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Press Release · June 2, 2000

Risky Business in Los Angeles County

As Los Angeles County faces the gloomy prospect of providing health care services to its 3 million uninsured residents without the usual $1 billion bailout from the federal government, a just-published study of the county by the Public Policy Institute of California (PPIC) reveals a local government with numerous structural and organizational stresses that place it at risk of financial meltdown if it experiences any economic shocks. And while these fundamental problems are magnified in Los Angeles County – a giant with almost 10 million residents – the region is also in many ways the poster child for the damaging effects of a dysfunctional relationship between the state and its 58 counties.

Risky Business: Providing Local Public Services in Los Angeles County provides an analysis of perceived fiscal strains facing the county and its administrators, and the organizational stresses associated with a complex system of finances that makes it difficult to connect service delivery with accountability. Through numerous in-depth interviews with local leaders and an extensive program-based analysis of the county’s finances, co-authors Mark Baldassare, Michael Shires, Christopher Hoene, and Aaron Koffman reach some important conclusions about the structural problems and economic perils facing this local government:

  • Funding indigent health care services remains a severe and chronic problem in Los Angeles County.
  • The county has little control over the revenues it generates and the money it spends. As a result, the county is constrained in its ability to customize programs to meet local needs.
  • Services the county provides as an agent of the state and federal government in some cases cost more than the county receives. Although the federal, state, and county governments are partners in providing local services, uncertainty over funding and mandates have created tensions among the levels of government.
  • Because the majority of the county’s discretionary funds come from the property tax, the budget is particularly susceptible to changes that affect this revenue stream, such as downturns in the real estate market or state policy interventions.
  • The size of county government, the large number of government entities operating in the county, and the complex connections between state and local finances make it difficult to assign responsibility and demand accountability for providing local services.

The report also suggests a number of policy alternatives for improving the effectiveness of county government in Los Angeles and elsewhere in California. Some of the practical – but politically difficult – recommendations deal with providing the county with greater fiscal control, expanding public-private partnerships, increasing government responsiveness to its residents, and reinventing the county’s regional role.

Please feel free to contact Abby Cook at 415/291-4436 or Victoria Pike Bond at 415/291-4412 for further information or assistance.

The Public Policy Institute of California is a private, nonprofit organization dedicated to objective, nonpartisan research on economic, social, and political issues that affect the lives of Californians. The Institute was established in 1994 with an endowment from William R. Hewlett.