Exceptions to Rules Threaten Impact of L.A.’s Hiring Freeze

By HOWARD FINE

Staff Reporter

When L.A. city officials instituted a “hard” hiring freeze two years ago, they signaled their intent to save tens of millions of dollars by not filling thousands of vacancies.

But that’s not the way it’s played out.

Almost half of the 3,785 current vacancies have been excluded from the city’s hiring freeze, and since July, department heads have sought case-by-case exemptions to fill another 606 positions.

The city does not keep track of how many exemptions have been requested or approved since the freeze took effect in October 2001, but 48 exemption requests have been granted since July and 98 have been rejected, according to Assistant Chief Administrative Officer Ellen Sandt. In addition, the council approved 83 exemption requests in May, when it passed the budget for the fiscal year that started on July 1.

The volume of requests 21 in just the past two weeks has caused members of the City Council’s budget committee to take notice, and begin looking at ways to put on the brakes.

“We had $1 million in hiring freeze exemptions come before us last week and another $1 million come before us this week,” said Budget Committee Chairman Bernard Parks. “That’s when we said, ‘Enough is enough.’ ”

Mayor James Hahn contends that the hiring freeze is working, noting there are 1,365 vacant positions in the city where managers have not requested exemptions.

As for the hundreds of requests for exemptions that have been received, Hahn said: “We’re looking at these on a case-by-case basis. Some make sense to be unfrozen. For example, some positions generate revenues, so it’s important to fill those. There are also some general fund positions that are new for the 2003-04 fiscal year and would never have been frozen.”

Growing payroll

The actions come amid a backdrop of lean budget times for the city and its workforce of 34,000. Thanks to a three-month delay in receiving vehicle license fees from the state, the city finds itself short $47 million for the 2003-04 fiscal year that started July 1.

In addition, a combination of previously negotiated pay hikes and a beefing up of the police department has caused overall payrolls to grow in the current fiscal year, instead of shrink. The city recently signed three-year contracts with 9,000 non-union employees, granting 4 percent annual pay increases, twice the rate of inflation, at a cost of about $46 million.

Add it up, and the city faces a projected structural deficit of $170 million to $300 million for the fiscal years starting in July 2004 and 2005.

“City leaders oversold the budgetary value of instituting a hiring freeze,” said Fernando Guerra, director of the Center for the Study of Los Angeles at Loyola Marymount University. “They gave the impression that it would be a blanket freeze. But a blanket hiring freeze is not a sound policy.”

Guerra pointed out that some jobs are needed to preserve critical city functions; other jobs left unfilled may cost the city more dollars in the long run by losing matching grant money or by losing revenues that a job might bring in.

Nine of the exemptions approved in the fiscal year that began on July 1 were for security officers, five for traffic enforcement related positions, and seven for animal-care positions, Sandt said.

At the council budget committee’s Sept. 30 meeting, only three of 11 exemption requests were approved. Parks has asked Chief Legislative Analyst Ron Deaton and Chief Administrative Officer Bill Fujioka to come up with ways to stem the volume of requests.

As of late last week, a new hiring freeze policy was still in the works. Parks said that any revised policy should not necessarily stop all hiring in its tracks.

“Some of the positions that are vacant are very critical, especially those in smaller departments where the loss of one person shuts down an entire function,” he said.

Looking for salary savings

Separate hiring freezes enacted by Hahn and the City Council after the Sept. 11, 2001 terrorist attacks were supposed to put a big dent into the salary costs that the council now finds itself fighting. With exceptions for public safety workers, these measures were supposed to be “hard” hiring freezes, meaning that if a position becomes vacant, it’s not filled until the hiring freeze is lifted.

But the freeze mechanisms were written to include exemptions including, for example, 655 public safety positions. Another 987 vacant positions can be filled because their funds come from sources other than the city’s general fund, such as building permits, sewer fees or federal grants.

“The issue for us is to save money from the general fund, since that’s the fund that’s taking the $47 million (budget) hit from the state,” Sandt said. “Eliminating these positions won’t help the general fund one bit.”

Sandt said that an additional 89 vacancies being exempted were in the offices of City Attorney Rocky Delgadillo and City Controller Laura Chick. Because they are separately elected officials, their offices have different vacancy thresholds that don’t go through the mayor and the council.

City Controller Laura Chick said that when the hiring freeze was first proposed two years ago, she successfully fought against it being extended to her office and the City Attorney’s office.

“I wanted the City Council and the Mayor to give us, as citywide elected officials, the same respect they give themselves in terms of managing their budgets and staff and expenditures,” she said.

Chick said her office and the City Attorney’s office have “hiring caps” set by the council and the mayor in each year’s budget. If either department dips below those caps, they can hire additional people.

As for the citywide hiring freeze, Chick said she lobbied hard against it. “It’s a baby-sitting kind of mentality,” Chick said. “What should happen is that each of the city’s general managers should be given a strict budget cap, along with a list of priorities that the Council and the Mayor want them to focus on. Then it should be up to the managers themselves to figure out how best to remain under the cap.”

Department heads have requested exemptions to fully one-third of the 2,054 city vacancies that don’t already fall under some kind of automatic exemption.

To make it harder to fill vacant jobs, the hiring freeze was established with a lengthy exemption approval process. Every request goes to the chief administrative officer, and if approved, it then goes to Hahn’s office. Once the mayor weighs in, the request goes to the City Council’s personnel committee and then the budget committee before going to the full Council.

“This whole process takes a minimum of 10 weeks, and often much longer,” Fujioka said. “And that itself represents a savings, since for all that time the position goes unfilled.”

Nonetheless, city officials are looking for ways to make the process less burdensome.

One possible change would give individual departments the option of taking funding cuts for a certain number of vacant positions up front, Sandt said. If more vacant positions cropped up, the department would be able to hire back up to that level without having to go through the council.

So if a 1,000-person department typically has 50 vacancies that aren’t funded, the department head can agree to forgo funding for another 25 jobs. Then if the actual number of vacancies goes above 75 say it’s 80 the department head is free to hire back five positions.

“The idea is to get the salary savings up front, but eliminate some of the paperwork involved with hiring freeze exemptions,” Sandt said.