As promised, the City Council budget committee held a several-hour hearing Monday on the issues raised by the Fix LA Coalition's research paper on Wall Street profits from LA city funds. Chaired by Council member Paul Krekorian, the hearing saw five Council members engaging intently with the report's authors, labor leaders and community-based representatives. The hearing was uniquely significant in that the labor-community advocates for the first time were invited to have a seat at the table as part of the official city agenda. The hearing, which lasted several hours, was televised live on the LA city channel.
In a few weeks, the Fix LA Coalition will also hold another lengthy and detailed dialogue with City Controller Ron Galperin and experts from his office. Galperin, who is one of only three LA citywide elected officials, has independent audit powers. Recent Controllers' reports have questioned whether the city has gotten the best return on its investments, and whether passively managed investments are sometimes perform better than actively-managed ones, which obtain the higher management fees.
Normally, Wall Street fees and management practice are evaluated by methods comparing other cities and pension funds. Therefore if all comparable fees are within the same range, they are considered acceptable. In the growing debate in LA, officials are being asked to compare Wall Street fees with budget cuts for essential services like street repair and with the long-term costs of downsizing urban services.