SCO
Los Angeles, City of
Open Meetings Act/Brown Act Reform
Read the report at Los Angeles, City of ↗
CITY OF LOS ANGELES
Audit Report
OPEN MEETINGS ACT/BROWN ACT
REFORM PROGRAM
Chapter 641, Statutes of 1986;
and Chapter 1136 through 1138, Statutes of 1993
July 1, 2005, through June 30, 2012
BETTY T. YEE
California State Controller
December 2021
BETTY T. YEE
California State Controller
December 8, 2021
CERTIFIED MAIL—RETURN RECEIPT REQUESTED
The Honorable Ron Galperin, Controller
City of Los Angeles
200 N. Main Street, Suite 300
Los Angeles, CA 90012
Dear Mr. Galperin:
The State Controller’s Office audited the costs claimed by the City of Los Angeles for the
legislatively mandated Open Meetings Act/Brown Act Reform Program for the period of July 1,
2005, through June 30, 2012.
The city claimed $2,417,363 for costs of the mandated program. Our audit found that $2,113,471
is allowable and $303,892 is unallowable, primarily because the city:
Understated its standard-time costs by making claim preparation errors;
Applied incorrect blended productive hourly rates to eligible agenda items;
Overstated its flat-rate costs by claiming unsupported and ineligible meeting agendas; and
Misstated its indirect cost rates.
The State made no payments to the city. The State will pay $2,113,471, contingent upon
available appropriations.
Following issuance of this audit report, the Local Government Programs and Services Division
of the State Controller’s Office will notify the city of the adjustment to its claims via a system-
generated letter for each fiscal year in the audit period.
If you have any questions, please contact Lisa Kurokawa, Chief, Compliance Audits Bureau, by
telephone at (916) 327-3138.
Sincerely,
Original signed by
KIMBERLY TARVIN, CPA
Chief, Division of Audits
KT/as
The Honorable Ron Galperin, Controller -2- December 8, 2021
cc: The Honorable Eric Garcetti, Mayor
Mayor of the City of Los Angeles
Matthew W. Szabo, City Administrative Officer
City of Los Angeles
Jacob Wexler, Finance Chief
Office of the City Administrative Officer
Bryan Oh, Senior Administrative Analyst
Office of the City Administrative Officer
Chris Hill, Principal Program Budget Analyst
Local Government Unit
California Department of Finance
Steven Pavlov, Finance Budget Analyst
Local Government Unit
California Department of Finance
Darryl Mar, Manager
Local Government Programs and Services Division
State Controller’s Office
Everett Luc, Supervisor
Local Government Programs and Services Division
State Controller’s Office
City of Los Angeles Open Meetings Act/Brown Act Reform Program
Contents
Audit Report
Summary ............................................................................................................................ 1
Background ........................................................................................................................ 1
Audit Authority.................................................................................................................. 2
Objective, Scope, and Methodology ................................................................................. 2
Conclusion .......................................................................................................................... 4
Follow-up on Prior Audit Findings .................................................................................. 4
Views of Responsible Officials .......................................................................................... 4
Restricted Use .................................................................................................................... 4
Schedule 1—Summary of Program Costs ........................................................................... 5
Schedule 2— Summary of Flat-Rate Meeting Agenda Costs ............................................ 7
Findings and Recommendations ........................................................................................... 11
Attachment—City’s Response to Draft Audit Report
City of Los Angeles Open Meetings Act/Brown Act Reform Program
Audit Report
Summary The State Controller’s Office (SCO) audited the costs claimed by the City
of Los Angeles for the legislatively mandated Open Meetings Act/Brown
Act Reform Program for the period of July 1, 2005, through June 30, 2012.
The city claimed $2,417,363 for costs of the mandated program. Our audit
found that $2,113,471 is allowable and $303,892 is unallowable, primarily
because the city:
Understated its standard-time costs by making claim preparation
errors;
Applied incorrect blended productive hourly rates (PHRs) to eligible
agenda items;
Overstated its flat-rate costs by claiming unsupported and ineligible
meeting agendas; and
Misstated its indirect cost rates.
The State made no payments to the city. The State will pay $2,113,471,
contingent upon available appropriations.
Background Open Meetings Act Program
Chapter 641, Statutes of 1986, added Government Code (GC)
sections 54954.2 and 54954.3. GC section 54954.2 requires the legislative
body of a local agency, or its designee, to post an agenda containing a brief
general description of each item of business to be transacted or discussed
at the regular meeting, subject to exceptions stated therein, specifying the
time and location of the regular meeting. It also requires that the agenda
to be posted at least 72 hours before the meeting in a location freely
accessible to the public. GC section 54954.3 requires members of the
public to be provided an opportunity to address the legislative body on
specific agenda items or an item of interest that is within the subject matter
jurisdiction of the legislative body. The legislation requires that this
opportunity be stated on the posted agenda.
Open Meetings Act/Brown Act Reform Program
Chapters 1136 through 1138, Statutes of 1993, amended GC
sections 54952, 54954.2, 54957.1, and 54957.7, expanding the types of
legislative bodies that are required to comply with the notice and agenda
requirements of GC sections 54954.2 and 54954.3. These sections also
require all legislative bodies to perform additional activities related to the
closed session requirements of the Brown Act.
The Commission on State Mandates (Commission) determined that the
Open Meetings Act Program (October 22, 1987) and the Open Meetings
Act/Brown Act Reform Program (June 28, 2001) resulted in state-
mandated costs that are reimbursable under GC section 17561.
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City of Los Angeles Open Meetings Act/Brown Act Reform Program
The program’s parameters and guidelines establish the state mandate and
define the reimbursement criteria. The Commission adopted parameters
and guidelines on September 22, 1988 (last amended on November 30,
2000) for the Open Meetings Act Program, and on April 25, 2002, for the
Open Meetings Act/Brown Act Reform Program. In compliance with GC
section 17558, the SCO issues claiming instructions to assist local
agencies and schools in claiming mandated program reimbursable costs.
The Open Meetings Act Program became effective on August 29, 1986.
Commencing in fiscal year (FY) 1997-98, a local agency may claim costs
using the actual time reimbursement option, the standard-time
reimbursement option, or the flat-rate reimbursement option as specified
in parameters and guidelines. The Open Meetings Act/Brown Act Reform
Program was effective for FY 2001-02.
Based on the passage of Proposition 30, adopted by the voters on
November 7, 2012, the Department of Finance filed a request for
redetermination of the Open Meetings Act and Brown Act Reform
Program. On January 23, 2015, the Commission found that the Open
Meetings Act/Brown Act Reform Program no longer constitutes a
reimbursable state-mandated program, effective November 7, 2012.
Audit Authority We conducted this performance audit in accordance with
GC sections 17558.5 and 17561, which authorize the SCO to audit the
city’s records to verify the actual amount of the mandated costs. In
addition, GC section 12410 provides the SCO with general authority to
audit the disbursement of state money for correctness, legality, and
sufficient provisions of law.
Objective, Scope, The objective of our audit was to determine whether costs claimed
represent increased costs resulting from the legislatively mandated Open
and Methodology
Meetings Act/Brown Act Reform Program. Specifically, we conducted
this audit to determine whether costs claimed were supported by
appropriate source documents, were not funded by another source, and
were not unreasonable and/or excessive.1
The audit period was July 1, 2005, through June 30, 2012.
To achieve our objective, we completed the following procedures.
General
We reviewed the annual mandated cost claims filed by the city for the
audit period and identified the material cost components claimed. For
standard-time option costs, these included the number of meeting
agenda items, the minutes per agenda item, and the blended PHRs. For
flat-rate costs, these included the number of meeting agendas and the
uniform cost allowance.
1 Unreasonable and/or excessive costs include ineligible costs that are not identified in the programs parameters and
guidelines as a reimbursable cost.
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City of Los Angeles Open Meetings Act/Brown Act Reform Program
We determined whether there were any mathematical errors or any
unusual or unexpected variances from year to year, and whether the
claims adhered to the SCO’s claiming instructions and the program’s
parameters and guidelines.
We completed an internal control questionnaire by interviewing key
city staff members. We discussed the claim preparation process with
city staff members to determine what information was obtained, who
obtained it, and how it was used.
Standard-time option
We haphazardly selected non-statistical samples of meeting agendas
claimed, ranging from 28% to 36% for each fiscal year of the audit
period.
We counted the number of eligible meeting agenda items and
determined allowable costs for each year of the audit period.
We held discussions with city representatives to determine which
employee classifications and/or individuals performed the
reimbursable activities and the extent of the mandated activities. We
used this information to determine the participation percentages for all
city employee classifications and/or individuals that performed the
mandated activities, using agendas provided by the City Clerk’s
Office.
We calculated the blended PHR calculations for FY 2005-06 through
FY 2011-12 for all city employee classifications and/or individuals
that performed the mandated activities, using documentation from the
city’s payroll system.
We determined whether the city adequately supported indirect costs
claimed separately from blended PHRs for FY 2005-06 through
FY 2008-09.
Flat-rate option
We haphazardly selected non-statistical samples of meeting agendas
claimed, ranging from 29% to 36% for each fiscal year of the audit
period; then we:
o Verified the existence of meeting agendas claimed and compared
the number of supported meetings to the number claimed (we
excluded from consideration meetings that did not include a
provision for public comment or meeting location); and
o Developed error rates for each fiscal year based on the number of
eligible meeting agendas. Consistent with the American Institute
of Certified Public Accountants’ Clarified Statement on Auditing
Standards section 530, we applied the error rate to the total costs
claimed for that fiscal year.
We conducted this performance audit in accordance with generally
accepted government auditing standards. Those standards require that we
plan and perform the audit to obtain sufficient, appropriate evidence to
provide a reasonable basis for our findings and conclusions based on our
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City of Los Angeles Open Meetings Act/Brown Act Reform Program
audit objective. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on our audit
objective.
We did not audit the city’s financial statements.
Conclusion As a result of performing the audit procedures, we found instances of
noncompliance with the requirements described in our audit objective. We
did not find that the city claimed costs that were funded by other sources;
however, we did find that it claimed unsupported and ineligible costs, as
quantified in Schedule 1, and described in the Findings and
Recommendations section of this audit report.
For the audit period, the City of Los Angeles claimed $2,417,363 for costs
of the legislatively mandated Open Meetings Act/Brown Act Reform
Program. Our audit found that $2,113,471 is allowable and $303,892 is
unallowable. The State made no payments to the city. The State will pay
$2,113,471, contingent upon available appropriations.
Following issuance of this audit report, the SCO’s Local Government
Programs and Services Division will notify the city of the adjustment to
its claims via a system-generated letter for each fiscal year in the audit
period.
Follow-up on The city has not resolved the findings noted in our prior audit report for
the period of July 1, 2001, through June 30, 2004, issued on June 30, 2006,
Prior Audit
as described in Findings 1 and 3.
Findings
Views of We issued a draft audit report on October 14, 2021. Matthew W. Szabo,
Responsible City Administrator Officer, responded by letter dated October 22, 2021
(Attachment), stating that the city has reviewed the report and concurs
Officials
with our findings.
Restricted Use This audit report is solely for the information and use of the City of Los
Angeles, the California Department of Finance, and SCO; it is not intended
to be and should not be used by anyone other than these specified parties.
This restriction is not intended to limit distribution of this audit report,
which is a matter of public record and is available on the SCO website at
www.sco.ca.gov.
Original signed by
KIMBERLY TARVIN, CPA
Chief, Division of Audits
December 8, 2021
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City of Los Angeles Open Meetings Act/Brown Act Reform Program
Schedule 1—
Summary of Program Costs
July 1, 2005, through June 30, 2012
Actual Costs Allowable per Audit
Cost Elements Claimed Audit Adjustment Reference1
July 1, 2005, through June 30, 2006
Standard time $ 119,331 $ 136,118 $ 16,787 Finding 1
Flat rate 139,323 103,373 (35,950) Finding 2
Total direct costs 258,654 239,491 (19,163)
Indirect costs2 93,277 126,685 3 3,408 Findings 1 and 3
Total direct and indirect costs 351,931 366,176 1 4,245
Less allowable costs that exceed costs claimed3 - ( 14,245) (14,245)
Total program costs $ 351,931 351,931 $ -
Less amount paid by the State4 -
Allowable costs claimed in excess of amount paid $ 351,931
July 1, 2006, through June 30, 2007
Standard time $ 125,590 $ 133,119 $ 7 ,529 Finding 1
Flat rate 125,604 95,718 (29,886) Finding 2
Total direct costs 251,194 228,837 (22,357)
Indirect costs2 181,116 130,987 (50,129) Findings 1 and 3
Total program costs $ 432,310 359,824 $ ( 72,486)
Less amount paid by the State4 -
Allowable costs claimed in excess of amount paid $ 359,824
July 1, 2007, through June 30, 2008
Standard time $ 102,102 $ 118,435 $ 16,333 Finding 1
Flat rate 143,204 116,193 (27,011) Finding 2
Total direct costs 245,306 234,628 (10,678)
Indirect costs2 186,767 124,058 (62,709) Findings 1 and 3
Total program costs $ 432,073 358,686 $ ( 73,387)
Less amount paid by the State4 -
Allowable costs claimed in excess of amount paid $ 358,686
July 1, 2008, through June 30, 2009
Standard time $ 93,316 $ 111,223 $ 17,907 Finding 1
Flat rate 153,641 121,116 (32,525) Finding 2
Total direct costs 246,957 232,339 (14,618)
Indirect costs2 22,747 93,544 7 0,797 Findings 1 and 3
Total direct and indirect costs 269,704 325,883 5 6,179
Less allowable costs that exceed costs claimed3 - ( 56,179) (56,179) Finding 1
Total program costs $ 269,704 269,704 $ -
Less amount paid by the State4 -
Allowable costs claimed in excess of amount paid $ 269,704
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City of Los Angeles Open Meetings Act/Brown Act Reform Program
Schedule 1 (continued)
Actual Costs Allowable per Audit
Cost Elements Claimed Audit Adjustment Reference1
July 1, 2009, through June 30, 2010
Standard time $ 1 81,655 $ 184,074 $ 2 ,419 Finding 1
Flat rate 127,091 1 02,920 (24,171) Finding 2
Total direct costs 308,746 2 86,994 (21,752)
Indirect costs2 - - - Findings 1 and 3
Total program costs $ 3 08,746 2 86,994 $ ( 21,752)
Less amount paid by the State4 -
Allowable costs claimed in excess of amount paid $ 286,994
July 1, 2010, through June 30, 2011
Standard time $ 1 79,190 $ 171,762 $ (7,428) Finding 1
Flat rate 156,877 71,496 (85,381) Finding 2
Total direct costs 336,067 2 43,258 (92,809)
Indirect costs2 - - - Findings 1 and 3
Total program costs $ 3 36,067 2 43,258 $ ( 92,809)
Less amount paid by the State4 -
Allowable costs claimed in excess of amount paid $ 243,258
July 1, 2011, through June 30, 2012
Standard time $ 1 48,774 $ 149,530 $ 756 Finding 1
Flat rate 137,758 93,544 (44,214) Finding 2
Total direct costs 286,532 2 43,074 (43,458)
Indirect costs2 - - - Findings 1 and 3
Total program costs $ 2 86,532 2 43,074 $ ( 43,458)
Less amount paid by the State4 -
Allowable costs claimed in excess of amount paid $ 243,074
Summary: July 1, 2005, through June 30, 2012
Standard time $ 9 49,958 $ 1,004,261 $ 54,303 Finding 1
Flat rate 983,498 7 04,360 ( 279,138) Finding 2
Total direct costs 1,933,456 1,708,621 ( 224,835)
Indirect costs2 483,907 4 75,274 (8,633) Findings 1 and 3
Total direct and indirect costs 2,417,363 2,183,895 ( 233,468)
Less allowable costs that exceed costs claimed3 - (70,424) (70,424) Finding 1
Total program costs $ 2,417,363 2,113,471 $ (303,892)
Less amount paid by the State4 -
Allowable costs claimed in excess of amount paid $ 2,113,471
_________________________
1 See the Findings and Recommendations section.
2 The city claimed indirect costs separately based on standard-time salaries and benefits for FY 2005-06 through
FY 2008-09. The city used indirect costs as part of its blended PHRs for the remaining years of the audit period.
3 GC section 17568 stipulates that the State will not reimburse any claim more than one year after the filing deadline
specified in the SCO’s claiming instructions. That deadline has expired for FY 2005-06 and FY 2008-09.
4 Payment amount current as of October 21, 2021.
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City of Los Angeles Open Meetings Act/Brown Act Reform Program
Schedule 2—
Summary of Flat-Rate Meeting Agenda Costs
July 1, 2005, through June 30, 2012
Agenda
Audit
City C l a i m e d Variance Allowable Unallowable Flat Adjustment
Department Agendas (%) Agendas Agendas Rate ($)
FY 2005-06
Building and Safety 3 0 71.43% 2 1 (9) $ 1 35.66 $ (1,221)
Bureau of Engineering 3 4 7.14% 2 (32) 1 35.66 (4,341)
Bureau of Sanitation 8 66.67% 5 (3) 1 35.66 (407)
City Administrative Officer 4 1 92.86% 3 8 (3) 1 35.66 (407)
City Clerk 2 79 80.65% 2 25 (54) 1 35.66 (7,326)
Disability 8 0.00% - (8) 1 35.66 (1,085)
Economic and Workforce Development 2 6 75.00% 2 0 (6) 1 35.66 (814)
Emergency Management 1 8 33.33% 6 (12) 1 35.66 (1,628)
Ethics 1 1 100.00% 1 1 - 1 35.66 -
Housing and Community Investment 6 9 36.36% 2 5 (44) 1 35.66 (5,969)
Information Technology Agency 9 50.00% 5 (4) 1 35.66 (543)
Library 1 5 80.00% 1 2 (3) 1 35.66 (407)
Los Angeles City Employee Retirement System 1 0.00% - (1) 1 35.66 (136)
Los Angeles Fire and Police Pension 2 9 0.00% - (29) 1 35.66 (3,934)
Los Angeles Homeless Services Authority 3 0.00% - (3) 1 35.66 (407)
Los Angeles Quality and Productivity 9 0.00% - (9) 1 35.66 (1,221)
Neighborhood Empowerment 1 3 0.00% - (13) 1 35.66 (1,764)
Personnel 3 2 88.89% 2 8 (4) 1 35.66 (543)
Planning 1 41 97.50% 1 37 (4) 1 35.66 (543)
Police 8 0 77.78% 6 2 (18) 1 35.66 (2,442)
Public Works 1 43 100.00% 1 43 - 1 35.66 -
Recreation and Parks 1 3 100.00% 1 3 - 1 35.66 -
Transportation 1 5 60.00% 9 (6) 1 35.66 (814)
Total, FY 2005-06 1 ,027 7 62 (265) $ (35,950)
FY 2006-07
Building and Safety 3 0 70.00% 2 1 (9) $ 1 40.97 $ (1,269)
Bureau of Engineering 5 3 5.88% 3 (50) 1 40.97 (7,049)
City Administrative Officer 7 6 91.67% 7 0 (6) 1 40.97 (846)
City Clerk 1 39 88.10% 1 22 (17) 1 40.97 (2,396)
Cultural Affairs 2 100.00% 2 - 1 40.97 -
Economic and Workforce Development 3 0.00% - (3) 1 40.97 (423)
Emergency Management 1 8 33.33% 6 (12) 1 40.97 (1,692)
Ethics 1 2 100.00% 1 2 - 1 40.97 -
Housing and Community Investment 5 2 22.22% 1 2 (40) 1 40.97 (5,639)
Information Technology Agency 1 0 100.00% 1 0 - 1 40.97 -
Library 1 2 100.00% 1 2 - 1 40.97 -
Los Angeles Fire and Police Pension 2 5 0.00% - (25) 1 40.97 (3,524)
Los Angeles Homeless Services Authority 1 0.00% - (1) 1 40.97 (141)
Los Angeles Quality and Productivity 1 0 0.00% - (10) 1 40.97 (1,410)
Neighborhood Empowerment 3 0 0.00% - (30) 1 40.97 (4,229)
Personnel 2 4 87.50% 2 1 (3) 1 40.97 (423)
Planning 1 59 96.08% 1 53 (6) 1 40.97 (846)
Police 6 4 100.00% 6 4 - 1 40.97 -
Public Works 1 44 100.00% 1 44 - 1 40.97 -
Recreation and Parks 1 8 100.00% 1 8 - 1 40.97 -
Transportation 9 100.00% 9 - 1 40.97 -
Total, FY 2006-07 8 91 6 79 (212) $ (29,886)
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City of Los Angeles Open Meetings Act/Brown Act Reform Program
Schedule 2 (continued)
Agenda
Audit
City C l a i m e d Variance Allowable Unallowable Flat Adjustment
Department Agendas (%) Agendas Agendas Rate ($)
FY 2007-08
Building and Safety 3 5 100.00% 3 5 - $ 1 50.90 $ -
Bureau of Engineering 4 3 42.86% 1 8 (25) 1 50.90 (3,773)
City Administrative Officer 8 3 70.27% 5 8 (25) 1 50.90 (3,773)
City Clerk 2 33 80.49% 1 88 (45) 1 50.90 (6,791)
Community Redevelopment Agency 5 0.00% - (5) 1 50.90 (755)
Cultural Affairs 7 100.00% 7 - 1 50.90 -
Economic and Workforce Development 9 100.00% 9 - 1 50.90 -
El Pueblo 1 100.00% 1 - 1 50.90 -
Emergency Management 1 8 33.33% 6 (12) 1 50.90 (1,811)
Ethics 9 100.00% 9 - 1 50.90 -
Housing and Community Investment 3 6 33.33% 1 2 (24) 1 50.90 (3,622)
Information Technology Agency 1 2 100.00% 1 2 - 1 50.90 -
Library 1 2 75.00% 9 (3) 1 50.90 (453)
Los Angeles Fire and Police Pension 2 3 0.00% - (23) 1 50.90 (3,471)
Los Angeles Homeless Services Authority 3 0.00% - (3) 1 50.90 (453)
Los Angeles Quality and Productivity 2 0.00% - (2) 1 50.90 (302)
Neighborhood Empowerment 2 1 57.14% 1 2 (9) 1 50.90 (1,358)
Personnel 2 8 100.00% 2 8 - 1 50.90 -
Planning 1 38 100.00% 1 38 - 1 50.90 -
Police 6 1 100.00% 6 1 - 1 50.90 -
Public Works 1 43 97.67% 1 40 (3) 1 50.90 (453)
Recreation and Parks 1 4 100.00% 1 4 - 1 50.90 -
Transportation 1 3 100.00% 1 3 - 1 50.90 -
Total, FY 2007-08 9 49 7 70 (179) $ (27,011)
FY 2008-09
Building and Safety 3 3 100.00% 3 3 - $ 1 54.88 $ -
Bureau of Engineering 2 0 14.29% 3 (17) 1 54.88 (2,633)
City Administrative Officer 6 0 80.95% 4 9 (11) 1 54.88 (1,704)
City Clerk 2 99 72.64% 2 17 (82) 1 54.88 (12,700)
Economic and Workforce Development 9 100.00% 9 - 1 54.88 -
Emergency Management 1 8 33.33% 6 (12) 1 54.88 (1,859)
Ethics 1 2 100.00% 1 2 - 1 54.88 -
Housing and Community Investment 5 3 23.53% 1 2 (41) 1 54.88 (6,350)
Information Technology Agency 4 100.00% 4 - 1 54.88 -
Library 1 9 100.00% 1 9 - 1 54.88 -
Los Angeles Fire and Police Pension 2 4 0.00% - (24) 1 54.88 (3,717)
Los Angeles Homeless Services Authority 4 0.00% - (4) 1 54.88 (620)
Los Angeles Quality and Productivity 1 0 0.00% - (10) 1 54.88 (1,549)
Neighborhood Empowerment 1 4 80.00% 1 1 (3) 1 54.88 (465)
Personnel 3 0 90.00% 2 7 (3) 1 54.88 (465)
Planning 1 39 100.00% 1 39 - 1 54.88 -
Police 6 5 100.00% 6 5 - 1 54.88 -
Public Works 1 43 100.00% 1 43 - 1 54.88 -
Recreation and Parks 1 8 85.71% 1 5 (3) 1 54.88 (465)
Transportation 1 8 100.00% 1 8 - 1 54.88 -
Total, FY 2008-09 9 92 7 82 (210) $ (32,525)
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City of Los Angeles Open Meetings Act/Brown Act Reform Program
Schedule 2 (continued)
Agenda
Audit
City C l a i m e d Variance Allowable Unallowable Flat Adjustment
Department Agendas (%) Agendas Agendas Rate ($)
FY 2009-10
Building and Safety 6 100.00% 6 - $ 1 55.94 $ -
Bureau of Engineering 1 9 100.00% 1 9 - 1 55.94 -
City Administrative Officer 1 100.00% 1 - 1 55.94 -
City Clerk 3 30 72.36% 2 39 (91) 1 55.94 (14,191)
Cultural Affairs 1 9 50.00% 1 0 (9) 1 55.94 (1,403)
Ethics 1 1 100.00% 1 1 - 1 55.94 -
Housing and Community Investment 3 3 50.00% 1 7 (16) 1 55.94 (2,495)
Library 1 8 100.00% 1 8 - 1 55.94 -
Los Angeles World Airpots 3 5 100.00% 3 5 - 1 55.94 -
Office of Finance 1 0 66.67% 7 (3) 1 55.94 (468)
Personnel 3 3 100.00% 3 3 - 1 55.94 -
Planning 3 5 92.31% 3 2 (3) 1 55.94 (468)
Police 4 0 100.00% 4 0 - 1 55.94 -
Public Works 1 43 100.00% 1 43 - 1 55.94 -
Recreation and Parks 1 7 100.00% 1 7 - 1 55.94 -
Transportation 3 1 50.00% 1 6 (15) 1 55.94 (2,339)
Water and Power 2 1 14.29% 3 (18) 1 55.94 (2,807)
Zoo 1 3 100.00% 1 3 - 1 55.94 -
Total, FY 2009-10 8 15 6 60 (155) $ (24,171)
FY 2010-11
Building and Safety 1 1 54.55% 6 (5) $ 1 59.59 $ (798)
Bureau of Engineering 1 1 14.29% 2 (9) 1 59.59 (1,436)
City Administrative Officer 1 6 0.00% - (16) 1 59.59 (2,553)
City Clerk 2 49 71.43% 1 78 (71) 1 59.59 (11,331)
Cultural Affairs 4 0.00% - (4) 1 59.59 (638)
Economic and Workforce Development 6 0.00% - (6) 1 59.59 (958)
Emergency Management 6 0.00% - (6) 1 59.59 (958)
Ethics 1 9 10.53% 2 (17) 1 59.59 (2,713)
Fire 3 100.00% 3 - 1 59.59 -
Housing and Community Investment 3 4 0.00% - (34) 1 59.59 (5,426)
Information Technology Agency 4 50.00% 2 (2) 1 59.59 (319)
Library 4 100.00% 4 - 1 59.59 -
Los Angeles Fire and Police Pension 4 0.00% - (4) 1 59.59 (638)
Los Angeles World Airpots 7 33.33% 2 (5) 1 59.59 (798)
Neighborhood Empowerment 1 15 12.69% 1 5 (100) 1 59.59 (15,959)
Office of Finance 1 9 28.57% 5 (14) 1 59.59 (2,234)
Personnel 5 9 9.68% 6 (53) 1 59.59 (8,458)
Planning 5 7 66.84% 3 8 (19) 1 59.59 (3,032)
Police 1 54 18.12% 2 8 (126) 1 59.59 (20,108)
Public Works 1 45 95.45% 1 38 (7) 1 59.59 (1,117)
Recreation and Parks 2 4 12.50% 3 (21) 1 59.59 (3,351)
Transportation 1 6 100.00% 1 6 - 1 59.59 -
Zoo 1 6 0.00% - (16) 1 59.59 (2,553)
Total, FY 2010-11 9 83 4 48 (535) $ (85,381)
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City of Los Angeles Open Meetings Act/Brown Act Reform Program
Schedule 2 (continued)
Agenda
Audit
City C l a i m e d Variance Allowable Unallowable Flat Adjustment
Department Agendas (%) Agendas Agendas Rate ($)
FY 2011-12
Building and Safety 5 100.00% 5 - $ 1 64.98 $ -
Bureau of Engineering 2 7 11.11% 3 (24) 1 64.98 (3,960)
City Administrative Officer 1 1 100.00% 1 1 - 1 64.98 -
City Clerk 2 6 25.00% 7 (19) 1 64.98 (3,135)
Controller 4 0.00% - (4) 1 64.98 (660)
Economic and Workforce Development 5 3 88.89% 4 7 (6) 1 64.98 (990)
El Pueblo 1 2 100.00% 1 2 - 1 64.98 -
Emergency Management 5 100.00% 5 - 1 64.98 -
Ethics 1 0 50.00% 5 (5) 1 64.98 (825)
Housing and Community Investment 7 0 42.31% 3 0 (40) 1 64.98 (6,599)
Information Technology Agency 6 100.00% 6 - 1 64.98 -
Library 2 5 50.00% 1 3 (12) 1 64.98 (1,980)
Los Angeles Fire and Police Pension 2 5 0.00% - (25) 1 64.98 (4,125)
Los Angeles World Airpots 1 1 100.00% 1 1 - 1 64.98 -
Neighborhood Empowerment 1 99 70.59% 1 40 (59) 1 64.98 (9,734)
Personnel 2 1 71.43% 1 5 (6) 1 64.98 (990)
Planning 3 8 92.86% 3 5 (3) 1 64.98 (495)
Police 9 9 48.57% 4 8 (51) 1 64.98 (8,414)
Public Works 1 43 100.00% 1 43 - 1 64.98 -
Recreation and Parks 1 9 100.00% 1 9 - 1 64.98 -
Zoo 2 6 44.44% 1 2 (14) 1 64.98 (2,310)
Subtotal 8 35 5 67 (268) (44,215)
Rounding Adjustment - - - 1
Total, FY 2011-12 8 35 5 67 (268) (44,214)
Grand Total 6 ,492 4 ,668 (1,824) $ (279,138)
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City of Los Angeles Open Meetings Act/Brown Act Reform Program
Findings and Recommendations
FINDING 1— For the audit period, the city claimed $949,958 under the standard-time
Understated option for the preparation and posting of agenda items, and $483,907 in
related indirect costs, for the Open Meetings Act/Brown Act Reform
standard-time
Program.
option and related
indirect costs
The city calculated standard-time costs by multiplying the number of
(Repeat Finding)
Los Angeles City Council meeting agenda items by the standard time
allowance of 30 minutes per agenda item, then multiplying the product by
the blended PHR. The blended PHR includes salaries and related benefits
for the employee classifications that performed the reimbursable activities
for all years of the audit period, and indirect costs from FY 2009-10
through FY 2011-12. The city claimed indirect costs separately for
FY 2005-06 through FY 2008-09.
During testing, we found that $1,004,261 is allowable, and that the city
understated its direct costs by $54,303. We also found that $475,274 in
indirect costs is allowable and $8,633 is unallowable. The costs were
misstated because the city made significant errors in its claims for
FY 2005-06 through FY 2008-09, resulting in under-claimed standard-
time option costs totaling $65,819. The city also misstated its blended
PHRs and indirect cost rates for all years of the audit period except for
FY 2019-10.
The following table summarizes the claimed, allowable, and audit
adjustment amounts for the standard-time option costs:
Fiscal Year
Cost Element 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Total
Number of claimed agenda items 6,395 5,923 5,043 4,746 4 ,130 3,756 3 ,061
Standard time (hour) per agenda × 0.50 × 0 .50 × 0.50 × 0.50 × 0.50 × 0.50 × 0.50
Total claimed hours 3,197.50 2 ,961.50 2,521.50 2,373.00 2,065.00 1,878.00 1,530.50
Claimed PHR × 4 3.69 × 47.54 × 45.68 × 4 6.56 × 87.97 × 9 5.42 × 97.21
Total direct costs $ 1 39,699 $ 140,790 $ 115,182 $ 1 10,487 $ 181,658 $ 1 79,199 $ 148,780 $ 1,015,795
Claim error adjustment (20,368) (15,200) (13,080) (17,171) (3) ( 9) (6) (65,837)
Total direct costs claimed $ 1 19,331 $ 125,590 $ 102,102 $ 93,316 $ 181,655 $ 1 79,190 $ 148,774 $ 949,958
Related indirect costs1 93,277 1 81,116 186,767 22,747 - - - 4 83,907
Total claimed costs $ 2 12,608 $ 306,706 $ 288,869 $ 1 16,063 $ 181,655 $ 1 79,190 $ 148,774 $ 1,433,865
Number of allowable agenda items 6,395 5,923 5,043 4,746 4 ,130 3,756 3 ,061
Standard time (hour) per agenda × 0.50 × 0 .50 × 0.50 × 0.50 × 0.50 × 0.50 × 0.50
Total allowable hours 3,197.50 2 ,961.50 2,521.50 2,373.00 2,065.00 1,878.00 1,530.50
Allowable blended PHR × 4 2.57 × 44.95 × 46.97 × 4 6.87 × 89.14 × 9 1.46 × 97.70
Total allowable direct costs $ 1 36,118 $ 133,119 $ 118,435 $ 1 11,223 $ 184,074 $ 1 71,762 $ 149,530 $ 1,004,261
Allowable related indirect costs1 126,685 1 30,987 124,058 93,544 - - - 4 75,274
Total allowable costs $ 2 62,803 $ 264,106 $ 242,493 $ 2 04,767 $ 184,074 $ 1 71,762 $ 149,530 $ 1,479,535
Audit adjustment $ 50,195 $ (42,600) $ ( 46,376) $ 88,704 $ 2,419 $ (7,428) $ 756 $ 4 5,670
1The city claimed indirect costs for FY 2005-06 through FY 2008-09 separately and included indirect costs in its blended PHR calculations for FY 2009-10
through FY 2011-12. The city also misstated its indirect cost rates for all years of the audit period except FY 2009-10. See Finding 3 for details.
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City of Los Angeles Open Meetings Act/Brown Act Reform Program
Testing methodology
We used non-statistical sampling to test meeting agendas in order to test
meeting agenda items claimed during the audit period under the standard-
time option. This procedure included the following steps:
We determined that the population of items for testing totaled
277 meeting agendas containing 33,054 agenda items claimed under
the standard-time option.
We haphazardly selected 277 meeting agendas containing
10,519 meeting items (31.8%) claimed under the standard-time
option. Then, we tested:
o 37 meeting agendas containing 1,789 out of 6,395 agenda items
claimed for FY 2005-06;
o 35 meeting agendas containing 1,743 out of 5,923 agenda items
claimed for FY 2006-07;
o 42 meeting agendas containing 1,822 out of 5,043 agenda items
claimed for FY 2007-08;
o 43 meeting agendas containing 1,601 out of 4,746 agenda items
claimed for FY 2008-09;
o 42 meeting agendas containing 1,481 out of 4,130 agenda items
claimed for FY 2009-10;
o 40 meeting agendas containing 1,174 out of 3,756 agenda items
claimed for FY 2001-11; and
o 38 meeting agendas containing 909 out of 3,061 agenda items
claimed for FY 2011-12.
We reviewed the agendas for selected meetings that were available on
the city’s website or requested from the city.
We counted the number of eligible agenda items for meeting agendas
provided under the standard-time option, based on the requirements of
the parameters and guidelines. We compared the testing results to the
number of agenda items claimed per fiscal year.
We projected the results from the samples selected from each year by
applying each year’s error percentage to the total population for that
year.
Understated standard-time option costs
The city claimed $949,958 under the standard-time option for preparing
and posting 33,054 agenda items, and $483,907 in related indirect costs,
for City Council meetings during the audit period. We found that
$1,004,261 in standard-time option costs is allowable and $475,274 in
indirect costs is allowable.
The city understated standard-time option costs because it:
Understated the blended PHRs for FY 2007-08 through FY 2009-10,
and for FY 2011-12;
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City of Los Angeles Open Meetings Act/Brown Act Reform Program
Overstated the blended PHRs for FY 2005-06, FY 2006-07, and
FY 2010-11;
Made material errors when preparing its claims for FY 2005-06
through FY 2008-09, resulting in an understatement of $65,819; and
Made rounding errors when preparing its claims for FY 2009-10
through FY 2011-12, resulting in an understatement of $18.
The city claimed related indirect costs separately for FY 2005-06 through
FY 2008-09. The indirect costs were related to direct costs claimed under
the standard-time option. The city overstated indirect costs by $8,633
because it overstated its indirect cost rates for FY 2006-07 through
FY 2008-09 and understated its indirect cost rate for FY 2005-06. See
Finding 3, Misstated Indirect Cost Rates, for more information.
Overstated and understated productive hourly rates
The city overstated its blended PHRs for FY 2005-06, FY 2006-07, and
FY 2010-11, and understated its blended PHRs for FY 2007-08 through
FY 2009-10, and FY 2011-12. The overstatements and understatements
occurred because the city misstated annual salary amounts for FY 2009-10
through FY 2011-12, overstated employee benefit rates for FY 2008-09
and FY 2010-11, and used an overstated indirect cost rate for FY 2010-11
and FY 2011-12 in its blended PHR calculations.
The city claimed blended PHRs and applied them to the following
employee job classifications for all years of the audit period:
Legislative Assistant I;
Legislative Assistant II;
Legislative Assistant III;
Clerk Typist;
Senior Clerk Typist; and
Principal Clerk.
Based on discussions with representatives of the City Clerk’s Office, we
determined which employee classifications performed the reimbursable
activities and the extent of their involvement during the audit period. We
also requested actual payroll information from the city’s Payroll Office for
the staff members performing the reimbursable activities during the audit
period and used this information to recalculate the blended PHRs. We
found that the city misstated the claimed PHRs for all fiscal years of the
audit period.
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City of Los Angeles Open Meetings Act/Brown Act Reform Program
The following table summarizes the actual participation percentages for
city staff who performed the reimbursable activities during the audit
period:
Employee Actual Percentage by Fiscal Year
Classification 2005-061 2006-071 2007-081 2008-09 2009-10 2010-11 2011-12
Legislatvie Assistant I 20.3% 20.3% 20.3% 20.3% 0.0% 13.0% 13.0%
Legislatvie Assistant II 0.0% 0.0% 0.0% 0.0% 0.0% 11.0% 11.0%
Legislatvie Assistant III2 0.0% 0.0% 0.0% 0.0% 21.0% 0.0% 0.0%
Clerk Typist 6.1% 6.1% 6.1% 6.1% 0.0% 0.0% 0.0%
Senior Clerk Typist 73.6% 73.6% 73.6% 73.6% 73.0% 44.5% 44.5%
Principal Clerk Typist 0.0% 0.0% 0.0% 0.0% 6.0% 31.5% 31.5%
1 We agreed to apply FY 2008-09 participation percentages retroactively to FY 2005-06 through 2007-08 because
the city did not provide its blended PHR calculation forms for those years. We determined that the process used
by the City Clerk’s Office was the same for those fiscal years.
2 Two Legislative Analyst IIIs worked on the mandated program in FY 2009-10, each at 10.5% involvement.
We used salary, benefit, and indirect cost information provided by the city
to re-calculate the city’s PHRs. We then multiplied the PHRs by the actual
participation percentages to compute blended PHRs for the audit period.
The following table shows the calculation of the blended PHR used to
calculate allowable costs for FY 2011-12:
Annual Productive Indirect Total Activity Blended
Employee Salary Hours PHR Cost Rate Benefits PHR % PHR
Classification [a] [b] [c=(a/b)] [d=(c × 98.48%)] e=(c × 46.00%) [f=(c+d+e)] [g] [f × g]
Legislative Assistant II $ 109,777 1,800 $ 60.99 $ 60.06 $ 28.06 $ 149.11 11.0% $ 16.40
Legislative Assistant I 9 8,909 1,800 5 4.95 54.11 2 5.28 134.34 13.0% 17.46
Senior Clerk Typist 5 8,760 1,800 3 2.64 32.14 1 5.01 79.79 44.5% 35.51
Principal Clerk 6 6,222 1,800 3 6.79 36.23 1 6.92 89.94 31.5% 28.33
Total $ 97.70
We performed a similar calculation for each fiscal year in the audit period.
We then applied allowable blended PHRs to allowable meeting agenda
items by fiscal year.
The following table presents the calculation of total allowable costs under
the standard-time option during the audit period by fiscal year:
Allowable Standard Audited/ Total
Agenda Time Claimed Allowable Allowable
Fiscal Items Allowance Blended Blended PHR Costs
Year [a] [b] PHR [c] [a] × [b] × [c]
2005-06 6 ,395 0.50 $ 4 3.69 $ 42.57 $ 136,118
2006-07 5 ,923 0.50 $ 4 7.54 $ 44.95 133,119
2007-08 5 ,043 0.50 $ 4 5.68 $ 46.97 118,435
2008-09 4 ,746 0.50 $ 4 6.56 $ 46.87 111,223
2009-10 4 ,130 0.50 $ 8 7.97 $ 89.14 184,074
2010-11 3 ,756 0.50 $ 9 5.42 $ 91.46 171,762
2011-12 3 ,061 0.50 $ 9 7.21 $ 97.70 149,530
Total 33,054 $ 1 ,004,261
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City of Los Angeles Open Meetings Act/Brown Act Reform Program
Criteria
Section IV. A. (Reimbursable Activities – Agenda Preparation and Posting
Activities) of the parameters and guidelines states, in part, that
reimbursable activities include “Prepar[ing] a single agenda for a regular
meeting of a legislative body of a local agency…” and “Post[ing] a single
agenda 72 hours before a meeting.”
Section V. A. 2. a. (Claim Preparation and Submission – Main Legislative
Body Meetings of Counties and Cities) of the parameters and guidelines
states:
List the meeting name and dates. For each meeting, multiply the number
of agenda items, excluding standard agenda items [emphasis added] such
as “adjournment”, “call to order”, “flag salute”, and “public comments”,
by 30 minutes and then by the blended productive hourly rate of the
involved employees.
Section VI. A. (Supporting Data – Source Documents) of the parameters
and guidelines states, “For auditing purposes, all incurred costs claimed
must be traceable to source documents that show evidence of their validity
and relationship to the reimbursable activities.” Section VI. A. also states:
For those entities that elect reimbursement pursuant to the standard time
methodology, option 2 in section V.A, documents showing the
calculation of the blended productive hourly rate and copies of agendas
shall be sufficient evidence.
Recommendation
No recommendation is applicable for this finding, as the period of
reimbursement for the legislatively mandated Open Meetings Act/Brown
Act Reform Program ended on November 7, 2012, due to the passage of
Proposition 30.
For other mandated programs, we recommend that the city:
Follow the mandated program’s parameters and guidelines and
claiming instructions when preparing its reimbursement claims; and
Ensure that claimed costs include only eligible costs, are based on
actual costs, and are properly supported.
City’s Response
…the City has reviewed the report and concurs with the State
Controller’s findings.
FINDING 2— For the audit period, the city claimed $ 983,498 under the flat-rate option
for the preparation and posting of meeting agendas for the Open Meetings
Overstated flat-rate
Act/Brown Act Reform Program.
costs
Claimed costs under the flat-rate option are determined by multiplying an
annual uniform cost allowance by the number of meeting agendas for
meetings held by eligible legislative bodies, as defined in the parameters
and guidelines (boards, commissions, committees, or other legislative
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City of Los Angeles Open Meetings Act/Brown Act Reform Program
bodies exercising authority delegated by the City Council). The uniform
cost allowance is adjusted each year by the Implicit Price Deflator
referenced in GC section 17523.
During testing, we found that $704,360 is allowable and $279,138 is
unallowable. The costs are unallowable because the city overstated the
number of meeting agendas claimed in all years of the audit period for the
city’s eligible legislative bodies. We worked with city representatives to
obtain the agendas for selected meetings that were available either from
the city’s website or as requested from various city departments. In
addition, some meeting agendas were ineligible for claiming purposes
because they:
Did not include an item for public comment;
Did not indicate the meeting location;
Were for cancelled meetings, and/or
Were claimed more than once by the same department.
The city could not explain why it claimed ineligible meeting agendas
because the city relied on a consultant to prepare its mandated cost claims.
The following table summarizes the claimed, allowable, and audit
adjustment amounts for the flat-rate option by fiscal year:
Fiscal Year
Cost Element 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Claimed agendas 1,027 891 949 992 8 15 983 835
Flat rate × $ 135.66 × $ 140.97 × $ 150.90 × $ 154.88 × $ 1 55.94 × $ 159.59 × $ 164.98
Total claimed costs $ 139,323 $ 125,604 $ 143,204 $ 153,641 $ 1 27,091 $ 156,877 $ 137,758
Allowable agendas 762 679 770 782 6 60 448 567
Flat rate × $ 135.66 × $ 140.97 × $ 150.90 × $ 154.88 × $ 1 55.94 × $ 159.59 × $ 164.98
Subtotal, allowable costs $ 103,373 $ 95,719 $ 116,193 $ 121,116 $ 1 02,920 $ 71,496 $ 93,544
Calculation rounding error - (1) - - - - -
Total allowable costs $ 103,373 $ 95,718 $ 116,193 $ 121,116 $ 1 02,920 $ 71,496 $ 93,544
Audit adjustment $ (35,950) $ (29,886) $ (27,011) $ (32,525) $ (24,171) $ (85,381) $ (44,214)
Testing Methodology
The city claimed meeting agendas from 35 city departments during the
audit period. We haphazardly selected for testing 32.78% of the meeting
agendas for legislative bodies within those departments during the audit
period. We used non-statistical sampling to test meeting agendas claimed
during the audit period under the flat-rate option. This procedure included
the following steps:
We verified that the population of items for testing included
6,492 meeting agendas claimed under the flat-rate option.
We haphazardly selected 2,121 meeting agendas claimed (32.7% of
the total) under the flat-rate option. Then, we tested:
o 325 out of 1,027 agendas for FY 2005-06;
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City of Los Angeles Open Meetings Act/Brown Act Reform Program
o 283 out of 891 agendas for FY 2006-07;
o 323 out of 949 agendas for FY 2007-08;
o 329 out of 992 agendas for FY 2008-09;
o 280 out of 815 agendas for FY 2009-10;
o 283 out of 983 agendas for FY 2010-11; and
o 298 out of 835 agendas for FY 2011-12.
We reviewed the agendas for selected meetings that were available on
the city’s website or requested from various city departments.
We verified the existence of meeting agendas for the meetings claimed
under the flat-rate option and comparing the number of supported
meetings to the number claimed. We excluded from consideration
meetings that did not specify a meeting location or include a provision
for public comment.
We projected the results from the samples selected from each year by
applying each department’s allowable agenda variance to the total
population for each department for that year.
Overstated number of agendas
The city claimed costs to prepare agendas for 6,492 meetings during the
audit period. We found that 4,668 agendas are allowable and 1,824 are
unallowable.
Allowable agendas are those for meetings that actually occurred and that
the city supported. Unallowable agendas are those associated with
meetings that the city did not support, cancelled meetings, meetings
claimed more than once, or meetings that did not include a provision for
public comment or meeting location. Based on our testing results, we
developed error variances for each of the 35 departments based on the
number of eligible agendas compared to the number claimed. We applied
these variances to the number of agendas claimed by each city department
for each fiscal year of the audit period.
See Schedule 2 for the agendas claimed, the agenda variance percentage,
the number of allowable agendas, the number of unallowable agendas, the
flat-rate used, and the audit adjustment for each year of the audit period.
Criteria
Section I. (Summary of the Mandate) of the parameters and guidelines
states:
On March 23, 1988, the Commission adopted the Open Meetings Act test
claim (CSM-4257). Statutes of 1986, chapter 641, added Government
Code section 54954.2 to require that the legislative body of the local
agency, or its designee, post an agenda containing a brief general
description of each item of business to be transacted or discussed at the
regular meeting, subject to exceptions stated therein, specifying the time
and location [emphasis added] of the regular meeting and requiring that
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City of Los Angeles Open Meetings Act/Brown Act Reform Program
the agenda be posted at least 72 hours before the meeting in a location
freely accessible to the public….
Statutes of 1986, chapter 641 also added Government Code
section 54954.3 to provide an opportunity for members of the public to
address the legislative body on specific agenda items or any item of
interest that is within the subject matter jurisdiction of the legislative
body, and this opportunity for comment must be stated on the posted
agenda.
Section IV. A. (Reimbursable Activities – Agenda Preparation and Posting
Activities) of the parameters and guidelines, states, in part, that
reimbursable activities include “Prepare[ing] a single agenda for a regular
meeting of a legislative body of a local agency…” and “Post[ing] a single
agenda 72 hours before a meeting….”
Section V. A. 3. (Claim Preparation and Submission – Flat Rate) of the
parameters and guidelines states, “List the meeting names and dates.
Multiply the uniform cost allowance…by the number of meetings.”
Section VI. A. (Supporting Data – Source Documents) of the parameters
and guidelines states that “For auditing purposes, all incurred costs
claimed must be traceable to source documents that show evidence of their
validity and relationship to the reimbursable activities.”
Section VI. .A. also states:
For those entities that elect reimbursement pursuant to the flat-rate
methodology, option 3 in section V.A, copies of agendas shall be
sufficient evidence.
Recommendation
No recommendation is applicable for this finding, as reimbursement under
the Open Meetings Act/Brown Act Reform Program ended on
November 7, 2012, due to the passage of Proposition 30.
For other mandated programs, we recommend that the city:
Follow the mandated program’s parameters and guidelines and
claiming instructions when filing its reimbursement claims; and
Ensure that claimed costs include only eligible costs, are based on
actual costs, and are properly supported.
City’s Response
The draft Open Meetings Act/Brown Act Reform Program Audit Report
states that the City was unable to produce any [flat-rate] agenda meetings
for Public Works meetings in Fiscal Year 2006-07. However, Public
Works meetings did occur in Fiscal Year 2006-07, but the City
inadvertently provided the wrong [meeting] dates on the initial claim.
We have been in discussions with the [S]tate’s audit staff to amend the
issue and anticipate a positive resolution.
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City of Los Angeles Open Meetings Act/Brown Act Reform Program
SCO Comment
Based on the additional information provided by the city related to Public
Works meeting agendas for FY 2006-07, we determined additional
allowable costs for the flat-rate option totaling $20,299. This increased
total allowable costs for the audit from $2,093,172 to $2,113,471.
FINDING 3— The city claimed separate indirect costs totaling $483,907 under the
standard-time cost option for FY 2005-06 through FY 2008-09. We found
Misstated indirect
that $475,274 is allowable and $8,633 is unallowable. The costs are
costs (Repeat Finding)
unallowable because the city understated its indirect cost rate for
FY 2005-06 and overstated its indirect cost rates for FY 2006-07 through
FY 2008-09. The city included indirect cost rates within its blended PHR
calculations for the remaining three years of the audit period. However,
the city overstated the indirect cost rates used in those calculations for
FY 2010-11 and FY 2011-12.
Claimed Rates
The city did not provide documentation to support the indirect cost rates
that it used for FY 2005-06 through FY 2008-09. For FY 2009-10, the city
used a rate provided by the U.S. Department of Health and Human
Services (HHS), the city’s federal cognizant agency. For FY 2010-11 and
FY 2011-12, the city used rates from a “Special Rates Calculation”
prepared by HHS, although the city claimed the FY 2009-10 rate again in
FY 2010-11. In addition, the city rounded the FY 2011-12 rate of 98.48%
to 98.50% when preparing its claim for that year.
Allowable Rates
City representatives stated that the “Special Rates Calculation”
worksheets, prepared by HHS for the Council and Public Services
Division of the Office of the City Clerk, provide the correct indirect cost
rates for each year of the audit period. The city provided the HHS
worksheets supporting the allowable rates.
The following table summarizes the claimed rates, allowable rates and
audit adjustments related to indirect costs by fiscal year:
Fiscal Claimed Allowable Related Indirect Costs
Year Rate* Rate* Claimed Allowable Adjustment
2005-06 92.70% 127.40% 93,277 126,685 3 3,408
2006-07 185.29% 136.07% 181,116 130,987 (50,129)
2007-08 223.15% 142.93% 186,767 124,058 (62,709)
2008-09 115.50% 111.12% 22,747 93,544 7 0,797
2009-10 106.39% 106.39% - - -
2010-11 106.40% 100.97% - - -
2011-12 98.50% 98.48% - - -
$ 483,907 $ 4 75,274 $ (8,633)
*The city used its indirect cost rates in its calculations of blended PHRs for
standard-time costs for FY 2009-10 through FY 2011-12 (see Finding 1).
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City of Los Angeles Open Meetings Act/Brown Act Reform Program
Criteria
Section V. C. (Claim Preparation and Submission – Indirect Cost Rates)
of the parameters and guidelines states:
Indirect costs are defined as costs which are incurred for a common or
joint purpose, benefiting more than one program and are not directly
assignable to a particular department of program without efforts
disproportionate to the result achieved. Indirect costs may include both
(1) overhead costs of the unit performing the mandate; and (2) the costs
of central government services distributed to other departments based on
a systematic and rational basis through a cost allocation plan.
Cities, Counties and Special Districts
Compensation for indirect costs is eligible for reimbursement utilizing
the procedure provided in the Office of Management and Budget (OMB)
Circular A-87. Claimants have the option of using 10% of direct labor,
excluding fringe benefits, or preparing an Indirect Cost Rate Proposal
(ICRP) if the indirect cost rate claimed exceeds 10%.
Recommendation
No recommendation is applicable for this finding, as reimbursement under
the Open Meetings Act/Brown Act Reform Program ended on
November 7, 2012, due to the passage of Proposition 30.
For other mandated programs, we recommend that the city:
Follow the mandated program’s parameters and guidelines and
claiming instructions when filing its reimbursement claims; and
Ensure that claimed costs include only eligible costs, are based on
actual costs, and are properly supported.
City’s Response
…the City has reviewed the report and concurs with the State
Controller’s findings.
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City of Los Angeles Open Meetings Act/Brown Act Reform Program
Attachment—
City’s Response to Draft Audit Report
State Controller’s Office
Division of Audits
Post Office Box 942850
Sacramento, CA 94250
http://www.sco.ca.gov
S20-MCC-0006