Page 22 - FY 2021-22 Proposed Budget

classify inter-fund transfers in a different manner. The Comprehensive Annual Financial Report for Los
Angeles shows the status of the City’s finances based on GAAP classifications.

BUDGET PRESENTATION

The Mayor presents the complete Proposed Budget in four budget books: Budget Summary, Proposed
Budget Book, Detail of Departmental Programs (Blue Book), and Revenue Outlook. Due to the volume of
budget data and the different ways in which the various types of information are used, the City presents its
budget information in these separate books.

The Mayor’s Budget Summary provides the reader with highlights and general information concerning the
Proposed Budget. It identifies the Mayor’s funding priorities and briefly describes how the proposed
budget meets these priorities. It also provides a general financial overview of the City.

The Proposed Budget Book contains technical information concerning departments and special funds. It
includes a basic explanation of expenditures, appropriations, and source of funds for each department,
major special purpose fund, and non-departmental account, the Controller’s revenue estimate, federal and
state grant funding estimates, and a breakdown of the proposed budget by function.

The Detail of Departmental Programs, also known as the Blue Book, provides detailed explanations of
year-over-year proposed changes to the City’s annual budget base. The Blue Book presents this
information for each operating department and for various funds. The Blue Book categorizes changes to
differentiate between obligatory changes, such as salary adjustments, and discretionary changes, such as
productivity improvements or service level changes. The Blue Book also includes schedules, by
department, office, or bureau, of employment authorities and salaries and contractual services. The
Contractual Services schedule details each department, office, or bureau’s authority to contract for
services. Finally, the Blue Book includes additional detail for selected non-departmental accounts and
expenditures.

The Revenue Outlook provides an overview of the revenue anticipated, including an explanation of
assumptions, changes between the prior year and program year, and a five-year General Fund revenue
forecast. It also includes detailed estimates of General receipts by type, licenses, permits, and fees by
department, and special funds receipts that directly finance the Proposed Budget.

BUDGET ADJUSTMENTS

Department funds are controlled at the line item or account level. Some enterprise funds are controlled
at the fund level. The City can adjust spending authority throughout the fiscal year to address changes
in revenue or expenditure projections or other unanticipated occurrences. The Mayor has authority to
transfer funds between accounts within a department subject to a limit established by ordinance.
Otherwise, the City Council, by majority vote and subject to approval by the Mayor, may adjust
appropriations and transfer funds within and between departments and funds. The Mayor may veto the
Council action, which the City Council can then override by a two-thirds vote.

To assist the Mayor and City Council in their consideration of interim budget adjustments, the CAO
prepares financial status reports throughout the year that provide information on the condition of the
City’s finances. The information contained in the financial status reports includes, but is not limited to,
departments’ expenditure patterns, actual revenues received to date, revenue trends, the status of the
Reserve Fund, and other issues that may have a fiscal impact on the City such as state or federal
funding changes. The CAO makes recommendations on any requested changes to appropriations
based on its financial analysis of the data, the anticipated fiscal impact of the change, and the long-
term financial outlook of the City. These recommendations also address identified or projected
overspending in accounts. The CAO typically issues four financial status reports each year, with the last
report serving as the year-end report for the fiscal year.

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