NCs had to Wait Five Months for Rollover Funds

Doug Epperhart, president of CSPNC and Linda Alexander, chair of the CSPNC

All 99 neighborhood councils in the City of Los Angeles had to wait five months to get their rollover funds from the 2021 to 2022 fiscal year, which ended June 30. Each council receives $32,000 in funding each year, but can receive up to $10,000 in unused funds from the previous fiscal year.

However, the wait is now over. Petty Santos, executive officer of the office of the city clerk, said that as of Dec. 1, the neighborhood council funding portal has been updated to include current balances for the councils, including rollover funds.

“Funds are not being withheld,” Santos said via email earlier that day. “Funds cannot be posted to each NC account until the year end reconciliation is completed by this office and approved by the Controller. While it is definitely not ideal to not see the funds available, it is important to ensure one year closes before another is opened.”

Santos said that each council already had the majority of its budget available, which is $32,000, as that number is set.

“The rollover amount is based on reconciling each of 99 accounts against the bank balance, the credit card balances, any special account balances and the public facing portal,” Santos said. “This year was particularly challenging for a team of all new accounting staff in this office who had to learn about the NC system, the City’s financial management system and the banking system from scratch. The staff turnover was great in the accounting unit due to retirements and promotions over the last year, or so. Safeguards are being put in place to hopefully avoid this reporting delay in the future.”

On Nov. 14, the Northwest San Pedro Neighborhood Council passed a motion asking the Board of Neighborhood Commissioners to investigate why the funds had not been distributed. On Nov. 28, Melanie Labrecque, the treasurer and chair of the council’s budget and finance committee, said that she received communication from the city clerk’s office explaining the delay. Labrecque said the reason was the city clerk was waiting for final approval on its year-end reconciliation from the city controller’s office.

However, Santos said that getting the controller’s approval was merely the last step in the process, and said it was secured on Nov. 30. She said that the city clerk’s office was the reason for the delay.

Labrecque said the neighborhood councils need the money, since the city reduced the councils’ budgets in 2020 from $42,000 to $32,000. She pointed out that a lot of councils plan big events with the intention of using rollover funds.

Labrecque said that she received a letter saying that the councils would be told about their rollover funds by Aug. 1. When that didn’t happen, she started investigating.

“I started checking, and hit walls,” Labrecque said.

Labrecque said the neighborhood councils haven’t had a problem like this before. Her council had $7,812.55 in rollover funds from the previous fiscal year.

“It’s going to affect our NPGs, neighborhood purpose grants,” Labrecque said, referring to grants that her council awards to local nonprofits every year. “Normally we would have done them in December, but we can’t, they’re on hold. We had to vote to put them on hold until after the first of the year, until this whole rollover thing is rectified.”

Labrecque said they normally use about $10,000 for the NPGs, but only have $3,000 without the rollover funds, because the councils are having their elections this year. With the rollover funds, they will likely spend at least $5,000 to $6,000. In addition, the council is planning an emergency preparedness fair for spring, which will need funding.

“The rollover funds make it so things aren’t as manageable as we had hoped they would be,” Labrecque said.

Doug Epperhart, president of Coastal San Pedro Neighborhood Council, said his council makes sure to spend most of their budget every year. Because of this, its rollover funds from last fiscal year don’t amount to much.

Epperhart said it’s possible that the delay could have been caused by the city allowing councils to encumber funds because of the pandemic. This refers to when a council votes to spend money past the deadline for the previous fiscal year, but the city allows them to charge it to the previous fiscal year, instead of the upcoming fiscal year.

“It will come out of last year’s funding, not this year’s funding,” Epperhart said.

However, when asked about these funds, Santos said they did not make a big difference, and she referred to them as accruals.

“Accruals also need to be reported, and are part of the equation needed to reconcile the Fund and close the prior fiscal year,” Santos said via email. “Accruals are one of several factors that lead to completing the report and did not affect the delay any more than the other factors.”

Even though Epperhart’s council does not have many ordinary rollover funds, it does have an issue with encumbered funds, or accruals.

“We have a situation at Coastal where the money was approved and should have been spent in last year’s budget, but because of the city clerk and contracting issues, they didn’t get around to finalizing anything on time,” Epperhart said. “They paid it, but they charged it to our current budget, even though it should not have been charged against the current budget.”

Epperhart said usually that sort of thing can be resolved with a lot of phone calls.

Matt Quiocho, president of the Central San Pedro Neighborhood Council, said that his council had an issue with rollover funds in their planning for the 2022 to 2023 fiscal year.

“It’s my understanding that when we submitted our yearly budget paperwork to the City Clerk we included the anticipated rollover funds in our accounting,” Quiocho said via text. “We should not have done that according to the City Clerk.”

However, Linda Alexander, chair of the Central San Pedro Neighborhood Council’s finance committee, said that this issue has been resolved. Her council is supposed to receive $8,366.49 in rollover funds this year.

Alexander said the delay in rollover funds has not made a big impact on how her council has operated this year. This is because for the past couple fiscal years the council has planned to go back to in-person meetings, but it hasn’t happened yet. Since the start of the pandemic, her council has been operating via Zoom. If it were to go back to in-person meetings, it would cost $400 to $500 each month, because of food, renting the room and paying the sound technician. Since the council’s meetings have remained over Zoom, it has money it can use for other things.