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Extracted from Consolidated Report
This investigation was originally published as part of a larger consolidated report containing multiple investigations. View the consolidated PDF for the complete document.
Los Angeles County Grand Jury
• 2006-2007
City of Los Angeles Fleet/Department of General Services 2006 Inventory Vehicle Type Fuel Type Owned 11403 Sedan 4
⚠️ Translation Notice: This content has been automatically translated. The original English text is the official version. Translation may contain errors.
⚠️ Este contenido ha sido traducido automáticamente. El texto original en inglés es la versión oficial. La traducción puede contener errores.
Recommendations 11
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R1Page 239Each department head shall be responsible for implementation of the Clean Fuels Policy within his/her department.
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R2Page 239Whenever possible, new vehicle purchases will be clean fuel vehicles.
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R3Page 239Implementation of the Clean Fuels Policy shall depend on the financial resources available to the County. Departments shall pursue funding available from a variety of sources and may work with other public/private agencies to share resources, coordinate efforts, and apply jointly for available 2006-2007 County of Los Angeles Civil Grand Jury 211 funds.
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R4Page 239Departments shall report to the Board by March 1st each year on the composition of their fleet and the number of vehicles powered by clean fuels. RESPONSIBLE DEPARTMENT _______________________________________________________________ Internal Services Department Chief Administrative Office DATE ISSUED/SUNSET DATE _______________________________________________________________ Issue Date: January 10, 1995 Sunset Review Date: January 10, 2004 Review Date: February 19, 2004 Sunset Review Date: January 10, 2007 2006-2007 County of Los Angeles Civil Grand Jury 212 Clean Fuels Policy (CF 00-0157) In May of 2000, the City Council adopted a Clean Fuels Policy (CF 00-0157). This policy helps to implement alternative fuel applications by supporting programs and regulations that balance environmental benefits against operational concerns such as safety, efficiency, and cost effectiveness. Specifically, the City Council decided to: use and purchase vehicles which utilize clean fuels and/or electric propulsion based upon technology that has been determined to be reliable, durable, and cost-effective; support development of vehicle technologies that promote energy efficiency and clean operation; consider retrofit technologies for existing vehicles; promote development of alternative fuel infrastructure; support implementation of federal and state vehicle emission standards; and address health and safety issues and cumulative impacts of existing and alternative fuel technologies on all neighborhoods, particularly low income communities of color. Council member Mark Ridley-Thomas authored the Clean Fuels Policy and received a Clean Air Award from the South Coast Air Quality Management District (Leadership in Government Category) in 2001 for this legislative initiative. For further reading see: Mark Ridley Thomas' motion Environmental Quality and Waste Management Committee Report Council Action to Adopt Policy 2006-2007 County of Los Angeles Civil Grand Jury 213 LOS ANGELES CLEAN CITIES COALITION BACKGROUND In February 1996, the City of Los Angeles joined the United States Department of Energy (DOE) Clean Cities Program by forming the City of Los Angeles Clean Cities Coalition. In 2002, the City was approved for its 5 year renewal, indicating Los Angeles' continuing commitment to improving air quality. The Coalition supports the voluntary deployment of alternative fuel vehicles (AFVs) and construction of infrastructure to support AFVs and includes 18 Principal Stakeholders and 10 General Stakeholders, who may participate on a project per project basis. The Principal Stakeholders consist of key City departments. The General Stakeholders consist of government agencies, utilities, and non-profit organizations committed to improving air quality in the Los Angeles area. The goals of the City of Los Angeles Clean Cities Coalition are to: (cid:131) Work to increase the City’s overall AFV fleet inventory by 15%, as a target goal, each fiscal year (cid:131) Identify opportunities to maximize the deployment of AFVs in City fleets (cid:131) Encourage the adoption of policies that promote the use of AFVs (cid:131) Enhance the support for AFV use by facilitating the expansion and increased utilization of AFV refueling/recharging infrastructure in the City (cid:131) Support local job creation and economic development opportunities related to the AFV industry through efforts to deploy AFVs in City fleets and enhance AFV use in the City Between 1996 and 2001, the number of clean fuel vehicles in the City’s fleet increased from 279 to 807, an average increase of over 23% per year. During this time, the City also supported the installation of alternative fuel infrastructure, including a fast-fill compressed natural gas (CNG) refueling station in downtown Los Angeles, a liquefied natural gas (LNG) refueling station at Los Angeles International Airport (LAX), and approximately 400 electric vehicle (EV) charging stations throughout the Los Angeles area. In May 2000, the City Council adopted a Clean Fuels Policy (CF 00-0157) that encourages the use of alternative fuel applications in the City. In addition, the City is required by the Fleet Rules, adopted by the South Coast Air Quality Management District (SCAQMD) in 2000 and after to acquire alternative fuel vehicles in most City operations when adding or replacing vehicles in the fleet. Thus, it appears that AFVs will have a continued and increasing role in the City’s fleet. In 2004, the number of AFVs increased to 2071, an average of 37 percent per year from 2001 through 2004. As of June 2005, there were over 2400 alternative fuel vehicles in the City's fleet. 2006-2007 County of Los Angeles Civil Grand Jury 214 Participation in the Clean Cities Program provides the City with grant opportunities only available to Clean Cities Coalitions and provides national recognition for the innovative alternative fuel projects spearheaded by the City. Past DOE grants are listed at this link. Regarding recognition, the DOE awarded the City of Los Angeles as one of the Top Ten Clean Cities in 2000. In addition, the Los Angeles Coalition has been presented with several Clean Cities awards, including the Rainmaker Award for securing the most funding from grants and other sources (1999) and the Gold Star Award for adding the most AFV fueling stations (1999, 2000). In 2001, the Clean Cities Legal Eagle Award was received for Advancing AFV Legislation. In 2004, an Excellence in Advancing Propane award was received. In 1994, the DOE created the Clean Cities Program to serve several objectives, both locally and nationally, including: 1) progress toward attainment of federal and state air quality standards; 2) enhanced penetration of clean fuel vehicles; 3) energy security and resource conservation; and 4) economic stimulation in areas that have been heavily impacted by the economic recession and cutbacks. There are currently 88 Clean Cities Coalitions throughout the United States. DOE requires Clean Cities Coalitions to report regularly on activities and achievements and appoint a Clean Cities Coordinator. For information about the Clean Cities Program, please contact the Air Quality Division at heloise.froelich@lacity.org. If you are interested in contacting the National Clean Cities Program directly please call their Clean Cities Hotline at (800) 224-8437or (703) 934-3068 or via e-mail at ccities@nrel.gov 2006-2007 County of Los Angeles Civil Grand Jury 215 LAHSA – THE STRUGGLE TO SERVE After a troubled period, the Los Angeles Homeless Services Authority has now stabilized its operation---but it needs much more City and County involvement to do its crucial job 2006-2007 County of Los Angeles Civil Grand Jury 216 EXECUTIVE SUMMARY Homelessness has been a pervasive and continuing problem in the City and County of Los Angeles for many years. As the result of a lawsuit, the City and the County agreed to establish a joint powers authority, the Los Angeles Homeless Services Authority (LAHSA). This Authority was authorized to take over the distribution of grant funds from a variety of Federal, City and County sources to the private contractors who provided direct services to the homeless. Serious concern about LAHSA’s ability to function effectively developed in the years after it was given autonomy in 2001. These issues came to a head by 2005, prompting the City Controller and the County Auditor to intervene. LAHSA was then severely criticized for operational problems and inappropriate (though not fraudulent) handling of grant funds passed through to contractors servicing the homeless. Since that time, the Los Angeles Homeless Services Authority (LAHSA), with considerable outside support (extensive audits, procedural changes and significant interim financial oversight and management), has been able to perform more effectively as a pass-through agency for funds granted for care of the homeless. LAHSA, therefore, continues to perform a critical and necessary role in receiving funds from HUD, the City and the County of Los Angeles and other sources, and to distribute them to some 90 non-profit contractors who provide direct services to the homeless. However, in order to continue to properly carry out its charter (as originally established in 1993 by a Joint Agreement between the City and the County) LAHSA requires substantial staff upgrading and expansion and, especially, further support and increased oversight from both the City and the County. Starting with five simple contracts to service in 1993, and a staff of thirteen, the Authority now administers 200 complex contracts with a staff of 70. LAHSA’s financial control requirements have also greatly increased because of greater and more complicated requirements from the various funding sources. At the same time, until recently, LAHSA has continued to function without either an Executive Director or a qualified Chief Financial Officer on staff. In order to insure a sound foundation and the proper capability of carrying out its significant responsibilities, LAHSA requires: (cid:131) closer and stronger County and City oversight (cid:131) creation of a broader, stronger governance body (cid:131) an increase in staff (cid:131) an upgrade in key staff positions (cid:131) a review of some of the more time-consuming accounting requirements made by some funding sources (cid:131) a fully qualified Chief Financial Officer (cid:131) the addition of a Director to administer both the Financial and the Contract areas (cid:131) creation of a special section to continually monitor contract servicers 2006-2007 County of Los Angeles Civil Grand Jury 217 (cid:131) a Line of Credit to cover gaps between servicers’ requests and remittances from funding sources (cid:131) annual reviews of its operations by the City and County Controllers (cid:131) implementation of the Homeless Management Information System HISTORY Prior to 1993, the processing of funds from HUD and other sources for the care of the homeless was handled within Los Angeles County and City organizations. In acquiring these responsibilities, LAHSA thus became the “lead agency” for Los Angeles for distribution of federal funds, a HUD requirement for every large city. Until 2001 the County and the City continued to manage the accounting concerns of LAHSA’s operations. In that year this responsibility was turned over to the Authority itself, with County and City oversight greatly reduced. Starting with a staff of thirteen, the size and workload of LAHSA has grown as the processing of requests from servicers and the draws from funding sources has expanded dramatically in number and complexity. The staff has similarly grown to between 60 and 70. Funding in these years increased from the initial $5,000,000 to over ten times that amount in some years. Contracts being serviced increased from the original 5 to forty times that number. More rigid and complex restrictions on funding requests complicated the receipt of funds due service contractors, and the wide variety of service contractors involved led to a variety of problems in receiving and processing requests in a timely manner. This combination of conditions caused LAHSA to be frequently unable to receive funds within the time that contractors needed them, and led to LAHSA sometimes commingling funds from inappropriate grants to meet those needs. This situation resulted in LAHSA owing major amounts to servicers without having the funds available to pay them. The limitation on funds designated for LAHSA’s administrative expense and the occasional delays in transferring them resulted in LAHSA’s inability to meet payroll on occasion. As the challenging work load increased during these years, LAHSA’s staff was not sufficiently qualified in some instances to properly handle the more complicated requirements, particularly in the financial area. Necessary training, upgraded procedures, and improved operating policies were not able to be provided because of the complex work load. The lack of strong, positive management was a major factor contributing to LAHSA’s inability to cope with these increased demands. By mid-2005 the operations of LAHSA were in serious disarray, owing to the increased and more complex workload, the loss of the Executive Director and the Chief Financial Officer, and the limited 2006-2007 County of Los Angeles Civil Grand Jury 218 qualifications of some of the staff in key areas. Systems, policies and procedures had not been evolved to meet the greatly expanded work demands. A review by the Los Angeles Housing Department (LAHD) reported that servicers were not paid and monies needed from funding sources were not being requested in a timely manner. Over $5,000,000 owed at one point in early 2005 with only $700,000 on hand because of delays in requesting grant funds. Commingling of funds (funds being drawn from sources intended for and restricted to other purposes) was done at times to pay some of the servicers. The fiscal closing of the books had not been done for 2004 and 2005. An audit by Laura Chick’s office identified all of these problems, and indicated serious concerns about the capabilities of the existing staff. A report quoting these problems appeared in the Los Angeles Times. * To address these urgent problems an intensive and extensive examination was made by the County Auditor/Controller’s office along with the Blue Consulting firm to fully audit LAHSA, to install a senior consultant as acting CFO, and to cause extensive rewriting of operating policies and procedures. This work lasted from October, 2005, through March of 2006. As a result of this combined effort, and with the close involvement of the interim Chief Financial Officer provided by Blue Consulting, accounts were reconciled, new policies and procedures were implemented, and intensive training was done to better prepare key staff members to maintain the suggested improvements The Simpson and Simpson audit firm has since completed the work of closing the fiscal books for 2004 and 2005. * Los Angeles Times, July 23, 2005, Pg. B.3 Significantly, no instance of any fraud was found in any of the audits. One instance involving the misappropriation of three checks was immediately discovered and stopped by LAHSA itself. The problems that had occurred were produced by a combination of ineffective management, especially in the financial controls area, the rapid increase in volume and complexity of work, and the inadequate training and staffing that existed. However, serious challenges for LAHSA remain. 2006-2007 County of Los Angeles Civil Grand Jury 219 FUNDING SOURCES, DESIGNATED PURPOSES: LAHSA BUDGET 2006-07 * Sources of Funding L.A. City L.A. County State HUD Total Designated for: Housing $ 1,169,000 $ 1,975,386 $ 29,987,736 $ 33,132,122 Shelter 8,639,844 9,137,531 146,136 17,923,511 Other 6,187,959 351,007 6,538,966 LAHSA directly administered prog. 245,120 3,064,309 3,309,429 LAHSA administration 1,540,126 2,035,160 73,293 3,648,579 Funding Totals $ 17,782,049 $ 16,563,393 $ 146,136 $ 30,061,029 $ 64,552,607 * Figures summarized by primary source, purpose. The Los Angeles Times articles criticizing the operations of LAHSA, exposed by the Laura Chick audit, sparked the interest of the 2006-2007 Los Angeles County Civil Grand Jury and resulted in the formation of the LAHSA Committee. The underlying or primary concern was to investigate whether the homeless community meant to be serviced by the funds distributed by LAHSA was indeed receiving proper benefits. The investigation determined to understand and evaluate the following concerns: (cid:131) LAHSA’s financial control problems (cid:131) LAHSA’s operational problems (cid:131) LAHSA’s relationship to contract servicers (cid:131) LAHSA’s evaluation of the actual service made to the homeless (cid:131) the need to identify and recommend needed changes, upgrades, etc. (cid:131) the need to identify and recommend needed changes in the relationship of LAHSA to its sources of funding, to its contract servicers, and to the City and the County 2006-2007 County of Los Angeles Civil Grand Jury 220 INVESTIGATION
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R5Page 239CHIEF FINANCIAL OFFICER LAHSA must have a fully qualified Chief Financial Officer. While this position is currently filled on an interim basis by an audit firm consultant, and while the search for a permanent replacement has been carried on for some time, the need continues. This person will be the key acquisition in the effective meeting of LAHSA’s fiscal responsibilities. This position is reported close to being filled.
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R6Page 239LINE OF CREDIT LAHSA must secure a line of credit to fill the gap between servicers’ requests and the release of funds from funding sources. While at this point efforts are indeed being made to secure such a financial support for LAHSA, the need is permanent and substantial. Whether through a coordinated support from the City and the County, or from outside financial sources, this need must be met. 2006-2007 County of Los Angeles Civil Grand Jury 223
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R7Page 239REVIEW OF STRINGENT FUND REQUEST ACCOUNTING Because of the extreme concern about the commingling of funds, stringent controls were imposed by LAHD on the request for funds. While entirely appropriate at the time, these controls, though recently eased, require substantial additional efforts by LAHSA’s staff to prepare fund requests on a timely basis. Similarly, the accrual adjustments required by the County Community Development Commission for their own accounting needs cause considerable extra effort on LAHSA’s staff. LAHSA should meet on a continuing basis with appropriate representatives from all funding sources to review the working relationships, the control requirements, and the possibility of moderating the stringent funding request requirements.
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R8Page 240LAHSA CONTRACTOR MONITORING SECTION LAHSA should organize a section dedicated to continually monitor and make risk assessments for the service contractors funded by LAHSA. This is a requirement for HUD’s continued funding, but also provides validation that the funds being distributed are indeed properly reaching the Homeless, as intended. This section should also complete the 100% source documentation reviews of Department of Housing and Urban Development Supporting Housing Program contractors. This has been acknowledged by LAHSA’s proposed 2007 budget.
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R9Page 241CENTRALIZED PROCESS FOR EXTERNAL AGENCY MONITORING REPORTS A centralized process should be developed by LAHSA to manage and follow up on external agency reports to LAHSA. These external monitoring findings and recommendations should be integrated into the LAHSA management process.
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R10Page 241IMPLEMENT THE HOMELESS MANAGEMENT INFORMATION SYSTEM This system has not been able to be properly implemented by LAHSA because of its complexity and because of LAHSA’s more urgent work overload. However, this system, when implemented, will not only meet HUD requirements but can supplysignificant reports on shelter usage, client intake, homeless demographics and success rates of people moving out of homelessness. LAHSA should complete this installation promptly. 2006-2007 County of Los Angeles Civil Grand Jury 224
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R11Page 241Until the time it can effectively audit the effectiveness of major contractors with its own designated staff, LAHSA should seek budget approval to hire an audit firm to perform this task CONCLUSION LAHSA, despite its past difficulties and ongoing concerns, remains the necessary vehicle for the proper and effective handling of the millions of dollars involved in contracting services for the homeless of Los Angeles City and County. Expanded training, revamped policies and procedures, particularly more efficient organization and review of certain demanding restrictions from fund sources are further needs. It requires the support itemized in the Recommendations listed to do its job more properly, dependably, and on a long term basis. 2006-2007 County of Los Angeles Civil Grand Jury 225