Page 46 - FY 2021-22 Supporting Information

2021-22 BUDGET
FOUR-YEAR GENERAL FUND BUDGET OUTLOOK (OUTLOOK) FOOTNOTES

ESTIMATED GENERAL FUND EXPENDITURES:

(12) General Fund Base: The General Fund base carries over all estimated General Fund expenditures from the
prior year to the following fiscal year.

(13) Incremental changes to the Base: The 2021-22 amount reflects funding adjustments to the prior fiscal year
General Fund budget. The expenditures included for subsequent years represent major expenses known at this
time and are subject to change.

(14) Employee Compensation Adjustments: The 2021-22 amount includes employee compensation adjustments
consistent with existing labor agreements as amended and all other required salary adjustments. Fiscal years
2022-23 through 2025-26 reflect restoration of one-time salary reductions from the prior year and full-funding for
partially financed positions. The Outlook does not include projections for future compensation adjustments from
future labor agreements, although it does include a two percent annual increase to account for natural salary
growth. Most current agreements expire in 2022-23 or 2023-24.

(15) City Employees’ Retirement System (LACERS) and Fire and Police Pensions (LAFPP): The contributions
are based on information commissioned or requested by the CAO from the systems’ actuary and include the
employee compensation adjustment assumptions noted above. In 2020, the board of commissioners for LACERS
and LAFPP adopted economic and demographic assumption changes, including reducing the assumed
investment rate of return from 7.25 percent to 7.00 percent. The contribution rates below include the adopted
assumption changes. The 2020-21 investments return of 14 percent reflects higher than anticipated unaudited
returns to date.

Table 1
LACERS and LAFPP

Assumptions 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26

LACERS
th
6/30 Investment Returns 14.00% 7.00% 7.00% 7.00% 7.00% 7.00%
Combined Contribution Rate 29.05% 32.15% 32.30% 31.92% 31.52% 29.27%
Pensions
6/30 Investment Returns 14.00% 7.00% 7.00% 7.00% 7.00% 7.00%
th
Combined Contribution Rate 46.79% 45.89% 45.27% 44.61% 43.21% 38.88%
(16) Workers' Compensation Benefits: The projection reflects an April 2021 actuarial analysis. They reflect the
impact of both current and projected future COVID-19 claims.
(17) Health, Dental, and Other Benefits: The projection incorporates all known cost-sharing provisions adopted
into labor agreements for the civilian and sworn populations. It assumes that net enrollment will increase an
average of one percent for the civilian and sworn populations. Benefit rate increase assumptions are consistent
with historical trends. Unemployment insurance costs rise in 2021-22, reflecting pandemic-related unemployment
claim increases, and then decline in future years.

(18) Debt Service: The debt service amounts include known future payments from the Capital Finance budget.
The 2021-22 amount reflects one-time funding totaling $13.2 million included in the Proposed Budget to prepay
outstanding bonds and the Municipal Improvement Corporation of Los Angeles (MICLA) commercial paper
program payments. The final debt service payment on all MICLA Los Angeles Convention Center Bonds is in
2022-23.

(19) Resolution Authorities: The deletion line reflects the practice of annually deleting resolution authority
positions, which are limited-term and temporary in nature. Continued or new resolution positions are included in
the “Add New and Continued Resolution Authorities” line.

27