,038 0.62 % A 1,112 285,590 336,059 29,900 31,502 684,163 3.82 % Baa 310,753 359,095 23,429 50,271 743,548 4.15 % Ba 1,900 167,781 7,786 23,355 280,349 481,171 2.69 % B 868,205 90,284 507,379 1,465,868 8.18 % Caa 185,790 6,745 155,347 347,882 1.94 % Ca 5,995 2,183 8,178 0.05 % C 987 101 2,680 3,768 0.02 % Not Rated 464 209,735 5,773,745 48,102 142,088 6,174,134 34.47 % Total Investment in Fixed Income Securities - Pension Plan $ 5,565,802 809,533 8,141 2,187,686 7,831,882 223,581 1,285,038 $ 17,911,663 100.00 % Note: Pooled Investments included within the Not Rated Quality Ratings, represent investments in commingled funds. The Credit Quality Ratings table does not include holdings with commingled investment structures or structures that are not directly held in custody by LACERA's global custodian, State Street Bank and Trust Company. Credit Quality Ratings of Investments in Fixed Income Securities - OPEB Trust As of June 30, 2023 (dollars in thousands) U.S. Pooled Percentage Quality Ratings Treasuries Investments Total of Portfolio Aaa $ 75,346 $ $ 75,346 6.07 % Not Rated 1,165,887 1,165,887 93.93 % Total Investment in Fixed Income Securities - OPEB Trust $ 75,346 $ 1,165,887 $ 1,241,233 100.00 % Note: Pooled Investments included with the Not Rated Quality represents investments in commingled funds. For FY 2022-2023, the OPEB Trust held fixed income securities. 91 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 4. CASH AND INVESTMENTS-Continued LACERA Investment Portfolio-Continued Custodial Credit Risk LACERA’s contract with its custodian, State Street Bank and Trust (Bank), provides that the Bank may hold LACERA’s securities registered in the Bank’s or its agent’s nominee name, in bearer form, book-entry form, with a clearing house corporation, or with a depository, so long as the Bank’s records clearly indicate that the securities are held in custody for LACERA’s account. The Bank may also hold securities in custody in LACERA’s name when required by LACERA. When held in custody by the Bank, the securities are not at risk of loss in the event of the Bank’s financial failure, because the securities are not property (assets) of the Bank. Cash invested overnight in the Bank’s depository accounts is subject to the risk that in the event of the Bank’s failure, LACERA might not recover all or some of those overnight deposits. This risk is mitigated when the overnight deposits are insured or collateralized. LACERA’s policy as incorporated in its current contract with the Bank requires the Bank to certify it has taken all steps to assure all LACERA monies on deposit with the Bank are eligible for and covered by pass-through insurance, in accordance with applicable law and FDIC rules and regulations. The steps taken by the Bank include paying deposit insurance premiums when due, maintaining a prompt corrective action capital category of “well capitalized,” and identifying on the Bank’s records that it acts as a fiduciary for LACERA with respect to the monies on deposit. In addition, the Bank is required to provide evidence of insurance and to maintain a financial institution bond, which would cover the loss of money and securities with respect to any and all property the Bank or its agents hold in or for LACERA’s account, up to the amount of the bond. To implement certain investment strategies, some of LACERA’s assets are invested in investment managers’ pooled vehicles. The securities in these vehicles may be held by a different custodian other than the Bank. Counterparty Risk Counterparty risk for investments is the risk that, in the event of the failure of the counterparty to complete a transaction, LACERA would not be able to recover the value of the investment or collateral securities that are in the possession of an outside party. LACERA and its investment managers seek to minimize risk of loss from its counterparties by diversifying the number of counterparties, periodically reviewing their credit quality, and seeking to structure agreements so that collateral is posted on accrued gains if they reach certain size thresholds. Concentration of Credit Risk For diversification purposes, all investment grade and liquid credit portfolios limit the exposure to a single issuer. This limitation is typically 5.00%, but does not apply to U.S. Treasury securities, government-guaranteed debt (including G-7 countries), agency debt, agency mortgage-backed securities, and approved commingled funds and fund-of-one vehicles. As of June 30, 2023, LACERA did not hold any investments in any one issuer that would represent 5.00% or more of the Pension Plan Fiduciary Net Position. Investments issued or explicitly guaranteed by the U.S. government and pooled investments are excluded from this requirement. 92 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 4. CASH AND INVESTMENTS-Continued LACERA Investment Portfolio-Continued Interest Rate Risk Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. Duration is a measure of the price sensitivity of a fixed income portfolio to changes in interest rates. It is calculated as the weighted average time to receive a bond’s coupon and principal payments. The longer the duration of a portfolio, the greater its price sensitivity to changes in interest rates. To manage interest rate risk, investment manager guidelines require that the duration of all investment grade bond portfolios must remain within a range centered around the duration of the benchmark index. This range is currently +/- 10.00% of the benchmark duration. The investment manager guidelines require that the duration of the U.S. long-term government bonds portfolio must remain within +/- 0.30 years of the duration of its benchmark index. Deviations from any of the stated guidelines require prior written authorization from LACERA. The Duration in Fixed Income Securities - Pension Plan schedule for the year ended June 30, 2023 presents the duration by investment type. Whole loan mortgages included in the Pension Plan Portfolio of $9.89 million are excluded from this presentation. Duration in Fixed Income Securities - Pension Plan As of June 30, 2023 (dollars in thousands) Portfolio Weighted Average Effective Investment Type Fair Value Duration* U.S. Treasuries, U.S. Government Agency, and Municipal Instruments: U.S. Treasuries $ 5,565,802 11.82 U.S. Government Agency 809,533 4.29 Municipal / Revenue Bonds 8,141 10.47 Subtotal U.S. Treasuries, U.S. Government Agency, and Municipal Instruments 6,383,476 Corporate Bonds and Credit Securities: Asset-Backed Securities 196,008 2.03 Corporate and Other Credit 1,991,678 2.13 Pooled Funds 7,831,882 1.70 Subtotal Corporate Bonds and Credit Securities 10,019,568 Non-U.S. Fixed Income 223,581 1.64 Private Placement Fixed Income 1,285,038 3.37 Subtotal Non-U.S. and Private Placement Securities 1,508,619 Total Fixed Income Securities - Pension Plan $ 17,911,663 Note: The Duration table does not include holdings within commingled investment structures or structures that are not directly held in custody by LACERA's global custodian, State Street Bank and Trust Company. *Effective Duration is a measure of a bond's sensitivity to interest rates. It is calculated as the percentage change in a bond's price caused by a change in the bond's yield. For example, a duration of 5 indicates that a 1.00% increase in a bond's yield will cause the bond price to decline 5.00%. 93 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 4. CASH AND INVESTMENTS-Continued LACERA Investment Portfolio-Continued Interest Rate Risk-Continued Duration in Fixed Income Securities - OPEB Trust As of June 30, 2023 (dollars in thousands) Portfolio Weighted Average Effective Investment Type Fair Value Duration* U.S. Treasuries Instruments: U.S. Treasuries $ 75,346 16.12 Corporate Bonds and Credit Securities: Pooled Investments 1,165,887 3.32 Total Fixed Income Securities - OPEB Trust $ 1,241,233 *Effective Duration is a measure of a bond's sensitivity to interest rates. It is calculated as the percentage change in a bond's price caused by a change in the bond's yield. For example, a duration of 5 indicates that a 1.00% increase in a bond's yield will cause the bond price to decline 5.00%. Foreign Currency Risk Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an investment or deposit. LACERA’s investment managers are permitted to invest in approved countries or regions, as stated in their respective investment manager guidelines. To mitigate foreign currency risk with global equity, LACERA has implemented a passive currency hedging program, which hedges into U.S. dollars approximately 50% of LACERA’s foreign currency exposure for developed market equities. The following schedule represents LACERA’s exposure to foreign currency risk in U.S. dollars. Most of the exposure is from separately managed accounts with the remaining exposure from non-U.S. commingled funds that are denominated in foreign currency. For the commingled funds, LACERA owns units, and the fund holds the actual securities and/or currencies. The values shown include LACERA’s separately managed account holdings and the pro-rata portion of non-U.S. commingled fund holdings. The OPEB Trust did not hold any non-U.S. investment securities as of June 30, 2023. 94 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 4. CASH AND INVESTMENTS-Continued LACERA Investment Portfolio-Continued Non-U.S. Investment Securities at Fair Value - Pension Plan As of June 30, 2023 (in thousands) Fixed Foreign Private Equity Forward Currency Equity Income Currency Real Estate Real Assets Investments Contracts Total AFRICA South African Rand $ 79,420 1,346 $ 80,766 AMERICAS Brazilian Real 137,294 2,195 139,489 Canadian Dollar 975,906 2,676 5,384 150,149 (9,163) 1,124,952 Chilean Peso 9,280 1,129 10,409 Colombian Peso 2,288 415 2,703 Mexican Peso 59,152 1,521 60,673 ASIA Australian Dollar 485,905 3,183 11,013 1,020 501,121 Chinese Renminbi 96,786 1,641 98,427 Hong Kong Dollar 663,581 2,826 183 666,590 Indonesian Rupiah 53,459 3,702 57,161 Japanese Yen 1,297,919 13,606 63,747 1,375,272 Malaysian Ringgit 31,769 1,859 33,628 New Zealand Dollar 11,375 497 133 12,005 Pakistan Rupee 28 28 Philippine Peso 13,232 406 13,638 Singapore Dollar 85,120 675 373 86,168 South Korean Won 275,212 3,092 278,304 Taiwan Dollar 327,583 7,229 334,812 Thai Baht 47,002 (165) 46,837 EUROPE British Pound Sterling 1,253,582 13,785 15,218 68 173,007 (16,208) 1,439,452 Czech Republic Koruna 4,069 421 4,490 Danish Krone 269,940 1,144 (114) 270,970 Euro 2,448,886 44,322 21,511 310,590 383,847 1,263,178 (2,674) 4,469,660 Hungarian Forint 4,643 343 4,986 Norwegian Krone 74,432 893 233 75,558 Polish Zloty 28,567 935 29,502 Russian Ruble 1,906 1,906 Swedish Krona 231,093 720 4,364 236,177 Swiss Franc 574,640 1,548 245 576,433 MIDDLE EAST Egyptian Pound 3,438 123 3,561 Israeli New Shekel 39,465 876 417 40,758 Kuwaiti Dinar 23,827 792 24,619 Qatari Rial 30,922 1,747 32,669 Saudi Riyal 6,220 6,220 Turkish Lira 19,948 438 20,386 UAE Dirham 40,609 201 40,810 Total Investment Securities Subject to Foreign Currency Risk - Pension Plan $ 9,706,564 60,783 99,385 310,658 533,996 1,447,198 42,556 $ 12,201,140 95 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 4. CASH AND INVESTMENTS-Continued LACERA Investment Portfolio-Continued Securities Lending Program The BOI policies authorize LACERA to participate in a securities lending program. Securities lending is an investment management activity that mirrors the fundamentals of a loan transaction. Securities are lent to brokers and dealers (borrower), and in turn, LACERA receives cash and non-cash collateral. When cash collateral is received, the income that is generated from securities lending has two sources: lending and reinvestment. LACERA pays the borrower interest on the collateral and invests the collateral with the goal of earning a higher yield than the interest rate paid to the borrower. When non-cash collateral is received, the borrower pays a fee for borrowing the security. Bank is the sole manager of LACERA's securities lending program. Collateralization is set on non- U.S. loans at 105% minimum and on U.S. loans at 102% minimum of the fair value of the securities on loan. State Street Global Advisors invests the collateral received from the lending programs. The collateral is invested in short-term highly liquid instruments. The maturities of the investments made with cash collateral typically do not match the maturities of their securities loans. Loans are marked- to-market daily, so that if the fair value of a security on loan rises, LACERA receives additional collateral. Conversely, if the fair value of a security on loan declines, then the borrower receives a partial return of the collateral. Earnings generated in excess of the interest paid to the borrowers represent net income to LACERA who shares this net income with the lending agent based on contractual agreements. Under the terms of their lending agreements, both lending agents provide borrower default indemnification in the event a borrower does not return securities on loan. The terms of the lending agreements entitle LACERA to terminate all loans upon the occurrence of default and purchase a like amount of “replacement securities” when loaned securities are not returned. LACERA does not have the ability to pledge assets received as collateral without a borrower default. In the event the purchase price of replacement securities exceeds the amount of collateral, the lending agent is liable to LACERA for the difference, plus interest. Either LACERA or the borrower of the security can terminate a loan on demand. At fiscal year-end, LACERA had no credit risk exposure to borrowers, because the amount of collateral received exceeded the value of securities on loan. LACERA had no losses on securities lending transactions resulting from the default of a borrower for the year ended June 30, 2023. As of June 30, 2023, the fair value of securities on loan was $3.759 billion, with a value of cash collateral received of $1.869 billion, which is included in Other payables on the financial statements, and non-cash collateral of $2.042 billion. LACERA’s investment income, net of expenses from securities lending, was $14.10 million for the year ended June 30, 2023. 96 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 4. CASH AND INVESTMENTS-Continued LACERA Investment Portfolio-Continued Securities Lending Program-Continued Securities Lending As of June 30, 2023 (in thousands) Fair Value of Cash Non-Cash Securities on Collateral Collateral Calculated Collateral Securities on Loan Loan Received Received Mark (1) Percent (2) U.S. Equity $ 2,332,066 $ 1,561,245 $ 840,301 $ 18,375 103.77 % U.S. Fixed Income 927,308 233,202 743,620 4,685 105.84 % Non-U.S. Equity 499,246 74,986 457,963 3,673 107.49 % Total $ 3,758,620 $ 1,869,433 $ 2,041,884 $ 26,733 (1) Calculated Mark is performed daily. It is the amount LACERA will collect from the borrower (if the amount is positive), or payment to the borrower (if the amount is negative) to bring the collateralization to appropriate levels based on fair value. (2) Collateral percent is the total collateral received divided by the fair value of securities on loan. U.S. loans are collateralized at 102% minimum of the fair value of the securities on loan while non-U.S. loans are collateralized at 105% minimum. Hedge Funds LACERA's Investment Policy Statement establishes the portfolio framework for and role of the hedge funds program. Diversified hedge funds comprise a variety of hedged investments, such as relative value, arbitrage, and long/short strategies within a diversified portfolio. The status of LACERA's hedge fund program as of June 30, 2023 is as follows: • LACERA is invested in eight hedge fund managers in the core hedge funds portfolio. • LACERA is invested in a total of seven hedge fund emerging managers in the hedge funds emerging manager portfolio. LACERA's discretionary hedge funds emerging manager separate account manager, Stable Asset Management, selected two new emerging managers during Fiscal Year 2022-2023. • LACERA continues to have exposure with one hedge fund of funds manager, Grosvenor Capital Management (GCM). In 2019, LACERA initiated the full redemption of the GCM hedge fund of funds' portfolio. This portfolio began returning cash during Fiscal Year 2019-2020 and will continue to distribute cash in alignment with the liquidity terms of the portfolio or underlying managers. GCM is managing the redemption process of the GCM portfolio. The investment performance for this strategy is measured separately from other asset classes. The fair value of assets invested in hedge funds as of June 30, 2023 was $4.891 billion. The core portfolio, emerging manager portfolio, and GCM hedge funds of funds portfolio reside within Diversified Hedge Funds under the Risk Reduction and Mitigation functional asset category of LACERA's Total Fund. 97 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 4. CASH AND INVESTMENTS-Continued LACERA Investment Portfolio-Continued Fair Value GASB 72 was issued to address accounting and financial reporting issues related to fair value measurements and disclosures. LACERA categorizes its fair value measurements within the fair value hierarchy established by GAAP. The hierarchy is based on the valuation inputs used to measure the fair value of the investment securities and holdings. The fair value hierarchy includes three levels and one additional category. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. Certain other investments held by LACERA are valued at net asset value (NAV) per share when an investment does not have a readily determined fair value, provided that the NAV is calculated and used as a practical expedient to estimate fair value in accordance with the requirements of GAAP. The table below illustrates investments classified by their fair value hierarchy (Levels 1, 2, and 3) as well as investments measured at NAV. Equity and Fixed Income Securities Equity securities classified in Level 1 of the fair value hierarchy are valued using prices quoted in active markets issued by pricing vendors for these securities. Fixed income and equity securities classified in Level 2 of the fair value hierarchy are valued using prices determined by matrix pricing techniques maintained by the various pricing vendors for these securities. Equity securities classified in Level 2 are not traded in the active market. Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted prices. These matrix pricing techniques incorporate inputs such as yield, prepayment speeds, and credit spreads for fixed income securities. Derivative securities classified as Level 2 are securities whose value are either derived daily from associated securities that are traded, or are determined by using a market approach that considers benchmark interest rates. Fixed income and equity securities classified in Level 3 are securities whose stated market price is unobservable by the marketplace; many of these securities are priced by the issuers or industry groups for these securities. Fair value is defined as the quoted market value on the last trading day of the period. These prices are obtained from various pricing sources by the Bank. Hedge Funds, Private Equity, Real Assets, Real Estate, Equity, and Fixed Income Funds Investments in hedge funds, private equity, real assets, real estate, equity and fixed income funds are valued at estimated net asset value (NAV) based upon the fair value of the underlying investments, as determined in good faith by the General Partner (GP), in accordance with GAAP fair value principles in instances where no observable public market values are available. Investments that are estimated at fair value are initially valued at cost with subsequent adjustments that reflect third party transactions, financial operating results, and other factors deemed relevant by the GP. These assets are reported by LACERA based on the practical expedient allowed under GAAP. In instances where observable public market values are available for the underlying securities held, fair value is determined by the fund's administrator using independent pricing sources. 98 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 4. CASH AND INVESTMENTS-Continued LACERA Investment Portfolio-Continued Fair Value-Continued Real Estate Separate Account Investments Real estate investments are valued at NAV, based upon estimated fair value, as determined in good faith by the Investment Manager. These investments are initially valued at cost with subsequent adjustments that reflect third party transactions, financial operating results, and other factors deemed relevant by the Investment Manager. Properties are subject to independent third party appraisals annually. Investments and Derivative Instruments Measured at Fair Value - Pension Plan As of June 30, 2023 (in thousands) Quoted Prices In Active Markets for Significant Other Significant Identical Assets Observable Inputs Unobservable Investments by Fair Value Level Total Level 1 Level 2 Inputs Level 3 Fixed Income Securities Asset-Backed Securities $ 196,008 $ $ 196,008 $ Corporate and Other Credit 1,991,678 1,932,426 59,252 Municipal/Revenue Bonds 8,141 8,141 Non-U.S. Fixed Income 223,581 179,595 43,986 Private Placement Fixed Income 1,285,038 1,280,928 4,110 U.S. Government Agency 809,533 809,533 U.S. Treasuries 5,565,802 5,565,802 Whole Loan Mortgages 9,893 9,893 Total Fixed Income Securities 10,089,674 9,972,433 117,241 Equity Securities Non-U.S. Equity 10,285,307 10,280,730 519 4,058 Pooled Investments 414,172 414,172 U.S. Equity 15,976,842 15,967,901 1,770 7,171 Total Equity Securities 26,676,321 26,662,803 2,289 11,229 Collateral from Securities Lending 1,869,433 1,869,433 Total Investments by Fair Value Level $ 38,635,428 $ 26,662,803 $ 11,844,155 $ 128,470 Investments Measured at NAV Fixed Income $ 7,831,883 Equity 453,239 Hedge Funds 4,890,856 Private Equity 13,894,495 Real Estate 5,109,454 Real Assets 2,514,132 Total Investments Measured at NAV 34,694,059 Total Investments $ 73,329,487 Derivatives Foreign Exchange Contracts $ 42,556 $ $ 42,556 $ Foreign Equity Derivatives 562 562 Total Derivatives $ 43,118 $ 562 $ 42,556 $ 99 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 4. CASH AND INVESTMENTS-Continued LACERA Investment Portfolio-Continued Fair Value-Continued Investments Measured at the Net Asset Value - Pension Plan As of June 30, 2023 (dollars in thousands) Unfunded Redemption Fair Value Commitments Redemption Frequency (If Currently Eligible) Notice Period Fixed Income Funds (1) $ 7,831,883 $ 1,834,547 Daily, Monthly or Not Eligible 1-60 days or N/A Commingled Equity Funds (2) 453,239 Daily, Monthly or Not Eligible 1-60 days or N/A Daily, Monthly, Quarterly, Semi-Annual, Annual, Hedge Funds (3) 4,890,856 181,598 Self-Liquidating 5-180 days Private Equity (4) 13,894,495 5,299,231 Not Eligible N/A Real Estate (4) 5,109,454 1,289,323 Quarterly or Not Eligible 30 days+ or N/A Real Assets (4) 2,514,132 913,268 Not Eligible N/A Total Investments Measured at the NAV $ 34,694,059 (1) Fixed Income Funds: 11 fixed income funds are valued at the NAV of units held at the end of the period based upon the fair value of the underlying investments. Approximately 60% of assets are available within 12 months; these funds provide daily, monthly or quarterly liquidity. Approximately 40% of the fund assets have liquidity beyond 12 months. (2) Commingled Equity Funds: 1 equity fund is considered commingled in nature. The fund is valued at the NAV of units held at the end of the period based upon the fair value of the underlying investments. The fund represents 2% of the equity assets and is subject to a lock up period that limits redemptions for the next year. (3) Hedge Funds: This portfolio consists of 15 current funds and 1 fund of funds. Hedge Fund investments are valued at NAV per share. When considering liquidity terms of the current funds, 70% of the fund assets are available within 12 months; these funds provide daily, monthly, quarterly, semi-annual, or annual liquidity. Some of these funds are subject to redemption notices that extend the time frame to receive redemptions beyond the next 12 months. Approximately 30% of fund assets are in funds that offer periodic liquidity that extends beyond the next 12 months. LACERA's Hedge Funds portfolio invests in the following strategies: (a) Macro and Tactical Trading: This strategy makes investments based on analyses and forecasts of macroeconomic trends, including governmental and central bank policies, fiscal trends, trade imbalances, interest rate trends, inter-country relations, and economic and technical analysis. (b) Equity Long/Short: This strategy purchases and/or sells equities based on fundamental and/or quantitative analysis and other factors. (c) Credit: This strategy includes long-biased credit, long/short credit, structured credit, and mortgage credit. (d) Relative Value: This strategy’s focus is to benefit from valuation discrepancies that may be present in related financial instruments by purchasing and/or shorting these instruments. (e) Multi-Strategy: This strategy aims to pursue varying strategies to diversify risks and reduce volatility. (f) Event Driven: This strategy seeks to gain an advantage from pricing inefficiencies that may occur in the onset or aftermath of a corporate action or related event. (4) Private Equity, Real Assets, and Real Estate Funds: LACERA’s Private Equity portfolio consists of 296 funds, investing primarily in buyout funds, with some exposure to venture capital, special situations, fund of funds, and co-investments. Due to contractual limitations, none of the funds are currently eligible for redemption. The Real Assets portfolio consists of 24 funds, investing primarily in infrastructure and natural resources. 4 of the funds are eligible for redemption after an initial lock-up period, and the other 20 of the funds are not eligible for redemption as the lock-up period is typically from 10-15 years. The Real Estate portfolio, composed of 25 commingled funds, invests in both U.S. and Non-U.S. commercial real estate. The fair values of these funds have been determined using net assets valued at the end of the period and net assets valued one quarter in arrears plus current quarter cash flows. 5 out of 25 Real Estate funds are eligible for redemption depending upon the availability of cash for redemptions in the fund. Distributions are received as underlying investments within the funds are liquidated, which on average can occur over the span of 5 to 10 years. For Real Estate investments held in separate accounts and debt program investments, see Note J - Special Purpose Entities of LACERA's ACFR. 100 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 4. CASH AND INVESTMENTS-Continued LACERA Investment Portfolio-Continued Fair Value-Continued Investments Measured at Fair Value - OPEB Trust As of June 30, 2023 (in thousands) Quoted Prices in Active Markets Significant Other Significant for Identical Observable Unobservable Investments by Fair Value Level Total Assets Level 1 Inputs Level 2 Inputs Level 3 Fixed Income Securities Pooled Investments $ 293,690 $ 293,690 $ $ U.S. Treasuries 75,346 75,346 Total Fixed Income Securities 369,036 293,690 75,346 — Total Investments by Fair Value Level $ 369,036 $ 293,690 $ 75,346 $ Investments Measured at Net Asset Value (NAV) Fixed Income $ 872,197 Equity 1,468,752 Real Estate Investment Trust (REIT) 311,966 Total Investments Measured at NAV 2,652,915 Total Investments $ 3,021,951 Investments Measured at Net Asset Value - OPEB Trust As of June 30, 2023 (dollars in thousands) Unfunded Redemption Frequency Redemption Investment by Fair Value Level Fair Value Commitments (If Currently Eligible) Notice Period Fixed Income Securities Commingled Fixed Income Funds $ 872,197 $ Daily, Monthly 1-30 days or N/A Commingled Equity Fund 1,468,752 Daily, Monthly 1-30 days or N/A Real Estate Investment Trust (REIT) 311,966 Daily, Monthly 1-30 days or N/A Total Investments Measured at NAV (1) $ 2,652,915 (1) Commingled Funds: The OPEB Master Trust is invested in 8 funds that are considered commingled in nature. They are valued at the NAV of units held at the end of the period based upon the fair value of the underlying investments. Most of the funds are highly liquid within one month. 101 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 5. CAPITAL ASSETS As a result of the implementation of GASB 96, the reclassification of certain lease asset types, and LACDA's recognition of a prior year capital asset acquisition, the capital asset balances as of July 1, 2022 were restated as follows (in thousands): Balance July 1, 2022, Balance as previously Restatement July 1, 2022, reported Amounts as restated Governmental Activities Capital assets, being depreciated/amortized: Subscription assets $ $ 55,802 $ 55,802 Lease land 9,081 684 9,765 Lease buildings and improvements 1,504,371 (684) 1,503,687 Accumulated depreciation/amortization: Lease land (3,406) (81) (3,487) Lease buildings and improvements (124,118) 81 (124,037) Total governmental activities capital assets restatement $ 55,802 LACDA: Capital assets, being depreciated/amortized: Buildings and improvements $ 254,644 $ 3,498 $ 258,142 Subscription assets 271 271 102 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 5. CAPITAL ASSETS-Continued Capital assets activity for the year ended June 30, 2023 is as follows (in thousands): Balance July 1, 2022, Balance Governmental Activities as restated Additions Deletions June 30, 2023 Capital assets, not being depreciated/ amortized: Land $ 2,506,545 75,139 (9,563) $ 2,572,121 Easements 5,038,570 36,226 — 5,074,796 Software in progress 64,652 17,884 (1,258) 81,278 Construction in progress-buildings and improvements 1,185,181 353,107 (85,444) 1,452,844 Construction in progress-infrastructure 604,166 174,583 (18,784) 759,965 Subscription assets in progress 8,250 8,250 Subtotal 9,399,114 665,189 (115,049) 9,949,254 Capital assets, being depreciated/amortized: Buildings and improvements 6,952,548 76,615 (22,654) 7,006,509 Equipment 1,871,749 105,690 (75,897) 1,901,542 Software 608,122 — — 608,122 Infrastructure 8,190,431 17,188 — 8,207,619 Lease land 9,765 372 — 10,137 Lease buildings and improvements 1,503,687 276,087 (30,176) 1,749,598 Lease equipment 9,690 7,905 (198) 17,397 Subscription assets 55,802 52,788 108,590 Subtotal 19,201,794 536,645 (128,925) 19,609,514 Less accumulated depreciation/amortization for: Buildings and improvements (2,620,078) (140,529) 3,350 (2,757,257) Equipment (1,408,850) (111,081) 73,477 (1,446,454) Software (408,139) (35,542) — (443,681) Infrastructure (4,776,123) (152,136) — (4,928,259) Lease land (3,487) (3,631) (7,118) Lease buildings and improvements (124,037) (116,190) (240,227) Lease equipment (1,722) (3,014) — (4,736) Subscription assets (21,651) (21,651) Subtotal (9,342,436) (583,774) 76,827 (9,849,383) Total capital assets, being depreciated/ amortized, net 9,859,358 (47,129) (52,098) 9,760,131 Governmental activities capital assets, net $ 19,258,472 $ 618,060 $ (167,147) $ 19,709,385 103 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 5. CAPITAL ASSETS-Continued Balance July 1, 2022, Balance Business-type Activities as restated Additions Deletions June 30, 2023 Capital assets, not being depreciated/ amortized: Land $ 134,932 — — $ 134,932 Easements 32,054 1,188 — 33,242 Construction in progress-buildings and improvements 316,099 241,378 (42,000) 515,477 Construction in progress- infrastructure 63,417 10,365 (14,690) 59,092 Subtotal 546,502 252,931 (56,690) 742,743 Capital assets, being depreciated/ amortized: Buildings and improvements 2,897,025 53,143 — 2,950,168 Equipment 455,582 35,355 (36,811) 454,126 Software 58,922 — — 58,922 Infrastructure 1,307,277 14,263 — 1,321,540 Lease equipment 1,188 902 2,090 Subtotal 4,719,994 103,663 (36,811) 4,786,846 Less accumulated depreciation/ amortization for: Buildings and improvements (1,005,720) (52,361) (1,058,081) Equipment (315,050) (30,668) 35,701 (310,017) Software (53,393) (3,359) (56,752) Infrastructure (719,947) (24,692) (744,639) Lease equipment (107) (397) (504) Subtotal (2,094,217) (111,477) 35,701 (2,169,993) Total capital assets, being depreciated/ amortized, net 2,625,777 (7,814) (1,110) 2,616,853 Business-type activities capital assets, net 3,172,279 245,117 (57,800) 3,359,596 Total capital assets, net $ 22,430,751 832,803 (194,573) $ 23,068,981 104 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 5. CAPITAL ASSETS-Continued Depreciation/Amortization Expense Depreciation/Amortization expense was charged to functions/programs of the primary government as follows (in thousands): Governmental activities: General government $ 63,082 Public protection 179,299 Public ways and facilities 91,261 Health and sanitation 110,919 Public assistance 67,591 Education 6,361 Recreation and cultural services 46,049 Capital assets held by the County’s internal service funds are charged to the various functions based on their usage of the assets 19,212 Total depreciation/amortization expense, governmental activities $ 583,774 Business-type activities: Hospitals $ 83,995 Waterworks 23,850 Aviation 3,632 Total depreciation/amortization expense, business-type activities $ 111,477 105 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 5. CAPITAL ASSETS-Continued Discretely Presented Component Units LACDA Capital assets activity for the LACDA component unit for the year ended June 30, 2023, was as follows (in thousands): Balance July 1, 2022, Balance as restated Additions Deletions June 30, 2023 Capital assets, not being depreciated/ amortized: Land $ 88,791 84 (3,532) $ 85,343 Construction in progress-buildings and improvements 5,310 4,912 (4,044) 6,178 Subtotal 94,101 4,996 (7,576) 91,521 Capital assets, being depreciated/amortized: Buildings and improvements 258,142 13,793 — 271,935 Equipment 8,908 491 (374) 9,025 Software 1,025 — — 1,025 Lease buildings and improvements 1,267 (1,267) — Lease equipment 431 (171) 260 Subscription assets 271 2,808 3,079 Subtotal 270,044 17,092 (1,812) 285,324 Less accumulated depreciation/amortization for: Buildings and improvements (176,768) (6,118) — (182,886) Equipment (7,957) (401) 373 (7,985) Software (333) (103) — (436) Lease buildings and improvements (206) (34) 240 — Lease equipment (250) (108) 171 (187) Subscription assets (1,334) (1,334) Subtotal (185,514) (8,098) 784 (192,828) Total capital assets being depreciated/ amortized, net 84,530 8,994 (1,028) 92,496 LACDA capital assets, net $ 178,631 13,990 (8,604) $ 184,017 106 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 5. CAPITAL ASSETS-Continued First 5 LA Capital assets activity for the First 5 LA component unit for the year ended June 30, 2023, was as follows (in thousands): Balance Balance July 1, 2022 Additions Deletions June 30, 2023 Capital assets, not being depreciated- Land $ 2,039 — — $ 2,039 Capital assets, being depreciated: Buildings and improvements 14,933 889 — 15,822 Equipment 3,103 134 — 3,237 Subtotal 18,036 1,023 19,059 Less accumulated depreciation for: Buildings and improvements (4,217) (353) — (4,570) Equipment (2,978) (85) — (3,063) Subtotal (7,195) (438) (7,633) Total capital assets being depreciated,net 10,841 585 11,426 First 5 LA capital assets, net $ 12,880 585 $ 13,465 6. PUBLIC-PRIVATE AND PUBLIC-PUBLIC PARTNERSHIPS AND AVAILABILITY AGREEMENTS GASB 94, “Public-Private and Public-Public Partnerships (PPPs) and Availability Payment Arrangements (APAs)" (GASB 94) defines a PPP as an arrangement in which the government (the transferor) contracts with an operator to provide public services by conveying control of the right to operate or use a nonfinancial asset, such as infrastructure or other capital asset (the underlying PPP asset), for a period of time in an exchange or exchange-like transaction type of public-private or public-public partnership. Some PPPs meet the definition of a service concession arrangement (SCA), which the Board defines in this Statement as a PPP in which (1) the operator collects and is compensated by fees from third parties; (2) the transferor determines or has the ability to modify or approve which services the operator is required to provide, to whom the operator is required to provide the services, and the prices or rates that can be charged for the services; and (3) the transferor is entitled to significant residual interest in the service utility of the underlying PPP asset at the end of the arrangement. An APA is an arrangement in which a government compensates an operator for services that may include designing, constructing, financing, maintaining, or operating an underlying nonfinancial asset for a period of time in an exchange or exchange-like transaction. The County determined that golf courses met the criteria set forth in GASB 94 (where the County is the transferor) and therefore included these SCAs in the County’s financial statements as deferred inflows of resources. GASB 94 also provides guidance on accounting treatment if the County were acting as an operator of another government’s facility. The County has determined that there are no incidences where the County would qualify as an operator. 107 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 6. PUBLIC-PRIVATE AND PUBLIC-PUBLIC PARTNERSHIPS AND AVAILABILITY AGREEMENTS- Continued Golf Courses The County manages a public golf course system, which offers affordable greens fees, discount programs for senior citizens and students, and a junior golf program. Each golf course is leased under agreement with an operator, which provides for activities such as golf course management, clubhouse operations, and food and beverage concessions. The operators collect user fees and are responsible for the day-to-day operations of the golf courses. The operators are required to operate and maintain the golf courses, and make installment payments to the County, in accordance with their respective contracts. As of June 30, 2023, the present value of the installment payments under contract is estimated to be $85.00 million and reported as deferred inflows of resources in the statement of net position. The present values of the installment payments were calculated using discount rates of 5.12%, 3.55%, 3.70%, 1.87% and 4.20% for the term of the agreement for each SCA. The lease terms for the twenty golf courses cover remaining periods ranging from 0 to 16 years as of June 30, 2023. The FY 2022-2023 total monthly installment payments are approximately $908,000. The County primarily uses the proceeds to fund parks and recreation operations, 10% of which is set aside for future golf course capital improvements. The acquisition value of the golf courses, including land, buildings, and construction in progress, is reported at $22.84 million as of June 30, 2023. 7. PENSION PLAN Plan Description The County pension plan is administered by LACERA, which was established under the CERL. LACERA is a cost-sharing, multi-employer defined benefit plan. It provides benefits to employees of the County and the following additional entities that are not part of the County's reporting entity: Los Angeles Superior Court Little Lake Cemetery District Local Agency Formation Commission Los Angeles County Office of Education (LACOE) South Coast Air Quality Management District (SCAQMD) New employees of LACOE hired on or after July 1971 and new employees of SCAQMD hired after December 31, 1979 are not eligible for LACERA benefits. LACERA issues a stand-alone financial report, which is available at its offices located at Gateway Plaza, 300 N. Lake Avenue, Pasadena, California 91101-4199 or at www.LACERA.com. Benefits Provided Benefits are authorized in accordance with the California Constitution, the CERL, the bylaws, and procedures and policies adopted by LACERA's Boards of Retirement and Investments. The County Board may also adopt resolutions, as permitted by CERL, which may affect the benefits of LACERA members. 108 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 7. PENSION PLAN-Continued Benefits Provided-Continued LACERA provides retirement, disability, death benefits and cost of living adjustments to eligible members. Vesting occurs when a member accumulates 5 years of creditable service under contributory plans or accumulates 10 years of creditable service under the general service non- contributory plan. Benefits are based upon 12 or 36 months' average compensation, depending on the plan, as well as age at retirement and length of service as of the retirement date, according to applicable statutory formula. Vested members who terminate employment before retirement age are considered terminated vested (deferred) members. Service-connected disability benefits may be granted regardless of length of service consideration. Five years of service are required for nonservice-connected disability eligibility according to applicable statutory formula. Members of the non-contributory plan, who are covered under separate long-term disability provisions not administered by LACERA, are not eligible for disability benefits provided by LACERA. Contributions LACERA has nine benefit tiers known as A, B, C, D, E and G, and Safety A, B and C. All tiers except E are employee contributory. Tier E is employee non-contributory. Prior to December 31, 2012, new general members were only eligible for tier D or E and new safety members were only eligible for Safety B. As of January 1, 2013, new general employees are only eligible for tier G and new safety members are only eligible for Safety C. These new tiers were added as a result of the California Public Employees’ Pension Reform Act of 2013 (PEPRA) and became effective January 1, 2013. Rates for the tiers are established in accordance with State law by LACERA's Boards of Retirement and Investments and the County Board. The following employer rates were in effect for FY 2022-2023: July 1, 2022 - June 30, 2023 A B C D E G General Members 31.11% 24.13% 21.23% 22.75% 24.3% 22.66% Safety Members 39.93% 34.79% 27.91% The rates were determined by the actuarial valuations performed as of June 30, 2021. The investment rate of return assumption used in the valuation performed as of June 30, 2021 remained at 7.00%. The employer contribution rates used in FY 2022-2023 increased from (0.29)% to 0.20% over the rates used in FY 2021-2022 and may increase again during the following fiscal year. The most significant factors causing the increase were increases to the normal cost rate and deferred recognition of new assumptions. Employee rates vary by option and employee entry age from 6% to 18% of their annual covered salary. During FY 2022-2023, the County contributed the full amount of the Actuarial Determined Contribution, as determined by the actuarial valuations, in the form of semi-monthly cash payments in the amount of $2.216 billion. 109 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 7. PENSION PLAN-Continued Net Pension Liability, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2023, the County reported a liability of $13.161 billion for its proportionate share of the net pension liability in accordance with the parameters of GASB 68, "Accounting and Financial Reporting For Pensions-an amendment of GASB Statement No. 27" (GASB 68). The net pension liability was measured as of June 30, 2022, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2021, projected forward to the measurement date, taking into account any significant changes between the valuation date and the measurement date. The County’s proportion of the net pension liability was based on a projection of the County’s future contribution effort to the pension plan relative to the projected contributions of all pension plan participants, actuarially determined. At June 30, 2022, the County’s proportionate share was 96.47%, which was an increase of 0.06% from its proportion measured as of June 30, 2021. For the year ended June 30, 2023, the County recognized negative pension expense of $(318.83) million which is reported as $(264.27) million for governmental activities and $(54.56) million for business-type activities. Pension expense represents the change in the net pension liability during the measurement period, adjusted for actual contributions and the deferred recognition of changes in investment gain/loss, actuarial gain/loss, actuarial assumptions or methods, and plan benefits. At June 30, 2023, the County reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources (in thousands): Deferred Inflows Deferred Outflows of Resources of Resources Net difference between projected and actual earnings $ 187,758 $ Change in assumptions 2,326,220 Change in experience 64,162 1,602,848 Change in proportion and differences between County contributions and proportionate share of contributions 295,286 325,013 Contributions made subsequent to measurement date 2,216,111 Total $ 547,206 $ 6,470,192 Deferred outflows of resources and deferred inflows of resources above represent the unamortized portion of changes to net pension liability to be recognized in future periods in a systematic and rational manner. Investment gains or losses are recognized in pension expense over a 5 year period and economic/demographic gains or losses and assumption changes or inputs are recognized over the average remaining service life for all active and inactive members, which is 8 years as of June 30, 2022. 110 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 7. PENSION PLAN-Continued Net Pension Liability, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions-Continued Amounts currently reported as deferred outflows and inflows of resources, other than contributions related to pension, will be recognized in pension expense as follows (in thousands): Deferred Outflows/(Inflows) Year Ending June 30: of Resources 2024 $ 760,458 2025 629,051 2026 (283,817) 2027 1,893,880 2028 536,210 Thereafter 171,093 Deferred outflows of $2.216 billion related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the subsequent fiscal period rather than the current fiscal period. As of the measurement date of June 30, 2023, the Pension Plan's fiduciary net position increased approximately $3.562 billion due to significant increases in the fair value of the Pension Plan's investments. Overall, the increase in the fiduciary net position and increase in the total pension liability of $4.538 billion from interest and service costs, resulted in an increase in net pension liability from $13.642 billion to $14.618 billion. The County's proportionate share of the Pension Plan's net pension liability was 96.47% as of June 30, 2022 and is historically above 96%. Actuarial Assumptions Valuation Timing June 30, 2021, rolled forward to June 30, 2022 Actuarial Cost Method Individual Entry Age Normal Inflation 2.75% General Wage Growth 3.25% Projected Salary Increases 3.66% to 12.54% Investment Rate of Return 7.13%, net of investment expense, including inflation Cost of Living Adjustments (COLA) Post-retirement benefit increases of either 2.75% or 2.00% per year are assumed based on the benefits provided. Supplemental Targeted Adjustment for Retirees (STAR) COLA benefits are assumed to be substantively automatic at the 80% purchasing power level until the STAR reserve is projected to be insufficient to pay further STAR benefits. Mortality Various rates based on the Pub-2010 mortality tables and using the MP-2014 Ultimate Projection Scale. See June 30, 2021 actuarial valuation for details. It can be found at www.LACERA.com. Experience Study Covers the 3 year period ended June 30, 2022. 111 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 7. PENSION PLAN-Continued Actuarial Assumptions-Continued The long-term expected rate of return on pension plan investments (7.00%, net of all expenses) was determined using a building block method in which a median, or expected, geometric rate of return was developed for each major asset class. The median rates were combined to produce the long- term expected rate of return by weighting the expected future rates of return by the target asset allocation percentages. For the year ended June 30, 2022: Weighted Average Long-Term Expected Rate of Return (After Expected 2.75% Inflation Rate) Asset Class Target Allocation (Geometric) Growth 51.00% 5.50 % Global Equity 34.00 % 4.30 % Private Equity 14.00 % 6.90 % Non-Core Private Real Estate 3.00 % 6.70 % Credit 11.00% 2.20 % Liquid Credit 6.00 % 1.50 % Illiquid Credit 5.00 % 2.80 % Real Assets and Inflation Hedges 17.00% 3.60 % Core Private Real Estate 6.00 % 3.30 % Natural Resources and Commodities 4.00 % 3.70 % Infrastructure 4.00 % 4.80 % TIPS 3.00 % (0.30) % Risk Reduction and Mitigation 21.00% 0.20 % Investment Grade Bonds 13.00 % (0.30) % Diversified Hedge Fund Portfolio 5.00 % 1.60 % Long-Term Government Bonds 2.00 % Cash Equivalents 1.00 % (1.00) % Discount Rate The discount rate used to measure the total pension liability was 7.13%. This is equal to the 7.00% long-term investment return assumption adopted by LACERA (net of investment and administrative expenses), plus 0.13% assumed administrative expenses. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate, and that County contributions will be made at rates equal to the difference between actuarially determined contribution rates and member rates. Based on those assumptions, the pension plan’s fiduciary net position was projected to be sufficient to pay all projected future benefit payments of current active and inactive plan members. Therefore, the discount rate for calculating the total pension liability is equal to the long-term expected rate of return, gross of administrative expenses. 112 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 7. PENSION PLAN-Continued Sensitivity of the County’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following represents the County’s proportionate share of the net pension liability calculated using the discount rate of 7.13%, as well as what the County’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower (6.13%) or 1-percentage point higher (8.13%) than the current rate (in thousands): 1% Decrease Discount Rate 1% Increase (6.13%) (7.13%) (8.13%) Net Pension Liability/(Asset) $ 24,145,685 $ 13,160,560 $ 4,089,111 Pension Plan Fiduciary Net Position Detailed information about pension plan fiduciary net position as of June 30, 2022 is available in the separately issued LACERA financial report, which can be found at www.LACERA.com. Deferred Compensation Plans The County offers to its employees three deferred compensation plans created in accordance with Sections 401 and 457 of the Internal Revenue Code. One or more of these plans are available to substantially all employees and allow participants to defer a portion of their current income until future years. Plan Description and Funding Policy The Deferred Compensation and Thrift Plan was established as a Section 457 defined contribution plan covering employees who have achieved full time and permanent employment status. The plan is designed to permit these employees to voluntarily defer a portion of their compensation and provide for retirement and death benefits. The plan is funded by employer and employee contributions. As of June 30, 2023, the County provided up to a 4% matching contribution per pay period of the employee’s voluntary contribution. Employer and employee contributions are deposited into the participant accounts and invested based on participant selected options. Total employer contributions for the year ended June 30, 2023, were $305.67 million. The Savings Plan is a Section 401(k) defined contribution plan covering eligible full-time permanent employees of the County not covered by collective bargaining agreements and who desire to participate in the plan. Employees eligible for voluntary participation in this plan are also eligible for participation in the Deferred Compensation and Thrift Plan. The plan is funded by employer and employee contributions. As of June 30, 2023, the County provided up to a 4% matching contribution per pay period of the employee’s voluntary contribution. Employer and employee contributions are deposited into the participant accounts and invested based on participant selected options. Total employer contributions for the year ended June 30, 2023, were $83.29 million. 113 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 7. PENSION PLAN-Continued Deferred Compensation Plans-Continued Plan Description and Funding Policy-Continued The Pension Savings Plan is a Section 457 defined contribution plan covering part-time, temporary and seasonal County employees who are not eligible to participate in the retirement programs provided through the LACERA. The plan was established in lieu of employee coverage under Social Security. Participation in the plan is mandatory and employees must contribute a minimum of 4.5% of their eligible earnings and the County makes a contribution equal to 3% of compensation. Participants may contribute additional amounts beyond the required 4.5%. Total employer contributions for the year ended June 30, 2023, were $9.62 million. The plans are administered through a third-party administrator. The assets of the plans are held in trust by Great West Trust Company LLC and invested at the direction of the participants. Thus, plan assets and any related liability to plan participants have been excluded from the County’s financial statements. 8. OTHER POSTEMPLOYMENT BENEFITS Retiree Healthcare Plan Description LACERA administers an agent multiple-employer Retiree Healthcare (RHC) OPEB program on behalf of the County, its affiliated Superior Court, and four outside districts. The outside districts include: Little Lake Cemetery District, Local Agency Formation Commission, LACOE and the South Coast Air Quality Management District. As of July 1, 2018, LACERA transitioned the OPEB program from a cost-sharing, multiple-employer plan. The agent plan structure determines program liabilities and costs directly by employer and allocates shared expenses. The measurement date for the RHC OPEB program is June 30, 2022. In April 1982, the County adopted an ordinance pursuant to Government Code Section 31691, which provided for a health insurance program and death benefits for retired employees and their dependents. In 1994, the County amended the agreements to continue to support LACERA’s retiree insurance benefits program regardless of the status of active member insurance. In June 2014, the LACERA Board approved the County’s request to modify the agreements to create a new retiree healthcare benefit plan in order to lower its Retiree Healthcare Program (RHP) costs. Structurally, this means the County will be segregating all current retirees and current employees into RHP Tier 1 and placing all employees hired after June 30, 2014 into RHP Tier 2. Under the new RHP Tier 2, retirees who are eligible for Medicare will be required to enroll in that program. In addition, coverage will be available for employees or eligible survivors only. 114 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 8. OTHER POSTEMPLOYMENT BENEFITS-Continued Retiree Healthcare-Continued Plan Description-Continued Pursuant to the 1982, 1994, and 2014 Agreements between the County and LACERA, the parties agreed to the continuation of the health insurance benefits then in existence. The County agreed to subsidize a portion of the insurance premiums of certain retired members and their eligible dependents based on the member’s length of service. The County further agreed to maintain the status quo of existing benefits provided to participants. As part of the 2014 Agreement, the County modified the existing healthcare benefit plan, which created a new benefit structure, Tier 2, for all employees hired after June 30, 2014. LACERA agreed not to change retired members’ contributions toward insurance premiums or modify medical benefit levels without the County’s prior consent. Active employees are not required to make contributions to the plan. Pursuant to the California Government Code, the County established an irrevocable OPEB Trust for the purpose of holding and investing assets to pre-fund the RHP, which LACERA administers. On May 15, 2012, the County Board entered into a trust and investment services agreement with the LACERA Board of Investments to act as trustee and investment manager. The OPEB Trust does not modify the County’s benefit programs. LACERA issues a stand-alone financial report that includes the required information for the OPEB plan. The report is available at its offices located at Gateway Plaza, 300 North Lake Avenue, Pasadena, California 91101-4199 or www.LACERA.com. Benefits Provided Health care benefits earned by County employees are dependent on the number of completed years of retirement service credited to the retiree by LACERA upon retirement; it does not include reciprocal service in another retirement system. Service includes all service on which the member's retirement allowance was based. The RHC OPEB Program offers members an extensive choice of medical plans as well as two dental/vision plans. The medical plans are either HMOs or indemnity plans, and some are designed to work with Medicare benefits, such as the Medicare Supplement or Medicare HMO plans. Coverage is available regardless of preexisting medical conditions. Under Tier 2, retirees who are eligible for Medicare are required to enroll in that program. Medicare-eligible retirees and their covered dependents must enroll in Medicare Parts A and B and in a Medicare HMO plan or Medicare Supplement plan under Tier 2. Medical and Dental/Vision - Program benefits are provided through third party insurance carriers with the participant’s cost for medical and dental/vision insurance varying according to the years of retirement service credit with LACERA, the plan selected, and the number of persons covered. The County contribution subsidizing the participant’s cost starts at 10 years of service credit in the amount of 40% of the lesser of the benchmark plan rate or the premium of the plan in which the retiree is enrolled. For each year of retirement service credit earned beyond 10 years, the County contributes 4% per year, up to a maximum of 100% for a member with 25 years of service credit. The County contribution can never exceed the premium of the benchmark plans. Members are responsible for premium amounts above the benchmark plans, including those with 25 or more years of service credit. 115 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 8. OTHER POSTEMPLOYMENT BENEFITS-Continued Retiree Healthcare-Continued Benefits Provided-Continued Under Tier 1, the County subsidy is based on the coverage elected by the retiree. The benchmark plans are Anthem Blue Cross Plans I and II for medical and Cigna Indemnity Dental/Vision for dental and vision. Under Tier 2, the County subsidy is based on retiree only coverage. Tier 2 medical benchmark plans are Anthem Blue Cross Plans I and II for Medicare-ineligible members, Anthem Blue Cross Plan III for Medicare-eligible members, and Cigna Indemnity Dental/Vision for dental and vision plans. Medicare Part B - The County reimburses the member’s Medicare Part B standard rate premiums paid by member to Social Security for Part B coverage, subject to annual approval by the County Board of Supervisors. Eligible members and their dependents must be enrolled in both Medicare Part A and Medicare Part B and enrolled in a LACERA- administered Medicare HMO Plan or Medicare Supplement Plan and meet all of the qualifications. Under Tier 2, the County reimburses for Medicare Part B (at the standard rate) for eligible members or eligible survivors only. Disability - If a member is granted a service-connected disability retirement and has less than 13 years of service, the County contributes the lesser of 50% of the benchmark plan rate or the premium of the plan in which the retiree is enrolled. Under Tier 2, the benchmark plan rate is based on retiree-only premiums. A member with 13 years of service credit receives a 52% subsidy. This percentage increases 4% for each additional completed year of service, up to a maximum of 100%. Death/Burial Benefit - There is a one-time lump-sum $5,000 death/burial benefit payable to the designated beneficiary upon the death of a retiree, reimbursed to LACERA by the County. Active and vested terminated (deferred) members are eligible for this benefit once they retire. Spouses and dependents are not eligible for this death benefit. Employees Covered by Benefit Terms Medical and Dental/Vision Benefits 2022 Dental/ Medical Vision Retired Participants Retired Members and Survivors 54,065 55,772 Spouses and Dependents 27,684 31,811 Total Retired 81,749 87,583 Inactive Members - Vested 9,250 9,250 Active Members - Vested 74,796 74,796 Total Membership Eligible for Benefits 165,795 171,629 116 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 8. OTHER POSTEMPLOYMENT BENEFITS-Continued Retiree Healthcare-Continued Employees Covered by Benefit Terms-Continued Death Benefits 2022 Retired with Eligibility for Death Benefits 61,931 Active Members - Vested 74,796 Inactive Members - Vested 9,250 Total Membership Eligible for Benefits 145,977 Contributions The current funding policy requires the County to contribute on a pay-as-you-go basis. During FY 2022-2023, the County made payments to LACERA totaling $713.03 million for retiree healthcare benefits. Included in this amount was $97.50 million for Medicare Part B reimbursements and $9.80 million in death benefits. Additionally, $48.40 million was paid by member participants. During FY 2022-2023, the County also contributed $441.45 million in excess of the pay-as-you-go amounts. Net OPEB Liability At June 30, 2023, the County reported a net RHC OPEB liability of $23.451 billion. The net RHC OPEB liability was measured as of June 30, 2022, and the total RHC OPEB liability used to calculate the net RHC OPEB liability was determined by an actuarial valuation as July 1, 2021, projected forward to the measurement date taking into account any significant changes between the valuation date and the measurement date. 117 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 8. OTHER POSTEMPLOYMENT BENEFITS-Continued Retiree Healthcare-Continued Actuarial Methods and Assumptions Valuation Timing July 1, 2021, rolled forward to June 30, 2022 Actuarial Cost Method Individual Entry Age Normal, Level Percent of Pay Asset Valuation Method Fair Value Inflation 2.75% Salary Increases 3.25% general wage increase and merit according to Table A-5 of the July 1, 2021 actuarial valuation of retirement benefits. It can be found at: www.LACERA.com. Mortality Various rates based on the RP-2014 Healthy and Disabled Annuitant mortality tables and including projection for expected future mortality improvement using the MO Healthcare Cost Trend Rates MP-2014 Ultimate Projection Scale. Experience Study Covers the three year period ended June 30, 2020. Discount Rate 4.85% Long-term expected rate of return, net of investment expenses 6.00% 20 Year Tax-Exempt Municipal Bond Yield 3.54% Healthcare Cost Trend rates: Initial Year Ultimate LACERA Medical Under 65 8.50% 4.20% LACERA Medical Over 65 3.70% 4.20% Part B Premiums 8.50% 4.00% Dental/Vision 3.70% 3.60% Weighted Average Trend 5.92% 4.13% Investments The LACERA Board of Investments is responsible for setting the investment policy and investing any contributions made to the OPEB Trust from the participating employers. In December 2017, the LACERA Board of Investments adopted a revised asset allocation policy which divides the OPEB Trust into four broad functional categories and contains asset classes that align with the purpose of each function. The approved target weights provide for diversification of assets in an effort to meet the LACERA's actuarial assumed rate of return, consistent with market conditions and risk control. The following was the adopted asset allocation policy as of June 30, 2022. 118 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 8. OTHER POSTEMPLOYMENT BENEFITS-Continued Retiree Healthcare-Continued Investments-Continued Asset Class Target Allocation Growth 50.00% Global Equity 50.00 % Credit 20.00% High Yield Bonds 6.00 % Bank Loans 10.00 % EM Local Currency Bonds 4.00 % Risk Reduction and Mitigation 10.00% Cash Equivalents 2.00 % Investment Grade Bonds 8.00 % Inflation Hedges 20.00% TIPS 6.00 % Real Estate (REITs) 10.00 % Commodities 4.00 % Money-Weighted Rate of Return As of the measurement date, June 30, 2022, the annual money-weighted rate of return on OPEB Trust investments, net of OPEB Trust investment expense, was 6.00%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. For the measurement date of June 30, 2021, the annual money- weighted rate of return was also 6.00%. Discount Rate GASB 75 requires determination of whether the OPEB Trust’s Fiduciary Net Position is projected to be sufficient to make projected benefit payments. The Plan’s fiduciary net position was not projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the discount rate incorporates a municipal bond rate based on the 20-year Bond Buyer GO index (municipal bond rate) which was 3.54% as of June 30, 2022. For 2021, the long-term expected rate of return of 2.16% was applied to projected benefit payments from 2021 to 2068. The municipal bond rate was applied to the remaining periods. The resultant blended discount rate used to measure the Total OPEB Liability as of June 30, 2022 was 4.85%, an increase of 0.57% from the rate as of June 30, 2021. 119 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 8. OTHER POSTEMPLOYMENT BENEFITS-Continued Retiree Healthcare-Continued Changes in the Net OPEB Liability (in thousands) Increase (Decrease) Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability Changes in Net OPEB Liability (a) (b) (a)-(b) Balance as of June 30, 2021 $ 27,760,135 2,235,814 $ 25,524,321 Service cost 1,024,895 1,024,895 Interest on Total OPEB Liability 1,217,398 1,217,398 Effect of economic/demographic gains or losses (168,643) (168,643) Effect of assumption changes or inputs (3,365,579) (3,365,579) Benefit payments (689,511) (689,511) Employer contributions 1,071,024 (1,071,024) Net investment income (280,358) 280,358 Administrative expenses (9,534) 9,534 Balance as of June 30, 2022 $ 25,778,695 2,327,435 $ 23,451,260 Sensitivity of the County’s Net RHC OPEB Liability to Changes in the Discount Rate The following represents the County’s net RHC OPEB liability calculated using the discount rate of 4.85%, as well as what the County’s net OPEB liability would be if it were calculated using a discount rate that is 1-percentage point lower (3.85%) or 1-percentage point higher (5.85%) than the current rate (in thousands): 1% Discount 1% Decrease Rate Increase (3.85%) (4.85%) (5.85%) Net RHC OPEB Liability $ 27,974,578 $ 23,451,260 $ 19,837,784 Sensitivity of the County’s Net RHC OPEB Liability to Changes in the Healthcare Cost Trend Rates The following represents the County’s proportionate share of the net RHC OPEB liability, as well as what the County’s proportionate share of the net RHC OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage point lower or 1-percentage point higher than the current healthcare cost trend rates (in thousands): 1% Current Trend 1% Decrease Rate Increase Net RHC OPEB Liability $ 19,150,590 $ 23,451,260 $ 29,075,261 120 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 8. OTHER POSTEMPLOYMENT BENEFITS-Continued Retiree Healthcare-Continued OPEB Expense and the Deferred Outflows/Inflows of Resources Related to RHC OPEB For the year ended June 30, 2023, the County recognized OPEB expense of $91.67 million which is reported as $136.38 million for governmental activities and $(44.71) million for business-type activities. OPEB expense represents the change in the net OPEB liability during the measurement period, adjusted for actual contributions and the deferred recognition of change in investment gain/ loss, actuarial gain/loss, actuarial assumptions or methods, and plan benefits. At June 30, 2023, the County reported deferred outflows of resources and deferred inflows of resources related to RHC OPEB from the following sources (in thousands): Deferred Deferred Inflows of Outflows of Resources Resources Net difference between projected and actual earnings $ $ 165,499 Change of assumptions 7,216,505 2,873,651 Change in experience 1,021,102 251,246 Change in proportion and differences between contributions and the proportionate share of contributions 1,133,238 1,133,238 Contributions made subsequent to measurement date 1,154,487 Total $ 9,370,845 $ 5,578,121 The deferred inflows of resources and deferred outflows of resources above represent the unamortized portion of changes to the net RHC OPEB liability to be recognized in future periods in a systematic and rationale manner. Investment gains or losses are recognized in OPEB expense over a five year period and economic/demographic gains or losses and assumption changes or inputs are recognized over the average remaining service life of all active and inactive members, which is 8 years as of June 30, 2022. The change in proportion and differences between the contributions and the proportionate share of contributions represents the changes in allocation percentages to the individual funds, including the proprietary funds, of the total OPEB RHC liability from the prior measurement date to the current measurement date. Amounts currently reported as deferred outflows and inflows of resources, other than contributions related to RHC OPEB, will be recognized in RHC OPEB expense as follows (in thousands): Deferred Outflows/(Inflows) Year ending June 30: of Resources 2024 $ (849,540) 2025 (849,772) 2026 (864,316) 2027 (609,814) 2028 (345,818) Thereafter (1,427,951) Deferred outflows of resources of $1.154 billion related to contributions subsequent to the measurement date will be recognized as a reduction of the net OPEB liability in the subsequent fiscal period rather than in the current fiscal period. 121 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 8. OTHER POSTEMPLOYMENT BENEFITS-Continued Long-Term Disability Plan Description The County provides LTD benefits to employees and these benefits have been determined to fall within the definition of OPEB. The LTD plans are administered by the County and are not administered through a trust. Each of the LTD plans are a single employer plan and the amounts paid by the County are on a pay-as-you-go basis. These LTD benefits provide for income replacement if an employee is unable to work because of illness or injury. The Board approved the County’s original LTD plan effective March 3, 1982. Effective January 1, 1991, a new Megaflex plan was approved by the Board and includes a Megaflex LTD plan and a LTD Health plan. The LTD Health plan was added to the LTD program and made available to all participants effective January 1, 2002. Benefits Provided The benefit provisions of the four LTD plans are as follows: Eligibility Non-Megaflex Income/Survivor Income Benefit (SIB) - The plan covers: (1) An employee who becomes totally disabled as a direct result of an injury or disease while performing his/her assigned duties; or, (2) An employee who becomes totally disabled after having completed five or more years of continuous service with the County; or, (3) A qualified beneficiary of a deceased employee who had previously become totally disabled as a direct result of an injury or disease while performing his/her assigned duties; or, (4) A qualified beneficiary of a deceased employee who had previously become totally disabled after having completed five or more years of continuous service with the County; or, (5) A qualified beneficiary of an employee who dies as a direct result of an injury or disease while performing his/her assigned duties, or, (6) A qualified beneficiary of an employee who dies in active service after having completed five or more years of continuous service with the County. Megaflex Income/SIB - The plan covers: (1) An employee purchases LTD coverage and then becomes totally disabled; or, (2) An employee who becomes totally disabled after having completed five or more years of continuous service with the County and is a member of Retirement Plan E. (3) The Qualified Beneficiary of a Retirement Plan E participant who is currently enrolled in the SIB plan at the time of death. 122 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 8. OTHER POSTEMPLOYMENT BENEFITS-Continued Long-Term Disability-Continued Benefits Provided-Continued Non-MegaFlex Member LTD Health Plan - The plan continues medical insurance coverage for employees who are receiving or eligible to receive LTD Income benefits and are enrolled in one of the County approved health plans. MegaFlex Member LTD Health Plan - The plan continues medical insurance coverage for employees who are receiving or eligible to receive LTD Income benefits and are enrolled in one of the County approved health plans. Benefit Formula Non-Megaflex Income/SIB - The plan provides a basic monthly benefit of: (1) 60% of Basic Monthly Compensation (commences after 6 months of disability). (2) Annual COLA, beginning after 2 years of benefit payments (limited to a maximum of 2%/ year), if disabled after 1/1/2001. (3) For a qualified beneficiary, 55% of the LTD disability benefit that the employee was receiving or would have received immediately prior to death; and, continues for the life of the qualified surviving spouse/domestic partner and upon spousal death to the qualified children beneficiaries. Megaflex Income/SIB - The plan provides a basic monthly benefit of: (1) 40% or 60% of Basic Monthly Compensation (commences after 6 months of disability) a. Plan E members (1) With 5+ years of services 40% non-elective or can buy up to 60% (2) With less than 5 years of service: can buy 40% or 60% b. Plan A, B, C, or D members: can buy 40% or 60% (2) Annual COLA, beginning after 2 years of benefit payments (limited to a maximum of 2% per year), if disabled after 1/1/2001. (3) For a qualified beneficiary, the plan provides a basic monthly benefit of 10%, 15%, 25%, 35%, or 50% of employee’s monthly salary if they elected. Non-MegaFlex Member LTD Health Plan - The plan pays 75% of monthly medical premiums for disabled members. MegaFlex Member LTD Health Plan - The plan pays 75% of monthly medical premiums for disabled members. 123 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 8. OTHER POSTEMPLOYMENT BENEFITS-Continued Long-Term Disability-Continued Benefits Provided-Continued Maximum Period Non-Megaflex Income/SIB and Megaflex Income/SIB - LTD benefits stop when: (1) Employee is no longer totally disabled or turns age 65, whichever occurs first. However, if employee is age 62 or older when benefit commences, benefit can continue beyond age 65 (length depends on age at commencement) as follows: Age at Disability Maximum Period 62 3 ½ 63 3 64 2 ½ 65 2 66 1 ¾ 67 1 ½ 68 1 ¼ 69 and older 1 or (2) Employee takes early or normal retirement under Plan E. Employees covered by benefit terms At June 30, 2022, the following employees were covered by the benefit terms: LTD Income and Survivor Benefit Plans: Inactive employees or beneficiaries currently receiving benefit payments 2,502 Inactive employees entitled to but not yet receiving benefit payments 0 Active employees 80,591 LTD Health Plans Inactive employees or beneficiaries currently receiving benefit payments 623 Inactive employees entitled to but not yet receiving benefit payments 0 Active employees 77,551 Total LTD OPEB Liability At June 30, 2023, the County reported a total LTD OPEB liability of $1.289 billion. The total LTD OPEB liability was determined by an actuarial valuation as of July 1, 2021, rolled forward to June 30, 2022. 124 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 8. OTHER POSTEMPLOYMENT BENEFITS-Continued Long-Term Disability-Continued Actuarial Methods and Assumptions Valuation Timing June 30, 2021, rolled forward to June 30, 2022 Actuarial Cost Method Individual Entry Age Normal, Level Percent of Pay Inflation The inflation rate is included in the salary increase percentage and the Healthcare cost trend rates. Salary Increases 3.25% general wage increase and merit according to Table A-5 of the June 30, 2021 RHC OPEB Program's actuarial valuation report which can be found at www.LACERA.com. Mortality Various rates based on the RP-2014 Healthy and Disabled Annuitant mortality tables and including projection for expected future mortality improvement using the MO Healthcare Cost Trend Rates - MP-2014 Ultimate Projection Scale. Discount Rate Equal to the municipal bond rate based on the 20- year Bond Buyer GO index (municipal bond rate), which was 2.16% as of June 30, 2021, and 3.54% as of June 30, 2022. Healthcare Cost Trend rates: Rate (pre Medicare/ Rate (pre Medicare/ Year post Medicare) Year post Medicare) 2022-2023 -0.40%/0.30% 2061-2062 4.60%/4.60% 2023-2024 8.50%/3.70% 2071-2072 4.30%/4.30% 2024-2025 6.80%/6.50% 2081+ 4.20%/4.20% 2025-2026 6.60%/6.50% 2026-2027 6.00%/6.00% 2027-2028 5.50%/5.50% 2028-2029 5.10%/5.10% 2029-2030 5.00%/5.00% 2030-2031 4.90%/4.90% 2041-2042 4.50%/4.50% 2051-2052 4.60%/4.60% 125 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 8. OTHER POSTEMPLOYMENT BENEFITS-Continued Long-Term Disability-Continued Changes in the Total LTD OPEB Liability (in thousands): Total LTD OPEB Liability at 6/30/2021 $ 1,473,239 Service cost 68,827 Interest 32,594 Differences between expected and actual experience (512) Changes of assumptions or other inputs (218,398) Benefit payments (66,425) Net Changes (183,914) Total LTD OPEB Liability at 6/30/2022 $ 1,289,325 Changes of assumptions or other inputs reflect a change in the discount rate from 2.16% as of June 30, 2021 to 3.54% as of June 30, 2022. Sensitivity of the Total LTD OPEB Liability to Changes in the Discount Rate The following represents the County’s total LTD OPEB liability calculated using the discount rate of 3.54%, as well as what the County’s total LTD OPEB liability would be if it were calculated using a discount rate that is 1-percentage point lower (2.54%) or 1-percentage point higher (4.54%) than the current rate (in thousands): 1% Discount 1% Decrease Rate Increase (2.54%) (3.54%) (4.54%) Total LTD OPEB Liability $ 1,454,655 $ 1,289,325 $ 1,142,786 Sensitivity of the County’s Total LTD OPEB Liability to Changes in the Healthcare Cost Trend Rates The following represents the County’s total LTD OPEB liability, as well as what the County’s total LTD OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage point lower or 1-percentage point higher than the current healthcare cost trend rates (in thousands): 1% Current Trend 1% Decrease Rate Increase Total LTD OPEB Liability $ 1,273,562 $ 1,289,325 $ 1,309,555 126 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 8. OTHER POSTEMPLOYMENT BENEFITS-Continued Long Term Disability-Continued OPEB Expense and the Deferred Outflows of Resources and Deferred Inflows of Resources Related to LTD OPEB For the year ended June 30, 2023, the County recognized LTD OPEB expense of $35.15 million which is reported as $32.98 million for governmental activities and $2.17 million for business-type activities. OPEB expense represents the change in the total LTD OPEB liability during the measurement period, adjusted for the deferred recognition of change in actuarial gain/loss, actuarial assumptions or methods, and plan benefits. At June 30, 2023, the County reported deferred outflows of resources and deferred inflows of resources related to LTD OPEB from the following sources (in thousands): Deferred Deferred Inflows of Outflows of Resources Resources Change in experience $ 35,571 $ 100,029 Change of assumptions 278,715 204,617 Change in proportionate share 90,433 90,433 Total $ 404,719 $ 395,079 The deferred inflows of resources and deferred outflows of resources above represent the unamortized portion of changes to the total LTD OPEB liability to be recognized in future periods in a systematic and rational manner. Economic/demographic gains or losses, assumption changes or inputs, and change in proportion are recognized over the average remaining service life of all active and inactive members, which is 12 years. The change in proportionate share represents the changes in allocation percentages to the individual funds, including the proprietary funds, of the total OPEB LTD liability from the prior measurement date to the current measurement date. Amounts currently reported as deferred outflows and inflows of resources will be recognized in OPEB expense as follows (in thousands): Deferred Outflows/(Inflows) Year Ending June 30: of Resources 2024 $ 151 2025 151 2026 151 2027 151 2028 151 Thereafter (10,395) 127 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 8. OTHER POSTEMPLOYMENT BENEFITS-Continued Combined Balances of the Net OPEB Liability, Deferred Outflows of Resources, Deferred Inflows of Resources and the OPEB Expense The following total balances are reflected in the accompanying statement of net position (in thousands): RHC OPEB LTD OPEB Total Net OPEB Liability $ 23,451,260 $ 1,289,325 $ 24,740,585 Deferred Outflows of Resources 5,578,121 395,079 5,973,200 Deferred Inflows of Resources 9,370,845 404,719 9,775,564 OPEB Expense 91,666 35,146 126,812 9. LEASES Lease Liabilities The County has entered into various leases as a lessee. These leases vary in the nature, substance, terms and conditions dependent upon the asset being leased. Examples of the types of assets leased range from office space, parking, warehouse space and office equipment to land for fire operations. GASB 87 requires that leases be categorized as either short-term (12 months or less in length, including options) or long-term. In determining the future minimum lease payments and receipts, the County includes the right to extend option terms in the non-cancelable lease term. Short-term lease financial transactions are reflected in the government-wide Statement of Activities and in the fund financial statements. 128 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 9. LEASES-Continued Lease Liabilities-Continued The following is a schedule of future minimum lease payments for the lease liabilities as of June 30, 2023 (in thousands): Governmental Activities Business-type Activities Year Ending June 30 Principal Interest Principal Interest 2024 $ 117,184 $ 44,836 $ 425 $ 59 2025 112,197 41,554 445 42 2026 112,736 38,339 462 25 2027 106,909 35,170 399 7 2028 102,814 32,157 2029-2033 414,951 120,515 2034-2038 287,824 70,005 2039-2043 154,228 37,967 2044-2048 80,177 19,570 2049-2053 43,194 10,241 2054-2058 39,975 3,612 2059-2063 5,797 228 2064-2068 206 12 Total $ 1,578,192 $ 454,206 $ 1,731 $ 133 Rent expenses related to leases for governmental activities were $110.33 million and $318 thousand for business-type activities, for the year ended June 30, 2023. Variable payments not previously included in the measurement of the lease liability were $5.31 million for the year ended June 30, 2023. There were no payments for residual value guarantees or termination penalties during the reporting period. The following is a schedule of right-to-use lease assets by major classes at June 30, 2023, (in thousands): Governmental Business-type Activities Activities Lease land $ 10,137 $ Lease buildings and improvements 1,749,598 Lease equipment 17,397 2,090 Lease asset accumulated amortization (252,081) (504) Total $ 1,525,051 $ 1,586 129 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 9. LEASES-Continued Lease Receivables As the lessor, the County leases County-owned properties such as land and buildings. The County has entered into long-term leases relative to the Marina del Rey Project area, asset development projects, regional parks, roads, Martin Luther King, Jr. Community Hospital (MLK Hospital), Flood Control District property, and County airports (Brackett Field, San Gabriel Valley, Whiteman, and General Wm. J. Fox Airfield). Substantially all the Marina's land and harbor facilities are leased to others. The asset development projects, which include the Marina del Rey Project area, are ground leases and development agreements entered into by the County for private sector development of commercial, industrial, residential, and cultural uses on vacant or underutilized County-owned property. Certain regional parks are leased under agreements which provide for activities such as food and beverage concessions, and recreational vehicle camping. Certain roads are leased under franchise agreements for electrical transmission system operations. The MLK Hospital is leased to the Martin Luther King, Jr. - Los Angeles Healthcare Corporation (MLK-LA) and is further discussed in Note 14. Flood Control District leases are for parking lots, and ingress and egress in connection with various commercial centers. The airport leases are for hanger space, vehicle parking, aircraft tiedowns and storage facilities, and are currently the only leases within the Business-type activities category. The asset development leases covering remaining periods ranging generally from 1 to 91 years, regional parks leases covering remaining periods from 5 to 16 years, roads leases with remaining periods of 34 years, and the MLK Hospital lease with a remaining period of 61 years are all accounted for in the General Fund. The Flood Control District leases cover remaining periods ranging from 12 to 67 years and are accounted for in the Flood Control District Fund. The airport leases cover remaining periods from 8 to 36 years and are accounted for in the Aviation Enterprise Fund. The land carrying value of the asset development project ground leases that include the Marina del Rey Project area and the Flood Control District totals $730.20 million. The carrying value of the capital assets associated with the regional park, roads, MLK Hospital, and County airports leases is not determinable. 130 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 9. LEASES-Continued Lease Receivables-Continued The following is a schedule of future minimum lease payment receipts on noncancelable leases as of June 30, 2023 (in thousands): Year Ending June 30, Governmental Activities Business-type Activities Principal Interest Principal Interest 2024 $ 33,652 $ 34,290 $ 847 $ 369 2025 34,195 33,668 862 354 2026 34,672 33,037 878 338 2027 34,932 32,397 895 321 2028 33,373 31,768 911 305 2029-2033 172,661 149,531 4,092 1,278 2034-2038 184,836 133,151 2,960 974 2039-2043 192,737 115,791 3,243 691 2044-2048 185,614 98,615 2,835 404 2049-2053 196,572 81,116 1,848 181 2054-2058 196,818 62,990 991 64 2059-2063 175,124 45,182 203 2 2064-2068 102,838 33,110 2069-2073 79,832 25,066 2074-2078 87,406 17,463 2079-2083 94,575 9,167 2084-2088 20,081 3,066 2089-2093 4,294 2,050 2094-2098 4,277 1,398 2099-2103 3,726 528 2104-2108 549 85 2109-2113 602 32 2114 42 Total $ 1,873,408 $ 943,501 $ 20,565 $ 5,281 The following is a schedule of lease payment income for leases for the year ended June 30, 2023 (in thousands): Governmental Business-type Activities Activities Minimum lease payments $ 35,686 $ 831 Variable lease payments 33,231 893 Total $ 68,917 $ 1,724 131 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 9. LEASES-Continued Lease Receivables-Continued The minimum lease income is a fixed amount based on the lease agreements. The variable lease income is a percentage of revenue above a certain base for the asset development leases or a calculated percentage of the gross revenue less the minimum rent payment for the other leases. The interest revenue received for leases of County-owned property for the year ended June 30, 2023 is $34.92 million. 10. SUBSCRIPTION-BASED INFORMATION TECHNOLOGY ARRANGEMENTS The County has entered into various Subscription-Based Information Technology Arrangements (SBITAs) as a lessee. These leases are for software as a service, platform as a service or infrastructure as a service and vary in terms and conditions. Beginning with FY 2022-2023, SBITA leases are presented in the financial statements and accompanying footnotes in accordance with GASB 96. GASB 96 requires that SBITA leases be categorized as either short-term (12 months or less in length, including options) or long-term. In determining the future minimum subscription lease payments, the County will include the right to extend option terms in the non-cancelable lease term if it is reasonably certain that the option will be exercised. Variable payments based on a per seat subscription or based on transaction volumes are not included in the measurement of the subscription liability. Short-term lease financial transactions are reflected in the government-wide Statement of Activities and in the fund financial statements. SBITA Lease Liabilities The following is a schedule of future minimum lease payments for the SBITA lease liabilities as of June 30, 2023 (in thousands): Governmental Activities Year Ending June 30, Principal Interest 2024 $ 19,223 $ 3,486 2025 14,299 2,751 2026 9,169 2,211 2027 8,719 1,798 2028 8,405 1,403 2029-2033 24,850 2,478 2034-2038 1,260 56 Total $ 85,925 $ 14,183 132 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 10. SUBSCRIPTION-BASED INFORMATION TECHNOLOGY ARRANGEMENTS-Continued SBITA variable payments not included in the measurement of the subscription liability for governmental activities were $84.54 million for the year ended June 30, 2023. There were no SBITA leases for business-type activities during the period. Additionally, there were no payments for termination penalties during the reporting period. The following is a schedule of the right-to-use (RTU) assets and accumulated amortization for subscription leases at June 30, 2023, (in thousands): Governmental Activities Subscription asset $ 108,590 Subscription asset accumulated amortization (21,651) Total $ 86,939 The development in progress for SBITAs that are not yet in production as of June 30, 2023 is $8.25 million. 11. LONG-TERM OBLIGATIONS Long-term obligations of the County consist of bonds, notes and loans from direct borrowings and direct placements, financed purchase obligations from direct borrowing, pension (see Note 7), OPEB (see Note 8), lease (see Note 9), subscription (see Note 10) and other liabilities, which are payable from the General, Special Revenue, Debt Service, Enterprise and Internal Service Funds. A summary of bonds, and notes and loans from direct borrowings and direct placements recorded within governmental activities follows (in thousands): Original Par Balance Amount of Debt June 30, 2023 NPC Bonds, 5.83% $ 5,000 $ 5,000 Public Buildings Bonds and Notes, 0.32% to 7.62% 2,066,006 2,058,815 Los Angeles County Securitization Corporation Tobacco Settlement Asset-Backed Bonds, 0.71% to 5.35% 349,584 343,338 Marina del Rey Loans, 4.50% to 4.70% 23,500 7,967 Lease Revenue Obligation Notes, 0.85% to 5.35% 135,467 135,467 Total $ 2,579,557 $ 2,550,587 A summary of bonds, and notes and loans from direct borrowings and direct placements recorded within business-type activities follows (in thousands): Original Par Balance Amount of Debt June 30, 2023 Public Buildings Bonds and Notes, 2.00% to 7.62% $ 820,783 $ 794,574 Lease Revenue Obligation Notes, 0.85% to 5.35% 115,476 115,476 Waterworks District Loans, 1.40% to 2.28% 12,619 8,675 Aviation Loan, 2.95% 2,000 1,180 Total $ 950,878 $ 919,905 133 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 11. LONG-TERM OBLIGATIONS-Continued Certificates of Participation and Bonds The County has issued lease revenue bonds through various financing entities that have been established and are component units of the County. The debt proceeds have been used to finance the acquisition of County facilities and equipment. The County makes annual payments to the financing entities for the use of the property and the debt is secured by the underlying capital assets that have been financed. The County has pledged a total of 16 County-owned properties as collateral for various bonds. During FY 2022-2023, the County did not issue new bonds. Principal and interest requirements on NPC bonds and Public Buildings certificates of participation and bonds for governmental activities and business-type activities are as follows (in thousands): Governmental Activities Business-type Activities Year Ending June 30, Principal Interest Principal Interest 2024 $ 49,931 $ 88,043 $ 20,729 $ 43,677 2025 52,336 85,403 21,690 42,373 2026 54,967 82,511 22,748 40,926 2027 57,747 79,444 23,878 39,401 2028 60,681 76,216 25,069 37,791 2029-2033 329,073 328,493 145,366 161,826 2034-2038 361,175 235,402 185,645 107,232 2039-2043 374,061 136,483 170,479 42,349 2044-2048 281,700 58,148 60,265 14,596 2049-2052 177,420 12,183 33,300 1,711 Subtotal 1,799,091 $ 1,182,326 709,169 $ 531,882 Add: Unamortized bond premiums 259,724 85,405 Total certificates of participation and bonds $ 2,058,815 $ 794,574 Tobacco Settlement Asset-Backed Bonds In 2006, the County entered into a Sale Agreement with the LACSC under which the County relinquishes to the LACSC a portion of its future tobacco settlement revenues (TSRs) for the next 40 years. The County received from the sold TSRs a lump sum payment of $319.83 million and a residual certificate in exchange for the rights to receive and retain 25.90% of the County’s TSRs through 2046. The residual certificate represented the County’s ownership interest in excess TSRs to be received by the LACSC during the term of the Sale Agreement. Residuals through 2023 were $131.51 million. The total TSRs sold, based on the projected payment schedule in the Master Settlement Agreement and adjusted for historical trends, was estimated to be $1.438 billion. The estimated present value of the TSRs sold, net of the expected residuals and assuming a 5.70% interest rate at the time of the sale, was $309.23 million. In the event of a decline in the tobacco settlement revenues for any reason, including the default or bankruptcy of a participating cigarette manufacturer, resulting in a decline in the tobacco settlement revenues and possible default on the Tobacco Bonds, neither the California County Tobacco Securitization Agency, the County, nor the LACSC has any liability to make up any such shortfall. 134 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 11. LONG-TERM OBLIGATIONS-Continued Tobacco Settlement Asset-Backed Bonds-Continued On June 10, 2020, the California County Tobacco Securitization Agency issued $349.59 million of Tobacco Settlement Bonds comprised of three series, maturing on various dates between 2021 and 2055, as reflected in governmental activities. These tax-exempt Tobacco Settlement Bonds Series 2020A (Senior) totaling $213.46 million, Series 2020B-1 (Subordinate) totaling $52.50 million, and Series 2020B-2 (Subordinate) totaling $83.63 million were issued to refund on a current basis all of the outstanding principal amount of $392.40 million of the Agency’s Tobacco Settlement Asset- Backed Bonds Series 2006 through defeasance and redemption. The effective interest rates of the Series 2020 bonds vary from 0.71% through 5.35%. Principal and interest requirements (in thousands) for the Tobacco Settlement Asset-Backed bonds are as follows: Governmental Activities Year Ending June 30, Principal Interest 2024 $ 6,280 $ 9,558 2025 6,240 9,244 2026 6,445 8,932 2027 6,775 8,609 2028 7,070 8,271 2029-2033 37,015 35,926 2034-2038 38,885 27,355 2039-2043 40,505 19,194 2044-2048 37,795 11,416 2049-2052 29,110 1,379 2054-2055 83,6294 446,441 Subtotal 299,749 586,325 Add: Accretions 14,227 (14,227) Add: Unamortized bond premiums 29,362 Total tobacco settlement asset-backed bonds $ 343,338 $ 572,098 Notes, Loans, and Lease Revenue Obligation Notes Notes from Direct Placements BANs are issued by LACCAL to provide interim financing for equipment purchases. BANs are purchased by the County Treasury Pool and are payable within 3 years of their initial issuance date from the proceeds of long-term bonds or other available funds. The repayment of the BANs is secured by lease agreements between the County and LACCAL and a pledge of the purchased equipment. During FY 2022-2023, LACCAL, an Internal Service Fund, issued additional BANs in the amount of $10.00 million as reflected in governmental activities. As of June 30, 2023, the note balance is $5.00 million for governmental activities only. 135 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 11. LONG-TERM OBLIGATIONS-Continued Notes, Loans, and Lease Revenue Obligation Notes-Continued Loans from Direct Borrowings Marina del Rey loans were obtained from the California Department of Boating and Waterways for the restoration and renovation of the marina seawall. The loans are secured by Marina del Rey lease revenue and by Los Angeles County Music Center parking revenues. The loan contract contains a provision that in the event the County fails to make payment due, all principal and interest outstanding shall become immediately due and payable, and the deficiency will be added to, and become part of, the principal of the loan. As of June 30, 2023, the balance is $7.97 million for governmental activities. In June 2010, the Board approved a resolution authorizing the Waterworks Districts to obtain Safe Drinking Water State Revolving loans in the amount of $3.41 million and $5.47 million from the California Department of Public Health to fund the Sepulveda Feeder Interconnection project (Malibu) and the Marina del Rey Waterline Replacement project (Marina), respectively. The loans will be repaid over 20 years and are secured by revenues from surcharges collected for capital improvements. Annual principal and interest payments of the loans are expected to require less than 46.73% of the annual surcharge revenues. The funding agreements contain a provision that in an event of default, obligations may be immediately due and payable, and further disbursements may be terminated. As of June 30, 2023, total loans drawn are $3.40 million on the Sepulveda Feeder Interconnection project and $5.47 million on the Marina del Rey Waterline Replacement project. As of June 30, 2023, the balance is $5.31 million for business-type activities. In July 2014, the Board approved the Whiteman Airport Leasehold Interest Acquisition Project, with a total Project cost of $4.02 million. To partially finance the acquisition, the Aviation Enterprise Fund obtained an Airport Development Loan from the State of California Department of Transportation, Aeronautics Program for $2.00 million with an annual interest rate of 2.95%. The Airport Development Loan will be repaid over 17 years with revenue generated by lease payment income. The loan agreement contains a provision that if the County fails to comply with or perform any term or condition in the agreement, or fails to pay the annual loan payment, the entire outstanding principal amount of the loan and all accrued interest may be immediately due and payable. In addition, the County may be ineligible for future financing under the program. During FY 2022-2023, the County did not obtain any additional airport development loans. As of June 30, 2023, the balance is $1.18 million for business-type activities. In September 2020, the Board approved a resolution authorizing the Waterworks Districts to obtain Safe Drinking Water State Revolving loans in the amount of $3.75 million from the California State Water Resources Control Board to fund the Del Valle Road Water Main Replacement Project. The loan will be repaid over 20 years and is secured by revenues from surcharges collected for capital improvements. Annual principal and interest payments of the loans are expected to require approximately 36% of the annual surcharge revenues. The funding agreement contains a provision that in an event of default, obligations may be immediately due and payable, and further disbursements may be terminated. During FY 2022-2023, the County drew down $2.32 million in loans. As of June 30, 2023, the balance is $3.37 million for business-type activities. 136 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 11. LONG-TERM OBLIGATIONS-Continued Notes, Loans, and Lease Revenue Obligation Notes-Continued Lease Revenue Obligation Notes from Direct Borrowings LRON provide the County with a flexible and cost-effective source of financing to provide interim funding during the initial construction phase of a capital project and fund tenant improvements costs on certain leases, which may be refinanced with the issuance of long-term bonds upon completion. Repayment of LRON is secured by four irrevocable direct-pay letters of credit (LOC) from separate banks supporting the issuance of LRON. This program is secured by fifteen County-owned properties pledged as collateral in a lease-revenue financing structure with LACCAL. The LOCs were issued for a five-year period and have a termination date of April 30, 2024. The County has the option to extend the LOCs for an additional one-year period or to some other term mutually agreed to with the participating banks. The aggregate maximum principal amount of the four LOCs is $600.00 million, which consists of $100.00 million of Series A (Bank of the West), $200.00 million of Series B (U.S. Bank), $200.00 million of Series C (Wells Fargo Bank), and $100.00 million of Series D (State Street Bank). The County is responsible for the payment of a non-refundable letter of credit fee for each LOC on a quarterly basis in an amount equal to the rate per annum corresponding to the lowest long-term unenhanced debt ratings assigned by any of Moody’s, S&P, or Fitch to any Lease Obligation Debt of the County. The letter of credit fee for all four series of LOCs is equal to 0.35% of the maximum principal amount of the LOC. As of June 30, 2023, $250.94 million of LRON issued under the program were outstanding, including $18.53 million of Series A, $76.13 million of Series B, $99.21 million of Series C, and $57.07 million of Series D. LRON are issued as variable rate instruments with a maximum term not to exceed 270 days. On the maturity date of LRON, the notes are reissued at the prevailing interest rates in the note market, which reflects the term of the note and the perceived credit quality of the supporting letter of credit bank. In the event the notes are not able to be reissued in the note market, the bank will make a Principal Advance to pay the principal of the maturing note. If the Principal Advance remains outstanding longer than 90 days, a term loan is created to repay the bank. During FY 2022-2023, the County reissued $99.24 million for governmental activities and $151.10 million for business-type activities, representing the total amounts outstanding at the beginning of the year. These reissues, along with new County LRON of $36.62 million for governmental activities and $184.38 million for business-type activities, totaling $221.00 million, and redemptions of $400 thousand for governmental activities and $220.00 million for business-type activities, totaling $220.40 million, are reflected as notes payable. The total outstanding LRON as of June 30, 2023 is $250.94 million, which is reported as $135.46 million for governmental activities and $115.48 million for business-type activities. The average interest rate on LRON issued in FY 2022-2023 was 2.41%. 137 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 11. LONG-TERM OBLIGATIONS-Continued Notes, Loans, and Lease Revenue Obligation Notes-Continued Lease Revenue Obligation Notes from Direct Borrowings-Continued Principal and interest requirements on NPC BANS, Marina del Rey Loans and LRON for governmental activities and NPC BANS, Waterworks District Loans, Aviation Loan and LRON for business-type activities are as follows (in thousands): Year Ending Governmental Activities Business-type Activities June 30 Principal Interest Principal Interest 2024 $ 136,653 $ 359 $ 115,896 $ 143 2025 6,239 305 648 191 2026 1,295 249 662 176 2027 1,354 191 677 161 2028 1,414 130 692 146 2029-2033 1,479 67 3,555 482 2034-2038 — — 1,343 172 2039-2043 577 114 2044-2048 618 73 2049-2053 663 27 Total notes, loans, and LRON $ 148,434 $ 1,301 $ 125,331 $ 1,685 Financed Purchase Obligations-Direct Borrowings Principal and interest requirements on financed purchase obligations for governmental activities are as follows (in thousands): Year Ending Governmental Activities June 30 Principal Interest 2024 $ 7,177 $ 397 2025 2,906 255 2026 2,687 199 2027 2,667 147 2028 2,616 96 2029-2031 4,697 67 Total financed purchase obligations $ 22,750 $ 1,161 138 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 11. LONG-TERM OBLIGATIONS-Continued Summary-All Future Principal, Interest and Accretions The following summarizes total future principal and interest requirements for the various debt issues referenced above (in thousands): Governmental Activities Business-type Activities Debt Type Principal Interest Principal Interest Certificates of participation and bonds $ 1,799,091 $ 1,182,326 $ 709,169 $ 531,882 Tobacco settlement asset-backed bonds 299,749 586,325 Notes, Loans, and LRON from direct borrowings and placements 148,434 1,301 125,331 1,685 Subtotal 2,247,274 $ 1,769,952 834,500 $ 533,567 Add: Accretions 14,227 Unamortized premiums on bonds payable 289,086 85,405 Total bonds and notes $ 2,550,587 $ 919,905 Long-term liabilities recorded in the government-wide statement of net position include accreted interest on zero coupon bonds and unamortized bond premiums. Bonds Defeased in Prior Years In prior years, various debt obligations, consisting of bonds and certificates of participation, were defeased by placing the proceeds of refunding bonds in an irrevocable trust to provide for all future debt service payments on the old obligations. GASB 86, "Certain Debt Extinguishment Issues," requires that debt also be considered defeased when cash and other monetary assets acquired with only existing resources are placed in an irrevocable trust to extinguish debt. Accordingly, the trust account assets and the related debt service payments for the defeased bonds would not be reflected in the County’s statement of net position. At June 30, 2023, there were no outstanding bonds and certificates of participation considered defeased. Changes in Long-term Liabilities The following is a summary of the restatement of beginning balances as a result of the implementation of GASB 96, as described in Note 2 (in thousands): Balance at July 1, 2022, Balance at as previously July 1, 2022, reported Adjustment as restated Governmental activities: Subscription liability (Note 10) $ 55,237 $ 55,237 139 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 11. LONG-TERM OBLIGATIONS-Continued Changes in Long-term Liabilities-Continued The following is a summary of long-term liabilities and corresponding activity for the year ended June 30, 2023 (in thousands): Balance July 1, 2022 Additions/ Transfers/ Balance Due Within as restated Accretions Maturities June 30, 2023 One Year Governmental activities: Bonds payable $ 2,184,272 — 85,432 $ 2,098,840 $ 56,211 Notes, loans, and LRON from direct borrowings and placements 108,346 135,467 100,379 143,434 136,653 2,292,618 135,467 185,811 2,242,274 192,864 ISF bonds payable and notes from direct placements 245 10,000 5,245 5,000 — Total bonds payable, notes, loans and LRON 2,292,863 145,467 191,056 2,247,274 192,864 Interest accretion on capital appreciation bonds payable 9,192 5,035 14,227 — Unamortized premium on bonds payable 294,346 — 5,260 289,086 6,258 Other long-term liabilities: Lease liability (Note 9) 1,419,492 284,364 125,664 1,578,192 117,184 Subscription liability (Note 10) 55,237 61,038 30,350 85,925 19,223 Financed purchase obligations 29,816 7,066 22,750 7,177 Accrued compensated absences 2,040,862 271,686 138,227 2,174,321 126,226 Workers’ compensation (Note 18) 3,014,106 720,646 622,795 3,111,957 626,398 Litigation and self-insurance (Note 18) 546,007 3,409,421 223,265 3,732,163 261,775 Pollution remediation obligation (Note 19) 38,032 1,759 2,625 37,166 2,815 Net pension liability (Note 7) 6,073,131 5,309,310 11,382,441 Net OPEB liability (Note 8) 22,862,738 1,868,134 20,994,604 Third party payor 408,097 216,621 292,197 332,521 195,898 Total governmental activities $ 39,083,919 10,425,347 3,506,639 $ 46,002,627 $ 1,555,818 Business-type activities: Bonds payable $ 729,059 — 19,890 $ 709,169 $ 20,729 Add: Unamortized premium on bonds payable 85,907 502 85,405 756 Notes, loans, and LRON from direct borrowings and placements 159,167 117,798 151,634 125,331 115,896 Total bonds payable, notes, loans and LRON 974,133 117,798 172,026 919,905 137,381 Other long-term liabilities: Lease liability (Note 9) 1,148 902 319 1,731 425 Financed purchase obligations 11 11 — Accrued compensated absences 267,130 35,938 19,200 283,868 17,385 Workers’ compensation (Note 18) 386,357 39,723 33,804 392,276 36,865 Litigation and self-insurance (Note 18) 67,911 1,433 35,294 34,050 21,709 Net pension liability (Note 7) 957,332 820,787 1,778,119 Net OPEB liability (Note 8) 4,134,822 388,841 3,745,981 Third party payor (Note 14) 496,901 146,925 117,052 526,774 142,136 Total business-type activities $ 7,285,745 1,163,506 766,547 $ 7,682,704 $ 355,901 140 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 11. LONG-TERM OBLIGATIONS-Continued Changes in Long-term Liabilities-Continued For governmental activities, the General Fund, the Fire Protection District Special Revenue Fund and the LA County Library Special Revenue Fund have typically been used to liquidate workers’ compensation, accrued compensated absences, pension, OPEB, lease, financed purchase, subscription, litigation and self-insurance. Bond interest accretions for deep discount bonds have been included in the amounts reported for Bonds. Accretions increased during FY 2022-2023, thereby increasing liabilities for Bonds by $5.04 million for governmental activities. Note 18 contains information about changes in the combined current and long-term liabilities for workers' compensation and litigation and self-insurance. Discretely Presented Component Unit Long-term debt obligations and corresponding activity for the LACDA and First 5 LA discretely presented component units for the year ended June 30, 2023, were as follows (in thousands): Balance Balance Due Within July 1, 2022 Additions Maturities June 30, 2023 One Year LACDA Governmental activities: Bonds payable $ 31,140 35 $ 31,105 $ 675 Unamortized premium on bonds payable 3,631 23 3,608 Notes from direct borrowing 5,882 10,300 1 ,564,020,703 6 13,446 1,083 Compensated absences 1,848 1,752 1,668 1,932 1,739 Lease liability 186 110 76 70 Subscription liability 2,489 1,197 1,292 490 Claims payable 3,525 7,251 3,862 6,914 691 Net pension liability 11,032 32,098 3,814 39,316 — Net OPEB liability — 2,409 1,132 1,277 — Total governmental activities $ 57,244 56,299 14,577 $ 98,966 $ 4,748 Business-type activities: Lease liability 1,059 1,059 — Subscription liability 319 76 243 53 Notes from direct borrowing 2,200 — — 2,200 — Compensated absences 1,467 1,273 1,382 1,358 1,223 Net pension liability 2,597 25,128 2,984 24,741 — Net OPEB liability 556 354 202 $ — Total business-type activities $ 7,323 27,276 5,855 $ 28,744 $ 1,276 Total long-term obligations-LACDA $ 64,567 83,575 20,432 $ 127,710 $ 6,024 First 5 LA Compensated absences $ 1,057 700 752 $ 1,005 $ 121 Total long-term obligations-First 5 LA $ 1,057 700 752 $ 1,005 $ 121 Total long-term obligations-Discretely presented component units $ 65,624 84,275 21,184 $ 128,715 $ 6,145 141 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 12. SHORT-TERM DEBT On July 1, 2022, the County issued $900.00 million of short-term Tax and Revenue Anticipation Notes at an effective interest rate of 1.65%. The proceeds of the notes were used to assist with County General Fund cash flow needs prior to the first major apportionment of property taxes, which occurred in December 2022. The notes matured and were redeemed on June 30, 2023. 13. CONDUIT DEBT OBLIGATIONS Community Facilities and Improvement District Bonds As of June 30, 2023, various community facilities and improvement districts established by the County had outstanding special tax bonds payable totaling $64.95 million and limited obligation improvement bonds totaling $573 thousand. The bonds were issued to finance the cost of various construction activities and infrastructure improvements, which have a regional or direct benefit to the related property owners. The bonds do not constitute an indebtedness of the County and are payable solely from special taxes and benefit assessments collected from property owners within the districts. In the opinion of County officials, these bonds are not payable from any revenues or assets of the County and neither the full faith and credit of the County, the State or any political subdivision thereof is obligated to the payment of the principal or interest on the bonds. The County has limited commitments for these bonds. Accordingly, no liability has been recorded in the accompanying basic financial statements. The County functions as an agent for the districts and bondholders. Debt service transactions related to the various bond issues are reported in the custodial funds. Construction activities are reported in the Improvement Districts' Capital Projects Fund. Industrial Development and Other Conduit Bonds Industrial development bonds, and other conduit bonds, have been issued to provide financial assistance to private sector entities and nonprofit corporations for the acquisition of industrial and health care facilities, which provide a public benefit. The bonds are secured by the facilities acquired and/or bank letter of credit and are payable solely from project revenue or other pledged funds. The County is not obligated in any manner for the repayment of the bonds. All industrial development bonds were paid during the year and no amount was outstanding as of June 30, 2023. Redevelopment Refunding Bonds The County of Los Angeles Redevelopment Refunding Authority, a JPA between the County and the Los Angeles County Public Works Financing Authority, was established to issue bonds that would enable successor agencies to former redevelopment agencies within the County to refund their outstanding tax allocation bonds in order to achieve debt service savings and to provide significant economies of scale through reduced costs of issuance and lower interest rates. The bonds are secured by a lien on future tax revenues of successor agencies. The County is not obligated in any manner for the repayment of the bonds. The County has limited commitment for these bonds. Accordingly, no liability has been recorded in the accompanying basic financial statements. As of June 30, 2023, the amount of redevelopment refunding bonds outstanding was $421.17 million. 142 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 14. HOSPITAL AND OTHER PROGRAM REVENUES Net patient service revenues are reported at the estimated net realizable amounts from patients, third party payors, and others for services rendered, including estimated retroactive adjustments under reimbursement agreements with third party payors. Retroactive adjustments are accrued on an estimated basis in the period the related services are rendered and adjusted in future periods, as final settlements are determined. California Advancing and Innovating Medi-Cal On December 28, 2021, the federal Centers for Medicaid and Medicare Services (CMS) approved the California Advancing and Innovating Medi-Cal (CalAIM) Section 1115 demonstration and CalAIM Section 1915(b) waiver, effective through December 31, 2026. CalAIM is an innovative and long- term commitment to transform and strengthen Medi-Cal, making the program more equitable, coordinated, and person-centered to help people maximize their health and life trajectory. CalAIM shifts Medi-Cal to a population health approach on a statewide level that prioritizes prevention and addresses social drivers of health. Revenues from CalAIM include those derived from Medical Managed Care (which the State moved from the Section 1115 waiver - where it resided in Medi-Cal 2020 - to the 1915(b) waiver portion of CalAIM). Those revenues are depicted below, consistent with historicals, to facilitate year-to-year comparisons. CalAIM revenues include (among other sources): 1. Global Payment Program 2. Providing Access and Transforming Health 3. Enhanced Care Management 4. Community Support Global Payment Program The Global Payment Program (GPP) originated under the Medi-Cal 2020 Waiver and was approved to continue under the CalAIM Section 1115 demonstration. GPP is a payment reform program that aims to change the way county-owned and operated Public Hospital Systems (PHS) in California are compensated for providing care to the remaining uninsured. The program encourages a shift away from cost-based, hospital-centric models of care, through financial incentives to provide cost-effective primary and specialty care. The GPP lifts restrictions that have historically impeded providing services for the remaining uninsured in the most appropriate setting for each patient, and now includes non-traditional methods of care delivery that have not been covered under either program. The shift from volume to value is done through a value-based point methodology, which takes into account both the value of care to the patient, and the recognition of costs to the health care system. 143 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 14. HOSPITAL AND OTHER PROGRAM REVENUES-Continued California Advancing and Innovating Medi-Cal-Continued Global Payment Program-Continued The GPP funds are comprised of (a) Disproportionate Share Hospital (DSH) funds that otherwise would have been allotted to the PHS, and (b) Safety Net Uncompensated Care Pool (SNCP) funds. DSH is a federal program to support safety-net hospitals that care for a disproportionate share of low-income patients. SNCP was established under California's 2005 waiver to support services provided to uninsured patients. Each GPP (PHS) participant has an opportunity to earn a global budget for care to the remaining uninsured and must meet service thresholds to receive full funding. Points are assigned to services in the following categories: • Traditional Outpatient (e.g., primary or specialty care visit, dental, ER/urgent care, mental health visit). • Non-Traditional Outpatient (e.g., health coaching, care navigation, community wellness encounters). • Technology-Based Outpatient (e.g., nurse advice line, email consultation, provider-to-provider eConsult for specialty care). • Inpatient and Facility Stays (e.g., trauma care, ICU stays, recuperative care, respite care, sober center stays, skilled nursing facility stays). The County provides funding for the State of California's (State) share of the program by using "intergovernmental transfers" (IGTs) to draw down federal matching funds. The estimated GPP revenues and related IGTs recorded in FY 2022-2023 were as follows (in thousands): GPP Intergovernmental Revenues Transfers Expense Harbor-UCLA Medical Center $ 273,373 $ 135,399 Olive View-UCLA Medical Center 133,786 65,958 Los Angeles General Medical Center 384,750 230,925 Rancho Los Amigos National Rehab Center 120,812 95,684 Total $ 912,721 $ 527,966 The General Fund received $347.63 million for GPP and paid $92.52 million of related IGTs, which were recorded as “Charges for Services” revenue and "Health and Sanitation" expenditures, respectively, on the governmental funds statement. Providing Access and Transforming Health Providing Access and Transforming Health (PATH) is a five-year, $1.850 billion initiative to provide and build capacity and infrastructure for initiatives under CalAIM, namely Enhanced Care Management, Community Support, and Justice-Involved services. There are several subaccounts in PATH that the Department of Health Services (DHS) has either applied for or will apply for: 144 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 14. HOSPITAL AND OTHER PROGRAM REVENUES-Continued California Advancing and Innovating Medi-Cal-Continued Providing Access and Transforming Health-Continued • Whole Person Care Services and Transition to Managed Care Mitigation Initiative PATH will fund services provided by former Whole Person Care Pilot Lead Entities until the services transition to managed care coverage under CalAIM. This funding will end by January 1, 2024. The County must provide local match funding in the form of an IGT, based on actual expenditures, to receive reimbursement from the Department of Health Care Services (DHCS). • Capacity and Infrastructure Transition, Expansion and Development (CITED) Initiative PATH will provide direct funding to support the transition, expansion, and development of Enhanced Care Management and Community Support services. Funds will be made available from DHCS directly to recipients in several rounds, with the first round being up to $100 million statewide. DHS is in the process of applying for this competitive pool of funds. The non- federal share will be provided with State general fund resources. DHS applied for funds in Round 1 and was authorized for $8.59 million. Currently, DHS is in the process of applying for funds in Round 2. • Justice-Involved Capacity Building Program Starting in 2023, PATH funding will be available from DHCS to support DHS pre-release capacity building activities to support the ability to claim for certain health services provided in jail 90 days before release. CMS authorized payment for these services in a waiver amendment approved January 26, 2023. DHS is working with DHCS to determine how much funding will be available for pre-release capacity building. In FY 2022-2023, the General Fund accrued $49.08 million for PATH and $20.87 million of related IGTs, which were recorded as “Charges for Services” revenue and "Health and Sanitation" expenditures, respectively, on the governmental funds statement. Enhanced Care Management Enhanced Care Management (ECM) is a new Medi-Cal managed care benefit that supports a whole person-focused, interdisciplinary approach to intensive care management intended to improve care coordination and address the physical, behavioral health, and social needs of the highest cost, highest need Medi-Cal beneficiaries. It is designed to replace similar services that were previously provided under Whole Person Care and Health Homes Program. DHS has contracted with LA Care and Health Net to provide ECM services to certain high-need members assigned to DHS for primary care, and beginning in January 2024 it will add a contract with Molina. In FY 2022-2023, an estimated $2.88 million of ECM revenues were recorded as part of net patient service revenues. The General Fund received an estimated $3.52 million for ECM, which were recorded as "Charges for Services" revenue on the governmental funds statement. 145 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 14. HOSPITAL AND OTHER PROGRAM REVENUES-Continued California Advancing and Innovating Medi-Cal-Continued Community Support Community Support (CS) covers a variety of managed care services that address complex barriers to health and drivers of health care costs, such as homelessness and unstable or unsafe housing, and food insecurity. CS is focused on addressing specific medical and social needs of the high-risk clients, in order to reduce utilization of higher-cost services. The services are voluntary for the managed care plan to offer, and for the patients to opt in to receiving. DHS has contracted with six Medi-Cal managed care plans to launch and offer the following CS services in 2022 and 2023: recuperative care, housing navigation and tenancy sustaining services. Additional services for newly eligible populations are scheduled to roll out through 2024. The General Fund received an estimated $66.36 million for CS, which were recorded as "Charges for Services" revenue on the governmental funds statement. It is expected that these amounts will decline in future years due to health plans limiting the duration of housing benefits to periods that are shorter than the time during which a person receives housing services from the County. While current year revenues reflect coverage for a substantial share of current clients, in future years, only newly housed individuals will be reimbursed. Previous Medi-Cal Demonstration Projects Bridge to Reform Bridge to Reform was approved in November 2010 by CMS, pursuant to Section 1115(a) of the Social Security Act. This waiver affected many aspects of Medi-Cal revenue for the County hospitals and clinics including the financing methods by which the State drew down federal matching funds. Bridge to Reform covered the period November 1, 2010 to October 31, 2015, with a temporary extension to December 31, 2015. As of the end of the FY 2022-2023, Program Years 2010-2011 and 2014-2015 are still pending State's final reconciliation. Managed Care for Seniors and Persons with Disabilities Under the Medi-Cal Demonstration Project, in an effort to provide more coordinated care and contain costs, Medi-Cal beneficiaries who are Seniors and Persons with Disabilities (SPDs) are required to enroll in managed care plans, rather than using a fee for service system. In FY 2022-2023, an estimated $153.58 million of SPD revenues were recorded as part of net patient service revenues. The General Fund received $16.45 million for SPD, which were recorded as "Charges for Services" revenue on the governmental funds statement. 146 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 14. HOSPITAL AND OTHER PROGRAM REVENUES-Continued Affordable Care Act On January 1, 2014, when the federal health care reform of the Patient Protection and Affordable Care Act went into effect, the Hospital Presumptive Eligibility program also provided individuals with temporary Medi-Cal benefits while a formal, permanent Medi-Cal application is being processed. Medicaid Coverage Expansion The Medicaid Coverage Expansion (MCE), also known as the Optional Medicaid Expansion program, provides Medi-Cal coverage for adult citizens or legal residents (ages 19-64) who are uninsured and have incomes at or below 138.00% of the Federal Property Level. The Federal Medical Assistance Percentage (FMAP) for the MCE Program was 100.00% from July 1, 2016 through December 31, 2016, 95.00% from January 1, 2017 through December 31, 2017, 94.00% from January 1, 2018 through December 31, 2018, and 93.00% from January 1, 2019 through December 31, 2019. It became 90.00% on January 2020 and is set to continue at the level thereafter. The County contracts with LA Care Health Plan (LA Care) and Health Net Community Solutions, Inc. (Health Net) to provide services for their Medi-Cal managed care members. During FY 2022-2023, LA Care paid the County managed care capitation payments based on the CY 2022 contract rates, while Health Net paid contracted rates effective January 2022. In FY 2022-2023, the total estimated MCE revenues and related estimated IGTs, including prior year over/under-realization were as follows (in thousands): Program Intergovernmental Revenues Transfers Expense MCE $ 402,102 $ MCRS - MCE 157,814 27,461 Total $ 559,916 $ 27,461 The General Fund received $90.69 million for MCE which was recorded as "Charges for Services" revenue. The IGTs recorded under "Health and Sanitation" expenditures on the governmental funds statement are related to prior year IGT reconciliations. On September 1, 2023, the County received a Civil Investigative Demand (“CID”) from the United States Department of Justice (“DOJ”). The demand seeks records and information related to managed care and the expansion of Medicaid to adult expansion under the Affordable Care Act. The County is cooperating with the investigation and has made an initial production of documents responsive to the CID. Potential penalties are contingent on a number of factors and too speculative to reasonably estimate at this time. 147 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 14. HOSPITAL AND OTHER PROGRAM REVENUES-Continued Other Medi-Cal Programs Medi-Cal Fee-For-Service The Medi-Cal Demonstration Project restructured the financing method by which the State draws down federal matching funds for the inpatient hospital FFS to cost based reimbursement. The non-federal share of the Medi-Cal FFS is provided by the hospitals primarily through certified public expenditures (CPE) whereby the hospital expends its local funding for services to draw down the federal financing participation (FFP), currently provided at a 56.20% match which incorporates a 6.20% increase in the FFP rate as authorized by the Families First Coronavirus Response Act (FFCRA). For FY 2022-2023, an estimated $456.31 million of Medi-Cal FFS revenues were recorded as part of net patient service revenue. Medi-Cal Physician State Plan Amendment The Medi-Cal Demonstration Project payment for inpatient and other facility services excluded professional services. State Plan Amendment 05-23 allows professional services provided by public entities to be paid similarly to the inpatient hospital services under the Medi-Cal Demonstration Project. Hospitals are allowed to claim federal reimbursement for unreimbursed costs of Medi-Cal professional services (Hospital Inpatient, Emergency Room, and Psychiatric services), which is matched at the applicable FMAP rate for the year. Revenues of $73.57 million were recognized and recorded as part of net patient service revenue during FY 2022-2023. Cost Based Reimbursement Clinics Cost Based Reimbursement Clinics (CBRC) reimburse 100% of allowable costs for outpatient services provided to Medi-Cal FFS beneficiaries at the County's hospital-based clinics, outpatient centers and Ambulatory Care Network health centers (excluding clinics that provide predominately public health services). In FY 2022-2023, CBRC revenues were $231.70 million for the enterprise funds and were recorded as net patient services revenue. As of June 30, 2023, the County estimated that approximately $27.64 million of CBRC accounts receivable would not be collectible within 12 months and this amount is classified as a noncurrent asset in the enterprise fund statements of net position for each hospital. The General Fund received $42.92 million for CBRC, which was recorded as "Charges for Services" revenue on the governmental funds statement. As of June 30, 2023, the County estimated that approximately $8.56 million of CBRC accounts receivable would not be collectible within 12 months. Medi-Cal Cost Report Settlements In FY 2022-2023, the County recognized final inpatient hospital FFS settlements of $29.48 million related to the FY 2011-2012. In addition, the County received CBRC audit settlements of $68.35 million related to FY 2019-2020 and FY 2020-2021. The County’s appeal of certain CBRC audit adjustments at various levels to the Office of Administrative Appeals have been favorably resolved resulting in $7.32 million of final settlement revenues. The State is in the process of auditing the FY 2020-2021 non-hospital CBRC and FY 2021-2022 hospital cost reports. Settlements are expected by the 4th quarter of FY 2023-2024. 148 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 14. HOSPITAL AND OTHER PROGRAM REVENUES-Continued Other Medi-Cal Programs-Continued Medi-Cal Managed Care Graduate Medical Education On March 19, 2020, the State executed State Plan Amendment (SPA) Transmittal Number 17-009 that allows for graduate medical education (GME) payments to certain governmental hospitals for Medi-Cal managed care services effective January 1, 2017. The Medi-Cal managed care plans do not include GME payments within the capitation rates. These supplemental GME payments are funded by voluntary IGTs made by the County pursuant to Welfare and Institutions Code (WIC) sections 14164 and 14105.29(c), that is used solely as the source for the non-federal share of GME payments made to the eligible providers of the Governmental Funding Entity pursuant to WIC section 14105.29 and Supplement 6 to Attachment 4.19-A of the SPA. The funds transferred qualify for FFP pursuant to 42 Code of Federal Regulations part 433 subpart B. Under the SPA, the County is required by Welfare and Institutions Code Section 14105.29, to pay the State a 5% administrative fee that is assessed on the full amount of the IGTs. This amount is also recorded as part of the IGT. In FY 2022-2023, the County recorded the GME supplemental gross revenue payments as listed below and recorded the corresponding IGT expense as follows (in thousands): GME Intergovernmental Revenues Transfers Expense Harbor-UCLA Medical Center $ 62,537 $ 7,764 Olive View-UCLA Medical Center 28,506 1,971 Los Angeles General Medical Center 108,501 11,951 Rancho Los Amigos National Rehab Center 2,342 281 Total $ 201,886 $ 21,967 Medi-Cal Managed Care Rate Supplements The State is obtaining CMS' approval to continue the Medi-Cal Managed Care Rate Supplements (MCRS) paid to LA Care and Health Net Health Plans for calendar year 2023. The supplements are funded by IGTs made by the County. The County does not receive the supplemental payments directly from the State; rather, the State contracts with LA Care and Health Net, which then subcontract for services with various provider networks. In addition, in order to receive the supplemental payments, the County is required by Welfare and Institutions Code Section 14301.4, to pay the State a 20% administrative fee that is assessed on the full amount of the IGTs. This amount is also recorded as part of the IGT. 149 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 14. HOSPITAL AND OTHER PROGRAM REVENUES-Continued Other Medi-Cal Programs-Continued Medi-Cal Managed Care Rate Supplements-Continued The total estimated managed care rate supplement revenues and related estimated IGTs recorded in FY 2022-2023, including prior year over/under realization, were as follows (in thousands): MCRS Intergovernmental Revenues Transfers Expense Harbor-UCLA Medical Center $ 1,230 $ (705) Olive View-UCLA Medical Center 216,060 117,058 Rancho Los Amigos National Rehab Center (7,529) (6,487) Total $ 209,761 $ 109,866 The MCRS IGTs related to the prior year reconciliations, in the amount of $0.04 million, were recorded in the General Fund as "Health and Sanitation" expenditures on the governmental fund statements. There are no associated revenues related to these IGT reconciliations. Managed Care Rule On April 25 2016, CMS published the Medicaid and Children's Health Insurance Program (CHIP) Managed Care Final Rule. The rule, many provisions of which went into effect July 1, 2017, is an update to the regulatory framework for Medicaid, aligning it as much as possible with Medicare and other commercial insurance requirements for issues like rate setting, access standards, grievances and appeals, and quality. The managed care rule limits the ability of states to direct payments to health care providers, unless certain conditions are met. Among the allowable exceptions are payments tied to performance, and payments that provide a uniform payment increase which includes a pre- determined increase over contracted rates. The previous SPD-SB208 and AB85 MCE-to-Cost programs did not meet these conditions. In order to retain this critical funding, the following two programs were introduced: 1. Enhanced Payment Program 2. Quality Incentive Program Enhanced Payment Program The Enhanced Payment Program (EPP) creates a funding pool to supplement the base rates public health care systems receive through Medi-Cal managed care contracts. It was intended to meet the managed care rule’s criteria that allow payments that provide a uniform increase within a class of providers such as a predetermined increase over contracted rates. The mechanism for delivering EPP payments to public health care systems depends largely on those systems’ existing payment arrangements with their managed care plans. Under the proposed structure, health plans would receive an add-on to their managed care rates and would provide interim payments to providers throughout the year. Payments would be reconciled at the end of the year, protecting health plans from any risk associated with payment. 150 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 14. HOSPITAL AND OTHER PROGRAM REVENUES-Continued Other Medi-Cal Programs-Continued Managed Care Rule-Continued Enhanced Payment Program-Continued The estimated EPP revenues and related IGTs reported in FY 2022-2023 are as follows (in thousands): EPP Intergovernmental Revenues Transfers Expense Harbor-UCLA Medical Center $ 301,653 $ 60,791 Olive View-UCLA Medical Center 133,803 26,825 Los Angeles General Medical Center 327,440 67,121 Rancho Los Amigos National Rehab Center 29,342 5,657 Total $ 792,238 $ 160,394 The General Fund received $249.42 million for EPP and paid $50.51 million of related IGTs, which were recorded as "Charges for Services" revenue and "Health and Sanitation" expenditures, respectively, on the governmental funds statement. Quality Incentive Program The Quality Incentive Program (QIP) is meant to meet the Managed Care Rule’s exception that allows payments tied to performance. The QIP represents a pay for performance program for California’s public health care systems that uses a value-based structure. QIP payments are tied to the achievement of performance on a set of clinically established quality measures for Medi-Cal managed care enrollees. At FY 2022-2023 year-end, the estimated QIP revenues, which were recorded as patient service revenues, and related IGTs, including prior year over/under realization, are as follows (in thousands): QIP Intergovernmental Revenues Transfers Expense Harbor-UCLA Medical Center $ 119,085 $ 26,513 Olive View-UCLA Medical Center 63,979 14,224 Los Angeles General Medical Center 145,914 32,397 Rancho Los Amigos National Rehab Center 22,304 4,964 Total $ 351,282 $ 78,098 The General Fund received $34.09 million for QIP and paid $7.72 million of related IGTs, which were recorded as "Intergovernmental Revenues - Federal" and "Health and Sanitation" expenditures, respectively, on the governmental funds statement. 151 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 14. HOSPITAL AND OTHER PROGRAM REVENUES-Continued Third Party Payor Liability The County's Hospitals reported third party payor liabilities of $526.77 million (see Note 11) as of June 30, 2023, as reported on the statement of net position for proprietary funds. The current liabilities for amounts due within one year are $142.13 million. The noncurrent liabilities for third party payors related to enterprise funds are $384.64 million. The primary programs associated with third party payors liabilities include DSH ($113.09 million), Medi- Cal ($56.33 million), SNCP ($26.64 million), Medicare ($46.97 million), SPD ($16.27 million), MCE ($69.79 million), AB 915 ($30.70 million), In-home Supportive Services (IHSS) ($14.42 million), Medi- Cal Physician SPA ($9.57 million), and other miscellaneous programs ($853 thousand). Accounts Receivable-Net The following is a summary, by hospital, of accounts receivable and allowances for uncollectible amounts as of June 30, 2023 (in thousands): Los Angeles H-UCLA OV-UCLA General Rancho Total Accounts receivable $ 2,680,967 1,483,593 3,530,850 692,579 $ 8,387,989 Less: Allowance for uncollectible amounts 1,876,091 1,021,312 2,473,495 467,368 5,838,266 Accounts receivable - net $ 804,876 462,281 1,057,355 225,211 $ 2,549,723 Charity Care Charity care includes those uncollectible amounts for which the patient is unable to pay. Generally, charity care adjustment accounts are those accounts for which an indigence standard has been established and under which the patient qualifies. Inability to pay may be determined through DHS’s Ability-to-Pay program, through other collection efforts by DHS, by the Treasurer and Tax Collector, or by an outside collection agency. Determinations of charity care may be made prior to, at the time of service, or any time thereafter. The estimated cost of charity care for the year ended June 30, 2023 was $797.01 million. The total amount of such charity care provided by the hospitals for the year ended June 30, 2023 is as follows (in thousands): Charity care at established rates $ 1,485,340 GPP reimbursements 160,537 Charges forgone $ 1,324,803 152 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 14. HOSPITAL AND OTHER PROGRAM REVENUES-Continued Realignment As a result of the ACA, the State adopted and passed Assembly Bill 85 (AB85), as amended by Senate Bill 98, which lays out the process by which a portion of the 1991 County Health Realignment funds will be redirected to support Social Services programs based on a formula. The redirection is based on the assumption that the counties will decrease their cost for healthcare for the indigent population. These savings will be shared between the counties’ health departments and the State. The sharing ratio is 80% to the State and 20% to the County. This ratio has been in place since FY 2014-2015. AB85, as amended, provides a unique formula for the County to determine the amount to be redirected. In FY 2022-2023, the State did not withhold any of the County's Health Realignment funds. This amount is expected to be reconciled against actual revenues and expenses for FY 2022-2023 within two years. The redirection amount will be subject to the State's review and approval. The financial impact of the potential redirection of realignment funding in future years is not yet known. In FY 2021-2022, the State did not withhold any of the County's Health Realignment funds. Based on updated revenues realized for FY 2021-2022 services in FY 2022-2023, the projected redirection amount remains at $0.00. In FY 2020-2021, the State did not withhold any of the County's Health Realignment funds. However, based on updated revenues realized for FY 2020-2021 services in FY 2022-2023, the projected redirection amount is $71.10 million. As a result, the "Intergovernmental Revenues - State" has been reduced by $71.10 million in the County's General Fund in FY 2022-2023. Martin Luther King, Jr. Community Hospital The County and the University of California (UC), with the State, have created a wholly independent, non-profit 501(c)(3) entity, the Martin Luther King, Jr. - Los Angeles Healthcare Corporation (MLK- LA), to operate a hospital at the MLK-MACC site. As originally conceived, the hospital would: i) serve as a safety-net provider treating a high volume of Medi-Cal and uninsured patients and ii) be integrated with the County's existing network of specialty and primary care ambulatory clinics. The seven-member MLK Hospital Board of Directors was appointed by the County and UC in August 2010. The MLK Community Hospital opened on May 14, 2015. To assist with the opening of the MLK Hospital, the County provided MLK-LA with $50.00 million of coordination start-up funds, $39.10 million of grant funding, and $82.00 million of long-term loan funding, which includes a 30-year loan in the amount of $50.00 million, a 10-year revolving line of credit in the amount of $20.00 million, and a 2-year loan in the amount of $12.00 million. On January 5, 2016, the Board approved an additional short-term revolving loan in the amount of $40.00 million to assist MLK-LA with post-hospital opening expenses. As of June 30, 2023, the 30-year loan has an outstanding balance of $37.50 million. In May 2023, MLK-LA drew down $20 million from the revolving line of credit. MLK-LA will make interest only payments due in May and November and plans to pay back the revolving line of credit in the early part of 2024. In addition, the DHS has committed to make ongoing annual payments of $18.00 million for indigent care support, and $50.00 million of intergovernmental transfers for the benefit of the MLK Hospital. Under the terms of the agreement, the lease is for a period of forty (40) years with three options to extend the term by an additional ten years. The County established a lease receivable to lease the MLK facility to MLK-LA which has a balance of $656.88 million as of June 30, 2023 and is reflected in governmental activities and the governmental funds. 153 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 14. HOSPITAL AND OTHER PROGRAM REVENUES-Continued Coronavirus Disease (COVID-19) Provider Relief Funds The Provider Relief Funds (PRF) are administered by the Health Resources and Services Administration and supports eligible health care providers in the battle against the COVID-19 pandemic. PRF provides relief funds to eligible providers of health care services and support for health care related expenses or lost revenues attributable to COVID-19. PRF recipients are restricted for eligible services rendered related to expenditures/expenses and lost revenues during the period of availability. As of June 30, 2023, the County PRF allocation is $322.67 million. Under the fund statements, the General Fund recognized the PRF as “Intergovernmental revenues-Federal” and the Hospital enterprise funds recognized revenue as operating revenues “Net patient service revenues”. The government-wide financial statements recorded the PRF revenue as “Operating Grants and Contributions” as reflected below (in thousands): FY 2022-2023 PRF Allocation Revenues Harbor-UCLA Medical Center $ 79,987 $ 4,684 Olive View-UCLA Medical Center 58,963 1,679 Los Angeles General Medical Center 150,915 1,281 Rancho Los Amigos National Rehab Center 25,505 182 General Fund 7,301 Total $ 322,671 $ 7,826 The PRF Allocation above does not include interest collected or accrued, which is subject to the same restrictions related to expenditures/expenses and lost revenue during the period of availability. In September 2022, the Office of Inspector General initiated an audit of DHS' compliance with the PRF requirements. The outcome of the audit is not determinable at this time. Harbor-UCLA Medical Center Accreditation In June of 2023, the Accreditation Council for Graduate Medical Education (ACGME) Institutional Review Committee (IRC) placed Harbor-UCLA Medical Center on probationary status. Leadership is actively working to resolve the issue. Institutions on probationary status remain accredited to sponsor all currently accredited residency and fellowship programs, but they may not apply for accreditation of new programs. Harbor-UCLA did not have plans to do so. There are no direct adverse financial consequences associated with the hospital’s probationary status and indirect consequences are too speculative to estimate at this time . 15. INTERFUND TRANSACTIONS Interfund Receivables/Payables Interfund receivables and payables have been eliminated in the government-wide financial statements, except for “internal balances” that are reflected between the governmental and business-type activities. The majority of the interfund balances resulted from the time lag between the time that (1) goods and services were provided; (2) the recording of those transactions in the accounting system; and (3) payments between the funds were made. Interfund receivables and payables have been recorded in the fund financial statements. Such amounts arise due to the exchange of goods or services (or subsidy transfers) between funds that were pending the transfer of cash as of June 30, 2023. 154 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 15. INTERFUND TRANSACTIONS-Continued Interfund Receivables/Payables-Continued Cash transfers related to interfund receivables/payables are generally made within 30 days after year-end. Amounts due to/from other funds at June 30, 2023 are as follows (in thousands): Receivable Fund Payable Fund Amount General Fund Fire Protection District $ 36,283 Flood Control District 4,351 LA County Library 6,049 Regional Park and Open Space District 1,960 Mental Health Services Act 218,840 Nonmajor Governmental Funds 289,133 Harbor-UCLA Medical Center 101,338 Olive View-UCLA Medical Center 50,571 Los Angeles General Medical Center 12,204 Rancho Los Amigos Nat’l Rehab Center 93,946 Waterworks 10,472 Nonmajor Aviation 163 Internal Service Funds 11,623 836,933 Fire Protection District General Fund 1,011 Nonmajor Governmental Funds 848 Internal Service Funds 13 1,872 Flood Control District General Fund 980 Fire Protection District 2 Nonmajor Governmental Funds 2,275 Waterworks 375 Nonmajor Aviation 26 Internal Service Funds 19,282 22,940 LA County Library General Fund 7,554 Nonmajor Governmental Funds 373 7,927 155 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 15. INTERFUND TRANSACTIONS-Continued Interfund Receivables/Payables-Continued Receivable Fund Payable Fund Amount Nonmajor Governmental Funds General Fund $ 52,712 Fire Protection District 11,119 Flood Control District 65 LA County Library 5 Nonmajor Governmental Funds 37,544 Internal Service Funds 22,548 123,993 Harbor-UCLA Medical Center General Fund 63,418 Nonmajor Governmental Funds 26,838 Olive View-UCLA Medical Center 15,173 Los Angeles General Medical Center 210,089 Rancho Los Amigos Nat'l Rehab Center 405 315,923 Olive View-UCLA Medical Center General Fund 43,374 Fire Protection District 71 Nonmajor Governmental Funds 12,782 Harbor-UCLA Medical Center 108 Los Angeles General Medical Center 127,407 Rancho Los Amigos Nat’l Rehab Center 266 Internal Service Funds 2 184,010 Los Angeles General Medical Center General Fund 134,041 Fire Protection District 33 Nonmajor Governmental Funds 48,571 Harbor-UCLA Medical Center 184,421 Olive View-UCLA Medical Center 3 Rancho Los Amigos Nat’l Rehab Center 108,677 475,746 156 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 15. INTERFUND TRANSACTIONS-Continued Interfund Receivables/Payables-Continued Receivable Fund Payable Fund Amount Rancho Los Amigos Nat’l Rehab Center General Fund $ 4,477 Harbor-UCLA Medical Center 24,725 Olive View-UCLA Medical Center 127,081 Los Angeles General Medical Center 30,101 186,384 Waterworks General Fund 36 Flood Control District 5 Nonmajor Governmental Funds 6 Internal Service Funds 2,026 2,073 Nonmajor Aviation General Fund 26 Fire Protection District 4 Nonmajor Governmental Funds 11 Waterworks 1 Internal Service Funds 249 291 Internal Service Funds General Fund 37,526 Fire Protection District 631 Flood Control District 30,428 Nonmajor Governmental Funds 44,249 Harbor-UCLA Medical Center 583 Olive View-UCLA Medical Center 314 Los Angeles General Medical Center 3,262 Rancho Los Amigos Nat'l Rehab Center 32 Waterworks 5,728 Nonmajor Aviation 988 123,741 Total Interfund Receivables/Payables $ 2,281,833 Interfund Transfers Transfers were made during the year from the General Fund to subsidize the operations of the LA County Library and the 4 hospitals. Other transfers primarily consisted of payments from the various operating funds (principally the General Fund) to debt service funds in accordance with long-term debt covenants. In addition, special revenue funds that are statutorily restricted made transfers to other funds to augment funding for programs operated in the General Fund and hospitals. 157 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 15. INTERFUND TRANSACTIONS-Continued Interfund Transfers-Continued Interfund transfers to/from other funds for the year ended June 30, 2023 are as follows (in thousands): Transfer From Transfer To Amount General Fund Fire Protection District $ 83,319 LA County Library 60,953 Nonmajor Governmental Funds 228,803 Harbor-UCLA Medical Center 311,903 Olive View-UCLA Medical Center 91,036 Los Angeles General Medical Center 360,371 Rancho Los Amigos Nat’l Rehab Center 142,643 Internal Service Funds 29 1,279,057 Fire Protection District Nonmajor Governmental Funds 22,284 22,284 Flood Control District General Fund 2,300 Internal Service Funds 2 2,302 LA County Library General Fund 1,069 Nonmajor Governmental Funds 765 1,834 Mental Health Services Act General Fund 657,350 Nonmajor Governmental Funds General Fund 530,057 Fire Protection District 4,882 LA County Library 884 Nonmajor Governmental Funds 32,145 Harbor-UCLA Medical Center 52,808 Olive View-UCLA Medical Center 29,651 Los Angeles General Medical Center 109,998 Rancho Los Amigos Nat'l Rehab Center 3,035 Internal Service Funds 3,387 766,847 Harbor-UCLA Medical Center Nonmajor Governmental Funds 902 Los Angeles General Medical Center 184,418 Rancho Los Amigos Nat'l Rehab Center 14,635 199,955 158 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 15. INTERFUND TRANSACTIONS-Continued Interfund Transfers-Continued Transfer From Transfer To Amount Olive View-UCLA Medical Center Rancho Los Amigos Nat'l Rehab Center 34,383 Los Angeles General Medical Center Nonmajor Governmental Funds 1 Olive View-UCLA Medical Center 80,004 Rancho Los Amigos Nat'l Rehab Center 132,656 212,661 Rancho Los Amigos Nat’l Rehab Center Nonmajor Governmental Funds 1,555 Harbor-UCLA Medical Center 4,012 Olive View-UCLA Medical Center 879 Los Angeles General Medical Center 108,128 114,574 Nonmajor Aviation Funds Internal Service Funds 3 Internal Service Funds General Fund 3,611 Flood Control District 2,392 Nonmajor Governmental Funds 2,582 Waterworks 142 8,727 Total Interfund Transfers $ 3,299,977 Interfund Advances The General Fund, along with other funds that receive services from the Public Works Internal Service Fund, makes short-term advances to ensure sufficient cash is available to fund operations. In addition, the General Fund makes short-term advances to assist the Hospital Funds in meeting their cash flow requirements. 159 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 15. INTERFUND TRANSACTIONS-Continued Interfund Advances-Continued Advances from/to other funds at June 30, 2023 are as follows (in thousands): Receivable Fund Payable Fund Amount General Fund Harbor-UCLA Medical Center $ 4,737 Olive View-UCLA Medical Center 2,554 Los Angeles General Medical Center 6,400 Rancho Los Amigos Nat’l Rehab Center 1,265 Internal Service Funds 2,782 17,738 Flood Control District Internal Service Funds 6,672 Nonmajor Governmental Funds Internal Service Funds 11,014 Waterworks Internal Service Funds 1,260 Nonmajor Aviation Internal Service Funds 272 Total Interfund Advances $ 36,956 16. BUDGETARY ACCOUNTING DIFFERENCES/RECONCILIATIONS BETWEEN THE BUDGETARY BASIS AND GAAP The County’s statement of revenues, expenditures and changes in fund balances-budget and actual on budgetary basis for the major governmental funds has been prepared on the budgetary basis of accounting, which is different from GAAP. The amounts presented for the governmental funds statements are based on the modified accrual basis of accounting and differ from the amounts presented on a budgetary basis of accounting. The major areas of difference are as follows: – For budgetary purposes, nonspendable, restricted, committed and assigned fund balances and the portion of unassigned fund balance reserved for the “Rainy Day” fund are recorded as other financing uses at the time they are established. The County recognizes them as uses of budgetary fund balance. The nonspendable, restricted, committed and assigned fund balances that are subsequently canceled or otherwise made available are recorded as changes in fund balance in other financing sources. – Under the budgetary basis, revenues (primarily intergovernmental) are recognized at the time encumbrances are established for certain programs and capital improvements. The intent of the budgetary policy is to match the use of budgetary resources (for amounts encumbered, but not yet expended) with funding sources that will materialize as revenues when actual expenditures are incurred. Under the modified accrual basis, revenues are not recognized until the qualifying expenditures are incurred and amounts are collected within the County’s availability period. 160 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 16. BUDGETARY ACCOUNTING DIFFERENCES/RECONCILIATIONS BETWEEN THE BUDGETARY BASIS AND GAAP-Continued – For the General Fund, obligations for accrued compensated absences and estimated liabilities for litigation and self-insurance are recorded as budgetary expenditures to the extent that they are estimated to be payable within one year after year-end. Under the modified accrual basis of accounting, such expenditures are not recognized until they become due and payable in accordance with GASB Interpretation 6. – In conjunction with the sale of Tobacco Settlement Asset-Backed bonds in FY 2005-2006, the County sold 25.9% of its future tobacco settlement revenues. Under the budgetary basis, the proceeds were recognized as revenues. Under the modified accrual basis, the proceeds were recorded as deferred inflows of resources and are being recognized over the duration of the sale agreement, in accordance with GASB 48 and 65. This matter is also discussed in Note 11, under the caption, “Tobacco Settlement Asset-Backed Bonds.” – Under the budgetary basis, property tax revenues are recognized to the extent that they are collectible within one year after year-end. Under the modified accrual basis, property tax revenues are recognized only to the extent that they are collectible within 60 days. – For budgetary purposes, investment income is recognized prior to the effect of changes in the fair value of investments. Under the modified accrual basis, the effects of such fair value changes have been recognized. – The County determined that certain assets were held by LACERA (the OPEB administrator) in an OPEB Custodial Fund. For budgetary purposes, any excess payments (beyond the pay-as-you-go amount) are recognized as expenditures. Under the modified accrual basis, the expenditures are adjusted to recognize the OPEB Custodial assets at June 30, 2023. 161 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 16. BUDGETARY ACCOUNTING DIFFERENCES/RECONCILIATIONS BETWEEN THE BUDGETARY BASIS AND GAAP-Continued The following schedule is a reconciliation of the budgetary and GAAP fund balances for the major governmental funds (in thousands): Regional Park and Mental Fire Flood LA Open Health General Protection Control County Space Services Fund District District Library District Act Fund balance - budgetary basis $ 3,764,489 $ 70,854 $ 69,148 $ 79,020 $ 471,490 $ 155,070 Budgetary fund balances 3,056,258 162,781 321,567 99,152 237,775 1,150,660 Subtotal 6,820,747 233,635 390,715 178,172 709,265 1,305,730 Adjustments: Accrual of estimated liability for litigation and self-insurance claims 328,909 1,858 — 564 — — Accrual of compensated absences 105,873 — — — — — Unamortized balance of sale of tobacco settlement revenue (183,207) — — — — — Change in revenue accruals (820,815) (33,306) (26,391) (11,329) (33,542) (72,857) Change in OPEB Custodial Fund 231,550 14,250 — 1,988 — — Subtotal (337,690) (17,198) (26,391) (8,777) (33,542) (72,857) Fund balance - GAAP basis $ 6,483,057 $ 216,437 $ 364,324 $ 169,395 $ 675,723 $ 1,232,873 17. OTHER COMMITMENTS AND CONTINGENCIES Construction and Other Significant Commitments At June 30, 2023, there were contractual commitments of approximately $12.38 million for various governmental construction projects and approximately $1.102 billion for various hospital construction projects that were financed by bonds and lease revenue obligation notes. LACERA Capital Commitments At June 30, 2023, LACERA had outstanding capital commitments to various investment managers, approximating $9.500 billion. 162 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 17. OTHER COMMITMENTS AND CONTINGENCIES-Continued Encumbrances The County uses “encumbrances” to control expenditure commitments for the year. Encumbrances represent commitments related to executory contracts not yet performed and purchase orders not yet filled. Commitments for such expenditure of monies are encumbered to reserve applicable appropriations. Depending on the source(s) of funding, encumbrances are reported as part of restricted, committed or assigned fund balance on the governmental funds balance sheet. As of June 30, 2023, the encumbrance balances for the governmental funds (in thousands) are reported as follows: Restricted Committed Assigned Total General Fund $ 1,027,396 $ 1,027,396 Fire Protection District 63,861 — — 63,861 Flood Control District 148,686 — — 148,686 LA County Library — — 16,953 16,953 Regional Park and Open Space District 71,824 — — 71,824 Nonmajor Governmental Funds 239,861 20,793 — 260,654 Total Encumbrances $ 524,232 20,793 1,044,349 $ 1,589,374 Contingent Gain During FY 2020-2021, the State of California and its political subdivisions participated in obtaining final settlement agreements and judgments against multiple companies to resolve legal claims related to the companies’ role in the opioid crisis. Currently, California's allocation is approximately 9.92% of the national settlement funds. The State of California Department of Health Care Services (DHCS) oversees and administers the settlement funds that are received as follows: 15 percent allocated to the State of California and used for future opioid remediation activities, 70 percent allocated to the Participating Subdivisions (i.e., counties and cities) and used for opioid remediation activities, and 15 percent allocated to the Plaintiff Subdivisions that are Initial Participating Subdivisions (which includes the County). DHCS will also oversee all activities funded by the settlements including, but not limited to, designating additional high-impact abatement activities, conducting related stakeholder engagement, monitoring the California participating subdivisions for compliance, and preparing annual reports. Future opioid litigation may result in additional settlement agreements or judgments, or suspension and reduction of payments, and each agreement or judgment may have unique terms governing payment timing and duration. The County reported Opioid settlement revenues of $33.35 million in FY 2022-2023 under the nonmajor health and sanitation funds, as reflected in the government-wide governmental activities and governmental fund statements. Because of the uncertainty of future revenues to be received from the State, no receivable has been established for the opioid settlements. 163 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 18. RISK MANAGEMENT The County purchases insurance for certain risk exposures such as property, aviation, employee fidelity, boiler and machinery, cyber, catastrophic workers’ compensation, art objects, volunteers, special events, public official bonds, crime, safety reserve employee death and disability, and fiduciary liability for the deferred compensation plans. There have been settlements related to these programs that exceeded self-insured retention in the last three years. Losses did not exceed coverage in FY 2020-2021, FY 2021-2022 or FY 2022-2023. The County retains the risk for all other loss exposures. Major areas of risk include workers' compensation, medical malpractice, law enforcement, natural disasters, inverse condemnation, non- tort and tort liability. Expenditures are accounted for in the fund whose operations resulted in the loss. Claims expenditures and liabilities are reported when it is probable that a loss has been incurred and the amount of that loss, including those incurred but not reported, can be reasonably estimated. The County utilizes actuarial studies, historical data, and individual claims reviews to estimate these liabilities. The liabilities include estimable incremental claim adjustment expenses, net of salvage, and recovery/subrogation of approximately 10% of the total liability expenditures. They do not include other claim adjustment costs because the County does not believe it is practical or cost effective to estimate them. As indicated in the following table, the County’s workers’ compensation balance as of June 30, 2023 was approximately $3.504 billion. This amount is undiscounted and is based on an actuarial study of the County’s self-insured program as of June 30, 2023. Approximately $154.72 million of the total liabilities pertain to salary continuation payments and other related costs mandated by the State Labor Code. As of June 30, 2023, the County's estimate of these liabilities is $7.270 billion. Changes in the reported liability since July 1, 2022 resulted from the following (in thousands): Current Year Beginning of Claims and Balance At Fiscal Year Changes In Claim Fiscal Year- Liability Estimates Payments End 2021-2022 Workers’ Compensation $ 3,306,645 698,471 (604,653) $ 3,400,463 Other 249,859 444,497 (80,438) 613,918 Total $ 3,556,504 1,142,968 (685,091) $ 4,014,381 2022-2023 Workers’ Compensation $ 3,400,463 760,369 (656,599) $ 3,504,233 Other 613,918 3,410,854 (258,559) 3,766,213 Total $ 4,014,381 4,171,223 (915,158) $ 7,270,446 In addition to the above estimated liabilities, the County has determined that claims seeking damages of approximately $348.09 million are reasonably possible of creating adverse judgments against the County. Because of the uncertainty of their outcome, no loss has been accrued for these claims. 164 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 18. RISK MANAGEMENT-Continued The County receives substantial federal revenues and operates many programs which are subject to federal rules and regulations. Federal assistance is especially critical to the County's ability to operate its four County hospitals and health care network. The County is carefully monitoring State and federal policy developments to determine the future impacts, if any, on its ability to administer federal programs and deliver County services that rely upon federal funding. 19. POLLUTION REMEDIATION The County is involved in several remediation actions to clean up pollution sites within its boundaries. These matters generally coincide with the County’s ownership of land, buildings and infrastructure assets. In some cases, regulatory agencies (e.g., Regional Water Quality Board, State Department of Toxic Control, California Coastal Commission) notified the County of the need for remedial action. In addition, the County conducts its own environmental monitoring and this activity identifies pollution sites and matters requiring further investigation and possible remediation. Once the County is aware of these conditions, it commences monitoring, assessment, testing and/or cleanup activities, and recognizes a pollution remediation obligation when estimates can reasonably be determined. The pollution remediation obligation is an estimate and is subject to revision because of price increases or reductions, changes in technology, or changes in applicable laws or regulations. The types of pollution that have been identified include leaking underground storage tanks, water, groundwater and soil contamination, asbestos and lead paint contamination, methane gas detection and excessive levels of other contaminants. Remediation efforts include developing remediation and feasibility studies, source identification studies, site testing, sampling and analysis, ground water cleanup, and removal of storage tanks, asbestos tiles and other hazardous materials. As of June 30, 2023, the County’s estimated pollution remediation obligation totaled $37.17 million. This obligation was associated with the County’s governmental activities. Obligations of enterprise and internal service funds were immaterial. The estimated liability was determined by project managers, based on historical cost information for projects of the same type, size and complexity and measured at their current value. In subsequent periods, the County will adjust the estimated obligation when new information indicates that such changes are required. At this time, the County has determined there are no estimated recoveries reducing the obligation. 20. DEFERRED OUTFLOWS AND INFLOWS OF RESOURCES Deferred outflows and inflows of resources balances in the government-wide and the proprietary funds statement of net position as of June 30, 2023 are described as follows: – The deferred outflows of resources, included on the government-wide statement of net position, relate to the unamortized losses on refunding of debt, changes in the net pension liability as discussed in Note 7, and changes in the net OPEB liability as discussed in Note 8. The unamortized losses on refunding of debt are a deferred charge on refunding resulting from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the remaining life of the old debt or the life of the new debt, whichever is shorter. 165 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 20. DEFERRED OUTFLOWS AND INFLOWS OF RESOURCES-Continued – The deferred inflows of resources, included on the government-wide statement of net position, relate to the future installment payments of public-private and public-public partnerships as discussed in Note 6, from changes in the lease receivable as discussed in Note 9, from changes in the net pension liability as discussed in Note 7, and from changes in the net OPEB liability as discussed in Note 8. Government-wide Statement of Net Position (in thousands) Governmental Business-type Activities Activities Total Deferred outflows of resources: Unamortized losses on refunding of debt $ 7,999 $ 7,999 Pension 5,619,576 850,616 6,470,192 OPEB 5,189,428 783,772 5,973,200 Total government-wide deferred outflows of resources $ 10,817,003 1,634,388 $ 12,451,391 Deferred inflows of resources: Unamortized gain on refunding of debt $ 10,920 10,586 $ 21,506 Public-private partnerships 84,995 84,995 Leases 1,873,408 20,565 1,893,973 Pension 436,051 111,155 547,206 OPEB 8,085,131 1,690,433 9,775,564 Total government-wide deferred inflows of resources $ 10,490,505 1,832,739 $ 12,323,244 Proprietary Funds Statement of Net Position (in thousands): H-UCLA OV-UCLA LA GEN Rancho Aviation Total ISF Funds Deferred outflows of resources: Pension $ 263,773 149,080 359,503 78,260 $ 850,616 $ 217,511 OPEB 234,647 129,341 348,457 71,327 783,772 215,653 Total proprietary funds deferred outflows of resources $ 498,420 278,421 707,960 149,587 $ 1,634,388 $ 433,164 Deferred inflows of resources: Unamortized gain on refunding of debt $ 10,586 $ 10,586 $ Leases 20,565 20,565 Pension 31,065 30,824 42,047 7,219 111,155 11,614 OPEB 472,547 337,739 729,420 150,727 1,690,433 334,226 Total proprietary funds deferred inflows of resources $ 514,198 368,563 771,467 157,946 20,565 $ 1,832,739 $ 345,840 166 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 20. DEFERRED OUTFLOWS AND INFLOWS OF RESOURCES-Continued Deferred outflows and inflows of resources balances in the governmental funds balance sheet as of June 30, 2023 are described as follows: – The intra-entity sales of future tobacco settlement revenues are reported as deferred inflows of resources in the General Fund and deferred outflows of resources in the nonmajor governmental funds. – Under the modified accrual basis of accounting, earning revenues during the current period is not sufficient for revenue recognition in the current period. Revenue must also be susceptible to accrual (i.e., measurable and available to finance expenditures of the current period). Governmental funds report revenues not susceptible to accrual as deferred inflows of resources. The County has included three such items, which are property tax revenues to be collected beyond the 60 day accrual period, lease receivables measured at the present value or expected to be received during the lease term in a future period, plus other long-term receivables, related mostly to SB90 claims, expected to be collected beyond the 12 month accrual period. Governmental Funds Balance Sheet (in thousands): Regional Park and Fire Flood Open General Protection Control LA County Space Nonmajor Fund District District Library District Funds Total Deferred outflows of resources - Tobacco settlement revenues $ 183,207 $ 183,207 Deferred inflows of resources: Tobacco settlement revenues $ 183,207 $ 183,207 Leases 1,833,620 34,781 5,007 1,873,408 Property tax revenues 186,132 38,192 9,876 5,857 1,638 15,217 256,912 Other long-term receivables 259,251 12,952 272,203 Total governmental funds deferred inflows of resources $ 2,462,210 51,144 44,657 5,857 1,638 20,224 $ 2,585,730 167 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 21. FUND BALANCES Fund balances are presented in the following categories: nonspendable, restricted, committed, assigned, and unassigned as described in Note 1. A detailed schedule of fund balances for all the major and nonmajor governmental funds at June 30, 2023 (in thousands) is as follows: Regional Park and Mental Fire Flood LA Open Health Nonmajor General Protection Control County Space Services Governmental Fund District District Library District Act Funds Fund Balances: Nonspendable: Inventories $ 137,240 $ 12,780 $ 200 $ 146 $ $ $ 1 Long-term receivables 126,127 27 Permanent fund principal — — — — — — 2,109 Total Nonspendable 263,367 12,780 200 146 2,137 Restricted for: Purpose of fund 203,657 364,025 82,037 675,723 1,232,873 2,355,475 Purpose of utility users tax 73,367 Sheriff Pitchess landfill 2,262 La Alameda project 2,000 Capital projects 44,920 Debt service 270,193 Endowments and annuities 36 Total Restricted 77,629 203,657 364,025 82,037 675,723 1,232,873 2,670,624 Committed to: Purpose of fund 72,045 Capital projects and extraordinary maintenance 72,689 69,855 Affordable housing 5,254 Board budget policies and priorities 3,334 Budget uncertainties 94,052 Capital assets 16,575 Department of Children and Family Services 8,840 DPSS building purchase 33,944 Financial system (eCAPS) 26,000 Health services future financial requirements 600 Health services-tobacco settlement 174,372 Alternatives to incarceration- Facilities and Programs 110,975 Information technology enhancements 52,160 Library services 1,496 168 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 21. FUND BALANCES-Continued Regional Park and Mental Fire Flood LA Open Health Nonmajor General Protection Control County Space Services Governmental Fund District District Library District Act Funds Live scan 2,000 Office of Diversion and Re- Entry Permanent Supportive Housing 112,777 Public works-permit tracking system 3,151 Services to unincorporated areas 4,320 Sheriff unincorporated patrol 90 TTC client asset and management system 500 TTC remittance processing and mailroom equipment 500 TTC unsecured property tax system 51,664 Youth justice reimagined development 29,430 Woolsey fire recovery efforts 28,069 Total Committed 832,792 141,900 Assigned to: Purpose of fund 99 87,212 152,106 Future purchases 1,028,770 Capital projects 46,107 Total Assigned 1,028,770 99 87,212 198,213 Unassigned 4,280,499 Total Fund Balances $ 6,483,057 $ 216,437 $ 364,324 $ 169,395 $ 675,723 $ 1,232,873 $ 3,012,874 Reserve for “Rainy Day” Fund On June 22, 2009, the Board established a Reserve for “Rainy Day” fund. The Reserve for “Rainy Day” fund was established and maintained to protect essential County programs against unforeseen emergencies and economic downturns. On May 3, 2022, the Board adopted an updated "Rainy Day" Fund amount of 17.00% of on-going locally generated revenue from the previous 10.00% amount. Transfers, at a minimum of ten percent (10.00%) of excess fund balance, less Board approved carryovers, will be set aside in the "Rainy Day" Fund each year until the 17.00% cap is met. Excess fund balance is defined as the difference between the actual year-end fund balance amount as determined by the Auditor-Controller, less the estimated fund balance amount included in the Adopted Budget. Board approved carryover is defined as unspent funding that was previously approved by the Board for critical programs and/or uncompleted projects. Seventeen percent (17.00%) of the new ongoing discretionary revenues should be set aside annually, during the budget process as a hedge against any unforeseen fiscal issues during the year. At year-end, these funds will be transferred to the Rainy Day fund. 169 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 21. FUND BALANCES-Continued Reserve for “Rainy Day” Fund-Continued The County’s “Rainy Day” fund does not meet the criteria for a stabilization arrangement for reporting the funds as either restricted or committed. As such, the Reserve for “Rainy Day” funds in the amount of $854.92 million is reported as unassigned fund balance in the General Fund. 22. CORONAVIRUS DISEASE 2019 (COVID-19) On March 13, 2020, a presidential emergency was declared for all states, tribes, territories, and the District of Columbia due to the ongoing Coronavirus Disease 2019 (COVID-19) pandemic. The declaration made federal disaster assistance available; through the Coronavirus Aid, Relief, and Economic Security (CARES) Act to the County and to the State of California to supplement the County’s local recovery efforts. To assist in the efforts to respond to COVID-19, the County received significant fiscal stimulus in federal funds as described below. In FY 2022-2023, the County spent all of the remaining federal and State CARES Act funds and no advances payable were recorded. Federal Emergency Management Agency The County also received $119.00 million from the Federal Emergency Management Agency (FEMA) and $3.70 million from the California Governor’s Office of Emergency Services (Cal OES) for 5 expedited projects to respond to COVID-19. The 5 projects were for the 1) County’s Emergency Operations Center and related emergency services/activities; 2) Non-congregate medical shelters; 3) COVID-19 testing; 4) Project Room Key – emergency non-congregate shelters for homeless individuals meeting certain criteria; and 5) Great Plates – emergency feeding for certain at-risk individuals. For FY 2022-2023, the County recorded $64.48 million as revenue on the fund and government-wide financial statements and $14.91 million (including the interest) is reported as advances payable. Emergency Rental Assistance The federal Emergency Rental Assistance (ERA) program makes funding available to assist households that are unable to pay rent or utilities due to the COVID-19 pandemic. Two separate programs have been established: ERA1 provides up to $25 billion under the Consolidated Appropriations Act, 2021, which was enacted on December 27, 2020, and ERA2 provides up to $21.55 billion under the American Rescue Plan Act of 2021, which was enacted on March 11, 2021. During FY 2020-2021, the County received $160.07 million and $84.72 million for ERA1 and ERA2, respectively. For ERA1, the County entered into an agreement to direct the State of California to administer the County’s funds to eliminate confusion for tenants and landlords because of the multiple programs amongst the multitude of jurisdictions within the State and the County. For ERA1, the County recorded $0.28 million of revenue and the corresponding expenditures on the fund and government-wide financial statements. All of ERA1 funds have been expended. For ERA2, $2.16 million (including the interest) is reported as advances payable. American Rescue Plan Act of 2021 The American Rescue Plan (ARP) Act of 2021 Coronavirus State and Local Government Fiscal Recovery Funds (Fiscal Recovery Funds) continues many of the programs started by the CARES Act (2020) and Consolidated Appropriations Act (2021) by adding new phases, new allocations, and new 170 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 22. CORONAVIRUS DISEASE 2019 (COVID-19)-Continued American Rescue Plan Act of 2021-Continued guidance to address issues related to the continuation of the COVID-19 pandemic. The ARP also creates a variety of new programs to address continuing pandemic-related crises, and fund recovery efforts as the United States begins to emerge from the COVID-19 pandemic. The ARP was passed by Congress on March 10, 2021 and signed into law on March 11, 2021. The Fiscal Recovery Funds may be used for the following: 1) to respond to the public health emergency or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality; 2) to respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers; 3) to provide government services to the extent of the reduction in revenue due to the COVID-19 public health emergency relative to revenues collected in the most recent full fiscal year prior to the emergency; and 4) to make necessary investments in water, sewer, or broadband infrastructure. In December 2022, Congress amended the ARP program through the Consolidated Appropriations Act, 2023, providing additional flexibility for recipients to use ARP funds to respond to natural disasters, build critical infrastructure, and support community development. On May 16, 2021, the County received the first tranche of $974.99 million of ARP funds from the U.S. Department of Treasury and on June 9, 2022, the County received the second tranche of $974.99 million. There is uncertainty on the timing of the revenue recognition since these ARP funds are subject to be returned to the U. S. Department of Treasury. The ARP funds must be obligated between March 3, 2021 and December 31, 2024, and expended to cover such obligations by December 31, 2026. For FY 2022-2023, the County recorded $515.57 million as revenue on the fund and government-wide financial statements and $1.173 billion is reported as advances payable. Local Assistance and Tribal Consistency Funds On November 17, 2022, the County received $1.66 million from the Local Assistance and Tribal Consistency Fund (LATCF). The LATCF was established by Section 605 of the Social Security Act, as added by Section 9901 of the American Rescue Plan Act of 2021. The purpose of the LATCF program is to serve as a general revenue enhancement program and is designed, in part, to supplement existing federal programs that augment and stabilize revenues. For FY 2022-2023, $1.66 million is reported as advances payable. Under the fund statements, the General Fund recorded the COVID-19 revenue as “Intergovernmental Revenues-Federal”. The government-wide financial statements recorded the COVID-19 revenue as “Operating Grants and Contributions”. The remaining balance was reported under advance payable on the fund and government-wide financial statements as summarized below (in thousands): COVID-19 Federal Revenues Advances Payable FEMA $ 64,480 $ 14,910 ERA 2,160 ARP 515,570 1,173,000 LATCF 1,660 Total $ 580,050 $ 1,191,730 171 COUNTY OF LOS ANGELES NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2023 23. SUBSEQUENT EVENTS Tax and Revenue Anticipation Notes (TRANS) On July 3, 2023, the County issued $700.00 million in FY 2023-2024 TRANS, which will mature on June 28, 2024. The TRANS are collateralized by taxes and other revenues attributable to FY 2023-2024 and were issued in the form of Fixed Rate Notes at an effective interest rate of 3.14%. Lease Revenue Obligation Notes (LRON) On July 24, 2023, LACCAL issued an additional $24.00 million in tax exempt LRON with an interest rate of 3.4%. On September 13, 2023, LACCAL issued an additional $30.00 million in tax exempt LRON with an interest rate of 3.2%. On October 19, 2023, LACCAL issued an additional $42.00 million in tax exempt LRON which consisted of an interest rate of 3.37% for $19.50 million, 3.4% for $1.50 million, and 3.5% for $21.00 million. On September 27, 2023, LACCAL redeemed $400 thousand in taxable LRON. The proceeds are being used to fund capital requirements of various capital projects. LRON issuances are supported and secured by four separate series of letters of credit and pledged County properties. Homelessness Response On September 28, 2023, a federal court approved Los Angeles County’s settlement with Plaintiff LA Alliance for Human Rights and six individual plaintiffs that commits additional resources for people experiencing homelessness. The settlement commits the County to $1.24 billion worth of resources and services over the next four years and includes 3,000 mental health and substance use disorder beds, 450 new subsidies for enriched residential care for adult residential facilities and residential care facilities for the elderly beds (also known as board and care beds) serving the most vulnerable, an increase from 27.5 to 44 the number of specialized outreached teams in the City of Los Angeles, and provide a comprehensive suite of supportive services to the more than 13,000 permanent supportive housing and interim housing beds financed by the City of Los Angeles as part of the City’s settlement with the plaintiffs. A federal monitor will assist the court in overseeing the County’s settlement. On September 29, 2023, the court dismissed the plaintiffs' claims against the County. The settlement agreement is effective September 29, 2023, the date of the dismissal Order, and terminates on June 30, 2027. 172 173 COUNTY OF LOS ANGELES REQUIRED SUPPLEMENTARY INFORMATION (Unaudited) Los Angeles County Employees Retirement Association Schedule of the County's Proportionate Share of the Net Pension Liability and Related Ratios Last 10 Fiscal Years1,2 (Dollar amounts in thousands) 6/30/2022 6/30/2021 6/30/2020 6/30/2019 6/30/2018 6/30/2017 6/30/2016 6/30/2015 06/30/2014 Pension Plan’s fiduciary net position as percentage of total pension liability 83.750 % 90.920 % 76.400 % 82.910 % 83.960 % 82.370 % 81.749 % 86.296 % 86.804 % County’s proportionate share of the collective net pension liability $ 13,160,560 $ 7,030,463 $ 17,394,887 $ 11,560,668 $ 10,345,209 $ 10,849,931 $ 10,272,671 $ 7,448,374 $ 6,957,082 County’s proportion as percentage of the collective net pension liability 96.472 % 96.415 % 96.268 % 96.223 % 96.169 % 96.119 % 96.170 % 96.081 % 95.897 % Covered payroll $ 8,756,990 $ 8,714,969 $ 8,377,352 $ 8,031,454 $ 7,631,381 $ 7,320,575 $ 6,986,004 $ 6,948,738 $ 6,672,228 County’s proportionate share of the collective net pension liability as a percentage of its covered payroll 150.286 % 80.671 % 207.642 % 143.942 % 135.561 % 148.211 % 147.046 % 107.190 % 104.269 % Schedule of County’s Pension Contributions Last 10 Fiscal Years1,3 (Dollar amounts in thousands) 2023 2022 2021 2020 2019 2018 2017 2016 2015 Actuarially Determined Contribution (ADC) $ 2,216,111 $ 2,122,282 $ 1,940,715 $ 1,732,960 $ 1,605,150 $ 1,466,411 $ 1,300,711 $ 1,389,628 $ 1,437,555 Less: Contributions in relation to the ADC 2,216,111 2,122,282 1,940,715 1,732,960 1,605,150 1,466,411 1,300,711 1,389,628 1,437,555 Contribution Deficiency (excess) $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Covered payroll $ 9,050,122 $ 8,756,990 $ 8,714,969 $ 8,377,352 $ 8,031,454 $ 7,631,381 $ 7,320,575 $ 6,986,004 $ 6,948,738 Contributions as a percentage of total covered payroll 24.487 % 24.235 % 22.269 % 20.686 % 19.986 % 19.216 % 17.768 % 19.892 % 20.688 % (1) Historical information is required only for measurement periods for which GASB 68 is applicable. Eventually, 10 years of data will be shown. (2) Reflects data as of the measurement date. (3) Reflects data as of the reporting date. 174 COUNTY OF LOS ANGELES REQUIRED SUPPLEMENTARY INFORMATION (Unaudited) Los Angeles County Employees Retirement Association Notes to Required Supplementary Information Changes of benefit terms There were no plan changes after June 30, 2013. Changes of assumptions There were no changes in investment return assumption since FY 2021. There were no changes of assumptions in determining the ADC since FY 2014-2015. 175 COUNTY OF LOS ANGELES REQUIRED SUPPLEMENTARY INFORMATION (Unaudited) Los Angeles County Employees Retirement Association Schedule of Changes in Net RHC OPEB Liability and Related Ratios Last 10 Fiscal Years 1,2,3 (Dollar amounts in thousands) 06/30/2022 06/30/2021 06/30/2020 06/30/2019 Total OPEB Liability Effect of Change from Cost Sharing to Agent Plan $ $ $ $ (2,204,743) Service cost 1,024,895 1,166,558 967,482 779,965 Interest on Total OPEB Liability 1,217,398 1,147,426 1,250,934 1,197,607 Effect of economic/demographic gains or losses (168,643) 323,030 (432,634) Effect of assumption changes or inputs (3,365,579) (3,729,953) 2,346,920 2,356,270 Benefit payments (689,511) (664,932) (631,917) (601,985) Net change in Total OPEB Liability (1,981,440) (1,757,871) 3,500,785 1,527,114 Total OPEB Liability, beginning 27,760,135 29,518,006 26,017,221 24,490,107 Total OPEB liability, ending (a) 25,778,695 27,760,135 29,518,006 26,017,221 Fiduciary Net Position Employer contributions 1,071,024 1,031,058 886,821 840,965 Net Investment income (280,358) 437,417 5,918 59,606 Benefit payments (689,511) (664,932) (631,917) (601,985) Administrative expenses (9,534) (9,127) (8,830) (8,601) Net change in plan Fiduciary Net Position 91,621 794,416 251,992 289,985 Fiduciary Net Position, beginning 2,235,814 1,441,398 1,189,406 899,421 Fiduciary Net Position, ending (b) 2,327,435 2,235,814 1,441,398 1,189,406 Net OPEB Liability, ending = (a) - (b) $ 23,451,260 $ 25,524,321 $ 28,076,608 $ 24,827,815 Fiduciary Net Position as a % of Total OPEB Liability 9.03 % 8.05 % 4.88 % 4.57 % Covered employee payroll $ 9,864,653 $ 9,653,678 $ 9,404,208 $ 9,071,329 Net OPEB Liability as a % of covered employee payroll 237.73 % 264.40 % 298.55 % 273.70 % Notes to Schedule: Changes of benefit terms: No changes to benefit terms Changes of Assumptions: The discount rate increased from 4.28% as of June 30, 2021 to 4.85% as of June 30, 2022. (1) Historical information is required only for measurement periods for which GASB 75 is applicable. Eventually, 10 years of data will be shown. (2) Reflects data as of the measurement date. (3) As of July 1, 2018, LACERA transitioned from a cost-sharing, multiple employer plan to an agent plan structure. Therefore, this schedule only reflects three years of data. 176 COUNTY OF LOS ANGELES REQUIRED SUPPLEMENTARY INFORMATION (Unaudited) Schedule of County's RHC OPEB Contributions Last 10 Fiscal Years1,2 (Dollar amounts in thousands) 2023 2022 2021 2020 2019 2018 Actuarially Determined Contribution (ADC) $ 1,559,600 $ 1,437,900 $ 1,508,400 $ 1,482,200 $ 1,549,500 $ 1,901,000 Less: Contributions in relation to the ADC 1,154,487 1,064,859 1,025,851 880,949 787,366 679,872 Contribution Deficiency (excess) $ 405,113 $ 373,041 $ 482,549 $ 601,251 $ 762,134 $ 1,221,128 Covered-employee payroll $ 10,332,418 $ 9,864,653 $ 9,653,678 $ 9,404,208 $ 9,071,329 $ 8,571,345 Contributions as a percentage of total covered- employee payroll 11.173 % 10.795 % 10.627 % 9.368 % 8.680 % 6.523 % (1) Historical information is required only for measurement periods for which GASB 75 is applicable. Eventually, 10 years of data will be shown. (2) Reflects data as of the reporting date. Actuarial Methods and Assumptions Valuation Timing July 1, 2021, rolled forward to June 30, 2022 Actuarial Cost Method Individual Entry Age Normal, Level Percent of Pay Asset Valuation Method Fair Value Inflation 2.75% Salary Increases 3.25% general wage increase and merit according to Table A-5 of the June 30, 2020 actuarial valuation of retirement benefits. It can be found at www.LACERA.com. Mortality Various rates based on the RP-2014 Healthy and Disabled Annuitant mortality tables and including projection for expected future mortality improvement using the MO Healthcare Cost Trend Rates MP-2014 Ultimate Projection Scale. Experience Study Covers the three year period ended June 30, 2020. Discount Rate 4.85% Long-term expected rate of return, net of investment expenses 6.00% 20 Year Tax-Exempt Municipal Bond Yield 3.54% 177 COUNTY OF LOS ANGELES REQUIRED SUPPLEMENTARY INFORMATION (Unaudited) Schedule of Changes in the Total LTD OPEB Liability and Related Ratios Last 10 Fiscal Years1 (Dollar amounts in thousands) 6/30/2022 6/30/2021 6/30/2020 6/30/2019 6/30/2018 6/30/2017 Total OPEB Liability Service cost $ 68,827 $ 62,563 $ 47,316 $ 41,832 $ 43,162 $ 49,068 Interest 32,594 29,275 38,779 41,028 38,818 33,546 Differences between expected and actual experience (512) 111,863 8,067 (55,159) 1,111 589 Changes of assumptions or other inputs (218,398) 37,166 170,346 78,190 (43,574) (106,200) Benefit payments (66,425) (59,149) (66,671) (60,451) (64,313) (63,430) Net Change in Total OPEB Liability (183,914) 181,718 197,837 45,440 (24,796) (86,427) Total LTD OPEB Liability - beginning 1,473,239 1,291,521 1,093,684 1,048,244 1,073,040 1,159,467 Total LTD OPEB Liability - ending $ 1,289,325 $ 1,473,239 $ 1,291,521 $ 1,093,684 $ 1,048,244 $ 1,073,040 Covered-employee payroll $ 9,864,653 $ 9,653,678 $ 9,404,208 $ 9,071,329 $ 8,571,345 $ 8,176,831 Total LTD OPEB Liability as a percentage of covered- employee payroll 13.070 % 15.261 % 13.733 % 12.056 % 12.230 % 13.123 % Notes to schedule: Changes of benefit terms: No changes to benefit terms Changes of assumptions: Changes of Assumptions and other inputs reflect the effects of changes in the discount rate each period. The following are the discount rates used in each period: As of June 30, 2017 3.58 % As of June 30, 2018 3.87 % As of June 30, 2019 3.50 % As of June 30, 2020 2.21 % As of June 30, 2021 2.16 % As of June 30, 2022 3.54 % (1) Historical information is required only for measurement periods for which GASB 75 is applicable. Eventually, 10 years of data will be shown. 178 COUNTY OF LOS ANGELES REQUIRED SUPPLEMENTARY INFORMATION (Unaudited) Total LTD OPEB Liability Notes to Required Supplementary Information Changes of benefit terms None Changes of assumptions The discount rate increased from 2.16% as of June 30, 2022 to 3.54% as of June 30, 2023. No assets are accumulated in a trust that meets the criteria in GASB 75, paragraph 4 to pay related benefits. 179 180 COUNTY OF LOS ANGELES SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2023 Identifying Number Passed Assistance Listing Assigned by Pass-Through Federal Through to Federal Grantor/Pass Through Grantor/Program Title Number (ALN) Grantor (Note A) Expenditures Subrecipients SCHEDULE OF EXPENDITURES OF NON-COVID-19 FEDERAL AWARDS U.S. AmeriCorps Direct Program AmeriCorps State and National Public Health Americorps 94.006 $ 268,714 $ - Total U.S. AmeriCorps 268,714 - U.S. Agency for International Development Direct Program USAID Foreign Assistance for Programs Overseas International Search and Rescue Operations 720FDA20CA00080 98.001 3,772,329 - Total U.S. Agency for International Development 3,772,329 - U.S. Consumer Product Safety Commission Direct Program Virginia Graeme Baker Pool and Spa Safety LAC-EH Pool Safely Grant Program 87.002 102,147 - Total U.S. Consumer Product Safety Commission 102,147 - U.S. Department of Agriculture Direct Program Gus Schumacher Nutrition Incentive Program Increasing Fruit and Vegetable Intake Among Prediabetic and Diabetic Medicaid Recipients (GUSNIP) 10.331 (13) 1 57,455 135,373 Produce Prescription Program for Medicaid Patients with Diabetes and Prediabetes 10.331 (13) 14,932 - Subtotal 10.331 172,387 135,373 Passed Through the California Department of Aging State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Supplemental Nutrition Assistance Program - Education (SNAP - ED) 10.561 (1)(14) SP2122-19 5 3,587 44,509 SNAP - ED 10.561 (1)(14) SP2223-19 253,849 2 21,799 Subtotal 10.561 307,436 2 66,308 Passed Through the California Department of Education Child and Adult Care Food Program Child and Adult Care Food Program 10.558 2 13,027 - Summer Food Service Program for Children Summer Food Service Program for Children 10.559 (2) CN220285 37,074 - Summer Food Service Program for Children 10.559 (2) 176,549 - Subtotal 10.559 213,623 - Passed Through the California Department of Food and Agriculture Plant and Animal Disease, Pest Control, and Animal Care Pest Detection Emergency Program 10.025 (12) 19-0996, 20-1034 908,534 - Pest Exclusion/Dog Teams Program 10.025 (12) 21-0203, 22-0923 580,663 - Glassy Winged Sharpshooter (GWSS) 10.025 (12) 20-0622, 21-0517, 22-1466 614,706 - Asian Citrus Psyllid/Huanglongbing 10.025 (12) 20-0709, 21-0516, 22-0294 102,138 - Subtotal 10.025 2,206,041 - Passed Through the California Department of Public Health State Administrative Matching Grants for the Supplemental Nutrition Assistance Program SNAP - ED 10.561 (1)(14) 19-10328 12,217,130 6,542,214 Passed Through the California Department of Social Services State Administrative Matching Grants for the Supplemental Nutrition Assistance Program SNAP - Administration (CalFresh) 10.561 (1) (14) CFL 21/22-115 3 41,961,156 1,147,399 Subtotal 10.561 3 54,178,286 7,689,613 See accompanying Notes to Schedule of Expenditures of Federal Awards. See legend on page 197 for AL No. Cluster Summary and Notes A, B, and C. 181 COUNTY OF LOS ANGELES SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2023 Identifying Number Passed Assistance Listing Assigned by Pass-Through Federal Through to Federal Grantor/Pass Through Grantor/Program Title Number (ALN) Grantor (Note A) Expenditures Subrecipients Passed Through the California State Controller's Office Schools and Roads - Grants to States U.S. Forest Service 10.665 (3) 670,612 - Total U.S. Department of Agriculture 3 57,961,412 8,091,294 U.S. Department of Defense Passed Through the Defense Logistics Agency Procurement Technical Assistance for Business Firms Procurement Technical Assistance 12.002 21 - SP4800-22-2-2204 381,934 - Total U.S. Department of Defense 381,934 - U.S. Department of Education Direct Program Federal Supplemental Educational Opportunity Grants Supplemental Educational Opportunity Grants 84.007 (11) 10,336 - Federal Pell Grant Program Pell Grants 84.063 (11) 281,922 - Subtotal Student Financial Assistance Cluster (84.007, 84.063) 292,258 - Total U.S. Department of Education 2 92,258 - U.S. Department of Health and Human Services Direct Program Public Health Emergency Preparedness Public Health Emergency Preparedness 93.069 20,856,506 1,177,631 Project Grants and Cooperative Agreements for Tuberculosis Control Programs Tuberculosis/Centers for Disease Control Cooperative Agreement 93.116 3,500,323 - Tuberculosis United for Ukraine 93.116 349,070 - Subtotal 93.116 3,849,393 - Family Planning Services Title X - Family Planning Services 93.217 (22) 9,717 - Substance Abuse and Mental Health Services Projects of Regional and National Significance First Responders - Comprehensive Addiction and Recovery Act (FR-CARA) Year 4 93.243 (23) 5H79SP080293-04 260,789 - Viral Hepatitis Prevention and Control Adult Viral Hepatitis Prevention and Control 93.270 557,234 - Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) ELC - Building and Strengthening Epidemiology 93.323 (25) 4,994,383 - ELC - Monkeypox Vaccine Effectiveness Evaluation (MPX VE) 93.323 (25) 86,450 - Subtotal 93.323 5,080,833 - The Healthy Brain Initiative: Technical Assistance to Implement Public Health Actions Related to Cognitive Health, Cognitive Impairment, and Caregiving at the State and Local Levels Los Angeles County BOLD Initiative 93.334 486,729 130,100 Healthy Brain Initiative - Road Map Strategist 93.334 2,461 - Subtotal 93.334 489,190 130,100 Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises Partners Across Regions Tackling Needs for an Equitable Response 93.391 10,811,670 8,225,360 See accompanying Notes to Schedule of Expenditures of Federal Awards. See legend on page 197 for AL No. Cluster Summary and Notes A, B, and C. 182 (Continued) COUNTY OF LOS ANGELES SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2023 Identifying Number Passed Assistance Listing Assigned by Pass-Through Federal Through to Federal Grantor/Pass Through Grantor/Program Title Number (ALN) Grantor (Note A) Expenditures Subrecipients The Innovative Cardiovascular Health Program Chronic Disease Prevention and Management Strategy: Innovation Solutions for Healthier Communities (SHC) 93.435 2,812,601 915,175 Ending the HIV Epidemic: A Plan for America - Ryan White HIV/AIDS Program Parts A and B Ending the HIV Epidemic: A Plan for America - Ryan White HIV/AIDS Program Parts A and B 93.686 2,837,607 - National Bioterrorism Hospital Preparedness Program Bioterrorism Hospital Preparedness Program 93.889 9,213,973 5,971,160 HIV Emergency Relief Project Grants HIV Emergency Relief Project Grant 93.914 43,696,761 31,528,183 Minority Aids Initiative (MAI) 93.914 4,962,097 1 ,173,659 Subtotal 93.914 48,658,858 32,701,842 Healthy Start Initiative Healthy Start Initiative 93.926 1,325,735 241,380 HIV Prevention Activities Health Department Based Integrated HIV Surveillance and Prevention for Los Angeles County 93.940 18,525,344 7,264,658 Solutions for Equitable Diabetes Prevention and Management (SEDPM) 93.940 122 - Integrated HIV Programs for Health Departments to Support Ending the HIV Epidemic in the United States 93.940 4,310,921 1 ,093,478 Subtotal 93.940 22,836,387 8,358,136 Human Immunodeficiency Virus (HIV)/Acquired Immunodeficiency Virus Syndrome (AIDS) Surveillance Medical Monitoring Project (MMP) 93.944 739,728 - Behavioral Surveillance Study of HIV Risk and Prevention Behaviors Among At-Risk Populations in Los Angeles 93.944 854,668 - Subtotal 93.944 1,594,396 - Centers for Disease Control and Prevention Collaboration with Academia to Strengthen Public Health Transforming Public Health Through a Community Collaborative Model 93.967 581,201 155,841 Sexually Transmitted Diseases (STD) Prevention and Control Grants CDC Strengthening STD Prevention and Control for Health Departments (STD PCHD) 93.977 3,555,351 236,000 CDC Strengthening STD Prevention and Control for Health Departments (STD DIS) 93.977 7,465,017 3 42,556 Subtotal 93.977 11,020,368 578,556 Passed Through the California Department of Aging Special Programs for the Aging, Title VII, Chapter 3, Programs for Prevention of Elder Abuse, Neglect, and Exploitation Title VII - Elder Abuse Prevention 93.041 (8) AP2223-19 85,284 85,284 Special Programs for the Aging, Title VII, Chapter 2, Long Term Care Ombudsman Services for Older Individuals Title VII - Ombudsman 93.042 (8) AP2223-19 139,905 139,905 Special Programs for the Aging, Title III, Part D, Disease Prevention and Health Promotion Services Area Agency on Aging III D 93.043 (8) AP2223-19 497,295 497,295 Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers Area Agency on Aging III B 93.044 (8)(20) AP2223-19 6,833,814 3,764,624 Special Programs for the Aging, Title III, Part C, Nutrition Services Area Agency on Aging III C-I 93.045 (8)(21) AP2223-19 7,839,084 7,279,671 Area Agency on Aging III C-II 93.045 (8) (21) AP2223-19 5,566,205 4 ,849,891 Subtotal 93.045 13,405,289 12,129,562 See accompanying Notes to Schedule of Expenditures of Federal Awards. See legend on page 197 for AL No. Cluster Summary and Notes A, B, and C. 183 (Continued) COUNTY OF LOS ANGELES SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2023 Identifying Number Passed Assistance Listing Assigned by Pass-Through Federal Through to Federal Grantor/Pass Through Grantor/Program Title Number (ALN) Grantor (Note A) Expenditures Subrecipients National Family Caregiver Support, Title III, Part E Area Agency on Aging Title III E 93.052 (8) AP2223-19 2,472,052 1,690,000 Nutrition Services Incentive Program Area Agency on Aging III USDA C-I 93.053 (8) AP2223-19 982,877 982,877 Area Agency on Aging III USDA C-II 93.053 (8) AP2223-19 710,122 7 10,122 Subtotal 93.053 1,692,999 1,692,999 Medicare Enrollment Assistance Program Medicare Improvements for Patients and Providers Act (MIPPA) 93.071 MI2122-19 102,993 102,878 MIPPA 93.071 MI2223-19 158,761 1 50,054 Subtotal 93.071 261,754 252,932 State Health Insurance Assistance Program Area Agency on Aging - Health Insurance Counseling and Advocacy Program (HICAP) H9 93.324 HI2122-19 225,295 209,498 Area Agency on Aging - HICAP H3 93.324 HI2122-19 63,214 57,486 Subtotal 93.324 288,509 266,984 Support for Ombudsman and Beneficiary Counseling Programs for States Participating in Financial Alignment Model Demonstrations for Dually Eligible Individuals Financial Alignment 93.634 FA2122-19 66,785 64,318 Elder Abuse Prevention Interventions Program 93.747 (8) AP2122-19 31,042 31,042 Passed Through the California Department of Child Support Services Child Support Services Child Support Enforcement Title IV-D 93.563 1 17,360,000 - Passed Through the California Department of Community Services and Development Community Services Block Grant Community Services Block Grant 93.569 (28) 21F-4021 673,133 673,133 Community Services Block Grant 93.569 (28) 22F-5021 5,431,184 3,554,111 Community Services Block Grant 93.569 (28) 22F-5105 204,849 182,330 Community Services Block Discretionary Grant 93.569 (28) 22F-5105 31,000 31,000 Community Services Block Grant 93.569 (28) 23F-4105 90,471 90,471 Community Services Block Grant 93.569 (28) 23F-4021 353,046 - Subtotal 93.569 6,783,683 4,531,045 Passed Through the California Department of Community Services and Development/Maravilla Foundation Low Income Household Water Assistance Program Low Income Household Water Assistance Program 93.499 673,059 - Passed Through the California Department of Education Child Care and Development Block Grant Child Care and Development Block Grant 93.575 (9)(29) CAPP1025, CAPP2024 4,850,395 - Child Care Mandatory and Matching Funds of the Child Care and Development Fund Child Day Care Program 93.596 (9) CAPP1025, CAPP2024 7,513,176 - Passed Through the California Department of Health Care Services Projects for Assistance in Transition from Homelessness (PATH) McKinney Homeless Act Program 93.150 68-0317191 796,594 - See accompanying Notes to Schedule of Expenditures of Federal Awards. See legend on page 197 for AL No. Cluster Summary and Notes A, B, and C. 184 (Continued) COUNTY OF LOS ANGELES SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2023 Identifying Number Passed Assistance Listing Assigned by Pass-Through Federal Through to Federal Grantor/Pass Through Grantor/Program Title Number (ALN) Grantor (Note A) Expenditures Subrecipients Medical Assistance Program Medi-Cal Administrative Activities (MAA) 93.778 (10)(30) 17-94017 22,354,388 - Medi-Cal Eligibility Determination 93.778 (10)(30) CFL 21/22-115 3 26,428,826 - Child Health and Disability Program 93.778 (10)(30) 3,773,677 - Federal Drug Medi-Cal (Prenatal and Drug) FMAP 93.778 (10)(30) 20-10182 47,865,313 - Health Care Program Children in Foster Care 93.778 (10)(30) 11,772,424 - Medi-Cal Health Enrollment Navigators Project (SB154) 93.778 (10)(30) 1,713,191 1,359,441 Medi-Cal Health Enrollment Navigators Project (AB74) 93.778 (10)(30) 587,858 4 90,458 Subtotal 93.778 4 14,495,677 1,849,899 Block Grants for Community Mental Health Services Mental Health Services: Block Grant 93.958 (31) 1680317191A1 15,149,357 1,937,573 Block Grants for Prevention and Treatment of Substance Abuse Drug-Free Schools and Communities (DFSC) - Friday Night Live 93.959 (32) 21-10089 117,500 112,500 Alcohol Block Grant 93.959 (32) 21-10089 35,116,817 22,988,201 Drug Free Schools and Communities - Club Live 93.959 (32) 21-10089 117,500 112,500 New Prenatal Set - Aside 93.959 (32) 21-10089 2,783,338 1,521,775 Substance Abuse Prevention and Treatment Block Grant Adolescent 93.959 (32) 21-10089 364,510 364,510 Substance Abuse Prevention and Treatment Set - Aside 93.959 (32) 21-10089 15,079,359 1 5,079,359 Subtotal 93.959 53,579,024 40,178,845 Passed Through the California Department of Health Care Services/Public Health Institute Substance Abuse and Mental Health Services Projects of Regional and National Significance SAMSHA STR to the Opioid Crisis Grant - Bridge Program 93.243 (23) 18-95423 658 - Passed Through the California Department of Public Health Injury Prevention and Control Research and State and Community Based Programs National Violent Death Reporting System (NVDRS) 93.136 22-10804 23,545 - Overdose Data to Action 93.136 CDC-RFA-CE19-1904 296,744 - Subtotal 93.136 320,289 - Immunization Cooperative Agreements Vaccine Preventable Disease Control 93.268 (24) 22-11039 5,334,726 - Refugee and Entrant Assistance State/Replacement Designee Administered Programs Refugee Health Promotion Afghan and Refugee Health Promotion Supplemental 93.566 (27) 162,664 - Refugee Health Assessment Program 93.566 (27) 22-09-90899-00 1,037,639 - Subtotal 93.566 1,200,303 - Refugee and Entrant Assistance Discretionary Grants Refugee Health Promotion Project (RHPP) 93.576 22-19-90893-00 43,512 - State Survey and Certification of Health Care Providers and Suppliers (Title XVIII) Medicare Health Facilities Inspection 93.777 (10) 19-10042 23,324,988 - Medical Assistance Program Maternal and Child Health Services Block Grant to the State 93.778 (10)(30) 202219 2,163,020 35,289 Maternal, Infant and Early Childhood Home Visiting Grant Title V Maternal, Infant, and Early Childhood Home Visiting Program 93.870 22-19, 22-19A 1,395,882 - HIV Care Formula Grants HIV Care Program 93.917 5,508,543 4,987,691 Maternal and Child Health Services Block Grant to the States Maternal and Child Health 93.994 202219 1,198,244 53,351 See accompanying Notes to Schedule of Expenditures of Federal Awards. See legend on page 197 for AL No. Cluster Summary and Notes A, B, and C. 185 (Continued) COUNTY OF LOS ANGELES SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2023 Identifying Number Passed Assistance Listing Assigned by Pass-Through Federal Through to Federal Grantor/Pass Through Grantor/Program Title Number (ALN) Grantor (Note A) Expenditures Subrecipients Passed Through the California Department of Social Services Guardianship Assistance Kinship Guardianship Assistance Payment Program (Kin - GAP) Title IV-E CFL 16/17-69, 14/15-40 & 93.090 11/12-18 45,937,994 - MaryLee Allen Promoting Safe and Stable Families Program Promoting Safe and Stable Families Program (PSSF) 93.556 CFL 22/23-15, 22/23-33 8,208,541 7,417,961 Temporary Assistance for Needy Families CalWORKs - Family Group/Unemployed Parent (FG/U) Assistance 93.558 (26) CFL 21/22-115 2 28,324,142 - CalWORKs Legal Immigrants (MC) 93.558 (26) CFL 21/22-115 3,374,889 - CalWORKs Diversion 93.558 (26) CFL 21/22-115 2,517 - CalWORKs Single 93.558 (26) CFL 21/22-115 5 02,101,877 202,996,359 Temporary Assistance for Needy Families (TANF) 93.558 (26) CFL 22/23-70 81,313,227 8 ,562,384 Subtotal 93.558 8 15,116,652 211,558,743 Refugee and Entrant Assistance State/Replacement Designee Administered Programs Refugee Resettlement 93.566 (27) CFL 21/22-1,15 , 16,279,397 - Refugee Employment Social Services 93.566 (27) 2002 2,694,927 1,386,328 Services to Older Refugees ORSA 1802,1902, 2002, 93.566 (27) 2102, 2202 26,416 2,256 Subtotal 93.566 19,000,740 1,388,584 Child Care and Development Block Grant Child Care Salary Retention Incentive Program FGRT-22-GAN-CCD-WFP- 93.575 (9)(29) 017 2,450,696 - Local Child Care Planning and Development Council (LCCPDC) 93.575 (9)(29) 19-2419-00-2 432,509 - Subtotal 93.575 2,883,205 - U.S. Repatriation U.S. Repatriation Program 93.579 CFL 21/22-115 11,719 - Community - Based Child Abuse Prevention Grants Community - Based Child Abuse Prevention 93.590 ACIN 1-13-23 584,025 - Adoption and Legal Guardianship Incentive Payments Adoptions and Legal Guardianship Incentive Payments 93.603 CFL 22/23-86 3,113,706 - Stephanie Tubbs Jones Child Welfare Services Program Children's Welfare Services IV-B (Direct Cost) 93.645 CFL 22/23-70 6,178,582 - Foster Care Title IV-E Aid to Families with Dependent Children - FC - Administration and Assistance 93.658 CFL 22/23-70 1 19,124,737 41,245,798 Foster Care Title IV-E CFL 22/23-07, 11, 23, 30, 35, 93.658 41, 50, 56, 58, 68 2 76,525,853 - Foster Parent Training 93.658 CFL 22/23-70 27,846 - Foster Family Licensing 93.658 CFL 22/23-69 1,534,607 - Group Home Month Visits / CWD 93.658 CFL 22/23-70 832,103 - Child Welfare Services Outcome Improvement Project (Cohort 1) 93.658 CFL 22/23-70 473,015 - Foster Care Title IV-E CFL 22/23-07, 23, 35, 36, 39, 93.658 42, 49, 66, 68, 74, 97 14,568,123 - Subtotal 93.658 4 13,086,284 41,245,798 Adoption Assistance Adoptions - Administration and Assistance CFL 16/17-69, 14/15-40 & 93.659 11/12-18 2 32,132,486 - Social Services Block Grant Children's Welfare Services Title XX 93.667 CFL 22/23-70 37,926,155 - John H. Chafee Foster Care Program for Successful Transition to Adulthood Independent Living Skills - Children's Services 93.674 CFL 22/23-59 6,628,921 2,821,883 See accompanying Notes to Schedule of Expenditures of Federal Awards. See legend on page 197 for AL No. Cluster Summary and Notes A, B, and C. 186 (Continued) COUNTY OF LOS ANGELES SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2023 Identifying Number Passed Assistance Listing Assigned by Pass-Through Federal Through to Federal Grantor/Pass Through Grantor/Program Title Number (ALN) Grantor (Note A) Expenditures Subrecipients Medical Assistance Program In-Home Supportive Services - Personal Care Services Program (Health-Related) 93.778 (10)(30) CFL 21/22-115 1 05,482,658 - Adult Protective Services/County Services Block Grant 93.778 (10)(30) CFL 21/22-115 30,911,051 - Children's Welfare Services XIX (Health-Related) CFL 16/17-69, 14/15-40 & 93.778 (10)(30) 11/12-18 61,519,022 - Subtotal 93.778 1 97,912,731 - Passed Through the Essential Access Health Family Planning Services Family Planning - Title X 93.217 (22) 1316-5320-71219-22 300,000 - Title X - Family Planning Services 93.217 (22) 120,000 425 Subtotal 93.217 420,000 4 25 Passed Through the Substance Abuse and Mental Health Services Administration Substance Abuse and Mental Health Services Projects of Regional and National Significance Substance Abuse and Mental Health Services: Projects of Regional and National Significance (SAMSHA) 93.243 (23) 312,677 2 55,408 Total U.S. Department of Health and Human Services 2 ,619,716,734 397,332,621 U.S. Department of Homeland Security Direct Program National Urban Search and Rescue (US&R) Response System US&R 2018 97.025 EMW-2018-CA-K00027-S01 38,783 - US&R 2018 97.025 EMW-2018-CA-USR-0003 110,598 - US&R 2019 97.025 EMW-2019-CA-00077-S01 208,741 - US&R 2020 97.025 EMW-2020-CA-00069-S01 293,156 - US&R 2021 97.025 EMW-2021-CA-00047-S01 486,670 - US&R 2022 97.025 EMW-2022-CA-00071-S01 503,528 - Subtotal 97.025 1,641,476 - Hazard Mitigation Grant Hazard Mitigation Grant Program 97.039 (34) 14,265 - Assistance to Firefighters Grant 2021 Assistance to Firefighter Grant 97.044 EMW-2021-FG-11846 1,579,934 - Port Security Grant Program Port Security Grant Program 19 97.056 EMW-2019-PU-00149 53,254 - Port Security Grant Program 20 97.056 EMW-2020-PU-00161 160,619 - Port Security Grant Program 21 97.056 EMW-2021-PU-00217 168,805 - Subtotal 97.056 382,678 - Passed Through the City of Los Angeles Homeland Security Grant Program 2019 Urban Area Security Initiative (UASI) 97.067 (36) C-136501 131,604 - Securing the Cities Program Securing the Cities Program 97.106 C-140131 9,553 - Securing the City Program (STC) 97.106 121,853 - Subtotal 97.106 131,406 - Passed Through the County of San Diego Homeland Security Grant Program Operation Stonegarden Grant Program (OPSG) 97.067 (36) 2021-0081 153,073 - OPSG 97.067 (36) 2020-0095 208,134 - Subtotal 97.067 361,207 - See accompanying Notes to Schedule of Expenditures of Federal Awards. See legend on page 197 for AL No. Cluster Summary and Notes A, B, and C. 187 (Continued) COUNTY OF LOS ANGELES SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2023 Identifying Number Passed Assistance Listing Assigned by Pass-Through Federal Through to Federal Grantor/Pass Through Grantor/Program Title Number (ALN) Grantor (Note A) Expenditures Subrecipients Passed Through the California Department of Parks and Recreation Boating Safety Financial Assistance Recreational Boating Safety Program 97.012 C1770602 64,000 - Passed Through the California Governor's Office of Emergency Services Disaster Grants - Public Assistance (Presidentially Declared Disasters) 2008 Wildfires 97.036 (33) DR1810-CA 492,321 - Hazard Mitigation Grant Hazard Mitigation Grant Program 97.039 (34) 4407-221-082R 517,765 - Emergency Management Performance Grants 2020 Emergency Management Performance Grant 97.042 (35) 2020-0006 1,117,177 1,117,177 2021 Emergency Management Performance Grant 97.042 (35) 2021-0015 588,921 3 31,887 Subtotal 97.042 1,706,098 1,449,064 Homeland Security Grant Program 2019 Homeland Security Program 97.067 (36) 2019-0035 1,521,504 824,770 2020 Homeland Security Grant Program (RTAC) 97.067 (36) 2,264,397 - 2020 Homeland Security Program 97.067 (36) 2020-0095 3,789,141 1,737,858 2021 Homeland Security Program 97.067 (36) 2021-0081 649,182 - Subtotal 97.067 8,224,224 2,562,628 Passed Through the California Governor's Office of Emergency Services/City of Los Angeles Homeland Security Grant Program UASI 20 97.067 (36) C-138950 850,248 - UASI 20 97.067 (36) C-138950 834,904 - UASI 20 97.067 (36) 037-95050 4,311,260 - UASI 21 97.067 (36) C-141324 394,592 - UASI 21 97.067 (36) 037-95050 104,340 - Urban Area Security Grant Program 20 97.067 (36) C-138950 7,684,447 - Urban Area Security Grant Program 21 97.067 (36) C-141324 3,788,733 - Subtotal 97.067 17,968,524 - Passed Through the California Governor's Office of Emergency Services/Los Angeles Regional Interoperable Communication Systems Authority Homeland Security Grant Program Urban Area Security Initiative 97.067 (36) C-141072 635,324 - Total U.S. Department of Homeland Security 3 3,850,826 4,011,692 See accompanying Notes to Schedule of Expenditures of Federal Awards. See legend on page 197 for AL No. Cluster Summary and Notes A, B, and C. 188 (Continued) COUNTY OF LOS ANGELES SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2023 Identifying Number Passed Assistance Listing Assigned by Pass-Through Federal Through to Federal Grantor/Pass Through Grantor/Program Title Number (ALN) Grantor (Note A) Expenditures Subrecipients U.S. Department of Housing and Urban Development Passed Through the Los Angeles County Development Authority Community Development Block Grants/Entitlement Grants 95th Street/ Normandie Park 14.218 (4)(15) 257,874 - Century Station Code Enforcement 14.218 (4)(15) F96232-22 199,052 - Community Code Enforcement 4th District 14.218 (4)(15) 600727-22 149,000 - Community Code Enforcement East Los Angeles - 1st District 14.218 (4)(15) 601956-22 188,000 - East Los Angeles Parking Lot Lease Payment 14.218 (4)(15) 602026-22 35,119 - Elderly Nutrition Program 14.218 (4)(15) CV1102-20 353,268 353,268 Enhanced Patrol Walnut Park - Century Station 14.218 (4)(15) 601938-22 60,000 - Equestrian Patrol Pilot Program - Industry Station 14.218 (4)(15) 601936-22 110,481 - Maravilla Disposition 14.218 (4)(15) 601469-22 30,941 - New Florence Library Project 14.218 (4)(15) 602206-20 1,205,392 - Loma Alta Park Recreation Program 14.218 (4)(15) 37,838 - Pamela Park Recreation Program 14.218 (4)(15) 24,871 - Pearblossom Park Recreation Program 14.218 (4)(15) 11,877 - Rowland Heights Youth Athletic League Program - Carolyn Rosas Park 14.218 (4)(15) F96415-22 49,927 - Walnut Park Parking Lot Maintenance - 4th District 14.218 (4)(15) 4JJ02X-22 44,915 - Wide Commercial Business Revitalization Program - 1st District 14.218 (4)(15) 601774-22 97,801 - Wide Commercial Business Revitalization Program - 2nd District 14.218 (4)(15) 601834-22 366,726 332,319 Willowbrook Community Project Area/Disposition 14.218 (4)(15) 2BF02X-22 31,350 - Subtotal 14.218 3,254,432 685,587 Total U.S. Department of Housing and Urban Development 3,254,432 6 85,587 U.S. Department of Justice Direct Program Strengthening the Medical Examiner - Coroner System 2021 Bureau of Justice Assistance (BJA) - Strengthening the Medical Examiner - Coroner System 16.037 154,412 - Services for Trafficking Victims Enhanced Collaborative Model to Combat Human Trafficking 21 16.320 15POVC-21-GK-04072-HT 245,169 - PREA Program: Strategic Support for PREA Implementation Prison Rape Elimination Act 16.735 11,838 - DNA Backlog Reduction Program DNA Capacity Enhancement and Backlog Reduction Program 16.741 2020-DN-BX-0141 406,007 - DNA Capacity Enhancement and Backlog Reduction Program 16.741 15PBJA-21-GG-03100-DNAX 767,753 - DNA Capacity Enhancement and Backlog Reduction Program 16.741 15PBJA-22-GG-01601-DNAX 8,328 - Subtotal 16.741 1,182,088 - Economic, High-Tech, and Cyber Crime Prevention Intellectual Property Enforcement Program - Counterfeit and Piracy Enforcement (CAPE) 2020 16.752 2020-IP-BX-0006 31,259 - Intellectual Property Enforcement Program - CAPE 2022 16.752 15PBJA-22-GG-01584-INTE 68,241 - Subtotal 16.752 99,500 - Second Chance Act Reentry Initiative Second Chance Act Reentry Initiative - Innovative Reentry Initiatives (IRI) 16.812 74,968 - Children of Incarcerated Parents Second Chance Act Addressing the Needs of Incarcerated Parents 18 16.831 2018-IG-BX-0006 258,409 - Comprehensive Opioid, Stimulant, and other Substances Use Program Comprehensive Opioid Abuse Site Based Program - Lead East LA 16.838 406,861 - Comprehensive Opioid Abuse Site Based Program - Lead Hollywood Expansion 16.838 135,070 - Subtotal 16.838 541,931 - See accompanying Notes to Schedule of Expenditures of Federal Awards. See legend on page 197 for AL No. Cluster Summary and Notes A, B, and C. 189 (Continued) COUNTY OF LOS ANGELES SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2023 Identifying Number Passed Assistance Listing Assigned by Pass-Through Federal Through to Federal Grantor/Pass Through Grantor/Program Title Number (ALN) Grantor (Note A) Expenditures Subrecipients Equitable Sharing Program Asset Seizure and Forfeiture 16.922 CA019153A 1,344,385 - Asset Seizure and Forfeiture 16.922 2,192,057 - Domestic Cannabis Eradication Suppression Program (DCESP) 2022-24 16.922 286,922 - DCESP 2023-24 16.922 196,405 - Subtotal 16.922 4,019,769 - Passed Through the City of Los Angeles Edward Byrne Memorial Justice Assistance Grant Program Public Health - Trauma Prevention Initiative (JAG) 18 16.738 JAG 2018-DJ-BX-0296 103,310 - Sheriff Unincorporated Area Patrol Services Overtime (JAG) 18 16.738 JAG 2018-DJ-BX-0296 29,961 - Sheriff Supervisorial District 5 Patrol Services Overtime (JAG) 18 16.738 JAG 2018-DJ-BX-0296 5,748 - Sheriff Supervisorial District 5 Patrol Services Overtime (JAG) 19 16.738 JAG 2019-DJ-BX-0862 10,472 - Alternate Sentencing Program (PD) (JAG) 18 16.738 JAG 2018-DJ-BX-0296 89,947 - Alternate Sentencing Program (PD) (JAG) 19 16.738 JAG 2019-DJ-BX-0862 441,811 - Soledad Enrichment Action - Life Program (JAG) 19 16.738 JAG 2019-DJ-BX-0862 49,575 - Toberman Grace (JAG) 18 16.738 JAG 2018-DJ-BX-0296 35,125 - Toberman Grace (JAG) 19 16.738 JAG 2019-DJ-BX-0862 39,631 - Boys and Girls Club - College and Career Bound (JAG) 19 16.738 JAG 2019-DJ-BX-0862 55,322 - Sheriff School Resource Deputy (JAG) 19 16.738 JAG 2019-DJ-BX-0862 22,527 - Sheriff Youth Activities League (JAG) 19 16.738 JAG 2019-DJ-BX-0862 47,031 - JAG City Clear Foothill 16.738 52,135 - JAG City Clear Various Sites 16.738 417,112 - JAG City Clear 16.738 15PBJA-22-GG-02107-JAGX 256,626 - Subtotal 16.738 1,656,333 - Passed Through the California Governor's Office of Emergency Services Paul Coverdell Forensic Sciences Improvement Grant Program 2021 California Coverdell Grant Program 16.742 CQ21 11 0190 22,183 - 2021 Paul Coverdell Forensic Science Improvement Grants 16.742 23,147 - Paul Coverdell Forensic Science Improvement Program 16.742 CQ21 18 0190 136,523 - Subtotal 16.742 181,853 - Crime Victim Assistance Victim Witness Assistance Program (VWAP) 16.575 037-00000-19 8,046,815 1,986,839 Underserved Victim Advocacy and Outreach Program (UV) 16.575 037-00000-19 90,348 - Human Trafficking Advocacy (HA) Program 16.575 037-00000-19 160,221 - County Victim Services (XC) Program 16.575 037-00000-19 2,489,890 2,183,332 Elder Abuse (XE) Program 16.575 037-00000-19 202,181 - Subtotal 16.575 10,989,455 4,170,171 Total U.S. Department of Justice 1 9,415,725 4,170,171 U.S. Department of Labor Passed Through the California Department of Aging Senior Community Service Employment Program Older American Title V Project 17.235 TV2122-19 1,462,228 1,437,280 Passed Through the California Employment Development Department Workforce Innovation and Opportunity Act (WIOA) Adult Program 1226 English Language Learner 17.258 (5) AA111012 79,557 69,095 WIOA Transfer DW to Adult 17.258 (5) AA211012 2,600,000 2,600,000 WIOA Adult 17.258 (5) AA311012 9,824,069 6,025,751 WIOA Adult 17.258 (5) AA211012 4,135,536 4 ,135,536 Subtotal 17.258 16,639,162 12,830,382 WIOA Youth Activities WIOA Youth 17.259 (5) AA311012 9,955,484 7,376,359 WIOA Youth 17.259 (5) AA211012 292,440 2 92,440 Subtotal 17.259 10,247,924 7,668,799 See accompanying Notes to Schedule of Expenditures of Federal Awards. See legend on page 197 for AL No. Cluster Summary and Notes A, B, and C. 190 (Continued) COUNTY OF LOS ANGELES SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2023 Identifying Number Passed Assistance Listing Assigned by Pass-Through Federal Through to Federal Grantor/Pass Through Grantor/Program Title Number (ALN) Grantor (Note A) Expenditures Subrecipients WIOA National Dislocated Worker Grants/WIA National Emergency Grants 2018 CA Megafires NDWG - Workforce Development 17.277 (16) AA111012 205,565 193,530 2020 September Wildfires Disaster Recovery - Temporary Jobs 17.277 (16) AA111012 494,855 415,320 2020 September Wildfires Disaster Recovery - Workforce Development 17.277 (16) AA111012 98,054 82,712 Subtotal 17.277 798,474 691,562 WIOA Dislocated Worker Formula Grants WIOA Dislocated Worker 17.278 (5)(17) AA211012 2,891,278 2,536,350 WIOA Dislocated Worker 17.278 (5)(17) AA311012 718,989 - WIOA Layoff Version RR (GC 292) 17.278 (5)(17) AA311012 129,688 - WIOA Layoff Version RR (GC 293) 17.278 (5)(17) AA311012 254,593 - WIOA Rapid Response 17.278 (5)(17) AA311012 1,462,826 8 41,280 Subtotal 17.278 5,457,374 3,377,630 Hurricanes and Wildfires of 2017 Supplemental - National Dislocated Worker Grants 2018 CA Megafires NDWG - Temporary Jobs 17.286 AA011012 177,574 144,080 Total U.S. Department of Labor 3 4,782,736 2 6,149,733 U.S. Department of the Interior Direct Program WaterSMART (Sustain and Manage America's Resources for Tomorrow) USBR WaterSMART Water and Energy Efficiency Grant 15.507 54 - Passed Through the California State Controller's Office Flood Control Act Lands Flood Control Act Lands 15.433 6,754 - Total U.S. Department of the Interior 6,808 - U.S. Department of Transportation Direct Program Airport Improvement Program, COVID-19 Airports Programs, and Infrastructure Investment and Jobs Act Programs Airport Improvement Program 20.106 (18) 559,618 - Passed Through the California Department of Transportation Highway Planning and Construction Surface Transportation Program (STP) 20.205 STPL-5953 (762) 220,425 - Highway Bridge Rehabilitation BRLS-5953 (621), BRLS- 5953 (601), BRLS-5953 (615), BPMPL-5953 (707) , BPMPL-5953 (680), BPMPL- 5953 (688), BPMPL-5953 (708), BPMPL-5953 (726), BRNBISL-5953 (788), BRLO- 20.205 5953 (636) 3,093,427 - Congestion Mitigation and Air Quality Program CMLNI-5953 (717), CML- 20.205 5953 (765) 9,874 - Emergency Relief Program ER-24A0 (002), ER-30X0 (003), ER-30X0 (005), ER- 30X0 (008), ER-32L0 (519), ER-38Y0 (017), ER-38Y0 (018), ER-40A0 (083), ER- 40A0 (084), ER-40A0 (093), ER-40A0 (101), ER-15A6 20.205 (008) 2,106,983 - Highway Safety Improvement Program (HSIP) HSIPL-5953 (752), HSIPL- 5953 (755), HSIPL-5953 20.205 (776) 119,290 - Transportation Alternative Program ATPL-5953 (739), ATPL- 5953 (741), ATPL-5953 20.205 (763), ATPL-5953 (773) 1,224,692 - Subtotal 20.205 6,774,691 - See accompanying Notes to Schedule of Expenditures of Federal Awards. See legend on page 197 for AL No. Cluster Summary and Notes A, B, and C. 191 (Continued) COUNTY OF LOS ANGELES SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2023 Identifying Number Passed Assistance Listing Assigned by Pass-Through Federal Through to Federal Grantor/Pass Through Grantor/Program Title Number (ALN) Grantor (Note A) Expenditures Subrecipients Formula Grants for Rural Areas and Tribal Transit Program Public Transportation for Non-Urbanized Areas 20.509 471,137 - Formula Grants for Rural Areas and Tribal Transit Program 20.509 475,588 - Subtotal 20.509 946,725 - Passed Through the California Office of Traffic Safety State and Community Highway Safety Office of Traffic Safety - Distracted Driving Program 20.600 (7) DD22005 59,522 20,185 Office of Traffic Safety - Pedestrian and Bicycle Safety Program 20.600 (7) PS23017 85,550 77,914 Selective Traffic Enforcement Program (402PT-23 Flex) 20.600 (7) PT 23124 341,874 - Selective Traffic Enforcement Program 20.600 (7) PT 22023 203,280 - Subtotal 20.600 690,226 98,099 Minimum Penalties for Repeat Offenders for Driving While Intoxicated Intensive Probation Supervision for High Risk Felony and Repeat DUI Offenders 20.608 AL22010, AL23014 338,308 - Selective Traffic Enforcement Program (164AI-23) 20.608 PT 23124 847,239 - Selective Traffic Enforcement Program (164Al-22) 20.608 PT 22023 297,068 - Subtotal 20.608 1,482,615 - National Priority Safety Programs Office of Traffic Safety Program (OTS) 20.616 (7) OP23013 161,055 102,921 Alcohol and Drug Impaired Driver Vertical Prosecution Program 20.616 (7) DI22004 & DI23013 1,500,038 - Subtotal 20.616 1,661,093 102,921 Passed Through the Los Angeles Metropolitan Transportation Authority Enhanced Mobility of Seniors and Individuals with Disabilities Enhanced Mobility of Seniors and Individuals with Disabilities CA-2022-141, CA-2022-142, 20.513 (6) CA-2022-143, CA-2020-167 82,410 82,410 New Freedom Program New Freedom Program 20.521 (6) CA-57-X084 29,273 29,273 Total U.S. Department of Transportation 12,226,651 312,703 U.S. Election Assistance Commission Passed Through the California Secretary of State Help America Vote Act (HAVA) Requirements Payments HAVA: Voter's Choice Act 90.401 21S10101 700,000 - Total U.S. Election Assistance Commission 700,000 - U.S. Environmental Protection Agency Direct Program Congressionally Mandated Projects Water Infrastructure - Avenue J-12 and 50th Street 66.202 45,097 - Passed Through the California Environmental Protection Agency Beach Monitoring and Notification Program Implementation Grants Public Beach Safety Program 66.472 D2214104 189,114 - Total U.S. Environmental Protection Agency 234,211 - U.S. Executive Office of the President Direct Program High Intensity Drug Trafficking Areas Program High Intensity Drug Trafficking Areas (HIDTA) 95.001 G22LA0005A 108,389 - Total U.S. Executive Office of the President 108,389 - See accompanying Notes to Schedule of Expenditures of Federal Awards. See legend on page 197 for AL No. Cluster Summary and Notes A, B, and C. 192 (Continued) COUNTY OF LOS ANGELES SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2023 Identifying Number Passed Assistance Listing Assigned by Pass-Through Federal Through to Federal Grantor/Pass Through Grantor/Program Title Number (ALN) Grantor (Note A) Expenditures Subrecipients U.S. Food and Drug Administration Passed Through the National Environmental Health Association Food and Drug Administration Research National Environmental Health Association (NEHA) Base - Self-Assessment of All Nine Standards 93.103 G-BDEV-202111-01468 4,230 - NEHA Add-On Grant Project for Track 1 93.103 G-OATR-202111-01796 5,948 - Subtotal 93.103 10,178 - Total U.S. Food and Drug Administration 10,178 - U.S. Institute of Museum and Library Services Passed Through the California State Library Grants to States Lending Library Program 45.310 40-9231 7,773 - Empowering Older Adults Through Multilingual Digital Literacy 45.310 74,646 - Transitioned Aged Youth (TAY) and Non-Minor Dependents (NMD) Programs 45.310 75,000 - Subtotal 45.310 157,419 - Total U.S. Institute of Museum and Library Services 157,419 - U.S. National Endowment for the Arts Direct Program Promotion of the Arts Grants to Organizations and Individuals Grants for Arts Project Funding 45.024 1894704-51 100,000 1 00,000 Total U.S. National Endowment for the Arts 100,000 100,000 Total Expenditures of Non-COVID-19 Federal Awards 3,087,342,903 440,853,801 SCHEDULE OF EXPENDITURES OF COVID-19 FEDERAL AWARDS U.S. Department of Treasury Direct Program Coronavirus Relief Fund COVID-19 - Coronavirus Aid, Relief, and Economic Security Act (CARES Act) 21.019 (19) 172,539 - Coronavirus State and Local Fiscal Recovery Funds COVID-19 - Coronavirus State and Local Fiscal Recovery Fund (SLFRF) 21.027 5 15,568,088 90,592,053 Passed Through the California Department of Housing and Community Development Emergency Rental Assistance Program COVID-19 - Emergency Rental Assistance 21.023 21-ERAP-10005 378,730 - Passed Through the California Department of Social Services Coronavirus Relief Fund COVID-19 - Coronavirus Aid, Relief, and Economic Security Act (CARES Act) 21.019 (19) 22,724,374 - Total U.S. Department of Treasury 5 38,843,731 90,592,053 U.S. Department of Agriculture Direct Program Plant and Animal Disease, Pest Control, and Animal Care COVID-19 - American Rescue Plan SARS CoV-2 Surveillance in Animals in Los Angeles County 10.025 (12) 20,570 - COVID-19 - American Rescue Plan SARS CoV-2 Surveillance in Imported Animals Entering into Los Angeles International Airport 10.025 (12) 15,075 - Subtotal 10.025 35,645 - Gus Schumacher Nutrition Incentive Program COVID-19 - Increasing Fruit and Vegetable Intake Among Prediabetic and Diabetic Medicaid Recipients 10.331 (13) 206,634 1 90,480 Total U.S. Department of Agriculture 242,279 190,480 See accompanying Notes to Schedule of Expenditures of Federal Awards. See legend on page 197 for AL No. Cluster Summary and Notes A, B, and C. 193 (Continued) COUNTY OF LOS ANGELES SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2023 Identifying Number Passed Assistance Listing Assigned by Pass-Through Federal Through to Federal Grantor/Pass Through Grantor/Program Title Number (ALN) Grantor (Note A) Expenditures Subrecipients U.S. Department of Education Direct Program Education Stabilization Fund COVID-19 - Education Stabilization Fund - CARES Act - Conah - Students 84.425 79,054 - COVID-19 - Education Stabilization Fund - CARES Act - Conah - Institution 84.425 245,713 - Subtotal 84.425 324,767 - Total U.S. Department of Education 3 24,767 - U.S. Department of Health and Human Services Direct Program Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) COVID-19 - Los Angeles County Epidemiology and Laboratory Capacity - Enhancing Detection Expansion 93.323 (25) 1 20,915,475 52,006,825 COVID-19 - ELC - CARES Act 93.323 (25) 9,708,813 - COVID-19 - ELC 93.323 (25) 605,518 - COVID-19 - ELC - PPPHEA 93.323 (25) 36,612,814 2,568,918 COVID-19 - ELC - Nursing Home and Long-Term Care Facility Strike Teams - NH and LTC 93.323 (25) 2,480,825 448,000 COVID-19 - ELC - Project E – Emerging Infections ELC Reopening Schools 93.323 (25) 83,060,689 82,225,913 COVID-19 - ELC - Data Modernization 93.323 (25) 999,771 - COVID-19 - ELC - Detection and Mitigation of COVID in Confinement Facilities 93.323 (25) 1,279,388 - COVID-19 - ELC - AMD Sequencing and Analytics Construction Grant 93.323 (25) 148,585 - COVID-19 - ELC - Project E - AMD Sequencing and Analytics and Strengthening PHL Preparedness 93.323 (25) 2,829,549 - COVID-19 - ELC Detection and Mitigation of COVID in Homeless Services Sites and other Congregate Settings 93.323 (25) 1,951,671 - COVID-19 - ELC Strengthening HAI and AR Program Capacity (SHARP) 93.323 (25) 2,236,591 - COVID-19 - ELC Nursing Home and Long-Term Care Facilities Strike Teams - SNF 93.323 (25) 336,674 - COVID-19 - ELC - Travelers Health 93.323 (25) 218,972 - Subtotal 93.323 2 63,385,335 137,249,656 Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response COVID-19 - Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis 93.354 275,674 - COVID-19 - Cooperative Agreement For Emergency Response: Public Health Crisis Response - Workforce Development 93.354 39,989,193 2 ,114,340 Subtotal 93.354 40,264,867 2,114,340 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution COVID-19 - Increased Health Care-Related Expenses Attributable to Coronavirus 93.498 7,825,701 - Passed Through the California Department of Aging Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers COVID-19 - ADRC COVID Vaccine Access 93.044 (8)(20) 2101CAVAC5-19 616,334 616,334 COVID-19 - ARP - Title III-B - Older American Act (OAA) - Supportive Services 93.044 (8)(20) AP2122-19 586,601 4 77,150 Subtotal 93.044 1,202,935 1,093,484 Special Programs for the Aging, Title III, Part C, Nutrition Services COVID-19 - ARP - Title III-C1 Congregate Meals 93.045 (8)(21) AP2122-19 2,496,045 2,242,267 COVID-19 - Families First Coronavirus Response Act (FFCRA) - OAA - Home Delivered Meals: Title III-C2 93.045 (8)(21) AP2122-19 1,033,388 962,677 COVID-19 - Consolidated Appropriation Act (CAA), Nutrition OAA Title III-C2 93.045 (8) (21) AP2122-19 611 611 Subtotal 93.045 3,530,044 3,205,555 See accompanying Notes to Schedule of Expenditures of Federal Awards. See legend on page 197 for AL No. Cluster Summary and Notes A, B, and C. 194 (Continued) COUNTY OF LOS ANGELES SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2023 Identifying Number Passed Assistance Listing Assigned by Pass-Through Federal Through to Federal Grantor/Pass Through Grantor/Program Title Number (ALN) Grantor (Note A) Expenditures Subrecipients Passed Through the California Department of Community Services and Development Community Services Block Grant COVID-19 - Community Services Block Grant CARES Act 93.569 (28) 20F-3660 2,716,132 1,782,992 Passed Through the California Department of Health Care Services Block Grants for Community Mental Health Services COVID-19 - Mental Health Services Block Grant - ARP 93.958 (31) 5,613,871 - Block Grants for Prevention and Treatment of Substance Abuse COVID-19 - ARP - Discretionary 93.959 (32) 21-10089 1,817,249 892,578 COVID-19 - ARP - Primary Prevention Set-Aside 93.959 (32) 21-10089 2,949,726 1,636,704 COVID-19 - ARP - Friday Night Live Set-Aside 93.959 (32) 21-10089 17,511 17,511 COVID-19 - Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA) - Primary Prevention Set-Aside 93.959 (32) 21-10089 3,418,992 2,643,228 COVID-19 - CRRSAA - Friday Night Live Set-Aside 93.959 (32) 21-10089 17,511 17,511 COVID-19 - CRRSAA - Perinatal Set-Aside 93.959 (32) 21-10089 909,086 357,021 COVID-19 - CRRSAA - Adolescent/Youth Set-Aside 93.959 (32) 21-10089 267,339 267,339 COVID-19 - CRRSAA - Recovery Housing Support 93.959 (32) 21-10089 3,426,847 3 ,426,847 Subtotal 93.959 12,824,261 9,258,739 Passed Through the California Department of Health Care Services/Advocate For Human Potential Block Grants for Community Mental Health Services COVID-19 - Mental Health Services Block Grant - Crisis Care Mobile Unit (CCMU) - CRRSAA 93.958 (31) 9,686,000 - Passed Through the California Department of Health Care Services/Sierra Health Foundation Block Grants for Community Mental Health Services COVID-19 - Mental Health Services Block Grant - CRRSAA 93.958 (31) 1,682,344 - Passed Through the California Department of Public Health Immunization Cooperative Agreements COVID-19 - Vaccine Preventable Disease Control 93.268 (24) 22-11039 28,283,898 474,271 Passed Through the California Department of Social Services Temporary Assistance for Needy Families COVID-19 - ARP - Pandemic Emergency Assistance Fund (PEAF) 93.558 (26) CFL 21/22-04 4,975,720 - Refugee and Entrant Assistance State/Replacement Designee Administered Programs COVID-19 - Refugee Support Services (RSS) COVID-19 Supplemental 93.566 (27) RSS2002 9,148 - Passed Through the Council of State and Territorial Epidemiologists Strengthening Public Health Systems and Services Through National Partnerships to Improve and Protect the Nation's Health COVID-19 - SARS CoV-2 One Health Surveillance and Capacity Building 93.421 5 NU38OT000297 52,310 - Total U.S. Department of Health and Human Services 3 82,052,566 155,179,037 U.S. Department of Homeland Security Passed Through the United Way Emergency Food and Shelter National Board Program COVID-19 - Emergency Food and Shelter Program - Phase ARP-R 97.024 ARPAR-0695 69,915 - Passed Through the California Governor's Office of Emergency Services Disaster Grants - Public Assistance (Presidentially Declared Disasters) COVID-19 - 2020 Project Roomkey 97.036 (33) DR4482-CA 16,651,968 - COVID-19 - 2020 COVID-19 97.036 (33) DR4482-CA 64,476,453 - Subtotal 97.036 81,128,421 - See accompanying Notes to Schedule of Expenditures of Federal Awards. See legend on page 197 for AL No. Cluster Summary and Notes A, B, and C. 195 (Continued) COUNTY OF LOS ANGELES SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2023 Identifying Number Passed Assistance Listing Assigned by Pass-Through Federal Through to Federal Grantor/Pass Through Grantor/Program Title Number (ALN) Grantor (Note A) Expenditures Subrecipients Emergency Management Performance Grants COVID-19 - 2021 Emergency Management Performance Grant - ARP 97.042 (35) 2021-0014 38,599 38,599 Total U.S. Department of Homeland Security 81,236,935 38,599 U.S. Department of Housing and Urban Development Passed Through the Los Angeles County Development Authority Community Development Block Grants/Entitlement Grants COVID-19 - Senior Program 14.218 (4)(15) 169,742 - Emergency Solutions Grant Program COVID-19 - Emergency Solutions Grant Program Via CARES Act - Purposeful Aging L.A. 14.231 CVES12-21 274,996 - COVID-19 - Emergency Solutions Grant Program Via the CARES Act (ESG-CV) - Street Outreach 14.231 C111437-CVES09-20 392,984 - COVID-19 - Emergency Solutions Grant Program Via the CARES Act (ESG-CV) - Temporary Emergency Shelter 14.231 C111870-CVES08-20 5,114,144 - Subtotal 14.231 5,782,124 - Total U.S. Department of Housing and Urban Development 5,951,866 - U.S. Department of Justice Passed Through the Board of State and Community Corrections Coronavirus Emergency Supplemental Funding Program COVID-19 - Coronavirus Emergency Supplemental Funding Program 16.034 BSCC 108-20 150,491 - Total U.S. Department of Justice 150,491 - U.S. Department of Labor Passed Through the California Employment Development Department WIOA National Dislocated Worker Grants/WIA National Emergency Grants COVID-19 - Disaster Recovery NDWG 1196 - Workforce Development 17.277 (16) AA011012 36,836 36,052 COVID-19 - Disaster Recovery NDWG 1195 - Temporary Jobs 17.277 (16) AA011012 71,777 16,040 Subtotal 17.277 108,613 52,092 WIOA Dislocated Worker Formula Grants COVID-19 - 1228 Response - Keep LA Working Phase II 17.278 (5)(17) AA111012 53,942 24,819 Total U.S. Department of Labor 162,555 76,911 U.S. Department of Transportation Direct Program Airport Improvement Program, COVID-19 Airports Programs, and Infrastructure Investment and Jobs Act Programs COVID-19 - CARES Act Airport 20.106 (18) 163,324 - Total U.S. Department of Transportation 163,324 - U.S. Federal Communications Commission Direct Program Emergency Connectivity Fund Program COVID-19 - ARP Emergency Connectivity Fund Program 32.009 ECF202111209 329,673 - Total U.S. Federal Communications Commission 329,673 - Total Expenditures of COVID-19 Federal Awards 1,009,458,187 246,077,080 Total Expenditures of Federal Awards $ 4 ,096,801,090 $ 6 86,930,881 See accompanying Notes to Schedule of Expenditures of Federal Awards. See legend on page 197 for AL No. Cluster Summary and Notes A, B, and C. 196 (Continued) COUNTY OF LOS ANGELES SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2023 Legend Amounts (1) SNAP Cluster $ 354,485,722 (2) Child Nutrition Cluster 213,623 (3) Forest Service Schools and Roads Cluster 670,612 (4) CDBG - Entitlement Grants Cluster (Note C) 3,424,174 (5) WIOA Cluster (Note C) 32,398,402 (6) Transit Services Programs Cluster 111,683 (7) Highway Safety Cluster 2,351,319 (8) Aging Cluster (Notes B and C) 29,890,659 (9) CCDF Cluster 15,246,776 (10) Medicaid Cluster 637,896,416 (11) Student Financial Assistance Cluster 292,258 (12) Total for ALN #10.025 - Plant and Animal Disease, Pest Control, and Animal Care (Note C) 2,241,686 (13) Total for ALN #10.331 - Gus Schumacher Nutrition Incentive Program (Note C) 379,021 (14) Total for ALN #10.561 - State Administrative Matching Grants for the Supplemental Nutrition Assistance Program 354,485,722 (15) Total for ALN #14.218 - Community Development Block Grants/Entitlement Grants (Note C) 3,424,174 (16) Total for ALN #17.277 - WIOA National Dislocated Worker Grants/WIA National Emergency Grants (Note C) 907,087 (17) Total for ALN #17.278 - WIOA Dislocated Worker Formula Grants (Note C) 5,511,316 (18) Total for ALN #20.106 - Airport Improvement Program, COVID-19 Airports Programs, and Infrastructure Investment and Job Acts Programs (Note C) 722,942 (19) Total for ALN #21.019 - Coronavirus Relief Fund (Note C) 22,896,913 (20) Total for ALN #93.044 - Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers (Note C) 8,036,749 (21) Total for ALN #93.045 - Special Programs for the Aging, Title III, Part C, Nutrition Services (Note C) 16,935,333 (22) Total for ALN #93.217 - Family Planning Services 429,717 (23) Total for ALN #93.243 - Substance Abuse and Mental Health Services Projects of Regional and National Significance 574,124 (24) Total for ALN #93.268 - Immunization Cooperative Agreements (Note C) 33,618,624 (25) Total for ALN #93.323 - Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Note C) 268,466,168 (26) Total for ALN #93.558 - Temporary Assistance for Needy Families (Note C) 820,092,372 (27) Total for ALN #93.566 - Refugee and Entrant Assistance State/Replacement Designee Administered Programs (Note C) 20,210,191 (28) Total for ALN #93.569 - Community Services Block Grant (Note C) 9,499,815 (29) Total for ALN #93.575 - Child Care and Development Block Grant 7,733,600 (30) Total for ALN #93.778 - Medical Assistance Program 614,571,428 (31) Total for ALN #93.958 - Block Grants for Community Mental Health Services (Note C) 32,131,572 (32) Total for ALN #93.959 - Block Grants for Prevention and Treatment of Substance Abuse (Note C) 66,403,285 (33) Total for ALN #97.036 - Disaster Grants - Public Assistance (Presidentially Declared Disasters) (Note C) 81,620,742 (34) Total for ALN #97.039 - Hazard Mitigation Grant 532,030 (35) Total for ALN #97.042 - Emergency Management Performance Grants (Note C) 1,744,697 (36) Total for ALN #97.067 - Homeland Security Grant Program 27,320,883 Note A - Certain awards do not have a pass-through entity ID number Note B - Aging Cluster (as determined by the California Health and Human Services Agency, Department of Aging) Note C - Includes COVID-19 awards See accompanying Notes to Schedule of Expenditures of Federal Awards. 197 COUNTY OF LOS ANGELES NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2023 NOTE 1 – GENERAL The accompanying Schedule of Expenditures of Federal Awards (SEFA) represents all federal programs of the County of Los Angeles, California (the County). The County’s basic financial statements include the operations of the Los Angeles County Development Authority (LACDA) and the Los Angeles County Children and Families First – Proposition 10 Commission (First 5 LA), which expended $614,359,546 and $132,945, respectively, in federal awards, and are not included in the accompanying SEFA. The LACDA engaged auditors to perform an audit in accordance with Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). First 5 LA did not meet the minimum threshold of $750,000 and, therefore, was exempt from having an audit in accordance with Uniform Guidance. All federal financial assistance received directly from federal/State agencies, as well as federal financial assistance passed through other government agencies, is included in the SEFA. NOTE 2 – BASIS OF ACCOUNTING The SEFA is prepared on the modified accrual basis of accounting for program expenditures accounted for in the governmental funds and the accrual basis of accounting for program expenditures accounted for in the proprietary funds, as described in Note 1 of the Notes to the County’s basic financial statements. The information in this schedule is presented in accordance with the requirements of Uniform Guidance. However, some amounts presented in this schedule are reported on a cash basis, as described in the succeeding paragraph. Additionally, certain federal program expenditures in the SEFA are converted to and reported on a cash basis due to the claiming requirements of pass-through and federal agencies. These expenditures are presented on a cash basis to be consistent with the amounts previously claimed and reported for reimbursement purposes. The affected programs are listed below. ALN Program Name __ 10.561 Supplemental Nutrition Assistance Program – Education (SNAP-ED) 10.561 Supplemental Nutrition Assistance Program (SNAP) – Administration (CalFresh) 14.218 Community Code Enforcement 4th District 14.218 Community Code Enforcement East Los Angeles – 1st District 14.218 Loma Alta Park Recreation Program 14.218 New Florence Library Project 14.218 Pamela Park Recreation Program 14.218 Pearblossom Park Recreation Program 16.738 Alternate Sentencing Program (PD) (JAG) 18 16.738 Public Health – Trauma Prevention Initiative (JAG) 18 16.738 Sheriff Supervisorial District 5 Patrol Services Overtime (JAG) 18 16.738 Sheriff Unincorporated Area Patrol Services Overtime (JAG) 18 16.738 Toberman Grace (JAG) 18 16.738 Sheriff Supervisorial District 5 Patrol Services Overtime (JAG) 19 16.738 Alternate Sentencing Program (PD) (JAG) 19 16.738 Soledad Enrichment Action – Life Program (JAG) 19 16.738 Toberman Grace (JAG) 19 16.738 Boys and Girls Club – College and Career Bound (JAG) 19 198 COUNTY OF LOS ANGELES NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2023 NOTE 2 – BASIS OF ACCOUNTING-Continued ALN Program Name __ 16.738 Sheriff School Resource Deputy (JAG) 19 16.738 Sheriff Youth Activities League (JAG) 19 20.616 Alcohol and Drug Impaired Driver Vertical Prosecution Program 20.616 Office of Traffic Safety Program (OTS) 32.009 COVID-19 – ARP Emergency Connectivity Fund Program 45.024 Grants for Arts Project Funding 45.310 Lending Library Program 84.007 Supplemental Educational Opportunity Grants 84.063 Pell Grants 93.041 Title VII – Elder Abuse Prevention 93.090 Kinship Guardianship Assistance Payment Program (Kin-GAP) Title IV-E 93.136 National Violent Death Reporting System (NVDRS) 93.268 Vaccine Preventable Disease Control 93.556 Promoting Safe and Stable Families Program (PSSF) 93.558 CalWORKs Diversion 93.558 CalWORKs – Family Group/Unemployed Parent (FG/U) Assistance 93.558 CalWORKs Legal Immigrants (MC) 93.558 CalWORKs Single 93.558 Temporary Assistance for Needy Families (TANF) 93.558 COVID-19 – ARP – Pandemic Emergency Assistance Fund (PEAF) 93.563 Child Support Enforcement Title IV-D 93.566 COVID-19 – Refugee Support Services (RSS) COVID-19 Supplemental 93.566 Refugee Employment Social Services 93.566 Refugee Health Assessment Program 93.566 Refugee Resettlement 93.566 Services to Older Refugees 93.569 Community Services Block Grant 22F-5021 93.569 COVID-19 – Community Services Block Grant CARES Act 20F-3660 93.569 Community Services Block Grant 22F-5105 93.569 Community Services Block Discretionary Grant 22F-5105 93.569 Community Services Block Grant 23F-4105 93.569 Community Services Block Grant 23F-4021 93.569 Community Services Block Grant 21F-4021 93.576 Refugee Health Promotion Project (RHPP) 93.579 U.S. Repatriation Program 93.590 Community – Based Child Abuse Prevention 93.596 Child Day Care Program 93.603 Adoptions and Legal Guardianship Incentive Payments 199 COUNTY OF LOS ANGELES NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2023 NOTE 2 – BASIS OF ACCOUNTING-Continued ALN Program Name __ 93.645 Children’s Welfare Services IV-B (Direct Cost) 93.658 Aid to Families with Dependent Children – FC- Administration and Assistance 93.658 Child Welfare Services Outcome Improvement Project (Cohort 1) 93.658 Foster Care Title IV-E 93.658 Foster Family Licensing 93.658 Foster Parent Training 93.658 Group Home Month Visits / CWD 93.659 Adoptions – Administration and Assistance 93.667 Children’s Welfare Services Title XX 93.674 Independent Living Skills – Children’s Services 93.778 Adult Protective Services/County Services Block Grant 93.778 Child Health and Disability Program 93.778 Children’s Welfare Services XIX (Health-Related) 93.778 Federal Drug Medi-Cal (Prenatal and Drug) FMAP 93.778 Health Care Program Children in Foster Care 93.778 In-Home Supportive Services – Personal Care Services Program (Health-Related) 93.778 Medi-Cal Eligibility Determination 93.778 Medi-Cal Health Enrollment Navigators Project 93.870 Title V Maternal, Infant, and Early Childhood Home Visiting Program 93.940 Integrated HIV Surveillance and Prevention for Los Angeles County 97.036 COVID-19 – Disaster Grants – Public Assistance (Presidentially Declared Disasters) NOTE 3 – GRANT PROGRAMS REIMBURSED IN ARREARS The County participates in several federal programs where payments are received in arrears because eligibility, as determined by the federal agency, is determined in arrears. The County reports actual revenues for these programs in the year that the funds are received, since the County’s eligible expenditures are not determinable until reimbursement is received. Pest Detection Emergency Program, ALN 10.025 FY Exp. Incurred FY Exp. Reimbursed Amount 2021-2022 2022-2023 $908,534 Pest Exclusion/Dog Teams Program, ALN 10.025 FY Exp. Incurred FY Exp. Reimbursed Amount 2021-2022 2022-2023 $580,663 Glassy Winged Sharpshooter, ALN 10.025 FY Exp. Incurred FY Exp. Reimbursed Amount 2021-2022 2022-2023 $614,706 200 COUNTY OF LOS ANGELES NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2023 NOTE 3 – GRANT PROGRAMS REIMBURSED IN ARREARS-Continued Asian Citrus Psyllid/Huanglongbing, ALN 10.025 FY Exp. Incurred FY Exp. Reimbursed Amount 2021-2022 2022-2023 $102,138 NOTE 4 – COMMUNITY SERVICES BLOCK GRANTS, ALN 93.569 At the request of the California Health and Human Services Agency, Department of Community Services and Development, supplementary schedules of expenditures for Community Services Block Grant programs are included on pages 251 through 258. NOTE 5 – MEDICAID CLUSTER Direct Medi-Cal and Medicare expenditures are excluded from the SEFA. These expenditures represent fees for services and are not included in the SEFA or in determining major programs. The County assists the State of California in determining eligibility and provides Medi-Cal and Medicare services through County-owned facilities. Administrative costs related to Medi-Cal and Medicare are, however, included in the SEFA under the Medicaid Cluster. NOTE 6 – INDIRECT COST RATE The County of Los Angeles has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. NOTE 7 – CORONAVIRUS DISEASE 2019 (COVID-19) On March 13, 2020, a presidential emergency was declared for all states, tribes, territories, and the District of Columbia due to the ongoing COVID-19 pandemic. The declaration made federal disaster grant public assistance available through the CARES Act to the County and to the State of California to supplement the County’s local recovery efforts. To assist in the efforts to respond to COVID-19, the County received significant fiscal stimulus in federal funds as described below. In FY 2022-2023, the County spent all of the remaining federal and State CARES Act funds. Federal Emergency Management Agency The County received a $119.00 million Public Assistance Grant from the Federal Emergency Management Agency (FEMA) and a $3.70 million Public Assistance Grant from the California Governor’s Office of Emergency Services (Cal OES) for five expedited projects to respond to COVID-19. The five projects were for the 1) County’s Emergency Operations Center and related emergency services/activities; 2) Non- congregate medical shelters; 3) COVID-19 testing; 4) Project Room Key – emergency non-congregate shelters for homeless individuals meeting certain criteria; and 5) Great Plates – emergency feeding for certain at-risk individuals. The accompanying SEFA includes FEMA COVID-19 public assistance expenditures of $81.13 million (ALN 97.036). Emergency Rental Assistance The federal Emergency Rental Assistance (ERA) program makes funding available to assist households that are unable to pay rent or utilities due to the COVID-19 pandemic. Two separate programs have been established: ERA1 provides up to $25 billion under the Consolidated Appropriations Act, 2021, which was enacted on December 27, 2020, and ERA2 provides up to $21.55 billion under the American Rescue Plan Act (ARP) of 2021, which was enacted on March 11, 2021. During FY 2020-2021, the County received $160.07 million and $84.72 million for ERA1 and ERA2, respectively. 201 COUNTY OF LOS ANGELES NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2023 NOTE 7 – CORONAVIRUS DISEASE 2019 (COVID-19)-Continued For ERA1 and ERA2, the County entered into an agreement to direct the State of California to administer the County’s funds to eliminate confusion for tenants and landlords because of the multiple programs amongst the multitude of jurisdictions within the State and the County. As part of the funding transfer agreement, the County was relieved of all ERA1 and ERA2 compliance responsibilities, which were transferred to the State. However, the accompanying SEFA includes $378,730 of ERA2 expenditures (ALN 21.023) for the administrative services reimbursed to LACDA as a contractor. Coronavirus State and Local Fiscal Recovery Funds The ARP Act of 2021 authorized the Coronavirus State and Local Fiscal Recovery Funds (SLFRF), which continues many of the programs started by the CARES Act (2020) and Consolidated Appropriations Act, 2021, by adding new phases, new allocations, and new guidance to address issues related to the continuation of the COVID-19 pandemic. The Coronavirus SLFRF also creates a variety of new programs to address continuing pandemic-related crises and fund recovery efforts as the United States begins to emerge from the COVID-19 pandemic. The ARP Act was passed by Congress on March 10, 2021, and signed into law on March 11, 2021. On May 16, 2021, the County received the first tranche of $974.99 million of Coronavirus SLFRF funds from the U.S. Department of Treasury and on June 9, 2022, the County received the second tranche of $974.99 million. The County is a prime recipient. The accompanying SEFA includes expenditures of Coronavirus SLFRF funds (ALN 21.027) in the amount of $515.57 million to: 1) respond to the public health emergency or its negative economic impacts; 2) respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers; 3) provide government services to the extent of the reduction in revenue due to the COVID-19 public health emergency relative to revenues collected in the most recent full fiscal year prior to the emergency; and 4) make necessary investments in water, sewer, or broadband infrastructure. In December 2022, Congress amended the Coronavirus SLFRF program through the Consolidated Appropriations Act, 2023, providing additional flexibility for recipients to use Coronavirus SLFRF funds to respond to natural disasters, build critical infrastructure, and support community development. The Coronavirus SLFRF funds must be obligated between March 3, 2021, and December 31, 2024, and expended to cover such obligations by December 31, 2026. NOTE 8 – GRANT NOT PREVIOUSLY REPORTED The County identified a grant received but not reported in the prior year’s SEFA. Below is the grant and fiscal year not previously reported. U.S. Department of Treasury Coronavirus SLFRF, ALN 21.027 Grant FY Amount Number 2021-2022 $1,249,778 U00015 NOTE 9 – PRIOR YEAR EXPENDITURES NOT PREVIOUSLY REPORTED In FY 2021-2022, due to an error, the Department of Public Health did not report all expenditures for one grant, COVID-19 – Los Angeles County Epidemiology and Laboratory Capacity – Enhancing Detection Expansion, of fifteen (15) grants for Epidemiology and Laboratory Capacity for Infectious Diseases (ELC), ALN 93.323, totaling $604,700,959. The following table summarizes the reported amount, revised amount, and corresponding variance for the grant. 202 COUNTY OF LOS ANGELES NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2023 NOTE 9 – PRIOR YEAR EXPENDITURES NOT PREVIOUSLY REPORTED-Continued Reported Revised FY Amount Amount Variance 2021-2022 $289,470,670 $316,986,209 $27,515,539 NOTE 10 – PRIOR YEARS ADJUSTMENTS On December 21, 2022, the California Department of Social Services (CDSS) issued County Fiscal Letter No. 22/23-31 informing the County that federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (ALN 21.019) funds replaced State General Funds for specific FY 2019-2020 and FY 2020-2021 COVID-19 related activities totaling $9,346,681 and $13,377,693, respectively, based on eligible CARES Act expenditures reported to CDSS. The following table summarizes the affected County programs and related amounts, which have been reported as federal expenditures under ALN 21.019 in the current year. Programs FY 2019-2020 FY 2020-2021 C alFresh Administration $7,009,049 Adult Protective Services 315,473 Child Welfare Services 1,839,230 Rate Increase Aid Code 5K 412 $1,157 Rate Increase Aid Codes 40/42 920 6,228 Rate Increase Aid Codes 43/49 181,597 8,448,208 Project Roomkey 2,000,000 Rate Increase Aid Code 5L 119,300 Non-Minor Dependents County 2,655,705 Welfare Departments Non-Minor Dependents County 147,095 P robation Departments Total $9,346,681 $13,377,693 NOTE 11 – FEMA EMERGENCY NON-CONGREGATE SHELTERING On October 16, 2023, FEMA issued Emergency Non-Congregate Sheltering (NCS) – FEMA-4482-DR-CA (COVID-19) providing clarification to the County of the eligibility of emergency NCS during the COVID-19 pandemic, specifically the eligibility of “high risk” individuals requiring social distancing. The County’s expenditures for Project Roomkey are $16,651,968 under Disaster Grants – Public Assistance (Presidentially Declared Disasters) (ALN 97.036) and FEMA funds were used for Project Roomkey NCS. The County acknowledges the impact of the FEMA emergency NCS letter has not been determined and is being evaluated. The County will disclose the impact of the FEMA emergency NCS letter in the FY 2023-24 Single Audit Report. 203 Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards The Honorable Board of Supervisors County of Los Angeles, California We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards), the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the County of Los Angeles, California (County), as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the County’s basic financial statements, and have issued our report thereon dated December 8, 2023, except for the report on the schedule of expenditures of federal awards, the community services block grant supplementary schedules of revenue and expenditures, and the supplementary schedule of expenditures of federal and State awards granted by the California Department of Aging, as to which the date is March 28, 2024. Our report includes emphasis of matter paragraphs for the County’s adoption of Governmental Accounting Standards Board Statement No. 96, Subscription- Based Information Technology Arrangements, and the advanced federal and State disaster assistance funding received by the County to supplement the County’s recovery efforts related to the Coronavirus Disease 2019 pandemic. Our report includes a reference to other auditors who audited the financial statements of the Los Angeles County Development Authority, the Los Angeles County Children and Families First – Proposition 10 Commission, and the Los Angeles County Employees Retirement Association, as described in our report on the County’s financial statements. This report does not include the results of the other auditors testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors. Report on Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the County’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the County’s internal control. Accordingly, we do not express an opinion on the effectiveness of the County’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We identified certain deficiencies in internal control described in the accompanying schedule of findings and questioned costs as items 2023-001 and 2023-002 that we consider to be significant deficiencies. Macias Gini & O’Connell LLP 700 South Flower Street, Suite 800 www.mgocpa.com Los Angeles, CA 90017 204 Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the County’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. County’s Response to Findings Government Auditing Standards requires the auditor to perform limited procedures on the County’s response to the findings identified in our audit and described in the accompanying schedule of findings and questioned costs. The County’s response was not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response. Purpose of This Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Los Angeles, California December 8, 2023 205 Independent Auditor’s Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance Required by the Uniform Guidance The Honorable Board of Supervisors County of Los Angeles, California Report on Compliance for Each Major Federal Program Qualified and Unmodified Opinions We have audited the County of Los Angeles, California’s (County) compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each of the County’s major federal programs for the year ended June 30, 2023. The County’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Qualified Opinion on Public Health Emergency Preparedness Program (ALN 93.069) In our opinion, except for the noncompliance described in the Basis for Qualified and Unmodified Opinions section of our report, the County complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on the Public Health Emergency Preparedness Program (ALN 93.069) for the year ended June 30, 2023. Unmodified Opinion on Each of the Other Major Federal Programs In our opinion, the County complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its other major federal programs identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs for the year ended June 30, 2023. Basis for Qualified and Unmodified Opinions We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS); the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards); and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report. We are required to be independent of the County and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified and unmodified opinions on compliance for each major federal program. Our audit does not provide a legal determination of the County’s compliance with the compliance requirements referred to above. Macias Gini & O’Connell LLP 700 South Flower Street, Suite 800 www.mgocpa.com Los Angeles, CA 90017 206 Matters Giving Rise to Qualified Opinion on Public Health Emergency Preparedness (ALN 93.069) As described in Finding 2023-008 in the accompanying schedule of findings and questioned costs, the County did not comply with the requirements regarding the following: Assistance Finding Listing Number Number Program/Cluster Name Compliance Requirement 2023-008 93.069 Public Health Emergency Preparedness Procurement and Suspension and Debarment Compliance with such requirements is necessary, in our opinion, for the County to comply with the requirements applicable to that program. Other Matter – Federal Expenditures Not Included in the Compliance Audit The County’s basic financial statements include the operations of the Los Angeles County Development Authority (LACDA) and the Los Angeles County Children and Families First – Proposition 10 Commission (First 5 LA), which expended $614,359,546 and $132,945, respectively, in federal awards, which are not included in the County’s schedule of expenditures of federal awards for the year ended June 30, 2023. Our compliance audit, described in the Qualified and Unmodified Opinions, does not include the operations of LACDA and First 5 LA because LACDA engaged other auditors to perform an audit of compliance and First 5 LA did not issue a compliance report because it did not meet the audit requirements of the Uniform Guidance. Responsibilities of Management for Compliance The County’s management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements applicable to the County’s federal programs. Auditor’s Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the County’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material, if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the County’s compliance with the requirements of each major federal program as a whole. 207 In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the County’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. • Obtain an understanding of the County’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the County’s internal control over compliance. Accordingly, no such opinion is expressed. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit. Other Matters The results of our auditing procedures disclosed instances of noncompliance which are required to be reported in accordance with the Uniform Guidance and which are described in the accompanying schedule of findings and questioned costs as items 2023-003, 2023-004, 2023-005, 2023-006, 2023-007, 2023-009, and 2023-010. Our opinion on each major federal program is not modified with respect to these matters. Government Auditing Standards requires the auditor to perform limited procedures on the County’s response to the noncompliance findings identified in our compliance audit described in the accompanying schedule of findings and questioned costs. The County’s response was not subjected to the other auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. Report on Internal Control Over Compliance Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as discussed below, we did identify certain deficiencies in internal control over compliance that we consider to be material weaknesses. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. We consider the deficiencies in internal control over compliance described in the accompanying schedule of findings and questioned costs as items 2023-003 through 2023-010 to be material weaknesses. 208 Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed. Government Auditing Standards requires the auditor to perform limited procedures on the County’s response to the internal control over compliance findings identified in our compliance audit described in the accompanying schedule of findings and questioned costs. The County’s response was not subjected to the other auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Los Angeles, California March 28, 2024 209 COUNTY OF LOS ANGELES SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2023 Section I - Summary of Auditor’s Results (a) Financial Statements Type of report issued on whether the financial statements audited were prepared in accordance with GAAP: Unmodified Opinion Internal control over financial reporting: • Material weakness(es) identified? No • Significant deficiency(ies) identified? Yes Noncompliance material to the financial statements noted? No (b) Federal Awards Internal control over major federal programs: • Material weakness(es) identified? Yes • Significant deficiency(ies) identified? None reported Type of auditor’s report issued on compliance for major federal programs: Unmodified for all major programs except for the following, which is qualified: ALN 93.069 - Public Health Emergency Preparedness Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a): Yes 210 COUNTY OF LOS ANGELES SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2023 Identification of major federal programs: Assistance Listing Numbers Name of Federal Program or Cluster 16.575 Crime Victim Assistance 21.019 Coronavirus Relief Fund 21.027 Coronavirus State and Local Fiscal Recovery Funds 93.069 Public Health Emergency Preparedness 93.090 Guardianship Assistance 93.116 Project Grants and Cooperative Agreements for Tuberculosis 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) 93.354 Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response 93.391 Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises 93.558 Temporary Assistance for Needy Families 93.566 Refugee and Entrant Assistance State/Replacement Designee Administered Programs 93.658 Foster Care Title IV-E 93.914 HIV Emergency Relief Project Grants 93.940 HIV Prevention Activities Health Department Based 93.994 Maternal and Child Health Services Block Grant to the States 98.001 USAID Foreign Assistance for Programs Overseas Dollar threshold used to distinguish between Type A and Type B programs: $12,290,403 Auditee qualified as a low-risk auditee? No 211 COUNTY OF LOS ANGELES SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2023 Section II – Financial Statement Findings Reference Number: 2023-001 Federal Program Title: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Assistance Listing Number: 93.323 Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: N/A Federal Award Number and Year: 6 NU50CK000498-02-04; Fiscal Year 2021-22 Name of Department: Department of Public Health Category of Finding: Schedule of Expenditure of Federal Awards Type of Finding: Significant Deficiency in Internal Control Over Financial Reporting Criteria In accordance with Title 2 U.S. Code of Federal Regulations (CFR) § 200.510 the non-Federal entity must prepare the schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee non- Federal entity's financial statements which must include the total Federal awards expended as determined in accordance with § 200.502. 2 CFR § 200.502 states: The determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the non-Federal entity to comply with Federal statutes, regulations, and the terms and conditions of Federal awards, such as: expenditure/expense transactions associated with awards including grants, cost-reimbursement contracts under the FAR, compacts with Indian Tribes, cooperative agreements, and direct appropriations; the disbursement of funds to subrecipients; the use of loan proceeds under loan and loan guarantee programs; the receipt of property; the receipt of surplus property; the receipt or use of program income; the distribution or use of food commodities; the disbursement of amounts entitling the non-Federal entity to an interest subsidy; and the period when insurance is in force. Condition During our audit of the Department of Public Health’s (DPH) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) program, we noted that DPH under reported expenditures in the SEFA for fiscal year ended June 30, 2022 by $27.5 million. The County disclosed the prior year expenditures not previously reported in note 9 to the SEFA. Cause The program misinterpreted guidance provided by the Office of the Auditor-Controller on identifying expenditures to include in the SEFA, and did not include accruals recorded in the accounting system for services incurred but not paid as of June 30, 2022. Effect Failure to accurately identify and report Federal expenditures in the SEFA could affect the major program determination and the programs selected for audit. 212 COUNTY OF LOS ANGELES SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2023 Questioned Costs Questioned costs were not identified. Context The FY 2021-22 SEFA underreported $27.5 million of expenditures, constituting 4.5 percent of the ELC program’s reported total expenditures of $607.4 million, or 4.3 percent of the ELC program’s actual total expenditures of $634.9 million. The County disclosed the prior year expenditures not previously reported in note 9 of the notes to the SEFA. The under reporting of expenditures in the SEFA did not affect the prior year’s major program determination and programs selected for audit. Recommendation We recommend that the DPH strengthen its processes for identifying and reporting Federal expenditures in the SEFA to ensure all services incurred but not paid during the applicable fiscal year are appropriately included in the SEFA. Views of Responsible Officials and Planned Corrective Action 1. Person responsible: Director, Department of Public Health 2. Corrective action plan: DPH Finance agrees with finding and recommendation. Finance will take the following corrective action: • Initiate direct, written communication with the Auditor-Controller to seek precise instructions and guidance on the inclusion of accruals in our reporting. • Proactively review and document accrual procedures, ensuring alignment with regulatory requirements. • Prospectively include and implement accrual reporting in the Single Audit. • Establish a communication protocol with the Auditor-Controller to address any future uncertainties promptly. Through these measures, DPH aims to address the audit finding, establish clear guidelines for accrual reporting, and ensure compliance with reporting requirements while maintaining transparency and accuracy in our financial reporting practices. 3. Anticipated implementation date: April 1, 2024 213 COUNTY OF LOS ANGELES SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2023 Reference Number: 2023-002 Federal Program Title: Maternal and Child Health Services Block Grant to the States Federal Assistance Listing Number: 93.994 Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: California Department of Health Care Services/Public Health Institute Federal Award Number and Year: 202219; Fiscal Year 2022-23 Name of Department: Department of Public Health Category of Finding: Schedule of Expenditure of Federal Awards Type of Finding: Significant Deficiency in Internal Control Over Financial Reporting Criteria In accordance with Title 2 U.S. Code of Federal Regulations (CFR) § 200.510 the non-Federal entity must prepare the schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee non- Federal entity's financial statements which must include the total Federal awards expended as determined in accordance with § 200.502. At a minimum, the schedule must provide total Federal awards expended for each individual Federal program and the Assistance Listings Number (ALN). Condition During our audit of the DPH’s Maternal and Child Health Services Block Grant to the States (MCH) program, we noted that DPH incorrectly reported expenditures for the MCH Program in the SEFA. $2,163,020 in expenditures for ALN 93.778 Medicaid Assistance Program, were reported as MCH Program expenditures under ALN 93.994. The SEFA was corrected to properly report the expenditures under both ALNs. Cause DPH used funds from ALN 93.778 Medicaid Assistance Program, as matching funds for the MCH Program, as allowed by the MCH Program. While DPH tracked the expenditures for the two ALNs separately, it reported all of the expenditures in the SEFA under the MCH Program. Effect Failure to accurately identify and report Federal expenditures in the SEFA could affect the major program determination and the programs selected for audit and the timely completion of the Single Audit. The MCH program was selected as a Type B program and audited for FY 2022-23. Upon correcting the error identified, an additional Type B program was required to be selected for audit, as MCH fell below the Type B program threshold for FY 2022-23 and did not need to be considered in the County’s risk assessment. Questioned Costs Questioned costs were not identified. Context The MCH Program originally reported total expenditures of $3,361,264 in FY 2022-23 for two different federal programs: ALN 93.994 for $1,198,244 and ALN 93.778 for $2,163,020. DPH reported the expenditures as $3,361,264 for ALN 93.994 and $0 for ALN 93.778. The SEFA was corrected to appropriately report the expenditures in ALN 93.994 and ALN 93.778. 214 COUNTY OF LOS ANGELES SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2023 Recommendation We recommend that the DPH strengthen its processes for identifying and reporting Federal expenditures in the SEFA to ensure expenditures are reported under the correct federal program ALN. Views of Responsible Officials and Planned Corrective Action 1. Person responsible: Director, Department of Public Health 2. Corrective action plan: DPH Finance agrees with this finding and recommendation. DPH will ensure to report Federal expenditures in the SEFA under the correct ALN based on Time Studies received. 3. Anticipated implementation date: March 7, 2024 215 COUNTY OF LOS ANGELES SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2023 Section III – Federal Award Findings and Questioned Costs Reference Number: 2023-003 Federal Program Title: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Assistance Listing Number: 93.323 Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: N/A Federal Award Number and Year: 6 NU50CK000498-02-06; Fiscal Year 2022-23 Name of Department: Department of Public Health Category of Finding: Reporting Type of Finding: Material Weakness in Internal Control Over Compliance; Instance of Noncompliance Criteria In accordance with Title 2 U.S. Code of Federal Regulations (CFR) Part 170 – Reporting Subaward and Executive Compensation Information, Appendix A to Part 170 – Award Term, prime awardees awarded a Federal grant are required to file a Federal Funding Accountability and Transparency Act (FFATA) report by the end of the month following the month in which the prime awardee awards any sub-grant equal to or greater than $30,000. A subaward may be provided through any legal agreement. 2 CFR § 200.303 states that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition During our audit of the Department of Public Health’s (DPH) compliance with the reporting requirement to file FFATA Reports for the Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) program, we noted that DPH submitted the FFATA report for one (1) subaward after the due date. Report Number of Subaward Reporting Name Subawards Obligation Date Period Due Date Date Submitted FFATA 1 10/5/2022 December 2022 11/30/2022 December 2022 This is a repeat finding of 2022-009. Cause DPH used the date of a notice to the subrecipient, December 16, 2022, for FFATA reporting; and not the date of the subaward agreement’s amendment, October 5, 2022. The notice is not a legal agreement. 216 COUNTY OF LOS ANGELES SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2023 Effect Failure to submit the FFATA reports on a timely basis results in noncompliance with the reporting requirements with 2 CFR Part 170. Questioned Costs Questioned costs were not identified. Context Five (5) subawards requiring the submission of a FFATA report were selected from a total population of seven (7) subawards, and a FFATA report was not submitted timely for one (1) subaward. The sample was not a statistically valid sample. Recommendation We recommend that the DPH develop and document a process to identify, track and report all subaward agreements and modifications executed throughout the fiscal year and subject to FFATA reporting requirements. Views of Responsible Officials and Planned Corrective Action 1. Person responsible: Director, Department of Public Health 2. Corrective action plan: DPH Acute Communicable Disease Controls (ACDC) agrees with the finding and recommendation. ACDC staff will monitor subawards and submit the required FFATA reports in the FFATA system upon execution date of the amendment, but no later than the following month it was executed. This includes keeping monitoring logs of all contract amendments and modifications that are subject to FFATA reporting requirements. 3. Anticipated implementation date: March 1, 2024 217 COUNTY OF LOS ANGELES SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2023 Reference Number: 2023-004 Federal Program Title: Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response Federal Assistance Listing Number: 93.354 Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: N/A Federal Award Number and Year: 6 NU90TP922183-01-03; Fiscal Year 2022-23 Name of Department: Department of Public Health Category of Finding: Reporting Type of Finding: Material Weakness in Internal Control Over Compliance; Instance of Noncompliance Criteria In accordance with Title 2 U.S. Code of Federal Regulations (CFR) Part 170 – Reporting Subaward and Executive Compensation Information, Appendix A to Part 170 – Award Term, prime awardees awarded a Federal grant are required to file a Federal Funding Accountability and Transparency Act (FFATA) report by the end of the month following the month in which the prime awardee awards any sub-grant equal to or greater than $30,000. 2 CFR § 200.303 states that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition During our audit of the DPH’s compliance with the reporting requirement for the Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response (PHER) program, we noted that DPH submitted the FFATA reports for two (2) subawards after the due date. Report Number of Subaward Reporting Name Subawards Obligation Date Period Due Date Date Submitted FFATA 1 12/07/2021 August 2022 01/31/2022 August 2022 FFATA 1 04/19/2022 August 2022 05/31/2022 August 2022 Cause Due to working on deadlines for the annual closing of multiple grants and claims submissions, it was an oversight that the FFATA report was not submitted on time. Effect Failure to submit the FFATA reports results in noncompliance with the reporting requirements with 2 CFR Part 170. 218 COUNTY OF LOS ANGELES SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2023 Questioned Costs Questioned costs were not identified. Context Two (2) subawards requiring the submission of a FFATA report were selected for testing from a total population of three (3) subrecipient awards, and FFATA reports were not submitted timely for two (2) subawards. The sample was not a statistically valid sample. Recommendation We recommend that the DPH develop and document a process to identify, track and report all subaward agreements and modifications executed throughout the fiscal year and subject to FFATA reporting requirements. Views of Responsible Officials and Planned Corrective Action 1. Person responsible: Director, Department of Public Health 2. Corrective action plan: DPH, Emergency Preparedness Response Program (EPRD) agrees with the finding and recommendation. EPRD staff will send the subrecipient/contractor the FFATA reporting notice, which includes a request for the five most highly compensated officers at the same time the contract is sent to the subrecipient/contractor for signature. This will assist EPRD with tracking the reporting notice because once the subrecipient/contractor returns the signed contract, they will also return the FFATA reporting notice. Once staff receives the executed contract from DPH’s Contracts and Grants, the FFATA reporting system will be updated accordingly and a screenshot showing the date/time the report was submitted will be kept on file. 3. Anticipated implementation date: July 1, 2024 219 COUNTY OF LOS ANGELES SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2023 Reference Number: 2023-005 Federal Program Title: HIV Prevention Activities Health Department Based Federal Assistance Listing Number: 93.940 Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: N/A Federal Award Number and Year: 5 NU62PS924619-02-00, 5 NU62SP924619-03-00, 6 NU62PS924569-05-03; 6 NU62PS924569-05-04; 6 NU62PS924569-05-05; Fiscal Year 2022-23 Name of Department: Department of Public Health Category of Finding: Reporting Type of Finding: Material Weakness in Internal Control Over Compliance; Instance of Noncompliance Criteria In accordance with Title 2 U.S. Code of Federal Regulations (CFR) Part 170 – Reporting Subaward and Executive Compensation Information, Appendix A to Part 170 – Award Term, prime awardees awarded a Federal grant are required to file a Federal Funding Accountability and Transparency Act (FFATA) report by the end of the month following the month in which the prime awardee awards any sub-grant equal to or greater than $30,000. 2 CFR § 200.303 states that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition During our audit of the DPH’s compliance with the reporting requirement for the HIV Prevention Activities Health Department Based program, we noted that DPH submitted the FFATA reports for seven (7) subawards after the due date. Report Number of Subaward Reporting Name Subawards Obligation Date Period Due Date Date Submitted FFATA 1 02/07/2023 June 2023 03/31/2023 June 2023 FFATA 1 09/16/ 2022 December 2022 10/31/2022 December 2022 FFATA 1 02/16/2023 June 2023 03/31/2023 June 2023 FFATA 1 09/06/2022 December 2022 10/31/2022 December 2022 FFATA 1 03/03/2023 June 2023 04/30/2023 June 2023 FFATA 1 12/20/2022 June 2023 01/31/2023 June 2023 FFATA 1 10/12/2022 December 2022 11/30/2022 December 2022 This is a repeat finding of 2022-010. 220 COUNTY OF LOS ANGELES SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2023 Cause The program reported subaward agreements and modifications in December 2022 and at fiscal year-end in June 2023, rather than 30 days after when the subaward agreements or modifications occurred. Effect Failure to submit the FFATA reports results in noncompliance with the reporting requirements with 2 CFR Part 170. Questioned Costs Questioned costs were not identified. Context Ten (10) subawards requiring the submission of a FFATA report were selected for testing from a total population of 38 subrecipient awards, and FFATA reports were not submitted timely for seven (7) subawards. The sample was not a statistically valid sample. Recommendation We recommend that the DPH develop and document a process to identify, track and report all subaward agreements and modifications executed throughout the fiscal year and subject to FFATA reporting requirements. Views of Responsible Officials and Planned Corrective Action 1. Person responsible: Director, Department of Public Health 2. Corrective action plan: DPH, Division of HIV and STD Programs (DHSP) agrees with the finding and recommendation. DHSP will institute a new procedure that 1) notifies subaward recipients within 30 days of the effective date of the subaward execution or modification of relevant federal award information and 2) uploads federal subaward information to FFATA within 30 days of the effective date of the subaward execution or modification of relevant federal award information. These notifications will happen for all subawards that meet the threshold for FFATA reporting. DHSP understands that these notifications may precede the full execution of a new contract or subaward. 3. Anticipated implementation date: July 1, 2024 221 COUNTY OF LOS ANGELES SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2023 Reference Number: 2023-006 Federal Program Title: Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response Federal Assistance Listing Number: 93.354 Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: N/A Federal Award Number and Year: 6 NU90TP922183-01-03; Fiscal Year 2022-23 Name of Department: Department of Public Health Category of Finding: Procurement and Suspension and Debarment Type of Finding: Material Weakness in Internal Control Over Compliance; Instance of Noncompliance Criteria Procurement In accordance with Title 2 U.S. Code of Federal Regulations (CFR) § 200.318: (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. 2 CFR § 200.319 states: (a) All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and § 200.320. 2 CFR § 200.320 states: The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. Suspension and Debarment In addition, in accordance with 2 CFR § 180.200 a covered transaction is a nonprocurement or procurement transaction that is subject to the prohibitions of this part. Per 2 CFR § 180.970(a), nonprocurement transaction means any transaction, regardless of type (except procurement contracts), including, but not limited to grants. According to 2 CFR § 180.300, when the County enters into a covered transaction with another person at the next lower tier, the County must verify that the person is not excluded or disqualified. The County can do this by: 1. Checking System for Award Management (SAM) exclusions 2. Collecting a certification from that person; or 3. Adding a clause or condition to the covered transaction with that person. 222 COUNTY OF LOS ANGELES SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2023 Per 2 CFR § 180.985, person means any individual, corporation, partnership, association, unit of government, or legal entity, however organized. Condition During our audit of the Department of Public Health (DPH) compliance with the procurement and suspension and debarment requirements for the Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response Program, we noted that for one (1) contract, DPH did not provide documentation related to the history of the procurement. Therefore, we were unable to determine whether DPH complied with the procurement requirements related to the method of procurement, competition, and the basis for the contract price. In addition, for the same one (1) contract, DPH did not provide documentation to demonstrate DPH verified that the vendor was not suspended or debarred from participating in federally funded contracts prior to entering into a covered transaction. Based on a subsequent review of the SAM exclusions, the vendor is not suspended or debarred. Cause The Office of the County Counsel stated the contract was privileged from disclosure under attorney-client privilege and did not provide the contract or procurement related documentation. In addition, County Counsel stated the contract did not contain an explicit debarment provision and did not provide documentation that Sam.gov was reviewed or a certification from the vendor. Effect Not providing sufficient documentation to auditors to demonstrate compliance with federal compliance results in an audit scope limitation. Failure to document verification of suspension and debarment results in noncompliance with 2 CFR § 180.300, and there is a risk that federal funds may be used to pay subrecipients and vendors that are suspended or debarred. Questioned Costs Questioned costs were not identified. Context For the six (6) contracts selected for testing, which totaled $37,256,347 from a population of eight (8) contracts with expenditures totaling $37,874,851, DPH did not provide procurement and suspension and debarment documentation for one (1) contract with expenditures totaling $1,499,482. The sample was not a statistically valid sample. Recommendation We recommend County departments discuss and document sensitive legal matters funded by federal funds with respective grantors to obtain guidance and direction on addressing audit requests. In addition, we recommend that DPH ensure sufficient documentation is maintained and available to demonstrate compliance with suspension or debarment. Acceptable items to confirm that vendors and subrecipients are not suspended or debarred are: 1) include a contract clause or condition to the covered transaction with that contractor, 2) search SAM exclusions prior to entering into a contract and maintain documentation of that verification, or 3) collect a certification from the contractor. 223 COUNTY OF LOS ANGELES SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2023 Views of Responsible Officials and Planned Corrective Action 1. Person responsible: Director, Department of Public Health 2. Corrective action plan: DPH agrees with this finding and recommendation and will discuss, and document sensitive legal matters funded by federal funds with respective grantors to obtain guidance and direction on addressing audit requests. DPH will implement a protocol wherein the program executing any contract using federal funds will collect and maintain sufficient records which detail the history of the procurement. The program will also verify that compliance with procurement requirements is maintained for all federally funded contracts, including sufficient documentation to demonstrate compliance with suspension or debarment. To confirm this, the program will check the SAM exclusions prior to entering into a contract and will maintain documentation of that verification. These will ensure DPH’s ability to provide documentation when requested by auditors. 3. Anticipated implementation date: July 1, 2024 224 COUNTY OF LOS ANGELES SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2023 Reference Number: 2023-007 Federal Program Title: Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises Federal Assistance Listing Number: 93.391 Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: N/A Federal Award Number and Year: 6 NH75OT000002-01-03; Fiscal Year 2022-23 Name of Department: Department of Public Health Category of Finding: Procurement and Suspension and Debarment Type of Finding: Material Weakness in Internal Control Over Compliance; Instance of Noncompliance Criteria In accordance with Title 2 U.S. Code of Federal Regulations (CFR) § 180.200, a covered transaction is a nonprocurement or procurement transaction that is subject to the prohibitions of this part. Per 2 CFR § 180.970(a), nonprocurement transaction means any transaction, regardless of type (except procurement contracts), including, but not limited to grants. According to 2 CFR § 180.300, when the County enters into a covered transaction with another person at the next lower tier, the County must verify that the person is not excluded or disqualified. The County can do this by: 1. Checking System for Award Management (SAM) exclusions 2. Collecting a certification from that person; or 3. Adding a clause or condition to the covered transaction with that person. Per 2 CFR § 180.985, person means any individual, corporation, partnership, association, unit of government, or legal entity, however organized. Condition During our audit of the Department of Public Health (DPH) compliance with suspension and debarment requirements for the Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises Program, we noted that for one (1) contract, DPH did not provide documentation to demonstrate DPH verified that a vendor was not suspended or debarred from participating in federally funded contracts prior to entering into a covered transaction. Based on a subsequent review of the SAM exclusions, the vendor is not suspended or debarred. Cause DPH was unable to locate documentation that verification of suspension or debarment occurred prior to contract execution. Effect Failure to document verification of suspension and debarment results in noncompliance with 2 CFR § 180.300, and there is a risk that federal funds may be used to pay subrecipients and vendors that are suspended or debarred. 225 COUNTY OF LOS ANGELES SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2023 Questioned Costs Questioned costs were not identified. Context Of the three (3) contracts selected for testing, which totaled $1,810,023 from a population of twelve (12) contracts with expenditures totaling $2,278,647, there was one (1) contract with expenditures totaling $7,100 without evidence that the verification of suspension and debarment was performed before entering into a covered transaction. This was not a statistically valid sample. Recommendation We recommend that DPH either: 1) include a contract clause or condition to the covered transaction with that person, 2) check the SAM exclusions prior to entering into a contract and maintain documentation of that verification, or 3) collect a certification from that person. Views of Responsible Officials and Planned Corrective Action 1. Person responsible: Director, Department of Public Health 2. Corrective action plan: DPH Center for Health Equity agrees with the finding and recommendation. Moving forward staff will check the SAM exclusions before entering into any contracts and maintain documentation of that verification to provide upon request. 3. Anticipated implementation date: July 1, 2024 226 COUNTY OF LOS ANGELES SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2023 Reference Number: 2023-008 Federal Program Title: Public Health Emergency Preparedness Federal Assistance Listing Number: 93.069 Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: N/A Federal Award Number and Year: 6 NU90TP922022-04-01; Fiscal Year 2022-23 Name of Department: Department of Public Health Category of Finding: Procurement and Suspension and Debarment Type of Finding: Material Weakness in Internal Control Over Compliance; Material Noncompliance Criteria Procurement In accordance with Title 2 U.S. Code of Federal Regulations (CFR) § 200.318: (j) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. 2 CFR § 200.319 states: (b) All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and § 200.320. 2 CFR § 200.320 states: The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. Suspension and Debarment In addition, in accordance with 2 CFR § 180.200 a covered transaction is a nonprocurement or procurement transaction that is subject to the prohibitions of this part. Per 2 CFR § 180.970(a), nonprocurement transaction means any transaction, regardless of type (except procurement contracts), including, but not limited to grants. According to 2 CFR § 180.300, when the County enters into a covered transaction with another person at the next lower tier, the County must verify that the person is not excluded or disqualified. The County can do this by: 1. Checking System for Award Management (SAM) exclusions 2. Collecting a certification from that person; or 3. Adding a clause or condition to the covered transaction with that person. Per 2 CFR § 180.985, person means any individual, corporation, partnership, association, unit of government, or legal entity, however organized. 227 COUNTY OF LOS ANGELES SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2023 Condition During our audit of the Department of Public Health (DPH) compliance with the procurement and suspension and debarment requirements for the Public Health Emergency Preparedness Program, we noted the following: • For twenty-one (21) contracts, DPH did not provide documentation related to the history of the procurement. Therefore, we were unable to determine whether DPH complied with the procurement requirements related to the method of procurement, competition, and the basis for the contract price. • For two (2) contracts, DPH did not provide documentation of the justification and approval of sole source. Therefore, we were unable to determine whether the procurement method used was appropriate and whether limiting competition was justified. • For three (3) contracts, DPH did not provide documentation to demonstrate DPH verified that the vendor was not suspended or debarred from participating in federally funded contracts prior to entering into a covered transaction. Based on a subsequent review of the SAM exclusions, the vendors are not suspended or debarred. Cause DPH did not provide procurement and suspension and debarment documentation due to staff shortages and increased workload. For suspension and debarment, for two of the three contracts, DPH provided copies of the verification from Sam.gov, however, the documents did not have dates indicating the verification occurred prior to contract execution. Effect Failure to document the history of procurements results in noncompliance with the procurement requirements with 2 CFR §§ 200.317, 200.318, 200.319 and 200.320. Failure to document verification of suspension and debarment results in noncompliance with 2 CFR § 180.300, and there is a risk that federal funds may be used to pay subrecipients and vendors that are suspended or debarred. Questioned Costs Questioned costs were not identified. Context For the twenty-seven (27) contracts selected for testing, which totaled $1,942,586 from a population of 178 contracts with expenditures totaling $2,132,936, DPH did not provide the necessary documentation for twenty-three (23) contracts with expenditures totaling $1,273,569 and suspension and debarment documentation for three (3) contracts with expenditures totaling $124,809. The sample was not a statistically valid sample. 228 COUNTY OF LOS ANGELES SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2023 Recommendation We recommend that DPH maintain sufficient records to support vendor selection in accordance with procurement requirements. In additional, we recommend that DPH either: 1) include a contract clause or condition to the covered transaction with that person, 2) check the SAM exclusions prior to entering into a contract and maintain documentation of that verification, or 3) collect a certification from that person. Views of Responsible Officials and Planned Corrective Action 1. Person responsible: Director, Department of Public Health 2. Corrective action plan: DPH, Acute Communicable Disease Control (ACDC) agrees with the finding and recommendation. Before entering into contract, DPH will check for SAM exclusions with date indicating verification before contract execution and keep this documentation on file. DPH, Administrative Services Division (ASD) - Procurement agrees with the finding and recommendation. DPH’s Administrative Services Division Manager will email Procurement staff to remind staff/manager to ensure SAM.GOV verification documents are included in all federally funded purchases before finalizing/approving those transactions. 3. Anticipated implementation date: March 11, 2024 and April 30, 2024 229 COUNTY OF LOS ANGELES SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2023 Reference Number: 2023-009 Federal Program Title: Coronavirus State and Local Fiscal Recovery Funds Federal Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Pass-Through Entity: N/A Federal Award Number and Year: Fiscal Year 2022-23 Name of Department: County Executive Office Internal Services Department Department of Consumer Business Affairs Department of Aging Category of Finding: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control Over Compliance; Instance of Noncompliance Criteria In accordance with Title 2 U.S. Code of Federal Regulations (CFR) § 200.332, all pass-through entities (PTE) must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal award identification: (i.) Subrecipient name (which must match the name associated with its unique entity identifier); (ii.) Subrecipient's unique entity identifier; (iii.) Federal Award Identification Number (FAIN); (iv.) Federal Award Date (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; (v.) Subaward Period of Performance Start and End Date; (vi.) Subaward Budget Period Start and End Date; (vii.) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii.) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; (ix.) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (x.) Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); (xi.) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; (xii.) Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (xiii.) Identification of whether the award is R&D; and (xiv.) Indirect cost rate for the Federal award (including if the de minimis rate is charged) per §200.414. 230 COUNTY OF LOS ANGELES SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2023 (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section. (c) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. (d) Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. Condition During our audit of the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) program, we selected twenty-three (23) subrecipients with active contracts with the County during FY 2022-23. • One (1) contract administered by the Internal Services Department (ISD) did not include one or more of the required elements defined in 2 CFR § 200.332 (a)(1) in the subrecipients’ agreements. • One (1) contract administered by the Department of Consumer Affairs (DCBA) did not include one or more of the required elements defined in 2 CFR § 200.332(a)(1) in the subrecipients’ agreements. • For four (4) contracts administered by the Aging Department (AD), the AD did not perform subrecipient monitoring related to the CSLFRF program during FY 2022-23. Cause Due to the urgency to implement the CSLFRF program, the Notice of Federal Subaward Information was not completed and provided to the subrecipient for two (2) contracts. The AD was not aware of the requirement to conduct subrecipient monitoring related to the CSLFR program and did not perform subrecipient monitoring of four (4) contracts. Effect Failure to provide all the required subaward information may result in subrecipients incorrectly reporting on federal pass-through awards in their Single Audit reports. Failure to document monitoring results in noncompliance with the subrecipient monitoring requirements 2 CFR § 200.332. Questioned Costs Questioned costs were not determinable. Context Of the twenty-three (23) subrecipients selected for testing, which totaled $71,323,434, from a population of 124 subrecipients with expenditures totaling $90,592,053: • The departments did not communicate all of the required subaward data elements for two (2) subrecipients with expenditures totaling $7,305,087. • The AD did not perform subrecipient monitoring for four (4) subrecipients with expenditures totaling $8,542,012. The sample was not a statistically valid sample. 231 COUNTY OF LOS ANGELES SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2023 Recommendation We recommend the County perform the following: 1. Remind departments that the Notice of Federal Subaward Information is a required attachment for all subrecipient agreements. In addition, subaward contract templates should be reviewed and revised to include placeholders for required information 2 CFR § 200.332(a)(1). 2. For existing subrecipients that were not provided the required elements, provide a letter or amended agreement to include all the required elements of 2 CFR § 200.332(a)(1). 3. Maintain sufficient records of monitoring subrecipients in accordance with subrecipient monitoring requirements. Views of Responsible Officials and Planned Corrective Action 1. Person responsible: Division Chief, Auditor-Controller Accounting Division 2. Corrective action plan: The County agrees with the finding and recommendation. In September 2022, the County issued the Notice of Federal Subaward Information template, which contains the 14 reporting elements required by 2 CFR § 200.332(a) that must be provided to subrecipients at the time of the subaward. The County will issue written correspondence reminding departments to complete the Notice of Federal Subaward Information template and provide a completed copy to the subrecipient at the time of the subaward. The County will also remind departments to provide all the required elements from 2 CFR § 200.332(a) via letter or amended agreement to existing subrecipients that were not initially provided all the requirements. In the same correspondence, the County will remind departments to monitor their Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) subrecipients, maintain sufficient records of the monitoring, and utilize the Subrecipient Monitoring Guide issued in June 2023. 3. Anticipated implementation date: June 28, 2024 232 COUNTY OF LOS ANGELES SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2023 Reference Number: 2023-010 Federal Program Title: Coronavirus State and Local Fiscal Recovery Funds Federal Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Pass-Through Entity: N/A Federal Award Number and Year: Fiscal Year 2022-23 Name of Department: County Executive Office Department of Public Health Category of Finding: Period of Performance Type of Finding: Material Weakness in Internal Control Over Compliance; Instance of Noncompliance Criteria In accordance with Title 2 U.S. Code of Federal Regulations (CFR) § 200.1, period of performance is the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Identification of the period of performance in the Federal award per § 200.211(b)(5) does not commit the awarding agency to fund the award beyond the currently approved budget period. Per 2 CFR § 200.403 in order for costs to be allowable under Federal awards (h) cost must be incurred during the approved budget period. Per 2 CFR § 200.1, the budget period is the time interval from the start date of a funded portion of an award to the end date of that funded portion during which recipients are authorized to expend the funds awarded. Per 31 CFR § 35.5, a recipient may only use Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) for the purposes enumerated in § 35.6 (b) through (f) to cover costs incurred during the period beginning March 3, 2021, and ending December 31, 2024. Condition During our audit of the CSLFRF program, we selected twenty-five (25) employees with payroll expenditures included in the County’s CSLFRF claims during FY 2022-23, and the expenditures for two employees were incurred before March 3, 2021. Cause DPH made adjustments to employee expenditure codes to improve the capture and claiming of eligible costs in October 2022; however, certain transactions were erroneously captured from May 2020 and February 2021, which is outside the period of performance. Effect Submitting claims with costs incurred or obligated prior to the period of performance start date of March 3, 2021, results in unallowable costs and noncompliance with the period of performance requirements 31 CFR 35.5. Questioned Costs Known questioned costs were $4,703. 233 COUNTY OF LOS ANGELES SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2023 Context Of the twenty-five (25) employees selected for testing, which totaled $59,861, from a population of more than 250 employees in five departments with expenditures totaling $43,302,346, expenditures were included for two employees totaling $4,703 that were incurred before the period of performance began March 3, 2021. The sample was not a statistically valid sample. Recommendation We recommend the County verify the date worked for all employees included in the CSLFRF claims was incurred or obligated on or after March 3, 2021. Views of Responsible Officials and Planned Corrective Action 1. Person responsible: Division Chief, Auditor-Controller Accounting Division 2. Corrective action plan: The County agrees with the finding and recommendation. The County will review CSLFRF claims and verify that all claimed payroll expenditures were incurred or obligated on or after March 3, 2021. Payroll expenditures that were incurred or obligated before March 3, 2021, will be removed from the CSLFRF claims. 3. Anticipated implementation date: June 28, 2024 234 COUNTY OF LOS ANGELES STATUS OF PRIOR YEARS’ FINDINGS FOR THE YEAR ENDED JUNE 30, 2023 FINANCIAL STATEMENT FINDINGS: Finding 09-04 – Protection of Information Assets (DHS) Condition At another hospital facility, IT assets are not currently safeguarded by an active dry fire suppression system. The server room has a Halon system, but it had been disconnected. Recommendation We recommend that the County evaluate options and budget for the replacement of the Halon fire suppression system because the system should be reactivated as soon as possible. Current Year Management Response Project is now in early implementation phase with some component installation. Project is expected to be fully implemented by August 30, 2024. Current Status as of June 30, 2023 Partially implemented. 235 COUNTY OF LOS ANGELES STATUS OF PRIOR YEARS’ FINDINGS FOR THE YEAR ENDED JUNE 30, 2023 FEDERAL AWARD FINDINGS: Finding 2022-001 – DHS – Procurement and Suspension and Debarment ALN 93.889 National Bioterrorism Hospital Preparedness Program Condition During our audit of the Department of Health Services’ (DHS) compliance with the procurement requirement for the National Bioterrorism Hospital Preparedness Program, we noted that for one (1) contract, DHS did not provide documentation related to the history of the procurement. Therefore, we were unable to determine whether DHS complied with the procurement requirements related to the method of procurement, competition, and the basis for the contract price. For the four (4) contracts selected for testing, which totaled $478,418 from a population of eleven (11) contracts with expenditures totaling $594,798, DHS did not provide documentation of the history of procurement for one (1) contract. Recommendation We recommend that DHS maintain records sufficient to detail the history of procurement and to ensure compliance with procurement requirements. Current Year Management Response On March 30, 2023, EMS management shared the “SAM.gov Registration” and “Federal Grant Management Programmatic Process” desk procedures with EMS staff. The procedures explain the process of entering into an agreement and how to verify debarment prior to entering into an award. EMS management also notified the staff to maintain records for five years after the project period end date. Current Status as of June 30, 2023 Implemented. Finding 2022-002 – DHS – Reporting ALN 93.889 National Bioterrorism Hospital Preparedness Program Condition During our audit of the Department of Health Services’ (DHS) compliance with the reporting requirement for the National Bioterrorism Hospital Preparedness Program, we noted that DHS was not able to demonstrate it submitted the required FFAFTA reports timely for seventeen (17) of its subawards. Furthermore, DHS did not submit a FFAFTA report for one (1) of its subaward. Number of Subaward Reporting Report Name Subawards Obligation Date Due Date Period Date Submitted FFATA 1 September 2021 10/31/2021 September 2021 Not provided FFATA 16 March 2022 4/30/2022 May 2022 Not provided FFATA 1 June 2022 7/31/2022 N/A Not submitted 236 COUNTY OF LOS ANGELES STATUS OF PRIOR YEARS’ FINDINGS FOR THE YEAR ENDED JUNE 30, 2023 Recommendation We recommend that the DHS strengthen its report submission process to ensure all reports are submitted by the defined due date and retain documentation evidencing submission of the report. Current Year Management Response On April 27, 2023, the National Bioterrorism Hospital Preparedness Program (NBHPP) Grant Program Manager began identifying each sub-awardee that meets the $30,000 FFATA threshold and providing the information to EMS Finance for review and to process payment. Before any payment is completed, the EMS Agency Disaster Services Assistant Nursing Directors of Administration obtain and confirm all Unique Entity Identifier (UEI) numbers from the sub-awardees are active prior to issuing any checks. The EMS Health Care Financial Analyst logs all sub-awardees that have reached the threshold into a report and submits the FFATA report via SAM.gov before the defined due date. To avoid access issues in retrieving submitted documents via the System for Award Management (SAM.gov) website, the EMS Agency Disaster Services Assistant Nursing Director retains copies of all reports that include the submission dates. Current Status as of June 30, 2023 Implemented. Finding 2022-003 – DPH – Reporting ALN 93.011 National Organizations of State and Local Officials Condition During our audit of the Department of Public Health’s (DPH) compliance with the reporting requirement for the National Organizations of State and Local Officials program, we noted that DPH was not able to demonstrate it submitted the required FFAFTA report timely for one (1) of its subrecipients. Subaward Reporting Report Name Obligation Date Due Date Period Date Submitted FFATA 12/09/2021 1/31/2022 January 2022 Not Provided Recommendation We recommend that the DPH strengthen its report submission process to ensure all reports are submitted by the defined due date and retain documentation evidencing submission of the report. Current Year Management Response Program submitted a second FFATA report on April 10, 2023 to document FFATA submission as previously January 2022 submission was not accepted due to missing time stamp. For future reporting, DPH has instituted a process to screenshot and download the FFATA submission and keep record of the submission time stamp. This project ended on May 31, 2022 and as such, no further FFATA submissions are required. Current Status as of June 30, 2023 Implemented. 237 COUNTY OF LOS ANGELES STATUS OF PRIOR YEARS’ FINDINGS FOR THE YEAR ENDED JUNE 30, 2023 Finding 2022-004 – DPH – Subrecipient Monitoring ALN 93.940 HIV Prevention Activities Health Department Based Condition During our audit of the HIV Prevention Activities Health Department Based program, we selected nine (9) subrecipients with active contracts with the Department of Public Health (DPH) during FY 2021-22 and noted that one or more of the required elements defined in 2 CFR §200.332 (a)(1) were not included for one (1) subrecipient. Recommendation We recommend that for the subrecipient that was not provided the required elements, DPH provide a letter or amended agreement to include all the required elements of 2 CFR §200.332(a). Current Year Management Response DPH implemented the corrective action and included a Notice of Federal Subaward Information tracking tool as part of its internal Master Contract tracking file that captures agencies' funding source, contract term/number, and contract amount whenever a contract is executed/augmented. The Master Contract tracking file has been modified to ensure that subrecipients' contract package includes the sub-award funding information. Current Status as of June 30, 2023 Implemented. Finding 2022-005 – CEO – Subrecipient Monitoring ALN 21.019 Coronavirus Relief Fund Condition During our audit of the Coronavirus Relief Fund (CRF) program, we selected three (3) subrecipients with active contracts with the County during FY 2021-22. Two (2) of the contracts administered by the Chief Executive Office (CEO) did not include one or more of the required elements defined in 2 CFR §200.332 (a)(1)(2)(3)(5) and (6) in the subrecipients’ agreements. The subrecipient agreements indicated that reporting was required, but were both vague and not consistent as to the level of detail or timing of when reports were due. The subrecipients selected did submit reports to the respective contracting departments for review; however, the information provided was not in a uniform and consistent format making it difficult to determine compliance with program expectations without requesting additional documentation. Furthermore, the County’s internal policy for entities doing business with the County, including subrecipients, requires that contracts and agreements include data encryption terms. None of the agreements included these requirements and per inquiry of the departments, staff were not aware of the requirement. This is a repeat finding of 2021-009. 238 COUNTY OF LOS ANGELES STATUS OF PRIOR YEARS’ FINDINGS FOR THE YEAR ENDED JUNE 30, 2023 Recommendation We recommend the County perform the following: 1. Design a subrecipient agreement template to include all the elements required by 2 CFR §200.332(a) and any other County required elements (e.g., data encryption requirements) and incorporate the use of the template in the contracting requirements for all departments. 2. For existing subrecipients that were not provided the required elements, provide a letter or amended agreement to include all the required elements of 2 CFR §200.332(a). 3. Include clear expectations for periodic reporting by subrecipients in the subrecipient agreement, including level of detail and timing of submission. Current Year Management Response Corrective action for CRF subrecipient monitoring has been implemented as of June 30, 2023 (see Current Year Management Response for Finding 2021-009). To address the recommendations, the County: • Issued the “Notice of Federal Subaward Information Template and Subrecipient Monitoring” memo on September 12, 2022, which provided departments with a template to communicate to subrecipients the 2 CFR 200.332(a) subrecipient reporting requirements at the time of the subaward. The memo also reminded departments to provide all the required elements from 2 CFR 200.332(a) to existing CRF subrecipients that were not initially provided all the reporting requirements and that subrecipient agreements must include detailed expectations for periodic reporting and timing of reporting submission. • The County issued the “CARES and ARP Act Funds Subrecipient Monitoring” memo on January 12, 2023, which reminded departments that subrecipient agreements must include data encryption requirements. The memo also reminded departments that existing subrecipient agreements without data encryption requirements need to be amended. • During the department-wide Single Audit Kick-off annual meeting on May 3, 2023, reminded departments that the “Notice of Federal Subaward Information Template” should be used to communicate to subrecipients all the 2 CFR 200.332(a) subrecipient reporting requirements at the time of the subaward. Departments were also reminded to maintain documentation that the template was provided to subrecipients and that CRF subrecipient monitoring requirements apply to Coronavirus State and Local Fiscal Recovery Fund subrecipients. • The County issued the Subrecipient Monitoring Guide (Guide) on June 30, 2023. The Guide is intended to assist departments with developing appropriate monitoring plans for their subrecipients to help ensure compliance with 2 CFR 200.332. Current Status as of June 30, 2023 Implemented. 239 COUNTY OF LOS ANGELES STATUS OF PRIOR YEARS’ FINDINGS FOR THE YEAR ENDED JUNE 30, 2023 Finding 2022-006 – DPW – Procurement and Suspension and Debarment ALN 20.205 Highway Planning and Construction Condition During our audit of the Highway Planning and Construction program, we noted that the Department of Public Works (DPW) was not able to provide documentation to demonstrate DPW verified that a vendor was not suspended or debarred from participating in federally funded contracts prior to entering into a covered transaction for three (3) of the twelve (12) vendors selected for testing. Based on a subsequent review of the SAM exclusions, the vendor is not suspended or debarred. This is a repeat finding of 2021-001. Recommendation We recommend that DPW either: 1) include a contract clause or condition to the covered transaction with that person, 2) check the SAM exclusions prior to entering into a contract and maintain documentation of that verification, or 3) collect a certification from that person. Current Year Management Response Updates to the Countywide debarment language is under Internal Services Department’s (ISD) authority. ISD indicated that they currently have debarment language in their solicitations and are working with County Counsel to strengthen the language. ISD plans on implementing the revised debarment language by the end of September 2023. Current Status as of June 30, 2023 Partially implemented. Finding 2022-007 – DCFS – Eligibility ALN 93.090 Guardianship Assistance Condition Of the sixty (60) samples selected for testing, we noted that for two (2) samples the form (KG 3) Kin-GAP Mutual Agreement for Nonminor Former Dependents was not provided. Therefore, we were not able to verify that the agreement for the participant was signed and was in effect when benefits were paid. This is a repeat finding of 2021-003. Recommendation We recommend that DCFS maintain required form Kin-GAP Mutual Agreement for Nonminor Former Dependents (KG 3) in the Guardianship Assistance case files. Current Year Management Response On March 20, 2023, a memo was sent to all Kin-GAP eligibility staff reminding them to ensure all required documents were obtained and filed in the Kin-GAP case. If the required documents were not received within the specified timeframe, the Kin-GAP staff were instructed to suspend the Kin-GAP payment pending receipt of the forms. The QA/ES staff continue to randomly sample and review Kin-GAP cases weekly to ensure all forms were obtained to continue funding. 240 COUNTY OF LOS ANGELES STATUS OF PRIOR YEARS’ FINDINGS FOR THE YEAR ENDED JUNE 30, 2023 Current Status as of June 30, 2023 Implemented. Finding 2022-008 – DPH – Reporting ALN 93.977 Sexually Transmitted Diseases (STD) Prevention and Control Grants Condition During our audit of the Department of Public Health’s (DPH) compliance with the reporting requirement for the Sexually Transmitted Diseases (STD) Prevention and Control Grants program, we noted that DPH did not submit a FFATA report for one (1) of its subawards. Subaward Report Name Obligation Date Due Date Reporting Period Date Submitted FFATA December 2021 01/31/2022 N/A Not submitted Recommendation We recommend that the DPH strengthen its report submission process to ensure all reports are identified and submitted by the defined due date and retain documentation evidencing submission of the report. Current Year Management Response DPH implemented the corrective action and identified subrecipients that surpassed the threshold, triggering FFATA reporting. DPH submitted its sub-award data to Federal Funding Accountability & Transparency Act Subaward Reporting System (FSRS) using the batch upload method. DPH retained screenshots of FFATA reports documenting the submission date. Current Status as of June 30, 2023 Implemented. Finding 2022-009 – DPH – Reporting ALN 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Condition During our audit of the Department of Public Health’s (DPH) compliance with the reporting requirement to file FFATA Reports for the Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) program, we noted that DPH submitted the FFATA reports for three (3) subawards after the due date. Number of Subaward Reporting Date Report Name Subawards Obligation Date Period Due Date Submitted FFATA 2 6/07/2021 July 2021 8/31/2021 8/05/2022 FFATA 1 8/25/2020 August 2020 9/30/2020 8/05/2022 This is a repeat finding of 2021-006. 241 COUNTY OF LOS ANGELES STATUS OF PRIOR YEARS’ FINDINGS FOR THE YEAR ENDED JUNE 30, 2023 Recommendation We recommend that the Department of Public Health strengthen its report submission process to ensure all reports are submitted and approved on a timely basis. Current Year Management Response FFATA reporting is consistently entered into fsrs.gov at the end of every month for the month being reported. Current Status as of June 30, 2023 Not Implemented. See current year finding 2023-001. Finding 2022-010 – DPH – Reporting ALN 93.940 HIV Prevention Activities Health Department Based Condition During our audit of the Department of Public Health’s (DPH) compliance with the reporting requirement for the HIV Prevention Activities Health Department Based program, we noted that DPH did not submit a FFATA report for nine (9) of its subawards. Recommendation We recommend that the DPH strengthen its report submission process to ensure all reports are identified and submitted by the defined due date, and retain documentation evidencing submission of the report. Current Year Management Response DPH implemented the corrective action and identified subrecipients that surpassed the threshold, triggering FFATA reporting. DPH submitted its sub-award data to Federal Funding Accountability & Transparency Act Subaward Reporting System (FSRS) using the batch upload method. DPH retained screenshots of FFATA reports documenting the submission date. Current Status as of June 30, 2023 Not Implemented. See current year finding 2023-005. Finding 2021-001 – DPW – Procurement and Suspension and Debarment ALN 20.205 Highway Planning and Construction Condition During our review of the Highway Planning and Construction Program, we noted that the Department of Public Works (DPW) did not include documentation of their verification of suspension and debarment or include a contract clause or certification for one (1) vendor prior to entering into a covered transaction. Based on a subsequent review of the SAM exclusions, the vendor is not suspended or debarred. 242 COUNTY OF LOS ANGELES STATUS OF PRIOR YEARS’ FINDINGS FOR THE YEAR ENDED JUNE 30, 2023 Recommendation We recommend that DPW either: 1) include a contract clause or condition to the covered transaction with that person, 2) check the SAM exclusions prior to entering into a contract and maintain documentation of that verification, or 3) collect a certification from that person. Current Year Management Response Updates to the Countywide debarment language is under ISD’s authority. ISD indicated that they currently have debarment language in their solicitations and are working with County Counsel to strengthen the language. ISD plans on implementing the revised debarment language by the end of September 2023. Current Status as of June 30, 2023 Partially implemented. Finding 2021-003 – DCFS – Eligibility ALN 93.090 Guardianship Assistance Condition Of the sixty (60) samples selected for testing, we noted the following exceptions: 1. One (1) sample where the form (SOC 369) Agency-Relative Guardianship Disclosure was not signed by the case social worker. 2. Two (2) samples where there was no form (KG 3) Kin-GAP Mutual Agreement for Nonminor Former Dependents. Therefore, we were not able to verify that the agreement for the participant was signed and was in effect when benefits were paid. 3. One (1) sample where there was no form (KG 1) Kin-GAP Mutual Agreement for 18 Year Olds. Therefore, we were not able to verify that the agreement for the participant was signed and was in effect when benefits were paid. Recommendation We recommend that DCFS maintain required documentation and forms for Agency-Relative Guardianship Disclosure (SOC 369), Kin-GAP Mutual Agreement for Nonminor Former Dependents (KG 3) and Kin-GAP Mutual Agreement for 18 Year Olds (KG 1) for the Guardianship Assistance case files. Current Year Management Response On August 4, 2022, a memo was sent to all Kin-GAP eligibility staff reminding them to ensure that all Kin- GAP forms were completed and signed appropriately before initiating payment, and filed in the case. Payments are to be suspended if the required documents are not received. Kin-GAP managers monitor a report, which identify youth nearing the age of 18 and notify the assigned staff to ensure the required documents are sent for signature timely. Current Status as of June 30, 2023 Implemented. 243 COUNTY OF LOS ANGELES STATUS OF PRIOR YEARS’ FINDINGS FOR THE YEAR ENDED JUNE 30, 2023 Finding 2021-004 – DHS – Procurement and Suspension and Debarment ALN 93.889 National Bioterrorism Hospital Preparedness Program Condition During our review of the National Bioterrorism Hospital Preparedness Program, we noted that five (5) vendor contracts reviewed did not include a suspension and debarment certification clause requiring the vendor to certify that it was not suspended or debarred from participation in federally funded contracts. There was no other documentation available to demonstrate that the verification of suspension and debarment was performed prior to entering into the covered transactions. Based on a subsequent review of the SAM exclusions, those five (5) vendors are not suspended or debarred. Recommendation We recommend that DHS check the SAM exclusions prior to entering into a contract, maintain documentation of that verification, and add a clause to the contract that requires vendors to certify that they are not suspended or debarred. Current Year Management Response As of July 1, 2022, EMS Contracts and Grants, Staff Analyst and EMS Procurement, Administrative Assistant II verify contractors/vendors are not debarred or suspended prior to entering into a contract or when establishing a purchase order. In addition, EMS Procurement Administrative Assistant II files copies of the verification document in the EMS’ shared file under the Purchase Order folder and in the contractor/subrecipient’s file folders. Additionally, the contract includes a clause that requires contractors/vendors to certify that they are not suspended or debarred. EMS Program Managers obtain approval from the HPP Grant Manager to use HPP funds before submitting the contract/purchase order, to ensure the services/purchases follow federal grant requirements. The EMS Finance Manager reviews the service/purchase order expenditure data to ensure the expense is posted under the correct HPP unit code. Current Status as of June 30, 2023 Implemented. Finding 2021-005 – DPH – Subrecipient Monitoring ALN 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Condition During our review of the Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) program, we selected two (2) subrecipient samples with active contracts with the Department of Public Health (DPH) during FY 2020-21 and noted that DPH did not identify the subrecipients’ DUNS number, FAIN, identification whether the award is R&D, and the indirect cost rate at the time of subaward to the subrecipients. Recommendation We recommend that DPH perform the following procedures: 1. Provide the subaward information as required by 2 CFR §200.332(a) to subrecipients at the time of the subaward and communicate any changes in subsequent subaward modifications. 244 COUNTY OF LOS ANGELES STATUS OF PRIOR YEARS’ FINDINGS FOR THE YEAR ENDED JUNE 30, 2023 2. For existing subrecipients that were not previously provided the required elements, ensure they are communicated prior to the end of FY 2021-22. 3. Consider including placeholders for required subaward information in the contract template, which could be removed if not applicable. Current Year Management Response DPH informed all Divisions/Program staff during the October 13, 2022 DPH Quarterly Contract Liaison meeting. DPH added to the DPH Contract Template and sent the template out to the all Division/Program on October 25, 2022 and instructed the Programs moving forward to use this template. As any new contracts or amendments are sent to Contracts and Grants for processing, Contracts and Grants are assuring that for Federal funded contracts the Notice of Federal Subaward Information exhibit is included. Current Status as of June 30, 2023 Implemented. Finding 2021-006 – DPH – Reporting ALN 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Condition During our review of the FFATA Reports required to be filed for Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) program, we noted that four (4) FFATA reports were not filed as required and two (2) expenditure reports were submitted after due date. Additionally, the program was unable to provide proof of timely submission and approval for four (4) Performance Measure reports. Report Name Reporting Period Due Date Date Submitted FFATA Report February 2021 3/31/2021 N/A FFATA Report April 2021 5/31/2021 N/A FFATA Report May 2021 6/30/2021 N/A FFATA Report June 2021 7/30/2021 N/A Expenditure Report February 2021 3/5/2021 3/10/2021 Expenditure Report March 2021 4/5/2021 4/6/2021 Performance Measure 7/1/2020 - 9/30/2020 10/31/2020 N/A Performance Measure 10/1/2020 – 12/31/2020 1/31/2021 N/A Performance Measure 1/1/2021 – 3/31/2021 4/30/2021 N/A Performance Measure 4/1/2021 – 6/30/2021 7/31/2021 N/A Recommendation We recommend that the Department of Public Health strengthen its report submission process to ensure all reports are submitted and approved on a timely basis. 245 COUNTY OF LOS ANGELES STATUS OF PRIOR YEARS’ FINDINGS FOR THE YEAR ENDED JUNE 30, 2023 Current Year Management Response FFATA reporting is consistently entered into fsrs.gov at the end of every month for the month being reported. Monthly expenditure reporting has now been changed by CDC to quarterly expenditure reporting (for the 20th of each quarter starting August 20th 2023). As indicated in prior year response, the timely submission of Performance Measure reports can still be obtained from CDC’s back-end process from their system. Current Status as of June 30, 2023 Implemented for expenditure and performance measure reporting. Not Implemented for FFATA reporting. See current year finding 2023-003. Finding 2021-008 – Registrar-Recorder/County Clerk – Procurement and Suspension and Debarment ALN 90.404 2018 HAVA Election Security Grants Condition During our review of the 2018 HAVA Election Security Grants program, we noted that fourteen (14) vendor contracts reviewed did not include a suspension and debarment certification clause indicating the vendor was not suspended or debarred from participation in federally funded contracts. There was no other documentation available to demonstrate that the verification of suspension and debarment was performed prior to entering into the covered transactions. Based on a subsequent review of the SAM exclusions, those fourteen (14) vendors are not suspended or debarred. Recommendation We recommend that Registrar-Recorder/County Clerk check the SAM exclusions prior to entering into a contract, maintain documentation of that verification, and add a clause to the contract that requires vendors to certify that they are not suspended or debarred. Current Year Management Response The email dated November 22, 2022, provided direction to all appropriate teams to ensure we verify vendor status on sam.gov. Since this notification RR/CC has only had one single-audit grant claim. The contractual purchase related to the one claim had a sam.gov screenshot taken and signed as per directives initiated via email dated November 22, 2022. Per ISD Purchasing Manager, ISD is continuing to work on changing their language on the standardized purchasing template to include the debarments clause for use by every department. ISD Purchasing Manager confirmed that this process continues and is anticipated to be completed within 30 days (target date 9/30/2023). Current Status as of June 30, 2023 Partially implemented. 246 COUNTY OF LOS ANGELES STATUS OF PRIOR YEARS’ FINDINGS FOR THE YEAR ENDED JUNE 30, 2023 Finding 2021-009 – CEO/DPH/DHS/WDACS – Subrecipient Monitoring ALN 21.019 Coronavirus Relief Fund Condition During our review of the Coronavirus Relief Fund (CRF) program, we selected nine (9) subrecipients with active contracts with the County administered by the County Executive Office (CEO), Department of Public Health (DPH), Department of Health Services (DHS) and Department of Workforce Development, Aging and Community Services during FY 2020-21 and noted that these departments did not include one or more of the required elements defined in 2 CFR §200.332 (a)(1)(2)(3)(5) and (6) in the subrecipients’ agreements. One (1) subrecipient agreement did not identify the funding as federal. The subrecipient agreements indicated that reporting was required, but were both vague and not consistent as to the level of detail or timing of when reports were due. The subrecipients selected did submit reports to the respective contracting departments for review; however, the information provided was not in a uniform and consistent format making it difficult to determine compliance with program expectations without requesting additional documentation. Furthermore, the County’s internal policy for entities doing business with the County, including subrecipients, requires that contracts and agreements include data encryption terms. None of the agreements included these requirements and per inquiry of the departments, staff were not aware of the requirement. Recommendation We recommend the County consider the following: 1. Design a subrecipient agreement template to include all the elements required by 2 CFR §200.332(a) and any other County required elements (e.g., data encryption requirements). Incorporate the use of the template in the contracting requirements for all departments. 2. For existing subrecipients that were not provided the required elements, provide a letter or amended agreement to include all the required elements of 2 CFR §200.332(a). 3. Include clear expectations for periodic reporting by subrecipients in the subrecipient agreement, including level of detail and timing of submission. Current Year Management Response Corrective action for CRF subrecipient monitoring has been implemented as of June 30, 2023. To address the recommendations, the County: • Issued the “Notice of Federal Subaward Information Template and Subrecipient Monitoring” memo on September 12, 2022, which provided departments with a template to communicate the 2 CFR 200.332(a) subrecipient reporting requirements at the time of the subaward. The memo also reminded departments to provide all the required elements from 2 CFR 200.332(a) to existing CRF subrecipients that were not initially provided all the reporting requirements. In addition, the memo reminded departments that subrecipient agreements must include detailed expectations for periodic reporting and timing of reporting submission. • Issued the “CARES and ARP Act Funds Subrecipient Monitoring” memo on January 12, 2023, which reminded departments that subrecipient agreements must include data encryption requirements. The memo also reminded departments that existing subrecipient agreements without data encryption requirements need to be amended. 247 COUNTY OF LOS ANGELES STATUS OF PRIOR YEARS’ FINDINGS FOR THE YEAR ENDED JUNE 30, 2023 •Reminded departments at the annual Single Audit Kick-off meeting on May 3, 2023, to use the “Notice of Federal Subaward Information Template” to communicate to subrecipients all the 2 CFR 200.332(a) subrecipient reporting requirements. Departments were also reminded to maintain documentation that the template was provided to subrecipients and that CRF subrecipient monitoring requirements apply to Coronavirus State and Local Fiscal Recover Fund subrecipients. •The County issued the Subrecipient Monitoring Guide (Guide) on June 30, 2023. The Guide is intended to assist departments with developing appropriate monitoring plans for their subrecipients to help ensure compliance with 2 CFR 200.332. Current Status as of June 30, 2023 Implemented. Finding 2020-003 – DCFS – Allowable Costs/Cost Principles ALN 93.558 Temporary Assistance for Needy Families; 93.658 Foster Care Title IV-E; 93.659 Adoption Assistance; 93.674 John H. Chafee Foster Care Program for Successful Transition to Adulthood Condition During our review of the payroll transactions, one (1) timesheet for indirect payroll and one (1) timesheet for direct payroll from the TANF program were not approved timely. Recommendation We recommend that DCFS strengthen its review process to ensure all timesheets and manual corrections are approved in a timely manner. Current Year Management Response The Payroll Section continues to work with the DCFS BIS and external partner Hyland to finalize the Timesheet Corrections system. On July 11, 2022, DCFS BIS and Payroll teams began meeting with the external contractor Hyland to discuss the frame work, and scope of work necessary to better track timesheet submission process. We provide the framework of the Department’s current email submission process, and samples of timesheets. In February 2023, the system design, the configuration of the API, eForm and iScript development was completed. On April 24, 2023, DCFS BIS conducted an initial train- the- trainer sessions. The Timesheet Correction System has been completed and is now in the system testing phases. Due to technical conflicts in the Hyland system, as well as time for the user testing, the final implementation has been pushed to September 30, 2023. This will allow the vendor time to ensure all functionality of the system is operating as intended. Current Status as of June 30, 2023 Partially implemented. 248 COUNTY OF LOS ANGELES STATUS OF PRIOR YEARS’ FINDINGS FOR THE YEAR ENDED JUNE 30, 2023 Finding 2019-004 – Allowable Costs/Cost Principles CFDA #93.558 Temporary Assistance for Needy Families Condition The Department of Children and Family Services (DCFS) has common internal controls over the payroll process for its federal programs. We selected seventy-five (75) employees, two timesheets for each employee for a total of 150 timesheets, to test allowable costs and the internal controls over this category of compliance requirements. Twenty-five (25) employees were selected from each of the three major programs below: 1. CFDA No. 93.558 Temporary Assistance for Needy Families (TANF) 2. CFDA No. 93.778 Medical Assistance Program 3. CFDA No. 93.659 Adoption Assistance During our review of the payroll transactions, two timesheets for one (1) employee were not approved timely for the TANF program. Delay in Timesheet Timesheet Month Timesheet Period Approval Date Approval November 2018 11/1/2018 – 11/15/2018 9/5/2019 10 Months November 2018 11/16/2018 – 11/30/2018 9/10/2019 10 Months Recommendation We recommend that DCFS strengthens its review process to ensure all timesheets and manual corrections are approved in a timely manner. Current Year Management Response The Payroll Section continues to work with the DCFS BIS and external partner Hyland to finalize the Timesheet Corrections system. On July 11, 2022, DCFS BIS and Payroll teams began meeting with the external contractor Hyland to discuss the frame work, and scope of work necessary to better track timesheet submission process. We provide the framework of the Department’s current email submission process, and samples of timesheets. In February 2023, the system design, the configuration of the API, eForm and iScript development was completed. On April 24, 2023, DCFS BIS conducted an initial train- the- trainer sessions. The Timesheet Correction System has been completed and is now in the system testing phases. Due to technical conflicts in the Hyland system, as well as time for the user testing, the final implementation has been pushed to August 30, 2023. This will allow the vendor time to ensure all functionality of the system is operating as intended. Current Status as of June 30, 2023 Partially Implemented. 249 This page left blank intentionally. 250 COUNTY OF LOS ANGELES DEPARTMENT OF PUBLIC SOCIAL SERVICES SUPPLEMENTARY SCHEDULE OF REVENUE AND EXPENDITURES CSBG CONTRACT NO. 20F-3660 FOR THE YEAR ENDED JUNE 30, 2023 AL #93.569 March 27, 2020 July 1, 2021 July 1, 2022 through through through Total Audited Total Reported June 30, 2021 June 30, 2022 June 30, 2023 Costs Expenses Total Budget (1) REVENUE Grant Revenue $ 1,239,973 $ 4,261,834 $ 2,716,132 $ 8,217,939 $ 8,217,939 $ 8,489,288 CSBG Discretionary 40,370 - - 40,370 40,370 40,370 Total Revenue 1,280,343 4,261,834 2,716,132 8,258,309 8,258,309 8,529,658 (2) EXPENDITURES Administrative Costs Salaries and Wages 22,802 58,045 54,846 135,693 135,693 165,670 Fringe Benefits 13,297 38,540 35,776 87,613 87,613 97,533 Operating Expenses - - - - - - Equipment - - - - - - Out-of-State Travel - - - - - - Contract/Consultant Services - - - - - - Other Costs 7,220 18,351 17,218 42,789 42,789 50,344 Total Administrative Costs 43,319 114,936 107,840 266,095 266,095 313,547 Program Costs Salaries and Wages 21,292 150,651 233,497 405,440 405,440 394,016 Fringe Benefits 12,350 86,922 132,922 232,194 232,194 232,469 Operating Expenses - - - - - - Equipment - - - - - - Out-of-State Travel - - - - - - Subcontractor/Consultant Services 1,196,654 3,840,936 1,782,992 6,820,582 6,820,582 7,470,594 Other Costs 6,728 68,389 458,881 533,998 533,998 119,032 Total Program Costs 1,237,024 4,146,898 2,608,292 7,992,214 7,992,214 8,216,111 Total Expenditures 1,280,343 4,261,834 2,716,132 8,258,309 8,258,309 8,529,658 (3) Revenue over (under) Expenditures: $ - $ - $ - $ - $ - $ - (1)The expenditure and total budget amounts are based on the CSBG Contract Budget Summary contained in the contract (as Attachment I to the Grant Agreement). The Contract Budget amounts are from March 27, 2020 through September 30, 2022. (2)The expenditure amounts are based on the monthly CSBG CARES Expenditure Claim Reports filed with the California Department of Community Services and Development from March 27, 2020 through June 30, 2023. (3)$271,349 ($8,529,658 - $8,258,309) represents the unspent funds returned by subcontractors for this contract. The unspent funds were remitted to the California Department of Community Services and Development. 251 COUNTY OF LOS ANGELES DEPARTMENT OF PUBLIC SOCIAL SERVICES SUPPLEMENTARY SCHEDULE OF REVENUE AND EXPENDITURES CSBG CONTRACT NO. 21F-4021 FOR THE YEAR ENDED JUNE 30, 2023 AL #93.569 January 1, 2021 July 1, 2021 July 1, 2022 through through through Total Audited Total Reported June 30, 2021 June 30, 2022 June 30, 2023 Costs Expenses Total Budget (1) REVENUE Grant Revenue $ 830,147 $ 4,798,810 $ 673,133 $ 6,302,090 $ 6,302,090 $ 6,302,090 CSBG Discretionary - - - - - - Total Revenue 830,147 4,798,810 673,133 6,302,090 6,302,090 6,302,090 (2) EXPENDITURES Administrative Costs Salaries and Wages 140,059 243,967 - 384,026 384,026 384,026 Fringe Benefits 80,794 148,794 - 229,588 229,588 222,735 Operating Expenses 7 14,000 - 14,007 14,007 20,860 Equipment - - - - - - Out-of-State Travel - 2,000 - 2,000 2,000 2,000 Contract/Consultant Services - - - - - - Other Costs 45,323 76,029 - 121,352 121,352 121,352 Total Administrative Costs 266,183 484,790 - 750,973 750,973 750,973 Program Costs Salaries and Wages 133,654 666,011 - 799,665 799,665 685,428 Fringe Benefits 67,901 387,908 - 455,809 455,809 390,694 Operating Expenses - - - - - - Equipment - - - - - - Out-of-State Travel - - - - - - Subcontractor/Consultant Services 311,436 3,059,980 673,133 4,044,549 4,044,549 4,259,771 Other Costs 50,973 200,121 - 251,094 251,094 215,224 Total Program Costs 563,964 4,314,020 673,133 5,551,117 5,551,117 5,551,117 Total Expenditures 830,147 4,798,810 673,133 6,302,090 6,302,090 6,302,090 Revenue over (under) Expenditures: $ - $ - $ - $ - $ - $ - (1)The expenditure and total budget amounts are based on the CSBG Contract Budget Summary contained in the contract (as Attachment I to the Grant Agreement). The Contract Budget amounts are from January 1, 2021 through August 31, 2022. (2)The expenditure amounts are based on the monthly CSBG Expenditure Claim Reports filed with the California Department of Community Services and Development from January 1, 2021 through June 30, 2023. 252 COUNTY OF LOS ANGELES DEPARTMENT OF PUBLIC SOCIAL SERVICES SUPPLEMENTARY SCHEDULE OF REVENUE AND EXPENDITURES CSBG CONTRACT NO. 22F-5021 FOR THE YEAR ENDED JUNE 30, 2023 AL #93.569 January 1, 2021 July 1, 2022 through through Total Audited Total Reported (1) June 30, 2022 June 30, 2023 Costs Expenses Total Budget REVENUE Grant Revenue $ 3 33,242 $ 5 ,400,184 $ 5 ,733,426 $ 5 ,733,426 $ 6 ,385,507 CSBG Discretionary - 3 1,000 3 1,000 3 1,000 3 1,000 Total Revenue 3 33,242 5 ,431,184 5 ,764,426 5 ,764,426 6 ,416,507 (2) EXPENDITURES Administrative Costs Salaries and Wages 9 6,494 2 79,559 3 76,053 3 76,053 3 76,053 Fringe Benefits 7 4,274 1 61,166 2 35,440 2 35,440 2 35,441 Operating Expenses - 1 4,360 1 4,360 1 4,360 1 4,360 Equipment - - - - - Out-of-State Travel 2 ,280 6 ,432 8 ,712 8 ,712 8 ,712 Contract/Consultant Services - - - - - Other Costs 3 1,042 8 4,707 1 15,749 1 15,749 1 15,749 Total Administrative Costs 2 04,090 5 46,224 7 50,314 7 50,314 7 50,315 Program Costs Salaries and Wages 8 1,707 7 08,920 7 90,627 7 90,627 7 90,627 Fringe Benefits 2 6,720 4 09,555 4 36,275 4 36,275 4 36,275 Operating Expenses - - - - - Equipment - - - - - Out-of-State Travel - - - - - Subcontractor/Consultant Services - 3 ,554,111 3 ,554,111 3 ,554,111 4 ,206,191 Other Costs 2 0,725 2 12,374 2 33,099 2 33,099 2 33,099 Total Program Costs 1 29,152 4 ,884,960 5 ,014,112 5 ,014,112 5 ,666,192 Total Expenditures 3 33,242 5 ,431,184 5 ,764,426 5 ,764,426 6 ,416,507 (3) Revenue over (under) Expenditures: $ - $ - $ - $ - $ - (1)The expenditure and total budget amounts are based on the CSBG Contract Budget Summary contained in the contract (as Attachment I to the Grant Agreement). The Contract Budget amounts are from January 1, 2022 through June 30, 2023. (2)The expenditure amounts are based on the monthly CSBG Expenditure Claim Reports filed with the California Department of Community Services and Development from January 1, 2022 through June 30, 2023. (3)The grant balance of this contract was $652,081 ($6,416,507 - $5,764,426) as of June 30, 2023. This amount will be expended during FY 2023-24. 253 COUNTY OF LOS ANGELES DEPARTMENT OF PUBLIC SOCIAL SERVICES SUPPLEMENTARY SCHEDULE OF REVENUE AND EXPENDITURES CSBG CONTRACT NO. 23F-4021 FOR THE YEAR ENDED JUNE 30, 2023 AL #93.569 January 1, 2023 through Total Audited Total Reported (1) June 30, 2023 Costs Expenses Total Budget REVENUE Grant Revenue $ 3 53,046 $ 3 53,046 $ 3 53,046 $ 6 ,270,685 CSBG Discretionary - - - 7 7,901 Total Revenue 3 53,046 3 53,046 3 53,046 6 ,348,586 (2) EXPENDITURES Administrative Costs Salaries and Wages 7 0,554 7 0,554 7 0,554 4 14,831 Fringe Benefits 5 9,937 5 9,937 5 9,937 2 62,975 Operating Expenses 4 ,705 4 ,705 4 ,705 4 1,052 Equipment - - - - Out-of-State Travel - - - 2 ,600 Contract/Consultant Services - - - - Other Costs 1 8,112 1 8,112 1 8,112 1 08,925 Total Administrative Costs 1 53,308 1 53,308 1 53,308 8 30,383 Program Costs Salaries and Wages 1 28,460 1 28,460 1 28,460 8 11,838 Fringe Benefits 4 9,962 4 9,962 4 9,962 4 54,629 Operating Expenses - - - - Equipment - - - - Out-of-State Travel - - - - Subcontractor/Consultant Services - - - 4 ,023,772 Other Costs 2 1,316 2 1,316 2 1,316 2 27,964 Total Program Costs 1 99,738 1 99,738 1 99,738 5 ,518,203 Total Expenditures 3 53,046 3 53,046 3 53,046 6 ,348,586 Revenue over (under) Expenditures: $ - $ - $ - $ - (3) (1)The expenditure and total budget amounts are based on the CSBG Contract Budget Summary contained in the contract (as Attachment I to the Grant Agreement). The Contract Budget amounts are from January 1, 2023 through May 31, 2024. (2)The expenditure amounts are based on the monthly CSBG Expenditure Claim Reports filed with the California Department of Community Services and Development from January 1, 2023 through June 30, 2023. (3)The grant balance of this contract was $5,995,540 ($6,348,586 - $353,046) as of June 30, 2023. This amount will be expended during FY 2023-24. 254 COUNTY OF LOS ANGELES DEPARTMENT OF ARTS AND CULTURE SUPPLEMENTARY SCHEDULE OF REVENUE AND EXPENDITURES CSBG CONTRACT NO. 22F-5105 FOR THE YEAR ENDED JUNE 30, 2023 AL #93.569 January 1, 2022 July 1, 2022 through through Total Audited Total Reported June 30, 2022 June 30, 2023 Costs Expenses Total Budget (1) REVENUE Grant Revenue $ 94,115 $ 206,839 $ 300,954 $ 300,954 $ 300,954 Interest Income - 500 500 500 - (2) Total Revenue 94,115 207,339 301,454 301,454 300,954 (3) EXPENDITURES Administrative Costs Salaries and Wages - - - - - Fringe Benefits - - - - - Operating Expenses - - - - - Equipment - - - - - Out-of-State Travel - - - - - Contract/Consultant Services - - - - - Other Costs - - - - - Total Administrative Costs - - - - - Program Costs Salaries and Wages - 13,813 13,813 13,813 13,813 Fringe Benefits - 5,966 5,966 5,966 5,966 Operating Expenses - - - - - Equipment - - - - - Out-of-State Travel - - - - - Subcontractor/Consultant Services 94,115 182,330 276,445 276,445 281,175 Other Costs - 2,740 2,740 2,740 - Total Program Costs 94,115 204,849 298,964 298,964 300,954 Total Expenditures 94,115 204,849 298,964 298,964 300,954 Revenue over (under) Expenditures: $ - $ 2,490 $ 2,490 (4) $ 2,490 $ - (1)Total budget amounts are based on the CSBG Contract Budget Summary contained in the contract (as an Attachment to the Grant Agreement) with year-end budget shifts. The interest earned on the advance in excess of $500 was remitted to the U.S. Department of Health and Human Services. (2)$500 of the interest earned on the advance was retained for administrative expenditures. (3)The expenditure amounts are based on the monthly California Department of Community Services and Development Expenditure Claim Reports filed with the California Department of Community Services and Development. (4)$1,990 ($2,490 - $500) of unspent funds was remitted to the California Department of Community Services and Development. 255 COUNTY OF LOS ANGELES DEPARTMENT OF ARTS AND CULTURE SUPPLEMENTARY SCHEDULE OF REVENUE AND EXPENDITURES CSBG CONTRACT NO. 22F-5105 DISCRETIONARY FOR THE YEAR ENDED JUNE 30, 2023 AL #93.569 January 1, 2022 July 1, 2022 through through Total Audited Total Reported June 30, 2022 June 30, 2023 Costs Expenses Total Budget (1) REVENUE Grant Revenue $ - $ 31,000 $ 31,000 $ 31,000 $ 31,000 Interest Income - - - - - Total Revenue - 31,000 31,000 31,000 31,000 (2) EXPENDITURES Administrative Costs Salaries and Wages - - - - - Fringe Benefits - - - - - Operating Expenses - - - - - Equipment - - - - - Out-of-State Travel - - - - - Contract/Consultant Services - - - - - Other Costs - - - - - Total Administrative Costs - - - - - Program Costs Salaries and Wages - - - - - Fringe Benefits - - - - - Operating Expenses - - - - - Equipment - - - - - Out-of-State Travel - - - - - Subcontractor/Consultant Services - 31,000 31,000 31,000 31,000 Other Costs - - - - - Total Program Costs - 31,000 31,000 31,000 31,000 Total Expenditures - 31,000 31,000 31,000 31,000 Revenue over (under) Expenditures: $ - $ - $ - $ - $ - (1)Total budget amounts are based on the CSBG Contract Budget Summary contained in the contract (as an Attachment to the Grant Agreement) with year-end budget shifts. (2)The expenditure amounts are based on the monthly California Department of Community Services and Development Expenditure Claim Reports filed with the California Department of Community Services and Development. 256 COUNTY OF LOS ANGELES DEPARTMENT OF ARTS AND CULTURE SUPPLEMENTARY SCHEDULE OF REVENUE AND EXPENDITURES CSBG CONTRACT NO. 23F-4105 FOR THE YEAR ENDED JUNE 30, 2023 AL #93.569 January 1, 2023 through Total Audited Total Reported June 30, 2023 Costs Expenses Total Budget (1) REVENUE Grant Revenue $ 90,471 $ 90,471 $ 90,471 $ 447,118 Interest Income - - - - Total Revenue 90,471 90,471 90,471 447,118 (2) EXPENDITURES Administrative Costs Salaries and Wages - - - - Fringe Benefits - - - - Operating Expenses - - - - Equipment - - - - Out-of-State Travel - - - - Contract/Consultant Services - - - - Other Costs - - - - Total Administrative Costs - - - - Program Costs Salaries and Wages - - - - Fringe Benefits - - - - Operating Expenses - - - - Equipment - - - - Out-of-State Travel - - - - Subcontractor/Consultant Services 90,471 90,471 90,471 447,118 Other Costs - - - - Total Program Costs 90,471 90,471 90,471 447,118 Total Expenditures 90,471 90,471 90,471 447,118 (3) Revenue over (under) Expenditures: $ - $ - $ - $ - (1)Total budget amounts are based on the CSBG Contract Budget Summary contained in the contract (as an Attachment to the Grant Agreement) with year-end budget shifts. (2)The expenditure amounts are based on the monthly California Department of Community Services and Development Expenditure Claim Reports filed with the California Department of Community Services and Development. (3)The grant balance of this contract was $356,647 ($447,118 - $90,471) as of June 30, 2023. This amount will be expended during FY 2023-24. 257 COUNTY OF LOS ANGELES DEPARTMENT OF AGING AND DISABILITIES SUPPLEMENTARY SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS GRANTED BY THE CALIFORNIA DEPARTMENT OF AGING FOR THE YEAR ENDED JUNE 30, 2023 Single Audit Federal State Total Grant Name AL # Expenditures Expenditures Expenditures SNAP-ED (SP2122-19) 10.561 $ 5 3,587 $ - $ 53,587 SNAP-ED (SP2223-19) 10.561 2 53,849 - 253,849 Older American Title V Project 17.235 1 ,462,228 - 1,462,228 MIPPA (MI2122-19) 93.071 1 02,993 - 102,993 MIPPA (MI2223-19) 93.071 1 58,761 - 158,761 Area Agency on Aging - HICAP H9 93.324 2 25,295 5 12,750 738,045 Area Agency on Aging - HICAP H3 93.324 6 3,214 173,253 236,467 Financial Alignment (FA 2122-19) 93.634 6 6,785 - 66,785 Long Term Care Ombudsman - Elder Justice 93.747 3 1,042 - 31,042 TOTAL OTHERS 2,417,754 6 86,003 3,103,757 Ombudsman SNF * - 242,873 2 42,873 Ombudsman Initiative * - 424,561 4 24,561 Ombudsman PH L&C * - 51,131 51,131 Title VII - Elder Abuse Prevention 93.041 8 5,284 - 85,284 Title VII - Ombudsman 93.042 139,905 - 139,905 Area Agency on Aging III D 93.043 4 97,295 - 497,295 Area Agency on Aging III B 93.044 6 ,833,814 903,130 7,736,944 Area Agency on Aging III C-I 93.045 7 ,839,084 4,126,789 11,965,873 Area Agency on Aging III C-II 93.045 5 ,566,205 6,013,767 11,579,972 Area Agency on Aging Title III E 93.052 2 ,472,052 - 2,472,052 Area Agency on Aging III USDA C-I 93.053 9 82,877 - 982,877 Area Agency on Aging III USDA C-II 93.053 7 10,122 - 710,122 TOTAL TITLE III AND VII 25,126,638 11,762,251 36,888,889 COVID-19 - ARDC COVID Vaccine Access 93.044 6 16,334 - 616,334 TOTAL COVID-19 TITLE III 6 16,334 - 616,334 COVID-19 - CAA, Nutrition OAA Title III-C2 93.045 6 11 - 611 TOTAL COVID-19 CAA 6 11 - 611 COVID-19 - FFCRA - OAA - Home Delivered Meals: Title III-C2 93.045 1 ,033,388 - 1,033,388 TOTAL COVID-19 FFCRA 1 ,033,388 - 1,033,388 COVID-19 - ARP - Title III-B - OAA - Supportive Services 93.044 5 86,601 - 586,601 COVID-19 - ARP - Title III C-1 Congregate Meals 93.045 2 ,496,045 - 2,496,045 TOTAL COVID-19 ARP 3 ,082,646 - 3,082,646 TOTAL $ 3 2,277,371 $ 1 2,448,254 $ 4 4,725,625 *This grant does not have an Assistance Listing Number. It is 100% State-funded. 258