Fiscal Sustainability and Local Governments in Southern California

June 4, 2012

by Lara Malakoff

In light of ongoing fiscal challenges, local governments are continuously working to adapt to a difficult and unpredictable fiscal environment. The latest issue of the National Civic Reviewexplores the successes of four government entities in Southern California-two cities, a county and a school district-in creating "fiscal sustainability."

The case investigations are part of a three-year research project on local governments and fiscal sustainability funded by the John Randolph Haynes and Dora Haynes Foundation. Last year, the National Civic League, the University of Southern California and the University of San Francisco entered into a partnership to conduct the research. The goal was to explore the impact of leadership in designing strategy to address several long-term structural changes in the economic and institutional environments, including:

  • Slowing of the state's economy;
  • Increased expectations for collective goods;
  • Skyrocketing costs, especially in employee salaries and benefits;
  • Greater limits on flexibility in collecting and spending state and local revenues; and
  • Growing public skepticism on whether government can spend tax dollars wisely.

The cases-the cities of Long Beach and Brea, Los Angeles County and the Whittier Union High School District-were selected through a process that involved, among other things, asking for recommendations from state-wide associations, including the California State Associations of Counties and the League of California Cities, as well as through discussion with researchers and senior executives with 20 or more years of local government experience.

Members of the research team interviewed a wide range of current and past officials from each of the jurisdictions, as well as drawing on Official Statements for borrowings, annual budget documents and published strategic plans and related documents, news articles and academic research publications.

In October of 2011, the research team presented initial findings of the investigation to a panel of experts consisting of researchers, several (current and retired) county and city administrators and elected officials. The panel provided the research team with valuable feedback on the presented findings. Based on ideas generated from the October event, further discussions among team members, and additional interviews for the cases, the team completed the narrative and analysis for each case. All four cases, along with an overview of the research process, have been published in volume 101:1 of the National Civic Review and are available online through NCR's publisher, Jossey-Bass (Wiley).

City of Long Beach

Long Beach's response to drops in revenue and increasing costs included a three-year strategic plan developed with citizen input, structural and pension reform, limiting growth of high-growth departments (such as public safety) to ensure cuts are shouldered proportionally and finding innovative ways to solve problems. These efforts to address the question of structural balance dating back to 2003 put Long Beach in a better position to face the fiscal crisis that erupted in 2008.

City of Brea

The City of Brea used a bottom-up strategic planning process that called on all levels of city staff to participate in budgeting meetings and make recommendations about ways to cut costs, streamline departments and find new sources of revenue for the city.

Los Angeles County

Los Angeles County is the largest county government in the U.S., with an annual budget that exceeds $24 billion. The county's diverse functions, geography, structure and programs have created a very complex administrative structure. The need to achieve fiscal sustainability in such a complex setting has produced a dramatic change from a "needs-dependence" culture to a "fiscal discipline allocation and efficiency" culture.

Whittier Union High School District

The Whittier Union High School District has promoted fiscal sustainability by changing the culture of the organization to emphasize inclusive partnerships with district staff, building and rebuilding public trust and increasing fiscal literacy throughout the organization, all while maintaining its well-recognized focus on increasing student achievement.

Two essays related to fiscal sustainability are also available:

The National Civic League will continue to make a priority of the issue of local government and fiscal sustainability. It will be publishing more reports and case studies in the National Civic Review and other venues, in hopes of sparking an ongoing dialogue about the fiscal challenges facing American communities and how institutions can adapt to meet them. The research will continue in 2012 and 2013 thanks to support from the Haynes Foundation.

Details: For more information, contact Mike McGrath at mikem@ncl.org or 303-571-4343.